SEC Company Response from Anixa Biosciences Inc (ANIX) (CIK 0000715446) (ANIX) — Apr 12, 2010
Anixa Biosciences Inc (ANIX) (CIK 0000715446)
Date: April 12, 2010 · CIK: 0000715446 · Accession: 0001157523-10-002007
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-11254
Referenced dates: March 31, 2010
Letter
Via EDGAR & Federal Express United States Securities and Exchange Commission CopyTele, Inc. Form 10-K/A for Fiscal Year Ended October 31, 2009, filed March 10, 2010 Form 10-Q for Fiscal Quarter Ended January 31, 2010, filed March 17, 2010 File No. 000-11254
Dear Mr. Shuman:
This letter sets forth the responses of CopyTele, Inc. (“CopyTele” or the "Company") to the comments of the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") set forth in its comment letter dated March 31, 2010 (the "Comment Letter") with respect to the Company’s Annual Report on Form 10-K/A for the fiscal year ended October 31, 2009 (the “Form 10-K/A”) and Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2010 (the “Form 10-Q”). In addition, this letter also contains the Company’s proposed changes to the Form 10-K/A. For the convenience of the Staff, we are providing under separate cover a hard copy of this letter in which the proposed changes to the Form 10-K/A have been marked to show changes from the applicable sections of the current Form 10-K/A.
We have reproduced below in italics each of the Staff's comments set forth in the Comment Letter. Immediately following each such comment is the Company's response in regular font. The Company's responses in this letter correspond to the numbers in the Staff's comments in the Comment Letter.
General
1.
Comment: You state on page 4 that your products are being used by government agencies, military, as well as domestic and international non-governmental organizations in the Middle East and Africa, and that your products are now being evaluated by Middle Eastern governments. Also, on page 5, you state that your specific Thuraya satellite products are being evaluated by a Middle Eastern government. Further, on page 21, you state that you are continuing to direct your encryption marketing efforts to opportunities in both the commercial and government security markets and you have recently uncovered new opportunities to market products to Middle Eastern governments to secure voice and fax communications. In addition, we are aware of a June 2008 news report that Videocon Industries Limited, which exports products to the Middle East and with which you have a significant technology license agreement, intended to build a plant in Iran in 2009.
Securities and Exchange Commission
April 12, 2010
Page 2
The Middle East and Africa include Iran, Syria, and Sudan, countries that are identified by the State Department as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls. We note that your Form 10-K does not include disclosure regarding contacts with Iran, Syria, and Sudan. Please describe to us the nature and extent of your past, current, and anticipated contacts with Iran, Syria, and Sudan, if any, whether through subsidiaries, distributors, licensees, or other direct or indirect arrangements. Your response should describe any products, components, equipment, technology, software, or services that you have provided into Iran, Syria, and Sudan, directly or indirectly, and any agreements, commercial arrangements, or other contacts you have had with the governments of those countries or entities controlled by those governments.
Response: In accordance with U.S. Export Administration Regulations CopyTele’s encryption devices, technology and software solutions are prohibited from export to Cuba, Iran, North Korea, Sudan and Syria without a valid Export License. Neither CopyTele nor any of its subsidiaries have ever exported, or currently anticipates exporting, any goods or services to these countries either directly or to its knowledge, indirectly through any distributor or licensee, nor has it ever had, or anticipate in the future to have, any direct or indirect arrangements or other contacts with the governments of those countries or entities controlled by those governments.
Furthermore, before any domestic or international shipment of encryption equipment, software or technology, CopyTele confirms that the recipient is not on any denied person or similar list maintained by the U.S. Department of Commerce, Bureau of Industry and Security.
In addition, in accordance with Export Administration Regulations EAR §740.17 (5) CopyTele files the requisite semiannually reports on exports of our encryption equipment, software and technology with the applicable U.S. government agencies.
The following disclosure will be added to “Item 1. Business - Regulation” on page 13 to describe the Export Administration Regulations and to state that the Company does not do and does not intend to do business with such countries.
Item 1. Business - Regulation
Our international sales of our encryption devices, technology and software solutions are subject to U.S. and foreign regulations such as the International Traffic in Arms Regulations (“ITAR”) and Export Administration Regulations and may require licenses (including export licenses) from U.S. government agencies or require the payment of certain tariffs. In addition, in accordance with applicable regulations, we file the requisite semiannually reports on exports of these products with the applicable U.S. government agencies. Our ability to export in the future is dependent upon our ability to obtain the export authorization from the appropriate U.S. government agency. In addition, in accordance with Export Administration Regulations, without a valid export license, we are prohibited from exporting these products to any country that the U.S. State Department has identified as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls, which includes Cuba, Iran, North Korea, Sudan and Syria. However, neither we nor any of our subsidiaries have ever exported, or currently anticipate exporting, any goods or services to any such countries either directly or to our knowledge, indirectly through any distributor or licensee, nor have we ever had, or anticipate in the future having, any direct or indirect arrangements or other contacts with the governments of those countries or entities controlled by those governments. Furthermore, before we make any domestic or international shipments of encryption equipment, software or technology, we confirm that the recipient is not on any denied person or similar list maintained by the U.S. Department of Commerce, Bureau of Industry and Security.
Securities and Exchange Commission
April 12, 2010
Page 3
Form 10-K for the Fiscal Year Ended October 31, 2009
Part I
Item 1. Business, page 4
2.
Comment: On page 5 you disclose that the payment terms of the technology license to Videocon were modified to "allow Videocon's payments to be more closely aligned with the progress being made towards optimization of the display performance." This text suggests that at least some of the additional license fee payments will be owed only if specific performance standards are met by prototypes of the company's products in the development process. Please clarify the disclosure, and ensure that your description of these provisions of the license agreement provides the materially complete summary of the rights and obligations of the related parties that is required by Item 404(a)(6) of Regulation S-K.
Response: The following clarifying disclosure will be added to “Item 1. Business” on page 5 and in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” on page 25 to clarify that none of the license fee payments are dependent on any specific performance standards which must be met by prototypes of CopyTele’s products in the development stage but rather such modifications were agreed to by CopyTele after discussions with Videocon to allow Videocon’s payments to be more closely aligned with the progress being made towards the optimization of the performance of the advanced version of CopyTele’s display technology. Concurrent with this decision, CopyTele agreed to reimburse Videocon $250,000 for engineering services related to the advanced version of our display technology.
Securities and Exchange Commission
April 12, 2010
Page 4
To the extent that the information is not subject to a request for confidential treatment, the Company will also expand the description of the material terms of the license agreement in “Item 1. Business on page 5. However, we wish to point out that at the time that the original license agreement was entered into by the parties on November 2, 2007, Videocon was not a related party and did not become a related party until it completed the purchase of its equity interest in CopyTele on November 6, 2007. Therefore we do not believe that disclosure is required by Item 13 of Form 10-K and Item 404(a)(6) of Regulation S-K.
Item 1 - Business
In May 2008, we received the first installment of the license fee of $2,000,000. During the quarter ended April 30, 2009, we modified the payment terms from Videocon and we agreed to reimburse Videocon $250,000 for engineering services related to an advanced version of our display technology, which amount was offset against amounts due to Videocon in lieu of a cash payment. In addition, in June 2009, we received a license fee payment from Videocon of $250,000, which was due during the quarter ended April 30, 2009 pursuant to the modified payment terms. In August 2009, we received an additional license fee payment from Videocon of $100,000, which was due during the quarter ended July 31, 2009 pursuant to the modified payment terms. As of October 31, 2009, we have received aggregate license fee payments of $2,600,000. TheWe further modified the payment terms from Videocon were modified during the second quarter of fiscal year 2009 and again during the first quarter of fiscal year 2010.2010 for amounts that were due during that quarter. The modifications were madeagreed to by CopyTele after discussions with Videocon to allow Videocon’s payments to be more closely aligned with the progress being made towards the optimization of the display performance of the advanced version of our display technology, although the total amount of the payments did not change and Videocon’s obligation to make such payments is subject only to CopyTele’s limited performance requirements described below and is not dependent on any specific performance standards which must be met by prototypes of CopyTele’s products in the development stage. Future modifications of the timing of payments from Videocon could occur that might materially affect in which future periods revenues from Videocon are recognized and which could delay the payment of the license fee beyond the 27 month period. Videocon’s obligations with respect to the pre-production phase, and CopyTele’s assistance, under the License Agreement remain unaffected.
Securities and Exchange Commission
April 12, 2010
Page 5
Videocon is the flagship company of the Videocon Group, one of India’s leading business houses. Videocon Group is a fully integrated consumer electronics and home appliances enterprise with backward integration in plasma panel, CRT glass, color picture tubes and other key components for the consumer electronics, home appliances and components industries. Videocon Group also operates in the oil & gas sector. The Videocon Group has sales and service networks throughout India and operates facilities in Europe and elsewhere in the world.
We are working with Videocon to implement our technology into production display modules. The display modules consist of our low voltage phosphor displays, the attached associated driver circuits, and controller circuits. Under the License Agreement, Videocon, with our assistance, is to provide the design and process engineering required to produce such display modules and also provide all tooling and fixtures required for the production process. Videocon has a group of qualified and experienced personnel assigned to this program. AsIn connection with our performance requirements under the License Agreement, we are providing technical support to Videocon’s technical team as part of our assistance to Videocon to produce such display modules, we are providing technical support to Videocon’s technical team. Weand are also cooperating with Videocon to jointly implement our technology prior to production to produce prototypes of such modules. Videocon is utilizing its display processing technology and facilities to continue to produce various configurations of our display matrix to optimize its performance. The matrix is the main component of our display, since it contains the structure to accommodate our electron emission technology and the color phosphors that are used to illuminate our display. Improvements to the technology are to be jointly owned by CopyTele and Videocon.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.
During the quarter ended April 30, 2009, we modified the payment terms from Videocon and we agreed to reimburse Videocon $250,000 for engineering services related to anotheran advanced version of our display technology. The license fee revenue recognized during the three months ended April 30, 2009 of $250,000 represented an offset against amounts due to Videocon for the aforementioned engineering services, in lieu of a cash payment. In addition, in June 2009, we received a license fee payment from Videocon of $250,000, which was due during the quarter ended April 30, 2009 pursuant to the modified payment terms, which was recognized as license fee revenue during the three months ended July 31, 2009. In August 2009, we received an additional license fee payment from Videocon of $100,000, which was due during the quarter ended July 31, 2009 pursuant to the modified payment terms, which was recognized as revenue during the three months ended October 31, 2009. We further modified the payment terms from Videocon during the first quarter of fiscal year 2010 for amounts that were due during that quarter. The modifications were madeagreed to by CopyTele after discussions with Videocon to allow Videocon’s payments to be more closely aligned with the progress being made towards the optimization of the display performance. While we have modified the timing of license fee payments to be received from Videocon,performance of the advanced version of our display technology, although the total amount of license fee payments of $11 million remains payable over the 27 month period, which commenced in May 2008.$11 million did not change and Videocon’s obligation to make such payments is subject only to CopyTele’s limited performance requirements described below and is not dependent on any specific performance standards which must be met by prototypes of CopyTele’s products in the development stage. Future modifications of the timing of payments from Videocon could occur that might materially affect in which future periods revenues from Videocon are recognized and which could delay the payment of the license fee beyond the 27 month period. Videocon’s obligations with respect to the pre-production phase, and ourCopyTele’s assistance, under the License Agreement remain unaffected. In connection with our performance requirements under the License Agreement, we are providing technical support to Videocon’s technical team as part of our assistance to Videocon to produce display modules, and are also cooperating with Videocon to jointly implement our technology prior to production to produce prototypes of such modules.
Securities and Exchange Commission
April 12, 2010
Page 6
3.
Comment: Ensure that your
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CORRESP
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filename1.htm
a6245996.htm
April 12, 2010
Via EDGAR & Federal Express
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Attn: Mark P. Shuman Branch Chief
Mail Stop 4561
Re:
CopyTele, Inc.
Form 10-K/A for Fiscal Year Ended October 31, 2009, filed March 10, 2010
Form 10-Q for Fiscal Quarter Ended January 31, 2010, filed March 17, 2010
File No. 000-11254
Dear Mr. Shuman:
This letter sets forth the responses of CopyTele, Inc. (“CopyTele” or the "Company") to the comments of the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") set forth in its comment letter dated March 31, 2010 (the "Comment Letter") with respect to the Company’s Annual Report on Form 10-K/A for the fiscal year ended October 31, 2009 (the “Form 10-K/A”) and Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2010 (the “Form 10-Q”). In addition, this letter also contains the Company’s proposed changes to the Form 10-K/A. For the convenience of the Staff, we are providing under separate cover a hard copy of this letter in which the proposed changes to the Form 10-K/A have been marked to show changes from the applicable sections of the current Form 10-K/A.
We have reproduced below in italics each of the Staff's comments set forth in the Comment Letter. Immediately following each such comment is the Company's response in regular font. The Company's responses in this letter correspond to the numbers in the Staff's comments in the Comment Letter.
General
1.
Comment: You state on page 4 that your products are being used by government agencies, military, as well as domestic and international non-governmental organizations in the Middle East and Africa, and that your products are now being evaluated by Middle Eastern governments. Also, on page 5, you state that your specific Thuraya satellite products are being evaluated by a Middle Eastern government. Further, on page 21, you state that you are continuing to direct your encryption marketing efforts to opportunities in both the commercial and government security markets and you have recently uncovered new opportunities to market products to Middle Eastern governments to secure voice and fax communications. In addition, we are aware of a June 2008 news report that Videocon Industries Limited, which exports products to the Middle East and with which you have a significant technology license agreement, intended to build a plant in Iran in 2009.
Securities and Exchange Commission
April 12, 2010
Page 2
The Middle East and Africa include Iran, Syria, and Sudan, countries that are identified by the State Department as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls. We note that your Form 10-K does not include disclosure regarding contacts with Iran, Syria, and Sudan. Please describe to us the nature and extent of your past, current, and anticipated contacts with Iran, Syria, and Sudan, if any, whether through subsidiaries, distributors, licensees, or other direct or indirect arrangements. Your response should describe any products, components, equipment, technology, software, or services that you have provided into Iran, Syria, and Sudan, directly or indirectly, and any agreements, commercial arrangements, or other contacts you have had with the governments of those countries or entities controlled by those governments.
Response: In accordance with U.S. Export Administration Regulations CopyTele’s encryption devices, technology and software solutions are prohibited from export to Cuba, Iran, North Korea, Sudan and Syria without a valid Export License. Neither CopyTele nor any of its subsidiaries have ever exported, or currently anticipates exporting, any goods or services to these countries either directly or to its knowledge, indirectly through any distributor or licensee, nor has it ever had, or anticipate in the future to have, any direct or indirect arrangements or other contacts with the governments of those countries or entities controlled by those governments.
Furthermore, before any domestic or international shipment of encryption equipment, software or technology, CopyTele confirms that the recipient is not on any denied person or similar list maintained by the U.S. Department of Commerce, Bureau of Industry and Security.
In addition, in accordance with Export Administration Regulations EAR §740.17 (5) CopyTele files the requisite semiannually reports on exports of our encryption equipment, software and technology with the applicable U.S. government agencies.
The following disclosure will be added to “Item 1. Business - Regulation” on page 13 to describe the Export Administration Regulations and to state that the Company does not do and does not intend to do business with such countries.
Item 1. Business - Regulation
Our international sales of our encryption devices, technology and software solutions are subject to U.S. and foreign regulations such as the International Traffic in Arms Regulations (“ITAR”) and Export Administration Regulations and may require licenses (including export licenses) from U.S. government agencies or require the payment of certain tariffs. In addition, in accordance with applicable regulations, we file the requisite semiannually reports on exports of these products with the applicable U.S. government agencies. Our ability to export in the future is dependent upon our ability to obtain the export authorization from the appropriate U.S. government agency. In addition, in accordance with Export Administration Regulations, without a valid export license, we are prohibited from exporting these products to any country that the U.S. State Department has identified as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls, which includes Cuba, Iran, North Korea, Sudan and Syria. However, neither we nor any of our subsidiaries have ever exported, or currently anticipate exporting, any goods or services to any such countries either directly or to our knowledge, indirectly through any distributor or licensee, nor have we ever had, or anticipate in the future having, any direct or indirect arrangements or other contacts with the governments of those countries or entities controlled by those governments. Furthermore, before we make any domestic or international shipments of encryption equipment, software or technology, we confirm that the recipient is not on any denied person or similar list maintained by the U.S. Department of Commerce, Bureau of Industry and Security.
2
Securities and Exchange Commission
April 12, 2010
Page 3
Form 10-K for the Fiscal Year Ended October 31, 2009
Part I
Item 1. Business, page 4
2.
Comment: On page 5 you disclose that the payment terms of the technology license to Videocon were modified to "allow Videocon's payments to be more closely aligned with the progress being made towards optimization of the display performance." This text suggests that at least some of the additional license fee payments will be owed only if specific performance standards are met by prototypes of the company's products in the development process. Please clarify the disclosure, and ensure that your description of these provisions of the license agreement provides the materially complete summary of the rights and obligations of the related parties that is required by Item 404(a)(6) of Regulation S-K.
Response: The following clarifying disclosure will be added to “Item 1. Business” on page 5 and in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” on page 25 to clarify that none of the license fee payments are dependent on any specific performance standards which must be met by prototypes of CopyTele’s products in the development stage but rather such modifications were agreed to by CopyTele after discussions with Videocon to allow Videocon’s payments to be more closely aligned with the progress being made towards the optimization of the performance of the advanced version of CopyTele’s display technology. Concurrent with this decision, CopyTele agreed to reimburse Videocon $250,000 for engineering services related to the advanced version of our display technology.
3
Securities and Exchange Commission
April 12, 2010
Page 4
To the extent that the information is not subject to a request for confidential treatment, the Company will also expand the description of the material terms of the license agreement in “Item 1. Business on page 5. However, we wish to point out that at the time that the original license agreement was entered into by the parties on November 2, 2007, Videocon was not a related party and did not become a related party until it completed the purchase of its equity interest in CopyTele on November 6, 2007. Therefore we do not believe that disclosure is required by Item 13 of Form 10-K and Item 404(a)(6) of Regulation S-K.
Item 1 - Business
In May 2008, we received the first installment of the license fee of $2,000,000. During the quarter ended April 30, 2009, we modified the payment terms from Videocon and we agreed to reimburse Videocon $250,000 for engineering services related to an advanced version of our display technology, which amount was offset against amounts due to Videocon in lieu of a cash payment. In addition, in June 2009, we received a license fee payment from Videocon of $250,000, which was due during the quarter ended April 30, 2009 pursuant to the modified payment terms. In August 2009, we received an additional license fee payment from Videocon of $100,000, which was due during the quarter ended July 31, 2009 pursuant to the modified payment terms. As of October 31, 2009, we have received aggregate license fee payments of $2,600,000. TheWe further modified the payment terms from Videocon were modified during the second quarter of fiscal year 2009 and again during the first quarter of fiscal year 2010.2010 for amounts that were due during that quarter. The modifications were madeagreed to by CopyTele after discussions with Videocon to allow Videocon’s payments to be more closely aligned with the progress being made towards the optimization of the display performance of the advanced version of our display technology, although the total amount of the payments did not change and Videocon’s obligation to make such payments is subject only to CopyTele’s limited performance requirements described below and is not dependent on any specific performance standards which must be met by prototypes of CopyTele’s products in the development stage. Future modifications of the timing of payments from Videocon could occur that might materially affect in which future periods revenues from Videocon are recognized and which could delay the payment of the license fee beyond the 27 month period. Videocon’s obligations with respect to the pre-production phase, and CopyTele’s assistance, under the License Agreement remain unaffected.
4
Securities and Exchange Commission
April 12, 2010
Page 5
Videocon is the flagship company of the Videocon Group, one of India’s leading business houses. Videocon Group is a fully integrated consumer electronics and home appliances enterprise with backward integration in plasma panel, CRT glass, color picture tubes and other key components for the consumer electronics, home appliances and components industries. Videocon Group also operates in the oil & gas sector. The Videocon Group has sales and service networks throughout India and operates facilities in Europe and elsewhere in the world.
We are working with Videocon to implement our technology into production display modules. The display modules consist of our low voltage phosphor displays, the attached associated driver circuits, and controller circuits. Under the License Agreement, Videocon, with our assistance, is to provide the design and process engineering required to produce such display modules and also provide all tooling and fixtures required for the production process. Videocon has a group of qualified and experienced personnel assigned to this program. AsIn connection with our performance requirements under the License Agreement, we are providing technical support to Videocon’s technical team as part of our assistance to Videocon to produce such display modules, we are providing technical support to Videocon’s technical team. Weand are also cooperating with Videocon to jointly implement our technology prior to production to produce prototypes of such modules. Videocon is utilizing its display processing technology and facilities to continue to produce various configurations of our display matrix to optimize its performance. The matrix is the main component of our display, since it contains the structure to accommodate our electron emission technology and the color phosphors that are used to illuminate our display. Improvements to the technology are to be jointly owned by CopyTele and Videocon.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.
During the quarter ended April 30, 2009, we modified the payment terms from Videocon and we agreed to reimburse Videocon $250,000 for engineering services related to anotheran advanced version of our display technology. The license fee revenue recognized during the three months ended April 30, 2009 of $250,000 represented an offset against amounts due to Videocon for the aforementioned engineering services, in lieu of a cash payment. In addition, in June 2009, we received a license fee payment from Videocon of $250,000, which was due during the quarter ended April 30, 2009 pursuant to the modified payment terms, which was recognized as license fee revenue during the three months ended July 31, 2009. In August 2009, we received an additional license fee payment from Videocon of $100,000, which was due during the quarter ended July 31, 2009 pursuant to the modified payment terms, which was recognized as revenue during the three months ended October 31, 2009. We further modified the payment terms from Videocon during the first quarter of fiscal year 2010 for amounts that were due during that quarter. The modifications were madeagreed to by CopyTele after discussions with Videocon to allow Videocon’s payments to be more closely aligned with the progress being made towards the optimization of the display performance. While we have modified the timing of license fee payments to be received from Videocon,performance of the advanced version of our display technology, although the total amount of license fee payments of $11 million remains payable over the 27 month period, which commenced in May 2008.$11 million did not change and Videocon’s obligation to make such payments is subject only to CopyTele’s limited performance requirements described below and is not dependent on any specific performance standards which must be met by prototypes of CopyTele’s products in the development stage. Future modifications of the timing of payments from Videocon could occur that might materially affect in which future periods revenues from Videocon are recognized and which could delay the payment of the license fee beyond the 27 month period. Videocon’s obligations with respect to the pre-production phase, and ourCopyTele’s assistance, under the License Agreement remain unaffected. In connection with our performance requirements under the License Agreement, we are providing technical support to Videocon’s technical team as part of our assistance to Videocon to produce display modules, and are also cooperating with Videocon to jointly implement our technology prior to production to produce prototypes of such modules.
5
Securities and Exchange Commission
April 12, 2010
Page 6
3.
Comment: Ensure that your