SEC Company Response from BNB PLUS CORP. (BNBX) (CIK 0000744452) (BNBX) — Jan 17, 2006
BNB PLUS CORP. (BNBX) (CIK 0000744452)
Date: Jan. 17, 2006 · CIK: 0000744452 · Accession: 0001013762-06-000085
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-122848
Referenced dates: November 8, 2005, September 12, 2005, September 12, 2005
Letter
Re: Applied DNA Sciences, Inc. Amendment No. 4 to Registration Statement on Form SB-2 File No. 333-122848 Amended Registration Statement filed October 28, 2005
Applied DNA Sciences, Inc. 25 Health Sciences Drive, Suite 113 Stony Brook, New York 11790
================================================================================
January 17, 2006
VIA EDGAR AND FEDERAL EXPRESS
Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549
Attn: Jeffrey Riedler, Assistant Director Division of Corporation Finance
Albert Lee, Esq.
Ladies and Gentlemen:
The following responses address the comments of the reviewing Staff of the Commission as set forth in a comment letter dated November 8, 2005 (the "Comment Letter") relating to Amendment No. 4 to the Registration Statement on Form SB-2 (the "Registration Statement") of Applied DNA Sciences, Inc. (the "Company"). The answers set forth herein refer to each of the Staffs' comments by number.
We are filing herewith Amendment No. 5 to the Company's Registration Statement.
FORM SB-2 ---------
General -------
1. Prior to requesting acceleration for effectiveness, please amend your Form 10-KSB for the year ended September 30, 2004 and your Forms 10-QSB for the quarters ended December 31, 2004, March 31, 2005 and June 30, 2005, as applicable, to comply with our comments on your Form SB-2.
<PAGE>
Securities and Exchange Commission January 17, 2006 Page 2 of 15
Response --------
Prior to requesting acceleration for effectiveness, we will amend our Form 10-KSB for the year ended September 30, 2004 and our Forms 10-Q for the quarters ended December 31, 2004, March 31, 2005 and June 30, 2005, as applicable, to comply with your comments on our Form SB-2.
2. Prior to requesting acceleration for effectiveness, please refer to Item 310(g)(2) of Regulation S-B and file an amended registration statement on Form SB-2 to include your most recent audited financial statements for your fiscal year ended September 30, 2005. In doing so, please also file as an exhibit an updated, signed consent report from your independent accountants.
Response --------
We have included our audited financial statements for the year ended September 30, 2005 in this amendment, along with an updated, signed consent from our independent registered public accounting firm.
3. We note your response to prior comment 1. Please confirm that the reference to Korea in the chart on page 20 is to South Korea and that, pursuant to your language regarding countries that the United States has designated as state sponsors of terrorism, you do not have, or intend to have, contacts with North Korea.
Response --------
We hereby confirm that the reference to Korea in the chart previously shown on page 20 was to South Korea. We have amended our disclosure to state South Korea instead of simply Korea. In addition, we hereby confirm that there are no past, current or intended, communications, personal contacts or contracts, directly or indirectly, of any nature whatsoever including through licensees or intermediaries, with North Korea, and/or with entities in North Korea.
Liquidity and Capital Resources, pages 17-18 --------------------------------------------
4. Please update the information regarding the beneficial conversion feature recorded and the penalties incurred to date due to failure to have a registration statement effective by July 15, 2005.
<PAGE>
Securities and Exchange Commission January 17, 2006 Page 3 of 15
Response --------
We have revised our disclosure to update the information regarding the beneficial conversion feature and penalities incurred to date due to our failure to have a registration statement effective by July 15, 2005.
Consolidated Financial Statements ---------------------------------
Statements of Losses, page F-3 ------------------------------
5. We acknowledge your response to comment 13 per our letter dated September 12, 2005. We again request that you revise your statements of operations for the year ended September 30, 2003 to separately present the license fee paid to Biowell Technology as research and development expense. Please also revise your statement of operations for the year ended September 30, 2004, as well as your cumulative statement of operations, to reflect the research and development expense that you incurred during those periods, as represented to us in your response.
Response --------
We have revised our cumulative statement of operations and related footnote disclosures for the years ending 2004 and 2005 to reflect the research and development expense that we incurred during those periods as well as to separately present the license fee paid to Biowell Technology as a research and development expense.
Notes to Consolidated Financial Statements -------------------------------------------
Note A - Summary of Accounting Policies, page F-17 --------------------------------------------------
6. Per your response to comment 13, we note that you incurred research and development expense during the period from September 16, 2002 through September 30, 2004. Please revise your disclosure accordingly.
Response --------
We have revised our disclosure to reflect that we incurred research and development expenses during the period from September 16, 2002 (date of inception) through September 30, 2004.
<PAGE>
Securities and Exchange Commission January 17, 2006 Page 4 of 15
Note D - Capital Stock - pages F-21 - F-27 ------------------------------------------
7. We acknowledge your response to comment 15 per our letter dated September 12, 2005, as well as the information provided in "Exhibit A" to your response. We again request the following:
o Please provide us with a detailed analysis that quantifies the aggregate understatement/overstatement of compensation expense that occurred in the third and fourth quarters of 2002 and the first quarter of 2003. Your analysis should include: the valuation date/period in which the service transaction occurred; the valuation calculation, including your accounting basis for ascribing value to the shares issued; and the trading price of your common shares at the date the services were provided, if applicable;
o With respect to Exhibit A, please clarify for us your basis for the restated amounts. Specifically, please specify whether the "price restated" column is based on the trading price or some other value of your common shares. Additionally, please clarify whether the "date" column relates to the date that the consulting services were provided and correlate that to the period in which you issued the shares.
Response --------
Exhibit A, attached hereto, describes the material transactions involving the issuance of our common stock in exchange for services from September 16, 2002 (date of inception) to March 31, 2003. We related the date of provided services to the market price of the shares on the same date and reflected the market price in Exhibit A. The aggregate understatement of expense based on the closing price of our common stock during this period represents approximately $12,000 or 0.02% of the cumulative loss of $54.6 million as of June 30, 2005.
Given the immaterial effect on our financial statements, we respectfully request the adjustment arising from this comment be waived.
In the "price restated" used in Exhibit A in the October 28, 2005 response, we should have indicated "Market price" instead. The date column corresponds to both the service provided date as well as the issuance date.
Unaudited Condenses Consolidated Statements of Cash Flows, page F-49 --------------------------------------------------------------------
8. We acknowledge your response to comment 17 per our letter dated September 12, 2005. Please provide us with additional information about or reconcile for us the following items for the nine months ended June 30, 2005: <PAGE>
Securities and Exchange Commission January 17, 2006 Page 5 of 15
o The "proceeds from loans" of $843,971;
o The "common stock canceled previously issued for services rendered" of $(642,098) as it relates to the corresponding statements of stockholders' deficit;
o The "common stock issued in exchange for consulting services rendered" of $13,037,773 as it relates to the corresponding statements of stockholders' deficit;
o The "amortization of beneficial conversion feature - convertible notes" of $8,836,000 as it relates to the corresponding statements of stockholders' deficit;
o The "proceeds from sale of common stock, net of cost" of $8,141,055 and the "proceeds from subscription of common stock" of $2,340,000 as each relates to the corresponding statements of stockholders' deficit.
Response --------
In reviewing the June 30, 2005 transactions, we misclassified some cash flow items. In the attached Exhibit B, we present the revised condensed consolidated statement of cash flows. We reclassified $2.9 million from financing to operations to more properly reflect sources and uses of cash.
For the items not affected by the reclassification, the ($642,098) cancelled service shares consist of 1,069,600 shares returned on October 2004 and agrees the Shareholder Equity Statement as well as Footnote B - Capital Stock detail for that period.
The $8,836,000 of beneficial conversion feature amortization consists of the $1,465,000 recorded in December 2004 and the $4,179,554 and $3,191,446 recorded in March 2005. These amounts agree to the disclosures in the Statement of Shareholder Equity for each applicable time period.
Notes to Unaudited Condensed Consolidated Financial Information ---------------------------------------------------------------
Note G - Subsequent Events, page F-68 -------------------------------------
9. We acknowledge your response to comment 19 per our letter dated September 12, 2005 and request the following.
o Please refer to Note 2 of Item 310 of Regulation S-B and to the interpretive guidance on the distinction between a "business" and an "asset" provided in Item 11-01(d) of Regulation S-X. Please then provide us with the relevant information about your acquisition of Rixflex Holdings that supports your conclusion that you have not acquired a business. <PAGE> Securities and Exchange Commission January 17, 2006 Page 6 of 15
o Please also provide us with your analysis under EIRF 98-3 that supports your determination that you will not account for the Rixflex Holdings acquisition as that of a business.
o Please discuss the purchase price for your acquisition of Rixflex Holdings and provide a preliminary purchase price allocation according to the applicable provisions of SFAS No. 141. Please also provide us with information that outlines your specific analysis of the substance of the transaction pursuant to paragraph 17 of SFAS No. 141.
Response --------
Acquiring Entity
On July 12, 2005, we acquired certain intangible assets held by Rixflex Holdings, Inc. ,a wholly owned subsidiary of Biowell Technology, Inc. in exchange for 36,000,000 shares of our restricted common stock, or approximately 35% of our issued and outstanding common shares. The shares were disbursed to approximately ____ Biowell shareholders of record subsequent to the exchange.
In connection with the acquisition of the intangible assets from Biowell, we were the acquiring entity based upon the following facts and circumstances:
Our owners, prior to the acquisition, retained majority control of our company, subsequent to the acquisition.
The absence of a single owner or organized group of owners that hold a large minority interest in our company.
While one Biowell manager joined our Board of Directors subsequent to the sale of assets, the Board of Directors is controlled by our owners prior to the acquisition of the Biowell assets.
Subsequent to the acquisition of the assets and issuance of our shares, we appointed Dr. Shu, formerly of Biowell, as our Chairman of the Board and Dr. Ben Liang, formerly of Biowell as well, as our Secretary. The rest of our senior management positions (Chief Chief Executive Officer, Chief Financial Officer and President) had no relationship with Biowell.
Based upon the above, we concluded the we were the acquiring entity.
<PAGE> Securities and Exchange Commission January 17, 2006 Page 7 of 15
Acquisition of Business vs. Acquisition of Assets
We have accounted for the transaction as an asset acquired based upon the following facts and circumstances.
The acquisition included the set of inputs:
o Long-lived intangible assets comprised exclusively of intellectual property o Two (2) senior managers of Biowell
The set acquired did not include:
o Operational employees of Biowell o Ability to access customers of Biowell o Customer contracts o Access to customers through continuity of location o Processes (including a systems to take customer orders, order fulfillment, billing and collecting, administration of personnel, and operations analysis)
Based upon the above facts and circumstances, we have concluded the
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Applied DNA Sciences, Inc.
25 Health Sciences Drive, Suite 113
Stony Brook, New York 11790
================================================================================
January 17, 2006
VIA EDGAR AND FEDERAL EXPRESS
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Attn: Jeffrey Riedler, Assistant Director
Division of Corporation Finance
Albert Lee, Esq.
Re: Applied DNA Sciences, Inc.
Amendment No. 4 to Registration Statement on Form SB-2
File No. 333-122848
Amended Registration Statement filed October 28, 2005
Ladies and Gentlemen:
The following responses address the comments of the reviewing Staff of the
Commission as set forth in a comment letter dated November 8, 2005 (the "Comment
Letter") relating to Amendment No. 4 to the Registration Statement on Form SB-2
(the "Registration Statement") of Applied DNA Sciences, Inc. (the "Company").
The answers set forth herein refer to each of the Staffs' comments by number.
We are filing herewith Amendment No. 5 to the Company's Registration
Statement.
FORM SB-2
---------
General
-------
1. Prior to requesting acceleration for effectiveness, please amend your
Form 10-KSB for the year ended September 30, 2004 and your Forms
10-QSB for the quarters ended December 31, 2004, March 31, 2005 and
June 30, 2005, as applicable, to comply with our comments on your Form
SB-2.
<PAGE>
Securities and Exchange Commission
January 17, 2006
Page 2 of 15
Response
--------
Prior to requesting acceleration for effectiveness, we will amend our
Form 10-KSB for the year ended September 30, 2004 and our Forms 10-Q
for the quarters ended December 31, 2004, March 31, 2005 and June 30,
2005, as applicable, to comply with your comments on our Form SB-2.
2. Prior to requesting acceleration for effectiveness, please refer to
Item 310(g)(2) of Regulation S-B and file an amended registration
statement on Form SB-2 to include your most recent audited financial
statements for your fiscal year ended September 30, 2005. In doing so,
please also file as an exhibit an updated, signed consent report from
your independent accountants.
Response
--------
We have included our audited financial statements for the year ended
September 30, 2005 in this amendment, along with an updated, signed
consent from our independent registered public accounting firm.
3. We note your response to prior comment 1. Please confirm that the
reference to Korea in the chart on page 20 is to South Korea and that,
pursuant to your language regarding countries that the United States
has designated as state sponsors of terrorism, you do not have, or
intend to have, contacts with North Korea.
Response
--------
We hereby confirm that the reference to Korea in the chart previously
shown on page 20 was to South Korea. We have amended our disclosure to
state South Korea instead of simply Korea. In addition, we hereby
confirm that there are no past, current or intended, communications,
personal contacts or contracts, directly or indirectly, of any nature
whatsoever including through licensees or intermediaries, with North
Korea, and/or with entities in North Korea.
Liquidity and Capital Resources, pages 17-18
--------------------------------------------
4. Please update the information regarding the beneficial conversion
feature recorded and the penalties incurred to date due to failure to
have a registration statement effective by July 15, 2005.
<PAGE>
Securities and Exchange Commission
January 17, 2006
Page 3 of 15
Response
--------
We have revised our disclosure to update the information regarding the
beneficial conversion feature and penalities incurred to date due to
our failure to have a registration statement effective by July 15,
2005.
Consolidated Financial Statements
---------------------------------
Statements of Losses, page F-3
------------------------------
5. We acknowledge your response to comment 13 per our letter dated
September 12, 2005. We again request that you revise your statements
of operations for the year ended September 30, 2003 to separately
present the license fee paid to Biowell Technology as research and
development expense. Please also revise your statement of operations
for the year ended September 30, 2004, as well as your cumulative
statement of operations, to reflect the research and development
expense that you incurred during those periods, as represented to us
in your response.
Response
--------
We have revised our cumulative statement of operations and related
footnote disclosures for the years ending 2004 and 2005 to reflect the
research and development expense that we incurred during those periods
as well as to separately present the license fee paid to Biowell
Technology as a research and development expense.
Notes to Consolidated Financial Statements
-------------------------------------------
Note A - Summary of Accounting Policies, page F-17
--------------------------------------------------
6. Per your response to comment 13, we note that you incurred research
and development expense during the period from September 16, 2002
through September 30, 2004. Please revise your disclosure accordingly.
Response
--------
We have revised our disclosure to reflect that we incurred research
and development expenses during the period from September 16, 2002
(date of inception) through September 30, 2004.
<PAGE>
Securities and Exchange Commission
January 17, 2006
Page 4 of 15
Note D - Capital Stock - pages F-21 - F-27
------------------------------------------
7. We acknowledge your response to comment 15 per our letter dated
September 12, 2005, as well as the information provided in "Exhibit A"
to your response. We again request the following:
o Please provide us with a detailed analysis that quantifies the
aggregate understatement/overstatement of compensation expense
that occurred in the third and fourth quarters of 2002 and the
first quarter of 2003. Your analysis should include: the
valuation date/period in which the service transaction occurred;
the valuation calculation, including your accounting basis for
ascribing value to the shares issued; and the trading price of
your common shares at the date the services were provided, if
applicable;
o With respect to Exhibit A, please clarify for us your basis for
the restated amounts. Specifically, please specify whether the
"price restated" column is based on the trading price or some
other value of your common shares. Additionally, please clarify
whether the "date" column relates to the date that the consulting
services were provided and correlate that to the period in which
you issued the shares.
Response
--------
Exhibit A, attached hereto, describes the material transactions
involving the issuance of our common stock in exchange for services
from September 16, 2002 (date of inception) to March 31, 2003. We
related the date of provided services to the market price of the
shares on the same date and reflected the market price in Exhibit A.
The aggregate understatement of expense based on the closing price of
our common stock during this period represents approximately $12,000
or 0.02% of the cumulative loss of $54.6 million as of June 30, 2005.
Given the immaterial effect on our financial statements, we
respectfully request the adjustment arising from this comment be
waived.
In the "price restated" used in Exhibit A in the October 28, 2005
response, we should have indicated "Market price" instead. The date
column corresponds to both the service provided date as well as the
issuance date.
Unaudited Condenses Consolidated Statements of Cash Flows, page F-49
--------------------------------------------------------------------
8. We acknowledge your response to comment 17 per our letter dated
September 12, 2005. Please provide us with additional information
about or reconcile for us the following items for the nine months
ended June 30, 2005:
<PAGE>
Securities and Exchange Commission
January 17, 2006
Page 5 of 15
o The "proceeds from loans" of $843,971;
o The "common stock canceled previously issued for services
rendered" of $(642,098) as it relates to the corresponding
statements of stockholders' deficit;
o The "common stock issued in exchange for consulting services
rendered" of $13,037,773 as it relates to the corresponding
statements of stockholders' deficit;
o The "amortization of beneficial conversion feature - convertible
notes" of $8,836,000 as it relates to the corresponding
statements of stockholders' deficit;
o The "proceeds from sale of common stock, net of cost" of
$8,141,055 and the "proceeds from subscription of common stock"
of $2,340,000 as each relates to the corresponding statements of
stockholders' deficit.
Response
--------
In reviewing the June 30, 2005 transactions, we misclassified some
cash flow items. In the attached Exhibit B, we present the revised
condensed consolidated statement of cash flows. We reclassified $2.9
million from financing to operations to more properly reflect sources
and uses of cash.
For the items not affected by the reclassification, the ($642,098)
cancelled service shares consist of 1,069,600 shares returned on
October 2004 and agrees the Shareholder Equity Statement as well as
Footnote B - Capital Stock detail for that period.
The $8,836,000 of beneficial conversion feature amortization consists
of the $1,465,000 recorded in December 2004 and the $4,179,554 and
$3,191,446 recorded in March 2005. These amounts agree to the
disclosures in the Statement of Shareholder Equity for each applicable
time period.
Notes to Unaudited Condensed Consolidated Financial Information
---------------------------------------------------------------
Note G - Subsequent Events, page F-68
-------------------------------------
9. We acknowledge your response to comment 19 per our letter dated
September 12, 2005 and request the following.
o Please refer to Note 2 of Item 310 of Regulation S-B and to the
interpretive guidance on the distinction between a "business" and
an "asset" provided in Item 11-01(d) of Regulation S-X. Please
then provide us with the relevant information about your
acquisition of Rixflex Holdings that supports your conclusion
that you have not acquired a business.
<PAGE>
Securities and Exchange Commission
January 17, 2006
Page 6 of 15
o Please also provide us with your analysis under EIRF 98-3 that
supports your determination that you will not account for the
Rixflex Holdings acquisition as that of a business.
o Please discuss the purchase price for your acquisition of Rixflex
Holdings and provide a preliminary purchase price allocation
according to the applicable provisions of SFAS No. 141. Please
also provide us with information that outlines your specific
analysis of the substance of the transaction pursuant to
paragraph 17 of SFAS No. 141.
Response
--------
Acquiring Entity
On July 12, 2005, we acquired certain intangible assets held by
Rixflex Holdings, Inc. ,a wholly owned subsidiary of Biowell
Technology, Inc. in exchange for 36,000,000 shares of our restricted
common stock, or approximately 35% of our issued and outstanding
common shares. The shares were disbursed to approximately ____ Biowell
shareholders of record subsequent to the exchange.
In connection with the acquisition of the intangible assets from
Biowell, we were the acquiring entity based upon the following facts
and circumstances:
Our owners, prior to the acquisition, retained majority control of our
company, subsequent to the acquisition.
The absence of a single owner or organized group of owners that hold a
large minority interest in our company.
While one Biowell manager joined our Board of Directors subsequent to
the sale of assets, the Board of Directors is controlled by our owners
prior to the acquisition of the Biowell assets.
Subsequent to the acquisition of the assets and issuance of our
shares, we appointed Dr. Shu, formerly of Biowell, as our Chairman of
the Board and Dr. Ben Liang, formerly of Biowell as well, as our
Secretary. The rest of our senior management positions (Chief Chief
Executive Officer, Chief Financial Officer and President) had no
relationship with Biowell.
Based upon the above, we concluded the we were the acquiring entity.
<PAGE>
Securities and Exchange Commission
January 17, 2006
Page 7 of 15
Acquisition of Business vs. Acquisition of Assets
We have accounted for the transaction as an asset acquired based upon
the following facts and circumstances.
The acquisition included the set of inputs:
o Long-lived intangible assets comprised exclusively of
intellectual property
o Two (2) senior managers of Biowell
The set acquired did not include:
o Operational employees of Biowell
o Ability to access customers of Biowell
o Customer contracts
o Access to customers through continuity of location
o Processes (including a systems to take customer orders, order
fulfillment, billing and collecting, administration of personnel,
and operations analysis)
Based upon the above facts and circumstances, we have concluded the