-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TFFru8F6y/jp5KC+T7eTHY1f/xbjlqUfU94qARheamnYaNTaRvC2jQP5qsLkze6t heUXWrm/pkbII+5XMDCBow== 0001104659-05-034345.txt : 20060913 0001104659-05-034345.hdr.sgml : 20060913 20050727121532 ACCESSION NUMBER: 0001104659-05-034345 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20050727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIDEO DISPLAY CORP CENTRAL INDEX KEY: 0000758743 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 581217564 STATE OF INCORPORATION: GA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: CORRESP BUSINESS ADDRESS: STREET 1: 1868 TUCKER INDUSTRIAL DR CITY: TUCKER STATE: GA ZIP: 30084 BUSINESS PHONE: 7709382080 MAIL ADDRESS: STREET 1: 1868 TUCKER INDUSTRIAL DR CITY: TUCKER STATE: GA ZIP: 30084 CORRESP 1 filename1.htm

 

July 26, 2005

 

Mr. David Burton

United States Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

 

RE:  Requests From David Burton per Comment Letter on Form 8-K filed 6/30/05.

 

Dear Mr. Burton:

 

Please find below the answers to your queries of June 30, 2005.

 

Item 4-01.  Changes in Registrant’s Certifying Accountant.

 

1)              Revise to provide info required by Item 304(a)(1)(v) of Regulation S-K

 

Specifically

 

304(a)(1)(iv)(B)

 

 

304(a)(1)(iv)(C)

 

regarding internal weaknesses that BDO advised Video Display Corporation of during the most recent two years and subsequent time period.

 

RE:  304(a)(1)(iv)(B):  The independent accountant (BDO Seidman) has not advised the registrant in written or verbal form of any reportable events (material weakness, etc.) during the two previous audit periods or period subsequent thereto other than the two disclosed in the Form 8-K submitted 6/27/2005.

 

The Form 8-K as submitted does adhere to Regulation S-K 304(a)(1)(iv)(B) as it states that BDO Seidman did discuss with the audit committee on June 10, 2005 the material weakness reported in the fiscal 2/28/2005 audit procedure and also reported to the audit committee subsequent to the February 28, 2003 audit a reportable event applicable to the 2003 fiscal year.

 

RE:  304(a)(1)(iv)(C):  The registrant has not authorized BDO Seidman in writing to respond to a successor accountant on any and all matters of disagreement since, as the submitted Form 8-K discloses, and confirmed by letter from BDO Seidman, “There has been no disagreement between the Company and BDO Seidman, LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.”

 


 

2)              Describe the nature of each reportable event and the amounts involved.

 

The first reportable event occurred in fiscal 2003 and is therefore not applicable to the reportable time period of the last two years audited.  The event pertained to insufficient reconciliations of intercompany A/R and A/P balances.  In the third quarter of fiscal 2004, the registrant implemented regular monthly transaction reconciliation and review processes to enhance its controls and procedures over intercompany transactions.  The amount associated with this reportable event was $238,000.

 

The second reportable event occurred in fiscal 2005 and related to a procedure for preparing timely preparation of journal entries as well as the failure to routinely review and approve on a monthly basis all repetitive and non-repetitive journal entries made at divisional levels.  The registrant has implemented new procedures which forbid any journal entries being prepared at divisional levels without first being approved by corporate level management.

 

There is no intent to restate or amend any previously submitted SEC Form 10Q or SEC Form 10K related to the aforementioned reportable events as financial adjustments, if any, have been recorded and reported in the applicable reporting periods.

 

3)  Provide a schedule of fiscal year end adjustments.

 

See attached BDO Seidman analysis for adjusting entries and reasons therefore.

 

4)  Provide letter or written communication from former accountant regarding disagreements, if any.

 

The respondent and the former accountant have previously submitted reports stating that there are no disagreements between the Company and BDO Seidman, LLP on any matter of accounting principles or practices, financial disclosures, or auditing scope or procedure.

 

5)  To the extent a Form 8-K is amended to comply, please file updated Exhibit 16.

 

The respondent believes that an amended Form 8-K is not required based upon the above disclosures and adherence of the June 27, 2005 Form 8-K to SEC Regulation S-K reporting requirements.  The respondent, however, is not averse to filing an amended
Form 8-K and would request SEC guidance on what additional or amended information, if any, should be included therein.

 

 

Sincerely yours,

 

 

 

VIDEO DISPLAY CORPORATION

 

 

 

/s/ Ronald D. Ordway

 

 

Ronald D. Ordway

 

Chief Executive Officer

 


 

PROPOSED ADJUSTING JOURNAL ENTRIES

 

Client

 

Video Display Corporation

 

Client No.  065967-0001

 

Year End  February 28, 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Effect

 

Pre-Tax

 

Net

 

 

 

Working

 

(Memo)

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Liabilities

 

Equity

 

Income

 

Income ***

 

Gross Profit

 

Capital

 

Non-

 

 

 

 

 

 

 

 

 

Workpaper

 

Proposed Journal Entry

 

Increase

 

Increase

 

Increase

 

Increase

 

Increase

 

Increase

 

Increase

 

Taxable

 

PAJE #

 

Adjustment Description

 

Type*

 

E**

 

Reference

 

Debit

 

Credit

 

(Decrease)

 

(Decrease)

 

(Decrease)

 

(Decrease)

 

(Decrease)

 

(Decrease)

 

(Decrease)

 

Items

 

 

 

Current Year PAJEs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

To reclassify O/S Checks to AP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Operating ‘0107-01-00

 

K

 

5

 

Fox A-6

 

464,056

 

 

 

464,056

 

 

 

 

 

 

 

 

 

 

 

464,056

 

 

 

 

 

Accounts Payable ‘0301-01-00

 

K

 

7

 

 

 

 

 

464,056

 

 

 

464,056

 

 

 

 

 

 

 

 

 

(464,056

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

Properly record inventory received

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory

 

K

 

5

 

F-1/1

 

42,780

 

 

 

42,780

 

 

 

 

 

 

 

 

 

 

 

42,780

 

 

 

 

 

Accounts Payable

 

K

 

7

 

 

 

 

 

42,780

 

 

 

42,780

 

 

 

 

 

 

 

 

 

(42,780

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

To remove double capitalized asset and depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AR - Other

 

K

 

5

 

Fox M-3

 

11,290

 

 

 

11,290

 

 

 

 

 

 

 

 

 

 

 

11,290

 

 

 

 

 

Fixed Asset 0235-01-00

 

K

 

6

 

 

 

 

 

11,290

 

(11,290

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acc. Dep - F&F 0236-01-00

 

K

 

6

 

Fox M-3

 

612

 

 

 

612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation Expense -
0732-01-00

 

K

 

1

 

 

 

 

 

612

 

 

 

 

 

612

 

612

 

612

 

612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

To reduce prepaid insurance balance to proper amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Expense

 

K

 

1

 

G-2

 

214,390

 

 

 

 

 

 

 

(214,390

)

(214,390

)

(214,390

)

(214,390

)

 

 

 

 

 

 

Prepaid Insurance

 

K

 

5

 

 

 

 

 

214,390

 

(214,390

)

 

 

 

 

 

 

 

 

 

 

(214,390

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

To correctly state prepaid professional fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional fees expense

 

K

 

2

 

G-1

 

20,156

 

 

 

 

 

 

 

(20,156

)

(20,156

)

(20,156

)

 

 

 

 

 

 

 

 

Prepaid Professional fees

 

K

 

5

 

 

 

 

 

20,156

 

(20,156

)

 

 

 

 

 

 

 

 

 

 

(20,156

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

To remove double capitalized asset

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manual A/P

 

K

 

7

 

M-9.2

 

42,844

 

 

 

 

 

(42,844

)

 

 

 

 

 

 

 

 

42,844

 

 

 

 

 

Sales Tax Payable

 

K

 

7

 

 

 

3,856

 

 

 

 

 

(3,856

)

 

 

 

 

 

 

 

 

3,856

 

 

 

 

 

Machinery & Equipment

 

K

 

5

 

 

 

 

 

46,700

 

(46,700

)

 

 

 

 

 

 

 

 

 

 

(46,700

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

To properly amortize Dataray Intanglibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization Expense

 

K

 

1

 

S-5

 

18,333

 

 

 

 

 

 

 

(18,333

)

(18,333

)

(18,333

)

(18,333

)

 

 

 

 

 

 

Other Assets

 

K

 

6

 

 

 

 

 

18,333

 

(18,333

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

To remove pending payable adjustment (Reverse Murry Fox Journal Entry)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COGS

 

K

 

1

 

Fox HH-2

 

148,083

 

 

 

 

 

 

 

(148,083

)

(148,083

)

(148,083

)

(148,083

)

 

 

 

 

 

 

Pending Payables

 

K

 

7

 

 

 

 

 

148,083

 

 

 

148,083

 

 

 

 

 

 

 

 

 

(148,083

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

To record the debt from the XKD royalty

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued Royalty

 

K

 

7

 

HH-9/2

 

350,000

 

 

 

 

 

(350,000

)

 

 

 

 

 

 

 

 

350,000

 

 

 

 

 

Discount on Debt

 

K

 

8

 

 

 

150,000

 

 

 

 

 

(150,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note Payable

 

K

 

8

 

 

 

 

 

500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

K

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

To accret debt discount for Q3, Q4, and for Santamaria conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

K

 

2

 

HH-9/2

 

56,250

 

 

 

 

 

 

 

(56,250

)

(56,250

)

(56,250

)

 

 

 

 

 

 

 

 

Debt discount

 

K

 

8

 

 

 

 

 

56,250

 

 

 

56,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

To account for Santamaria conversion of Debt to Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note Payable

 

K

 

8

 

HH-9/2

 

125,000

 

 

 

 

 

(125,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

K

 

9

 

 

 

 

 

125,000

 

 

 

 

 

125,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

To record expense for utility expense not accrued for at year-end

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utility Expense

 

K

 

2

 

VI

 

49,502

 

 

 

 

 

 

 

(49,502

)

(49,502

)

(49,502

)

 

 

 

 

 

 

 

 

Accounts Payable

 

K

 

7

 

 

 

 

 

49,502

 

 

 

49,502

 

 

 

 

 

 

 

 

 

(49,502

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

To correctly account for Warranty Exchange Items at the Florida Location

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

K

 

1

 

 

 

96,000

 

 

 

 

 

 

 

(96,000

)

(96,000

)

(96,000

)

(96,000

)

 

 

 

 

 

 

Deferred Revenue

 

K

 

7

 

 

 

 

 

96,000

 

 

 

96,000

 

 

 

 

 

 

 

 

 

(96,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

To correctly state the Company’s AR reserve needed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bad Debt Expense

 

E

 

2

 

C-5

 

32,000

 

 

 

 

 

 

 

(32,000

)

(32,000

)

(32,000

)

 

 

 

 

 

 

 

 

Allowance for doubtful accounts

 

E

 

5

 

 

 

 

 

32,000

 

(32,000

)

 

 

 

 

 

 

 

 

 

 

(32,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PAJE Totals

 

 

 

 

 

 

 

1,825,152

 

1,825,152

 

175,869

 

184,971

 

(509,102

)

(634,102

)

(634,102

)

(476,195

)

(198,840

)

—

 

 

*                Indicate whether PAJE is estimated (E), known (K) or projected sampling error (P)

 

**         Enter effect code: 1 = Sales or CGS, 2 = Other taxable income or deductible expense (except income tax), 3 = Other non-taxable income or non-deductible expense (permanent difference), 4 = Income tax expense (or benefit), 5 = Current asset, 6 = Long-term asset, 7 = Current liability, 8 = Long-term liability, 9 = Equity

 

***  Tax effect of PAJEs, where applicable, is reflected on the Totals sheet with an offsetting effect on current liabilities.  If a significant PAJE would affect current assets or long-term deferred tax assets or liabilities instead of current liabilities, manual override should be considered

 

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