SEC Company Response from BNB PLUS CORP. (BNBX) (CIK 0000744452) (BNBX) — Dec 22, 2006
BNB PLUS CORP. (BNBX) (CIK 0000744452)
Date: Dec. 22, 2006 · CIK: 0000744452 · Accession: 0001282695-06-000421
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-122848
Referenced dates: December 13, 2006
Letter
December 22, 2006 VIA EDGAR AND FEDERAL EXPRESS Mr. Jeffrey P. Riedler Assistant Director U.S. Securities and Exchange Commission Division of Corporation Finance 100 F Street, N.E. Mail Stop 3561 Washington, D.C. 20549-3561
Re: Applied DNA Sciences, Inc. Registration Statement on Form SB-2 Filed January 15, 2005 File No. 333-122848
Dear Mr. Riedler:
On behalf of Applied DNA Sciences, Inc. (the "Company") and in response to the Staff's comment letter dated December 13, 2006 (the "Comment Letter") in connection with Amendment No.8 to the Company's above-referenced Registration Statement on Form SB-2 (the "Registration Statement"), we hereby submit proposed changes to the financial statements for your review. We do not intend to file an Amendment No.9 to the Registration Statement until financial statements for the Company's fourth quarter are available and the Company's responses to the Comment Letter have been approved. We hope this approach is satisfactory.
All responses to the comments set forth in this letter are submitted on behalf of the Company at its request. All responses to the accounting comments were prepared by the Company in consultation with its independent auditors. The following numbered paragraphs repeat the comments in the Comment Letter for your convenience, followed by the Company's responses to those comments.
General
1. Prior to requesting acceleration for effectiveness, please refer to Item 310(g) of Regulation S-B and amend your registration statement on Form SB-2 to provide updated financial statements.
RESPONSE: Updated financial statements shall be provided in accordance with Item 310 (g) of Regulation S-B prior to requesting effectiveness.
Condensed Consolidated Financial Statements
Statements of Stockholders' Deficit, page F-4
<PAGE> Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corporation Finance December 22, 2006 Page 2
2. Please revise your interim and annual statements of stockholders' deficit to retroactively change the par value of your common stock to the beginning of the period presented as a result of the change in par value from $0.50 to $.001 in March 2005.
RESPONSE: In March, 2005, the Company changed the par value of its common stock from $.50 per share to $.001 per share. The Company's financial statements accounted for and disclosed the change in par value. According to generally accepted accounting principles, changes in the capital structure must be retroactively adjusted for stock dividends, stock splits or reverser splits. Accounting standards do not require an adjustment to the capital structure for changes in par value of the common stock. Accordingly, the Company believes its accounting and disclosure of the change in par value of its common stock is reasonable and in accordance with generally accepted accounting principles.
Notes to Condensed Consolidated Financial Information
Note A - Summary of Significant Accounting Policies, page F-20
Stock-Based Compensation, page F-23
3. Please tell us why you have not yet adopted SFAS No. 123(R), for which the effective date is as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. Alternatively, please revise your financial statements and related disclosures to reflect your adoption of SFAS No. 123(R).
RESPONSE: The Company had no unvested employee stock options as of January 1, 2006. We propose to include the following disclosure:
NEW ACCOUNTING PRONOUNCEMENTS
On January 1, 2006, we adopted the fair value recognition provisions of Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock Based Compensation, to account for compensation costs under our stock option plans. We previously utilized the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (as amended) ("APB 25"). Under the intrinsic value method prescribed by APB 25, no compensation costs were recognized for our employee stock options because the option exercise price equaled the market price on the date of the grant. Prior to January 1, 2006 we only disclosed the pro forma effects on net income and earnings per share as if the fair value recognition provisions of SFAS 123(R) had been utilized.
<PAGE> Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corporation Finance December 22, 2006 Page 3
In adopting SFAS No. 123(R), we elected to use the modified prospective method to account for the transition from the intrinsic value method to the fair value recognition method. Under the modified prospective method, compensation cost is recognized from the adoption date forward for all new stock options granted and for any outstanding unvested awards as if the fair value method had been applied to those awards as of the date of the grant. We had no outstanding unvested awards as of the adoption date.
Note I - Restatement of Quarterly Financial Statements, page F-45
4. In general, please revise this note substantially to explain why you made each correction of an error. The examples in the ensuing comment are not all inclusive of the revisions that we believe you should make; additionally, please ensure that your revised narrative discussion not only discloses the amount of each change and the affected financial statement line item, but why each change occurred.
RESPONSE: We propose to revise Footnote I as follows:
The Company has restated its financial statements for the nine and three months ended June 30, 2005 and 2006 and for the period from September 16, 2002 (date of inception) through June 30, 2006 by filing amended Form 10-QSB's for the three month periods ended June 30, 2005 and June 30, 2006 to correct the following errors in the financial statements previously filed:
o The Company erroneously accounted for and recorded as a current period expense the cost of issuing its debt aggregating $390,000 during the quarter ended March, 2006. The restatement corrects the $390,000 capitalized financing costs within the correct reporting quarter.
o The Company erroneously accounted for and recorded the fair value of warrants issued in previous quarters and corrected the year to date fair value increasing the selling, general and administrative costs by $563,750 for the nine months ended June 30, 2006.
o The Company erroneously accounted for and recorded the fair value of non-debt related warrants in the amount of $5,940,556 to interest expense in previous quarter(s) and corrected the year to date interest expense and related warrant liability for the nine months ended June 30, 2006.
o The Company erroneously accounted for and recorded the net gain on change in fair value warrants in the amount of $1,156,698 and $4,355,942 for the three and nine months ended June 30, 2006, respectively.
<PAGE> Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corporation Finance December 22, 2006 Page 4
The net effect of the corrections of these errors was to:
o Increase the Company's profitability by $766,698 from a loss of $5,611 to a profit of $761,087 for the three months ended June 30,
o Increase the Company's net income by $2,148,264 from a profit of $3,458,485 to $5,606,849 for the nine months ended June 30, 2006.
o Increase the Company's net loss by $136,400 from $84,181,303 to $84,317,703 from the period from September 16, 2002 (date of inception) through June 30, 2006.
The result of the Consolidated Balance Sheet restatement is to reflect the:
o Increase in additional paid in capital by $136,400 from $81,860,606 as of June 30, 2006 to $81,997,006.
o Increase in deficit accumulated during development stage by $136,400 from $84,181,303 as of June 30, 2006 to $84,317,703.
Following are reconciliations of the Company's restatement of the Consolidated Balance Sheet as of June 30, 2006:
<TABLE> <CAPTION> June 30, 2006 ------------------------------- (As Restated) (As Reported) ------------ ------------ <S> <C> <C> ASSETS $ 11,693,826 $ 11,693,826 ============ ============
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities 4,680,849 4,680,849 Note payable - Related Party 410,429 410,429 ------------ ------------ Total Current Liabilities 5,091,278 5,091,278
Convertible Note Payable, net of unamortized discount 3,306,371 3,306,371 Debt Derivative and Note Liability 5,698,286 5,698,286 Deficiency in Stockholders' Equity: Preferred Stock 6 6 Common Stock 118,582 118,582 Common stock subscribed (200,000) (200,000) Additional Paid-In-Capital 81,997,006 81,860,606 Deficit Accumulated During Development Stage (84,317,703) (84,181,303) ------------ ------------ Total Deficiency in Stockholders' Equity (2,402,109) (2,402,109) Total Liabilities and Deficiency in Stockholders' Equity $ 11,693,826 $ 11,693,826 ============ ============ </TABLE>
<PAGE> Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corporation Finance December 22, 2006 Page 5
The result of the Consolidated Statement of Income (Losses) restatement for the three and nine months ended June 30, 2006 and for the period from September 16, 2002 (date of inception) through June 30, 2006 is:
o Increase in selling, general and administrative expenses for the three months ended June 30, 2006 by $390,000 from $1,190,967 to $1,580,967. The increase is to correct into the appropriate reporting quarter the reclassification of previously expensed debt issuance costs from selling, general and administrative expenses.
o Reduction in selling, general and administrative expenses for the nine months ended June 30, 2006 by $563,750 from $4,955,055 to $4,391,305 for the nine months ended June 30, 2006. The reduction is a result of an error in recognizing and recording the fair value of warrants issued to non-employees and consultants.
o Increase in selling and administrative expenses from September 16, 2002 (date of inception) to June 30, 2006 by $5,838,514 from $70,072,368 to $75,910,882. The increase is a cumulative result of an error in recognizing and recording the fair value of warrants issued to non-employees and consultants, an error in recognizing and recording at fair value common stock issued in settlement of debt and recognizing and recording additional compensation expenses.
o Increase in net gain in fair value of debt derivative and warrant liabilities by $1,156,698 from $2,337,263 to $3,493,961 for the three months ended June 30, 2006. The increase is a result of an error in recognizing and recording fair value of non-debt warrants issued to non-employees and consultants leading to a revised change in reported gain in the current reporting period.
o Decrease in net gain in fair value of debt derivative and warrant liabilities by $4,355,942 from $18,606,563 to $14,250,621 for the nine months ended June 30, 2006. The decrease is a result of an error in recognizing and recording the fair value of non-debt related warrants to non-employees and consultants of $5,940,556 erroneously charged to interest expense, net with the correction and an error in fair value adjustment of non-debt related warrants of $1,584,614.
o Decrease in net gain in fair value of debt derivative and warrant liabilities by $4,355,942 from $35,307,553 to $30,951,611 for the period from September 16, 2002 (date of inception) through June 30, 2006. The decrease is a result of an error in recognizing and recording the fair value of non-debt related warrants to non-employees and consultants of $5,940,556 erroneously charged to interest expense, net with the correction and an error in fair value adjustment of non-debt related warrants of $1,584,614.
o Decrease in interest expense by $5,940,556 from $9,117,785 to $3,177,229 for the nine months ended June 30, 2006. This decrease is a result of an error in recognizing and recording the initial fair value of non-debt related warrants issued to non-employees and consultants.
o Decrease in interest expense by $10,580,055 from $47,119,730 to $37,061,675 for the period from September 16, 2002 (date of inception) through ended June 30, 2006. This decrease is a cumulative result of an error in recognizing and recording the initial fair value of non-debt related warrants issued to non-employees and consultants.
<PAGE> Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corpora
Show Raw Text
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
Fulbright & Jaworski l.l.p.
A Registered Limited Liability Partnership
666 Fifth Avenue, 31st Floor
New York, New York 10103-3198
www.fulbright.com
mkraines@fulbright.com telephone: (212) 318-3000
direct dial: (212) 318-3261 facsimile: (212) 318-3400
December 22, 2006
VIA EDGAR AND FEDERAL EXPRESS
Mr. Jeffrey P. Riedler
Assistant Director
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Mail Stop 3561
Washington, D.C. 20549-3561
Re: Applied DNA Sciences, Inc.
Registration Statement on Form SB-2
Filed January 15, 2005
File No. 333-122848
Dear Mr. Riedler:
On behalf of Applied DNA Sciences, Inc. (the "Company") and in response to
the Staff's comment letter dated December 13, 2006 (the "Comment Letter") in
connection with Amendment No.8 to the Company's above-referenced Registration
Statement on Form SB-2 (the "Registration Statement"), we hereby submit proposed
changes to the financial statements for your review. We do not intend to file an
Amendment No.9 to the Registration Statement until financial statements for the
Company's fourth quarter are available and the Company's responses to the
Comment Letter have been approved. We hope this approach is satisfactory.
All responses to the comments set forth in this letter are submitted on
behalf of the Company at its request. All responses to the accounting comments
were prepared by the Company in consultation with its independent auditors. The
following numbered paragraphs repeat the comments in the Comment Letter for your
convenience, followed by the Company's responses to those comments.
General
1. Prior to requesting acceleration for effectiveness, please refer to Item
310(g) of Regulation S-B and amend your registration statement on Form
SB-2 to provide updated financial statements.
RESPONSE: Updated financial statements shall be provided in accordance
with Item 310 (g) of Regulation S-B prior to requesting effectiveness.
Condensed Consolidated Financial Statements
Statements of Stockholders' Deficit, page F-4
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corporation Finance
December 22, 2006
Page 2
2. Please revise your interim and annual statements of stockholders' deficit
to retroactively change the par value of your common stock to the
beginning of the period presented as a result of the change in par value
from $0.50 to $.001 in March 2005.
RESPONSE: In March, 2005, the Company changed the par value of its common
stock from $.50 per share to $.001 per share. The Company's financial
statements accounted for and disclosed the change in par value. According
to generally accepted accounting principles, changes in the capital
structure must be retroactively adjusted for stock dividends, stock splits
or reverser splits. Accounting standards do not require an adjustment to
the capital structure for changes in par value of the common stock.
Accordingly, the Company believes its accounting and disclosure of the
change in par value of its common stock is reasonable and in accordance
with generally accepted accounting principles.
Notes to Condensed Consolidated Financial Information
Note A - Summary of Significant Accounting Policies, page F-20
Stock-Based Compensation, page F-23
3. Please tell us why you have not yet adopted SFAS No. 123(R), for which the
effective date is as of the beginning of the first interim or annual
reporting period that begins after December 15, 2005. Alternatively,
please revise your financial statements and related disclosures to reflect
your adoption of SFAS No. 123(R).
RESPONSE: The Company had no unvested employee stock options as of January
1, 2006. We propose to include the following disclosure:
NEW ACCOUNTING PRONOUNCEMENTS
On January 1, 2006, we adopted the fair value recognition provisions of
Financial Accounting Standards Board ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock Based
Compensation, to account for compensation costs under our stock option
plans. We previously utilized the intrinsic value method under Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(as amended) ("APB 25"). Under the intrinsic value method prescribed by
APB 25, no compensation costs were recognized for our employee stock
options because the option exercise price equaled the market price on the
date of the grant. Prior to January 1, 2006 we only disclosed the pro
forma effects on net income and earnings per share as if the fair value
recognition provisions of SFAS 123(R) had been utilized.
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corporation Finance
December 22, 2006
Page 3
In adopting SFAS No. 123(R), we elected to use the modified prospective
method to account for the transition from the intrinsic value method to
the fair value recognition method. Under the modified prospective method,
compensation cost is recognized from the adoption date forward for all new
stock options granted and for any outstanding unvested awards as if the
fair value method had been applied to those awards as of the date of the
grant. We had no outstanding unvested awards as of the adoption date.
Note I - Restatement of Quarterly Financial Statements, page F-45
4. In general, please revise this note substantially to explain why you made
each correction of an error. The examples in the ensuing comment are not
all inclusive of the revisions that we believe you should make;
additionally, please ensure that your revised narrative discussion not
only discloses the amount of each change and the affected financial
statement line item, but why each change occurred.
RESPONSE: We propose to revise Footnote I as follows:
The Company has restated its financial statements for the nine and three
months ended June 30, 2005 and 2006 and for the period from September 16,
2002 (date of inception) through June 30, 2006 by filing amended Form
10-QSB's for the three month periods ended June 30, 2005 and June 30, 2006
to correct the following errors in the financial statements previously
filed:
o The Company erroneously accounted for and recorded as a current
period expense the cost of issuing its debt aggregating $390,000
during the quarter ended March, 2006. The restatement corrects the
$390,000 capitalized financing costs within the correct reporting
quarter.
o The Company erroneously accounted for and recorded the fair value of
warrants issued in previous quarters and corrected the year to date
fair value increasing the selling, general and administrative costs
by $563,750 for the nine months ended June 30, 2006.
o The Company erroneously accounted for and recorded the fair value of
non-debt related warrants in the amount of $5,940,556 to interest
expense in previous quarter(s) and corrected the year to date
interest expense and related warrant liability for the nine months
ended June 30, 2006.
o The Company erroneously accounted for and recorded the net gain on
change in fair value warrants in the amount of $1,156,698 and
$4,355,942 for the three and nine months ended June 30, 2006,
respectively.
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corporation Finance
December 22, 2006
Page 4
The net effect of the corrections of these errors was to:
o Increase the Company's profitability by $766,698 from a loss of
$5,611 to a profit of $761,087 for the three months ended June 30,
2006
o Increase the Company's net income by $2,148,264 from a profit of
$3,458,485 to $5,606,849 for the nine months ended June 30, 2006.
o Increase the Company's net loss by $136,400 from $84,181,303 to
$84,317,703 from the period from September 16, 2002 (date of
inception) through June 30, 2006.
The result of the Consolidated Balance Sheet restatement is to reflect
the:
o Increase in additional paid in capital by $136,400 from $81,860,606
as of June 30, 2006 to $81,997,006.
o Increase in deficit accumulated during development stage by $136,400
from $84,181,303 as of June 30, 2006 to $84,317,703.
Following are reconciliations of the Company's restatement of the
Consolidated Balance Sheet as of June 30, 2006:
<TABLE>
<CAPTION>
June 30, 2006
-------------------------------
(As Restated) (As Reported)
------------ ------------
<S> <C> <C>
ASSETS $ 11,693,826 $ 11,693,826
============ ============
LIABILITIES AND DEFICIENCY IN
STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities 4,680,849 4,680,849
Note payable - Related Party 410,429 410,429
------------ ------------
Total Current Liabilities 5,091,278 5,091,278
Convertible Note Payable, net of
unamortized discount 3,306,371 3,306,371
Debt Derivative and Note Liability 5,698,286 5,698,286
Deficiency in Stockholders' Equity:
Preferred Stock 6 6
Common Stock 118,582 118,582
Common stock subscribed (200,000) (200,000)
Additional Paid-In-Capital 81,997,006 81,860,606
Deficit Accumulated During Development Stage (84,317,703) (84,181,303)
------------ ------------
Total Deficiency in Stockholders' Equity (2,402,109) (2,402,109)
Total Liabilities and Deficiency in
Stockholders' Equity $ 11,693,826 $ 11,693,826
============ ============
</TABLE>
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corporation Finance
December 22, 2006
Page 5
The result of the Consolidated Statement of Income (Losses) restatement
for the three and nine months ended June 30, 2006 and for the period from
September 16, 2002 (date of inception) through June 30, 2006 is:
o Increase in selling, general and administrative expenses for the
three months ended June 30, 2006 by $390,000 from $1,190,967 to
$1,580,967. The increase is to correct into the appropriate
reporting quarter the reclassification of previously expensed debt
issuance costs from selling, general and administrative expenses.
o Reduction in selling, general and administrative expenses for the
nine months ended June 30, 2006 by $563,750 from $4,955,055 to
$4,391,305 for the nine months ended June 30, 2006. The reduction is
a result of an error in recognizing and recording the fair value of
warrants issued to non-employees and consultants.
o Increase in selling and administrative expenses from September 16,
2002 (date of inception) to June 30, 2006 by $5,838,514 from
$70,072,368 to $75,910,882. The increase is a cumulative result of
an error in recognizing and recording the fair value of warrants
issued to non-employees and consultants, an error in recognizing and
recording at fair value common stock issued in settlement of debt
and recognizing and recording additional compensation expenses.
o Increase in net gain in fair value of debt derivative and warrant
liabilities by $1,156,698 from $2,337,263 to $3,493,961 for the
three months ended June 30, 2006. The increase is a result of an
error in recognizing and recording fair value of non-debt warrants
issued to non-employees and consultants leading to a revised change
in reported gain in the current reporting period.
o Decrease in net gain in fair value of debt derivative and warrant
liabilities by $4,355,942 from $18,606,563 to $14,250,621 for the
nine months ended June 30, 2006. The decrease is a result of an
error in recognizing and recording the fair value of non-debt
related warrants to non-employees and consultants of $5,940,556
erroneously charged to interest expense, net with the correction and
an error in fair value adjustment of non-debt related warrants of
$1,584,614.
o Decrease in net gain in fair value of debt derivative and warrant
liabilities by $4,355,942 from $35,307,553 to $30,951,611 for the
period from September 16, 2002 (date of inception) through June 30,
2006. The decrease is a result of an error in recognizing and
recording the fair value of non-debt related warrants to
non-employees and consultants of $5,940,556 erroneously charged to
interest expense, net with the correction and an error in fair value
adjustment of non-debt related warrants of $1,584,614.
o Decrease in interest expense by $5,940,556 from $9,117,785 to
$3,177,229 for the nine months ended June 30, 2006. This decrease is
a result of an error in recognizing and recording the initial fair
value of non-debt related warrants issued to non-employees and
consultants.
o Decrease in interest expense by $10,580,055 from $47,119,730 to
$37,061,675 for the period from September 16, 2002 (date of
inception) through ended June 30, 2006. This decrease is a
cumulative result of an error in recognizing and recording the
initial fair value of non-debt related warrants issued to
non-employees and consultants.
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corpora