<SEC-DOCUMENT>0001144204-13-054056.txt : 20131211
<SEC-HEADER>0001144204-13-054056.hdr.sgml : 20131211
<ACCEPTANCE-DATETIME>20131004163013
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-13-054056
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20131004

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INNODATA INC
		CENTRAL INDEX KEY:			0000903651
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
		IRS NUMBER:				133475943
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		THREE UNIVERSITY PLAZA
		STREET 2:		SUITE 506
		CITY:			HACKENSACK
		STATE:			NJ
		ZIP:			07601
		BUSINESS PHONE:		201 371 8000

	MAIL ADDRESS:	
		STREET 1:		THREE UNIVERSITY PLAZA
		STREET 2:		SUITE 506
		CITY:			HACKENSACK
		STATE:			NJ
		ZIP:			07601

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INNODATA ISOGEN INC
		DATE OF NAME CHANGE:	20031117

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INNODATA CORP
		DATE OF NAME CHANGE:	19930505
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
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<P STYLE="margin: 0">&nbsp;<FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Via Edgar</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">October 4, 2013</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Mr. Patrick Gilmore </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Accounting Branch Chief
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">United States Securities
and Exchange Commission </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Division of Corporation
Finance </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">100 F Street, N.E. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Washington, D.C. 20549</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; margin-left: 0in; text-indent: 0in; text-align: justify">Re:
Innodata Inc.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Form 10-K for the Fiscal
Year Ended December 31, 2012 </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 65.35pt"><FONT STYLE="background-color: white">Filed March
15, 2013</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Form 10-Q for the Quarterly
Period Ended June 30, 2013 </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 65.35pt"><FONT STYLE="background-color: white">Filed August
8, 2013 </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 65.35pt"><FONT STYLE="background-color: white">File No. 001-35774
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 73.45pt"><BR>
<BR>
</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 73.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Dear Mr. Gilmore, </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">Set
forth below is the response of Innodata Inc. (the &ldquo;Company&rdquo;) to the comments in your letter dated September 11, 2013.
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">For
reference purposes, the Staff&rsquo;s comment as reflected in your letter is reproduced in bold and the corresponding response
of the Company is shown below the comment. &nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">The
contact persons at the Company for these matters are O&rsquo;Neil Nalavadi, Senior Vice President and Chief Financial Officer,
Telephone: 201-371-8019; Facsimile: 201-488-3341, and Raj Jain, Vice Present Finance, Telephone: 201-371-8024; Facsimile: 201-488-3341.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="background-color: white">&nbsp;<B><U>Form
10-K for the fiscal year ended December 31, 2012</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="background-color: white">&nbsp;<B><U>Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations </U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><FONT STYLE="background-color: white"><B>&nbsp;<U>Liquidity
and Capital Resource, page 31</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">1.</TD><TD STYLE="text-align: justify"><FONT STYLE="background-color: white"><B>We note from your financial statements that your gross
accounts receivable were $14,925,000 and $22,314,000 as of December 31, 2012 and 2011, respectively, and your revenues were $86,591,000
and $73,942,000 for the years ended December 31, 2012 and 2011, respectively. Please tell us how you determined the days&rsquo;
sales outstanding to be approximately 76 days and 74 days as of December 31, 2012 and 2011, respectively. </B></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>Our
response to your Comment 1: </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><I>DSO
calculation:</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">We
calculated DSO using a two-step method. First, we calculated the DSO ratio using the formula: DSO Ratio = Total Revenues/Average
Net Accounts Receivable. &ldquo;Average Net Accounts Receivable&rdquo; is the sum of net accounts receivable at the beginning of
the period and net accounts receivable at the end of the period, divided by 2. In the next step we divided the 365 days in a calendar
year by the DSO ratio to yield the DSO expressed in numbers of days. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">We
applied this methodology to calculate DSOs for December 31, 2012 and 2011 as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><I>DSO
calculation as of December 31, 2012:</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">We
divided 2012 revenues of $86,591,000 by the average net accounts receivable balance of $18,012,000 (determined by adding the net
accounts receivable ending balances of $14,317,000 as of December 31, 2012 and $21,706,000 as of December 31, 2011, and dividing
the resulting sum of $36,023,00 by 2) to determine that the accounts receivable turnover for 2012 was 4.81. To calculate days&rsquo;
sales outstanding, we divided 365 by the accounts receivable turnover of 4.81 to yield 75.88 days or 76 days rounded off.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><I>DSO
calculation as of December 31, 2011:</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">We
divided 2011 revenues of $73,942,000 by the average net accounts receivable balance of $15,048,000 (determined by adding the net
accounts receivable ending balances of $21,706,000 as of December 31, 2011 and $8,389,000 as of December 31, 2010, and dividing
the resulting sum of $30,095,00 by 2) to determine that the accounts receivable turnover for 2011 was 4.91. To calculate days&rsquo;
sales outstanding, we divided 365 by the accounts receivable turnover of 4.91 to yield 74.33 days or 74 days rounded off.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">There
is no significant difference between the results of the above method and a method that takes into account average gross accounts
receivable instead of average net accounts receivable. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><U>Consolidated
Statements of Operation and Comprehensive Income (Loss), page F-4</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">2.</TD><TD STYLE="text-align: justify"><FONT STYLE="color: black; background-color: white"><B>We note your presentation of comprehensive
income does not begin with net income, does not have a separate line item for comprehensive income attributable to non-controlling
interests and does not include a subtotal for other comprehensive income. Please tell us your consideration for including these
line items in your presentation of comprehensive income based on the guidance in ASU No. 2011-5. </B></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>Our
response to your Comment 2: </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company did not begin its presentation
of comprehensive income with net income because the amount of net income was already presented in the statement of operations.
<FONT STYLE="color: black; background-color: white">In our future filings, we will apply the guidance in ASU No. 2011-5 and make
corresponding disclosures.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">The
Company's Comprehensive income (loss) consists of a pension liability adjustment, net of taxes, and changes in the fair value of
derivatives, net of taxes. Both of these adjustments are attributable to the Company and not to non-controlling interests. The
Company's non-controlling interests arise from its Innodata Advanced Data Solutions segment (IADS) where there is no comprehensive
income (loss) adjustment. Thus, there is no separate line for comprehensive income (loss) attributable to the non-controlling interests.
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company did not report a subtotal for
other comprehensive income in the statement of operations and comprehensive income (loss) because it considered that there was
adequate disclosure of comprehensive income and its components in the footnotes to the financial statements. In our future filings
we<FONT STYLE="color: black; background-color: white"> will apply the guidance in ASU No. 2011-5 and make corresponding disclosures.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><U>Notes
to Consolidated Financial Statements</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white"><B><U>Note 3 &ndash; Income
taxes, pages F-11 &ndash; F-14</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">3.</TD><TD STYLE="text-align: justify"><FONT STYLE="background-color: white"><B>We note from your disclosure that you have not recognized
a valuation allowance against the deferred tax assets associated with the U.S. component&rsquo;s net operating losses. We also
note that the US component has incurred pre-tax losses for the years ended December 31, 2012, 2011 and 2010. Please tell us the
factors that led you to conclude that it is more likely than not that you will be able to generate enough taxable income to utilize
the respective net operating losses and that a valuation allowance was not necessary. In your response please describe, in reasonable
detail, the nature of the positive and negative evidence that you considered when assessing the likelihood of realizing the deferred
tax assets and indicate how the positive and negative evidence was weighted. Refer to paragraphs16 through 23 of ASC 740-10-30.</B></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>Our
response to your Comment 3: </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><U>Background:</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">The
Company generated $5.5 million and $8.3 million of pre-tax profits in 2008 and 2009, respectively, and recognized no valuation
allowance. In 2010 the Company incurred a pre-tax loss of $1.2 million primarily on account of a significant revenue decline from
a significant client. The Company did not recognize a valuation allowance for 2010 based on a three-year plan that the Company
adopted in February 2011 to return to profitability with respect to its Content Services (CS) segment, which the Company did achieve
beginning in 2011 and continuing through 2012 and into 2013. The CS segment generated $7.5 million and $13.1 million in 2011 and
2012, after eliminating inter-segment profits. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">The
CS segment was the Company's only reporting segment through mid-2011. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">In
mid-2011, the Company formed its new IADS segment to establish start-up service offerings that extract and classify data in an
innovative way for the insurance and financial services sectors. IADS incurred operating losses of $2.2 million in 2011 and $6.3
million in 2012 but reported no significant revenues. This led to the consolidated pre-tax US component losses in 2011 and 2012
to which you refer in your letter. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><U>Analysis:</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">In
assessing the likelihood of realizing the deferred tax assets, the Company considered the following: </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">As
noted, the CS segment was profitable in 2008, 2009, 2011 and 2012. Based on past performance, the Company believed that the CS
segment standing alone should be profitable in 2013 and 2014 and should generate enough taxable income to utilize the respective
net operating losses. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">In
analyzing the effect of IADS on the Company's ability to realize its net deferred tax asset, the Company performed a two-part analysis.
The first part weighed the prospects of the IADS business if continued by the Company. The second part considered the consequence
to the Company's operations should there be a sale or other termination or substantial cutback in the IADS business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">For
the first part of the IADS analysis, the Company evaluated the prospects for the IADS segment every quarter. The primary positive
factors were several active prospective customers as well as pilot projects that the Company performed over time for more than
15 companies. A number of the pilot projects had resulted in positive feedback. The financial and business model for IADS indicated
significant revenues and profits if and when prospective clients converted into revenue generating clients. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">The
negative IADS factors assessed by the Company primarily related to the failure to achieve meaningful revenues. The Company ascribed
the lack of revenues primarily to the conservative and slow moving nature of the insurance industry in approaching major changes
in process and technology. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">After
weighing the positive and negative factors, the Company updated its projections in December 2012 to look to a return to profitability
of the Company as a whole, including IADS, by the end of 2013. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">For
the second part of its analysis the Company considered the effect on IADS of a prolonged delay in winning revenue-generating clients
and attaining profitability. Under this scenario the options available to the Company would include a sale or other discontinuance
or substantial cutback of the IADS business. The Company has entered into no commitments that would result in significant continuing
operating losses should the Company terminate the IADS business. Assuming no further acquisitions or dispositions, the Company's
U.S. operations would then consist primarily of its CS business. As noted above, the Company believed that the CS business standing
alone would generate sufficient taxable income to utilize the cumulative net operating losses.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">As
of December 31, 2012, the Company had approximately $11.4 million of net operating loss carryforwards. As a result of the foregoing
analyses, the Company believed that it was more likely than not that all of the deferred tax assets will be realized. Accordingly,
the Company did not recognize a valuation allowance. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">The
Company reviews its deferred tax assets in connection with all relevant filings and developments, and will continue to do so in
connection with future filings.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white"><B><U>Form 10-Q for the
quarterly period year ended June 30, 2013</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><U>Notes
to Condensed Consolidated Financial Statements</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B><U>Note
5 &ndash; Comprehensive income (loss), page 12</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 22.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">4.</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="background-color: white"><B>Please tell us your consideration for the disclosure requirement
to identify, for each significant reclassification amount, each line item affected by the reclassification on the statement where
net income is presented. Refer to ASC 220-10-45-17</B></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"><B>Our
response to your Comment 4:</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">Under the provisions
of ASC 220-10-45-14A an entity has the option to present either on the face of the financial statements or as a separate disclosure
in the notes, the changes in the accumulated balances for each component of other comprehensive income. We opted to provide such
disclosures in the notes to the financial statements. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In accordance with the provisions of ASC 220-10-45-17B, the
Company presented the significant amounts of reclassification by each component of accumulated other comprehensive income and
provided a subtotal of each component of comprehensive income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Direct operating costs were affected by
the reclassification. The Company inadvertently omitted to include the reference to direct operating costs in its disclosure, but<FONT STYLE="color: black; background-color: white">
will apply this provision and make corresponding disclosures in its future filings.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">In connection with our
response to the Staff&rsquo;s comments we acknowledge that: </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: white">
    <TD STYLE="width: 3%; padding-top: 6pt; padding-bottom: 6pt; text-align: justify; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 3%; padding-top: 6pt; padding-bottom: 6pt; text-align: justify; font-size: 10pt"><FONT STYLE="color: black; background-color: white">&middot; </FONT></TD>
    <TD STYLE="width: 94%; padding-top: 6pt; padding-bottom: 6pt; text-align: justify; font-size: 10pt"><FONT STYLE="color: black; background-color: white">The Company is responsible for the adequacy and accuracy of the disclosure in the filing; </FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD STYLE="padding-top: 6pt; padding-bottom: 6pt; text-align: justify; font-size: 10pt">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">&middot;
        </FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P></TD>
    <TD STYLE="padding-top: 6pt; padding-right: 64.7pt; padding-bottom: 6pt; text-align: justify; font-size: 10pt"><FONT STYLE="color: black; background-color: white">Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and </FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: white">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">&middot;
        </FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P></TD>
    <TD STYLE="padding-top: 6pt; padding-right: 64.7pt; padding-bottom: 6pt; text-align: justify; font-size: 10pt"><FONT STYLE="color: black; background-color: white">The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. </FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">If you have any questions,
please contact me by telephone at 201-371-8019 or by facsimile at 201-488-3341. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">Sincerely,
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">/s/ O&rsquo;Neil Nalavadi</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="background-color: white">O&rsquo;Neil Nalavadi
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">Senior
Vice President and Chief Financial Officer,</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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