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Mail Stop 4561
August 5, 2005
T. Kendall Hunt
Chairman and Chief Executive Officer
VASCO Data Security International, Inc.
1901 South Meyers Road, Suite 210
Oakbrook. IL 60181
Re: VASCO Data Security International, Inc.
From S-3 filed April 29, 2005
Registration no. 333-124458
Form 10-K filed March 31, 2005
File no. 0-24389
Dear Mr. Hunt:
We have reviewed your response letter dated June 17, 2005
and
have following comments.
Form S-3
General
1. With respect to our previous comment no. 1, we understand you
submitted a waiver request to the Office of Chief Counsel, which
was
not granted. Please respond accordingly.
Form 10-K for the Fiscal Year Ended December 31, 2004
Note 1 - Summary of Significant Accounting Policies, Revenue
Recognition, pages F-8
2. We note your responses to our previous comment no. 8 - 12 and
your
expanded discussions with regards to the Company`s revenue
recognition policy.
Revise your disclosures to include the additional information
provided in your responses. At a minimum your disclosures should
include (a) a discussion of the applicable accounting guidance
applied, (b) revenue recognition policies for
resellers/distributors
(or indicate that your policy does not differ for these
arrangements), (c) multi-element arrangements, (d) contingencies
such
as rights of returns (or specifically indicate that no such rights
exist) and (e) clarification as to what constitutes a volume
purchase
discount.
Note 12 - Discontinued Operations, page F-20
3. We note your response to our previous comment no. 13 where you
indicate that the Company will remove reference to the independent
valuation firm used in the Vacman transaction in future filings.
Considering you are incorporating the December 31, 2004 Form 10-K
into a registration statement, please amend your Form 10-K to
remove
this reference pursuant to Section 436(b) of Regulation C.
Note 12 - Discontinued Operations, page F-20
4. We note your response to our previous comment no. 15 where you
indicate the Company did not consider the trading price of common
stock to be a reasonable indication of the fair value of the
preferred stock received. With regards to the information
provided
in your response, please address following:
* Provide a copy of the valuation report provided by the
independent
valuation firm.
* Tell us your basis for using 20% discount rate for the dividend
payment.
* Explain the specific assumptions used in determining the fair
value
of preferred shares to be $600,000. In this regard, provide a
detail
analysis supporting the fair value.
* Tell us how you reconciled the difference between the Company`s
$0.33 per share valuation of SSI`s preferred stock to (a) the
$2.00
per share trading price of the underlying shares in SSI`s common
stock and (b) the $0.75 per share price of the common stock sold
by
SSI in a private placement in July 2003 as a condition to the
consummation of their merger with SSGI.
* Tell us who provided the assumptions used in your analysis. If
SSI
provided the assumptions, were similar assumptions provided by SSI
to
be used in any other transactions (i.e. the SSGI merger or the
Dolfin.com acquisition)?
* Also, tell us how you reconciled the difference between the
$600,000 fair value of the preferred stock as determined by the
Company to the $2,000,000 fair value of the Series A preferred
stock
as recorded by SSI.
Form 8-K/A Filed May 23, 2005
5. We note that the Company filed an amended Form 8-K to include
the
signed audit opinion for AOS-Hagenuk B.V. We further note that
such
audit was performed in accordance with auditing standards
generally
accepted in the Netherlands. Tell us how you considered the
requirements of Instruction 8.A.2 to Item 8 of Form 20-F to
include
audited financial statements as required by Article 3-05 of
Regulation S-X that were audited in accordance with US generally
accepted accounting standards. Also, tell us how the auditor
complied with the U.S independence standards.
6. Also, revise the report of AOS-Hagenuk`s independent auditors
to
include the name of the accounting firm performing the audit
pursuant
to Article 2-02 of Regulation S-X.
* * * *
We have not yet received the written representation that we
requested in our prior comment letter. Please provide the
requested
response.
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
You may contact Kari Jin at (202) 551-3481, or Kathleen
Collins
at (202) 551-3499, if you have questions or comments on the
financial
statements and related matters. Please contact Hugh Fuller at
(202)
551-3853 or me at (202) 551-3730 with other questions.
Sincerely,
Mark P. Shuman
Branch Chief - Legal
cc: Robert B. Murphy
Pepper Hamilton LLP
600 14 Street, NW
Washington, DC 20005
Fax no. (202) 220-1665
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Mr. Hunt
VASCO Data Security International, Inc.
August 5, 2005
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