SEC Company Response from BNB PLUS CORP. (BNBX) (CIK 0000744452) (BNBX) — Mar 6, 2007
BNB PLUS CORP. (BNBX) (CIK 0000744452)
Date: March 6, 2007 · CIK: 0000744452 · Accession: 0001282695-07-000024
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-122848
Referenced dates: January 25, 2007
Letter
March 6, 2007 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 January 25, 2007 (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.
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.
Amendment No. 8 to Registration Statement on Form SB-2
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 of the Registration Statement.
<PAGE>
Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corporation Finance March 6, 2007 Page 2
Notes to Condensed Consolidated Financial Information
Note A - Summary of Significant Accounting Policies, page F-20
Note I - Restatement of Quarterly Financial Statements, page F-45
2. We acknowledge your response to comments 4, 5 and 7 and reissue our comments. You have not provided us with sufficiently detailed disclosure that substantially revises your restatement footnote to explain why you made each correction of an error for the three and nine months ended June 30, 2006 and 2005 and the period from your inception through June 30, 2006. Please revise Note I to not only disclose the amount of each error and the related financial statement period and financial statement line item affected, but why each change occurred. That is, describe the nature of each error and the corresponding financial statement line items that it affected; tell us how you concluded that an adjustment was necessary; and tell us how you calculated that adjustment. Additionally, if a particular adjustment affects, for example, both your balance sheet and statements of operations and cash flows for a particular period, you should clearly illustrate that correlation in your description of the error. Your disclosure should provide a clear illustration of how you progressed from each financial statement line item "as reported" to "as adjusted" in each period, disaggregating the total error affecting each line item, preferably in tabular format with corresponding footnote disclosure. Examples of items that we would like you to clarify based on the information included in your December 22, 2006 supplemental response follow; however, you should provide this enhanced information for each error, as our list of examples is not exhaustive.
o It is unclear, based on your explanation regarding the capitalization of debt issuance costs, why you recorded a $390,000 increase to selling, general and administrative (SG&A) expense for the three months ended June 30, 2006 without a corresponding decrease to your balance sheet. Please clarify.
o Explain why, in general, you would record the fair value effect of stock-based compensation issued to non-employees/consultants to your interest expense or gain on fair value of debt derivative and wanrrant liabilities line items, as opposed to SG&A expense. It appears that you recorded various adjustments of this nature for the nine months ended June 30, 2006, as well as the cumulative period from your inception through June 30, 2006; for example, you recorded an increase in gain on fair value of debt derivative and warrant liabilities of $ 1,156,598 for the three months ended June 30, 2006 and a decrease in interest expense of $5,940,556 for the nine months ended June 30, 2006.
o Tell us why the increase in "non-cash income attributable to the repricing of warrant and debt derivatives" of $4,131,604 in your narrative explanation of the adjustments to your statements of cash flows for the nine months ended June 30, 2006 and the period from your inception through June 30, 2006 does not correlate to the adjustment to the net gain on fair value of debt derivative and warrant liabilities line item on page 6 of your response letter (for both periods).
<PAGE>
Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corporation Finance March 6, 2007 Page 3
o Tell us why an error of $1,365,000 occurred in relation to your issuance of common shares to settle related party debt and where you recorded that error on your statements of operations for the nine months ended June 30, 2005 and for the period from your inception to June 30, 2006. Similarly, tell us why and where on your statements of operations you recorded the other adjustments to the "non-cash fair value of common stock issued in exchange for services" that you have outlined on page 11 of your response letter.
RESPONSE: We propose to amend the June 30, 2006 unaudited financial statements to read as follows:
The accompanying condensed consolidated financial statements as of June 30, 2006 and the three and nine months ended June 30, 2006 and from September 16, 2002 (date of inception) through June 30, 2006 have been restated to correct its accounting for (a) the issuance of options and warrants in exchange for compensation and financing activities, (b) correcting the period reporting capitalized finance costs and current operating expenses and (c) errors in report preparation and miscellaneous accounting adjustments appropriate for the fair presentation of the financial statements.
The effect of the adjustments in the restated financial statements is an increase in net loss of $136,401 from September 16, 2002 (date of inception) through June 30, 2006 and an increase in net income of $766,698 and $2,148,364 for the three and nine month periods ended June 30, 2006, respectively. There was no effect on total cash flows provided by (used in) operations, investing or financing activities.
The following tables summarize the effects of these adjustments on the Company's condensed consolidated balance sheet as of June 30, 2006, condensed consolidated statements of losses 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 and the condensed consolidated statements of cash flows for the nine months ended June 30, 2006 and for the period from September 16, 2002 (date of inception) through June 30, 2006:
<PAGE>
Mr. Jeffrey P. Riedler U.S. Securities and Exchange Commission Division of Corporation Finance March 6, 2007 Page 4
<TABLE> <CAPTION> Condensed Consolidated Balance Sheet June 30, 2006
As Previously Reported Adjustment Reference As Restated -------------------------------------- -------------------------- ------------------- <S> <C> <C> <C> <C> Cash $ 1,931,173 $ $ 1,931,173 Accounts receivable, net $ 18,900 $ $ 18,900 Advances and other receivables $ 11,611 $ $ 11,611 Prepaid expenses $ 146,667 $ $ 146,667 Total current assets $ 2,108,351 $ $ 2,108,351 Property, plant and equipment, net $ 38,286 $ $ 38,286 Deposits $ 8,322 $ $ 8,322 Capitalized finance costs $ 1,437,862 $ $ 1,437,862 Patents, net $ 17,376 $ $ 17,376 Intellectual property, net $ 8,083,629 $ $ 8,083,629 total assets $ 11,693,826 $ $ 11,693,826 Accounts payable and accrued liabilities $ 4,680,849 $ $ 4,680,849 Notes payable, related party $ 410,429 $ $ 410,429 Total current liabilities $ 5,091,278 $ $ 5,091,278 Convertible notes payable, net $ 3,306,371 $ $ 3,306,371 Debt derivative and warrant liability $ 5,698,286 $ $ 5,698,286 Total liabilities $ 14,095,935 $ $ 14,095,935 Preferred stock $ 6 $ $ 6 Common stock $ 118,582 $ $ 118,582 Common stock subscription $ (200,000) $ $ (200,000) Additional paid in capital $ 81,860,606 $ 136,400 a $ 81,997,006 Accumulated deficit $ (84,181,303) $ (136,400) a $ (84,317,703) 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 March 6, 2007 Page 5
<TABLE> <CAPTION> Condensed Consolidated Statement of Income (Losses) For the Three Months Ended June 30, 2006 <S> <C> <C> <C> <C> Sales $ 18,900 $ $ 18,900 Cost of sales $ 15,639 $ $ 15,639 Gross margin $ 3,261 $ $ 3,261 Selling, general & administrative $ 1,190,967 $ 390,000 b $ 1,580,967 Research and development $ - $ - Depreciation and amortization $ 336,824 $ $ 336,824 Total operating expenses $ 1,527,791 $ 390,000 b $ 1,917,791 Net loss from operations $ (1,524,530) $ (390,000) b $ (1,914,530) Net gain (loss) in fair value of debt derivative and warrant liability $ 2,337,263 $ 1,156,698 c $ 3,493,961 Other income (expense) $ 8,483 $ $ 8,483 Interest income (expense) $ (826,827) $ $ (826,827) Net income (loss) $ (5,611) $ 766,698 b,c $ 761,087 Net income (loss) per share-basic $ (0.00) 0.01 $ 0.01 Net income (loss) per share-fully diluted NA 0.01 $ 0.01 </TABLE>
<TABLE> <CAPTION> Condensed Consolidated Statement of Income (Losses) For the Nine Months Ended June 30, 2006 <S> <C> <C> <C> <C> Sales $ 18,900 $ $ 18,900 Cost of sales $ 15,639 $ $ 15,639 Gross margin $ 3,261 $
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
March 6, 2007
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 January 25, 2007 (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.
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.
Amendment No. 8 to Registration Statement on Form SB-2
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 of
the Registration Statement.
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corporation Finance
March 6, 2007
Page 2
Notes to Condensed Consolidated Financial Information
Note A - Summary of Significant Accounting Policies, page F-20
Note I - Restatement of Quarterly Financial Statements, page F-45
2. We acknowledge your response to comments 4, 5 and 7 and reissue our
comments. You have not provided us with sufficiently detailed
disclosure that substantially revises your restatement footnote to
explain why you made each correction of an error for the three and nine
months ended June 30, 2006 and 2005 and the period from your inception
through June 30, 2006. Please revise Note I to not only disclose the
amount of each error and the related financial statement period and
financial statement line item affected, but why each change occurred.
That is, describe the nature of each error and the corresponding
financial statement line items that it affected; tell us how you
concluded that an adjustment was necessary; and tell us how you
calculated that adjustment. Additionally, if a particular adjustment
affects, for example, both your balance sheet and statements of
operations and cash flows for a particular period, you should clearly
illustrate that correlation in your description of the error. Your
disclosure should provide a clear illustration of how you progressed
from each financial statement line item "as reported" to "as adjusted"
in each period, disaggregating the total error affecting each line
item, preferably in tabular format with corresponding footnote
disclosure. Examples of items that we would like you to clarify based
on the information included in your December 22, 2006 supplemental
response follow; however, you should provide this enhanced information
for each error, as our list of examples is not exhaustive.
o It is unclear, based on your explanation regarding the
capitalization of debt issuance costs, why you recorded a $390,000
increase to selling, general and administrative (SG&A) expense for
the three months ended June 30, 2006 without a corresponding
decrease to your balance sheet. Please clarify.
o Explain why, in general, you would record the fair value effect of
stock-based compensation issued to non-employees/consultants to
your interest expense or gain on fair value of debt derivative and
wanrrant liabilities line items, as opposed to SG&A expense. It
appears that you recorded various adjustments of this nature for
the nine months ended June 30, 2006, as well as the cumulative
period from your inception through June 30, 2006; for example, you
recorded an increase in gain on fair value of debt derivative and
warrant liabilities of $ 1,156,598 for the three months ended June
30, 2006 and a decrease in interest expense of $5,940,556 for the
nine months ended June 30, 2006.
o Tell us why the increase in "non-cash income attributable to the
repricing of warrant and debt derivatives" of $4,131,604 in your
narrative explanation of the adjustments to your statements of
cash flows for the nine months ended June 30, 2006 and the period
from your inception through June 30, 2006 does not correlate
to the adjustment to the net gain on fair value of debt derivative
and warrant liabilities line item on page 6 of your response
letter (for both periods).
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corporation Finance
March 6, 2007
Page 3
o Tell us why an error of $1,365,000 occurred in relation to your
issuance of common shares to settle related party debt and where
you recorded that error on your statements of operations for the
nine months ended June 30, 2005 and for the period from your
inception to June 30, 2006. Similarly, tell us why and where on
your statements of operations you recorded the other adjustments
to the "non-cash fair value of common stock issued in exchange for
services" that you have outlined on page 11 of your response
letter.
RESPONSE: We propose to amend the June 30, 2006 unaudited financial
statements to read as follows:
The accompanying condensed consolidated financial statements as of June
30, 2006 and the three and nine months ended June 30, 2006 and from
September 16, 2002 (date of inception) through June 30, 2006 have been
restated to correct its accounting for (a) the issuance of options and
warrants in exchange for compensation and financing activities, (b)
correcting the period reporting capitalized finance costs and current
operating expenses and (c) errors in report preparation and
miscellaneous accounting adjustments appropriate for the fair
presentation of the financial statements.
The effect of the adjustments in the restated financial statements is
an increase in net loss of $136,401 from September 16, 2002 (date of
inception) through June 30, 2006 and an increase in net income of
$766,698 and $2,148,364 for the three and nine month periods ended June
30, 2006, respectively. There was no effect on total cash flows
provided by (used in) operations, investing or financing activities.
The following tables summarize the effects of these adjustments on the
Company's condensed consolidated balance sheet as of June 30, 2006,
condensed consolidated statements of losses 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 and the condensed
consolidated statements of cash flows for the nine months ended June
30, 2006 and for the period from September 16, 2002 (date of inception)
through June 30, 2006:
<PAGE>
Mr. Jeffrey P. Riedler
U.S. Securities and Exchange Commission
Division of Corporation Finance
March 6, 2007
Page 4
<TABLE>
<CAPTION>
Condensed Consolidated Balance Sheet
June 30, 2006
As Previously
Reported Adjustment Reference As Restated
-------------------------------------- -------------------------- -------------------
<S> <C> <C> <C> <C>
Cash $ 1,931,173 $ $ 1,931,173
Accounts receivable, net $ 18,900 $ $ 18,900
Advances and other receivables $ 11,611 $ $ 11,611
Prepaid expenses $ 146,667 $ $ 146,667
Total current assets $ 2,108,351 $ $ 2,108,351
Property, plant and equipment, net $ 38,286 $ $ 38,286
Deposits $ 8,322 $ $ 8,322
Capitalized finance costs $ 1,437,862 $ $ 1,437,862
Patents, net $ 17,376 $ $ 17,376
Intellectual property, net $ 8,083,629 $ $ 8,083,629
total assets $ 11,693,826 $ $ 11,693,826
Accounts payable and accrued liabilities $ 4,680,849 $ $ 4,680,849
Notes payable, related party $ 410,429 $ $ 410,429
Total current liabilities $ 5,091,278 $ $ 5,091,278
Convertible notes payable, net $ 3,306,371 $ $ 3,306,371
Debt derivative and warrant liability $ 5,698,286 $ $ 5,698,286
Total liabilities $ 14,095,935 $ $ 14,095,935
Preferred stock $ 6 $ $ 6
Common stock $ 118,582 $ $ 118,582
Common stock subscription $ (200,000) $ $ (200,000)
Additional paid in capital $ 81,860,606 $ 136,400 a $ 81,997,006
Accumulated deficit $ (84,181,303) $ (136,400) a $ (84,317,703)
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
March 6, 2007
Page 5
<TABLE>
<CAPTION>
Condensed Consolidated Statement of Income (Losses)
For the Three Months Ended June 30, 2006
<S> <C> <C> <C> <C>
Sales $ 18,900 $ $ 18,900
Cost of sales $ 15,639 $ $ 15,639
Gross margin $ 3,261 $ $ 3,261
Selling, general & administrative $ 1,190,967 $ 390,000 b $ 1,580,967
Research and development $ - $ -
Depreciation and amortization $ 336,824 $ $ 336,824
Total operating expenses $ 1,527,791 $ 390,000 b $ 1,917,791
Net loss from operations $ (1,524,530) $ (390,000) b $ (1,914,530)
Net gain (loss) in fair value of debt derivative and
warrant liability $ 2,337,263 $ 1,156,698 c $ 3,493,961
Other income (expense) $ 8,483 $ $ 8,483
Interest income (expense) $ (826,827) $ $ (826,827)
Net income (loss) $ (5,611) $ 766,698 b,c $ 761,087
Net income (loss) per share-basic $ (0.00) 0.01 $ 0.01
Net income (loss) per share-fully diluted NA 0.01 $ 0.01
</TABLE>
<TABLE>
<CAPTION>
Condensed Consolidated Statement of Income (Losses)
For the Nine Months Ended June 30, 2006
<S> <C> <C> <C> <C>
Sales $ 18,900 $ $ 18,900
Cost of sales $ 15,639 $ $ 15,639
Gross margin $ 3,261 $