Cicely
L.
LaMothe
Jorge
L.
Bonilla
United
States Securities and Exchange Commission
Washington,
D.C. 20549
RE:
Secured Diversified Investment, Ltd.
File
No.
000-30653
Dear
Ms.
LaMothe and Mr. Bonilla,
We
are in
receipt of your letter dated September 25, 2007, regarding your comments with
respect to our Form 10-KSB for the year ended December 31, 2006 and Forms 10-QSB
for the quarters ended March 31, 2007 and June 30, 2007. We will address your
comments in order as presented in your letter.
Form
10-KSB / Financial Statements / Note 3 Significant Accounting
Policies:
Comment
1 - Investments, Page F-8:
In
response to staff comments the Company only consolidates wholly owned or
majority owned subsidiaries. There was neither any subsidiary in the past or
in
the present that the Company consolidated with less than 51% ownership
interest.
The
accounting policy disclosed in the 10KSB filed was presented incorrectly and
should be read as:
Investments. The
equity method of accounting is used for all investments in associated companies
in which the company’s interest is 20% or more but less than 51%. Under the
equity method, the Company recognizes its share in the net earnings or losses
of
these associated companies as they occur rather than as dividends are received.
Dividends received are accounted for as a reduction of the investment rather
than as dividend income. Losses from the equity investments reduce receivables
from the associated companies. As of December 31, 2006 the Company does not
have
any investments to be recorded on equity method.
Comment
2 - Page F-9:
In
response to staff comments following are the explanation.
| a) |
The
Company reports its investment in these properties at historical
cost.
Those properties were acquired with the intention that when the value
of
properties will appreciate the Company will sell its share in those
properties.
|
The
Company used cost method of accounting based on SOP 78-9 paragraph .08 which
states that
“The
division believes that the accounting recommendations for use of the equity
method of accounting for investments in general partnerships are generally
appropriate for accounting by limited partners for their investments in limited
partnerships. A limited partner's interest may be so minor that the limited
partner may have virtually no influence over partnership operating and financial
policies. Such a limited partner is, in substance, in the same position with
respect to the investment as an investor that owns a minor common stock interest
in a corporation, and, accordingly, accounting for the investment using the
cost
method may be appropriate.”
Although
the Company’s investment is 20% or more but less than 51%, it would have
accounted for its investment under the equity method but as disclosed in from
10KSB filed that the Company does not share in the income and expense stream,
the cost method treatment is appropriate under the circumstances.
Currently
the properties are included under ‘Properties, net of accumulated depreciation’.
The Company will re-classed the properties to ‘Investment in Real estate’ in the
amended 10KSB.
b)
The
25% interest in the property located in Paradise Valley, Arizona was paid for
in
cash.
c)
The
Company assesses the subject investments for impairment by determining its
ability to recapture its investment by evaluating the real estate market
conditions to determine value and monitoring the debt, and income and expenses
associated with the property.
Forms
10-QSB for the quarters ended March 31, 2007 and June 30, 2007:
Comment
3 - Financial Statements:
In
response to staff comment we will amend our 10QSB forms for March 31, 2007
and
June 30, 2007 to retroactively restate stockholders’ equity section and net loss
per share based on our reverse split and other changes in capital structure
in
2006.
Comment
4 - Management Discussion and Analysis, Campus Drive Office
Building:
In
response to staff comments the Company assesses impairment of this property
on
annual basis. Considering the circumstances disclosed in the 10KSB filed the
Company has assessed the value of the property which resulted in the fair market
value more than the book value and no impairment is required as of December
31,
2006.
In
submitting our response we acknowledge that:
The
Company is responsible for the adequacy and accuracy of the disclosure in the
filings;
Staff
comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filings;
and
The
Company may not assert comments as a defense in any proceeding initiated by
the
Commission or any person under the federal securities laws of the United
States.
Thank
you
very much for your comments and assistance.
Respectfully,
SECURED
DIVERSIFIED INVESTMENT, Ltd.
By:
/s/
Munjit Johal
Its:
Chief
Financial Officer
