SEC Company Response from CALCITECH LTD (CIK 0000889431) — Dec 21, 2005
CALCITECH LTD (CIK 0000889431)
Date: Dec. 21, 2005 · CIK: 0000889431 · Accession: 0001001277-05-000860
AI Filing Summary & Sentiment
Referenced dates: September 20, 2005
Letter
VIA EDGAR AND FEDERAL EXPRESS United States Securities and Exchange Commission Division of Corporate Finance Re: CalciTech Ltd. Form 20-F for fiscal year ended February 28, 2005 SEC File Number: 0-20420
Dear Ms. Trimeloni:
This letter sets forth the responses of CalciTech Ltd. (the "Company") to the Staff's comment letter dated September 20, 2005 (the “Comment Letter”), in connection with the above-referenced filing. The Company's responses to the Staff's comments have been provided below in the order in which each comment appears in the Staff's Comment Letter. For your convenience, we have re-inserted the Staff's comments before the Company's response.
The Company is prepared to file an amendment no. 1 to the Form 20-F/A as discussed below to respond to the Staff's Comment Letter and to clarify and supplement disclosure. Pursuant to your request, for your review we have attached a draft of amendment No. 1 to the Form 20-F/A which incorporates all of the changes referenced below, including the revised audit reports and certifications marked to show changes from the last filing (the "Redline"). Upon your review, the Company will file the amendment no. 1 to the Form 20-F/A.
Please note that the page numbers set forth in our comments below refer to the page numbers in the Redline.
General
1. Where a comment below requests additional disclosures or other revisions to be made, please show us in your supplemental response what the revisions will look like. Some of our comments refer to US GAAP literature. If your accounting under IFRS differs from your accounting under US GAAP, please also show us the additional disclosures that will be included in your US GAAP reconciliation footnote. With the exception of comments below that specifically refer to an amendment, these revisions may be included in your future filings.
RESPONSE: We note the comment will amend the Form 20-F to include additional disclosures requested in the Comment Letter.
Selected Financial Information, page 1
2. Please round your per share amounts to only the nearest cent in the Selected Financial Information and throughout your filing, in order not to imply a greater degree of prevision than exists.
RESPONSE: The Company will amend its Form 20-F to round its per share amounts to the nearest cent throughout the Form 20-F/A.
Item 5, Operating and Financial Review and Prospects, page 18
3. Please add an Overview section, as suggested by SEC Release No. 34-48960. In this overview, discuss the prospects for commencing full scale production and the funding necessary to accomplish this objective. Also, discuss your current financing arrangements and the consequences if you are unable to repay or refinance your convertible debentures prior to their maturity. In this regard, please discuss the specific repayment and conversion terms of the convertible debentures in a manner similar to your discussion of the Epsom convertible loan facility at the end of Item 3.D on page 4.
RESPONSE: We have reviewed SEC Release No. 34-48960 and will amend our Form 20-F to include an “overview section” which discusses the Company’s plan to commence full scale production and the proposed sources of funding for the project (see page 19). In addition, the Company will amend its Form 20-F to discuss the consequences that may result as of the Company’s inability to repay the convertible debentures and discuss the specific terms of the convertible debentures (see page number 20).
New accounting pronouncements under IFRS and US GAAP, page 20
4. We note that you are in the process of evaluating the effect of adopting FAS 150 in your consolidated financial statements. Since FAS 150 is effective for financial statements entered into or modified after May 31, 2003, please amend your Form 20-F to update as the process of evaluating should be complete.
RESPONSE: The Company has completed its evaluation of the effects of adopting FAS 150 and has determined that there is no material effect. The Company will amend its Form 20-F to delete this paragraph (see page 23).
Operating Results, page 21
5. Please discuss the business reasons for the changes between periods in revenues, expenses and net loss. In doing so, please disclose the amount of each significant change in line items between periods and the business reasons for it. In circumstances where there is more than one business reason for the change, attempt to qualify the incremental impact of each individual business reason discussed on the overall change in the line item. The discussion should include information that does not clearly appear in the financial statements. Your discussion should not merely repeat numerical data contained in the financial statements or recite amounts that are readily computable from the financial statements. See Item 5 in the instructions for Form 20-F and Financial Reporting Codification 501.04.
RESPONSE: The Company will amend its Form 20-F to include additional information regarding the specific reasons for changes in revenues, expenses and net loss between periods (see page 23).
Liquidity and Capital Resources, page 22
6. With respect to your working capital deficiency, discuss the reasons for increases or decreases in such deficiency. Also, discuss the effect (if any) of your working capital deficiency on your ability to meet your obligations as they become due as required under Item 5.B.1.(a) in the instructions for Form 20-F.
RESPONSE: The Company will amend its Form 20-F to include additional disclosure regarding its decrease in working capital deficiency and sufficiency to meet working capital requirements for the next twelve months (see page 25).
7. In view of the uncertainties concerning your continued existence as a going concern, the filing should contain a reasonably detailed description of management's specific viable plans intended to mitigate the effect of such conditions and management's assessment of the likelihood that such plans can be effectively implemented. Those elements of the plan that are particularly significant or critical to overcoming your present financial difficulties should be clearly identified and discussed. Additionally, there should be a reasonably detailed discussion of your ability (or inability) to generate sufficient cash to support its operations during the twelve-month period following the date of the most recent balance sheet presented. You should describe the plan in both the management's discussion and analysis of liquidity and the notes to the financial statements. This discussion should be updated, as necessary, in future filings. See Financial Reporting Codification Section 607.02.
RESPONSE: The Company will amend its Form 20-F to include additional disclosure regarding the Company’s strategic plan for the next twelve months and its ability to generate sufficient working capital within the next twelve months (see page 25).
Tabular Disclosure of Contractual Obligations, page 25
8. Since the convertible debentures are accounted for differently under IFRS and U.S. GAAP, please add disclosure below the table discussing such differences and explaining how you determined the $4.5 million amount shown in the table and why it is reflected as an obligation due in less than on year.
RESPONSE: The Company will amend its Form 20-F to include a revised table of contractual obligations and additional disclosure regarding the difference of treatment of the convertible debentures under IFRS and US GAAP (see page 28).
9. Please revise your table of contractual obligations to include estimated interest payments on your debt. Because the table is aimed at increasing transparency of cash flow, we believe those payments should be included in the table. Please also disclose any assumptions you made to derive these amounts.
RESPONSE: The Company will amend its Form 20-F to include a revised table of contractual obligations to include a line item for estimated interest payments (see page 28).
Item 15. Disclosure Controls and Procedures, page 39
10. We note your disclosure that your "principal executive officer and principal financial officer have concluded that as of the end of that fiscal year, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the Securities and Exchange Commission rules and forms." Revise to clarify, if true, that your officers concluded that your disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that you file or submit under the Exchange Act is accumulated and communicated to your management, including your chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. See Exchange Act Rule 13a-15(e).
RESPONSE: The Company will amend its Form 20-F to include the disclosure that the “principal executive officer and principal financial officer have concluded that as of the end of the fiscal year, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that you file or submit under the Exchange Act is accumulated and communicated to your management, including your chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.” (see page 43).
Financial Statements
Audit Report of MRI Moores Rowland LLP, page 2
11. In accordance with the PCAOB's Auditing Standard No. 1, please have your auditors refer to "the standards of the Public Company Accounting Oversight Board (United States)" rather than "the auditing standards of the Public Company Accounting Oversight Board (United States)" in the second paragraph of the audit report. Also, the fourth paragraph only presents an opinion for the year ended February 28, 2005. Please amend the Form 20-F to have your audits present an opinion on each of the two years ended February 28, 2005. Note that you are required to refile the entire Form 20-F with the amended audit report and obtain updated certifications as well as an updated signature page.
RESPONSE: MRI Moores Rowland LLP (“MRI”) has revised its audit report to refer to the “standards of the Public Company Accounting Oversight Board (United States).” In addition, MRI has revised its audit report to express an opinion with regards to the financial statements for the years ended February 28, 2005 and February 29, 2004. The Companywill amend its Form 20-F to include the revised audit report (see page 2 of the financial statements).
Audit Report of PricewaterhouseCoopers, page 4
12. Please have your auditors revise their report to express an opinion only the financial statements covered in this Form 20-F. In this regard, references to the balance sheets of February 28, 2003 and February 28, 2002 should be eliminated as well as references to the statements of operations, shareholders' deficiency, and cash flows for the years ended February 28, 2002 and February 28, 2001. Please also eliminate references in this audit report to financial statement notes that do not exist in this filing or update them, as appropriate. Please amend your Form 20-F in response to this comment.
RESPONSE: PricewaterhouseCoopers (“PWC”) has revised its audit report to only express an opinion with regards to the financial statements for the year ended February 28, 2003. Accordingly, PWC has further revised its audit report to eliminate any references to the financial statements for any prior years and notes that do not exist in the Form 20-F. The Company will amend its Form 20-F to include the revised audit report (see page 4 of the financial statements).
Note 15. Differences Between International Financial Reporting Standards and US Generally Accepted Accounting Principles, page 29
13. Due to the significant differences in your accounting under IFRS and U.S. GAAP, we suggest that you present a balance sheet under U.S. GAAP. In the alternative, add prominent disclosure
of the differences in accounting for the convertible debentures with respect to the balance sheet presentation.
RESPONSE: The Company will amend its Note 15 to include additional disclosure regarding the differences in accounting treatment for the convertible debentures in the balance sheet under IFRS and U.S. GAAP (see pages 29-31 of the financial statements).
14. Using the reconciled to U.S. GAAP net income and other necessary data, furnish in Note 15 a statement of stockholders' equity under U.S. GAAP for each of the three years ended February 28, 2005.
RESPONSE: The Company is amending its Form 20-F to include a statement of stockholders’ equity under U.S. GAAP for each of the three years ended February 28, 2005 (see page 29 of the financial statements).
Furthermore, in connection with the Company's response to the Comment Letter, the Company hereby acknowledges that the Company is responsible for the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
We believe that the foregoing and the proposed amendment no. 1 to the Form 20-F/A (attached hereto) addresses the Staff's comments. As discussed, the Company is prepared to file the attached Form 20-F/A with the required certifications once we hear from you. Should you have any further question, please do not hesitate to contact me.
Sincerely,
CALCITECH LTD.
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CORRESP 1 filename1.htm CALCITECH LTD. CP 261, 10 route de l’aeroport 1215 Geneva Switzerland December 20, 2005 VIA EDGAR AND FEDERAL EXPRESS Ms. Marie Trimeloni United States Securities and Exchange Commission Division of Corporate Finance 100 F Street, N.E. Washington, D.C. 20549-0405 Re: CalciTech Ltd. Form 20-F for fiscal year ended February 28, 2005 SEC File Number: 0-20420 Dear Ms. Trimeloni: This letter sets forth the responses of CalciTech Ltd. (the "Company") to the Staff's comment letter dated September 20, 2005 (the “Comment Letter”), in connection with the above-referenced filing. The Company's responses to the Staff's comments have been provided below in the order in which each comment appears in the Staff's Comment Letter. For your convenience, we have re-inserted the Staff's comments before the Company's response. The Company is prepared to file an amendment no. 1 to the Form 20-F/A as discussed below to respond to the Staff's Comment Letter and to clarify and supplement disclosure. Pursuant to your request, for your review we have attached a draft of amendment No. 1 to the Form 20-F/A which incorporates all of the changes referenced below, including the revised audit reports and certifications marked to show changes from the last filing (the "Redline"). Upon your review, the Company will file the amendment no. 1 to the Form 20-F/A. Please note that the page numbers set forth in our comments below refer to the page numbers in the Redline. General 1. Where a comment below requests additional disclosures or other revisions to be made, please show us in your supplemental response what the revisions will look like. Some of our comments refer to US GAAP literature. If your accounting under IFRS differs from your accounting under US GAAP, please also show us the additional disclosures that will be included in your US GAAP reconciliation footnote. With the exception of comments below that specifically refer to an amendment, these revisions may be included in your future filings. RESPONSE: We note the comment will amend the Form 20-F to include additional disclosures requested in the Comment Letter. Selected Financial Information, page 1 2. Please round your per share amounts to only the nearest cent in the Selected Financial Information and throughout your filing, in order not to imply a greater degree of prevision than exists. 1 RESPONSE: The Company will amend its Form 20-F to round its per share amounts to the nearest cent throughout the Form 20-F/A. Item 5, Operating and Financial Review and Prospects, page 18 3. Please add an Overview section, as suggested by SEC Release No. 34-48960. In this overview, discuss the prospects for commencing full scale production and the funding necessary to accomplish this objective. Also, discuss your current financing arrangements and the consequences if you are unable to repay or refinance your convertible debentures prior to their maturity. In this regard, please discuss the specific repayment and conversion terms of the convertible debentures in a manner similar to your discussion of the Epsom convertible loan facility at the end of Item 3.D on page 4. RESPONSE: We have reviewed SEC Release No. 34-48960 and will amend our Form 20-F to include an “overview section” which discusses the Company’s plan to commence full scale production and the proposed sources of funding for the project (see page 19). In addition, the Company will amend its Form 20-F to discuss the consequences that may result as of the Company’s inability to repay the convertible debentures and discuss the specific terms of the convertible debentures (see page number 20). New accounting pronouncements under IFRS and US GAAP, page 20 4. We note that you are in the process of evaluating the effect of adopting FAS 150 in your consolidated financial statements. Since FAS 150 is effective for financial statements entered into or modified after May 31, 2003, please amend your Form 20-F to update as the process of evaluating should be complete. RESPONSE: The Company has completed its evaluation of the effects of adopting FAS 150 and has determined that there is no material effect. The Company will amend its Form 20-F to delete this paragraph (see page 23). Operating Results, page 21 5. Please discuss the business reasons for the changes between periods in revenues, expenses and net loss. In doing so, please disclose the amount of each significant change in line items between periods and the business reasons for it. In circumstances where there is more than one business reason for the change, attempt to qualify the incremental impact of each individual business reason discussed on the overall change in the line item. The discussion should include information that does not clearly appear in the financial statements. Your discussion should not merely repeat numerical data contained in the financial statements or recite amounts that are readily computable from the financial statements. See Item 5 in the instructions for Form 20-F and Financial Reporting Codification 501.04. RESPONSE: The Company will amend its Form 20-F to include additional information regarding the specific reasons for changes in revenues, expenses and net loss between periods (see page 23). 2 Liquidity and Capital Resources, page 22 6. With respect to your working capital deficiency, discuss the reasons for increases or decreases in such deficiency. Also, discuss the effect (if any) of your working capital deficiency on your ability to meet your obligations as they become due as required under Item 5.B.1.(a) in the instructions for Form 20-F. RESPONSE: The Company will amend its Form 20-F to include additional disclosure regarding its decrease in working capital deficiency and sufficiency to meet working capital requirements for the next twelve months (see page 25). 7. In view of the uncertainties concerning your continued existence as a going concern, the filing should contain a reasonably detailed description of management's specific viable plans intended to mitigate the effect of such conditions and management's assessment of the likelihood that such plans can be effectively implemented. Those elements of the plan that are particularly significant or critical to overcoming your present financial difficulties should be clearly identified and discussed. Additionally, there should be a reasonably detailed discussion of your ability (or inability) to generate sufficient cash to support its operations during the twelve-month period following the date of the most recent balance sheet presented. You should describe the plan in both the management's discussion and analysis of liquidity and the notes to the financial statements. This discussion should be updated, as necessary, in future filings. See Financial Reporting Codification Section 607.02. RESPONSE: The Company will amend its Form 20-F to include additional disclosure regarding the Company’s strategic plan for the next twelve months and its ability to generate sufficient working capital within the next twelve months (see page 25). Tabular Disclosure of Contractual Obligations, page 25 8. Since the convertible debentures are accounted for differently under IFRS and U.S. GAAP, please add disclosure below the table discussing such differences and explaining how you determined the $4.5 million amount shown in the table and why it is reflected as an obligation due in less than on year. RESPONSE: The Company will amend its Form 20-F to include a revised table of contractual obligations and additional disclosure regarding the difference of treatment of the convertible debentures under IFRS and US GAAP (see page 28). 9. Please revise your table of contractual obligations to include estimated interest payments on your debt. Because the table is aimed at increasing transparency of cash flow, we believe those payments should be included in the table. Please also disclose any assumptions you made to derive these amounts. RESPONSE: The Company will amend its Form 20-F to include a revised table of contractual obligations to include a line item for estimated interest payments (see page 28). Item 15. Disclosure Controls and Procedures, page 39 10. We note your disclosure that your "principal executive officer and principal financial officer have concluded that as of the end of that fiscal year, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in 3 the Securities and Exchange Commission rules and forms." Revise to clarify, if true, that your officers concluded that your disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that you file or submit under the Exchange Act is accumulated and communicated to your management, including your chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. See Exchange Act Rule 13a-15(e). RESPONSE: The Company will amend its Form 20-F to include the disclosure that the “principal executive officer and principal financial officer have concluded that as of the end of the fiscal year, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that you file or submit under the Exchange Act is accumulated and communicated to your management, including your chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.” (see page 43). Financial Statements Audit Report of MRI Moores Rowland LLP, page 2 11. In accordance with the PCAOB's Auditing Standard No. 1, please have your auditors refer to "the standards of the Public Company Accounting Oversight Board (United States)" rather than "the auditing standards of the Public Company Accounting Oversight Board (United States)" in the second paragraph of the audit report. Also, the fourth paragraph only presents an opinion for the year ended February 28, 2005. Please amend the Form 20-F to have your audits present an opinion on each of the two years ended February 28, 2005. Note that you are required to refile the entire Form 20-F with the amended audit report and obtain updated certifications as well as an updated signature page. RESPONSE: MRI Moores Rowland LLP (“MRI”) has revised its audit report to refer to the “standards of the Public Company Accounting Oversight Board (United States).” In addition, MRI has revised its audit report to express an opinion with regards to the financial statements for the years ended February 28, 2005 and February 29, 2004. The Companywill amend its Form 20-F to include the revised audit report (see page 2 of the financial statements). Audit Report of PricewaterhouseCoopers, page 4 12. Please have your auditors revise their report to express an opinion only the financial statements covered in this Form 20-F. In this regard, references to the balance sheets of February 28, 2003 and February 28, 2002 should be eliminated as well as references to the statements of operations, shareholders' deficiency, and cash flows for the years ended February 28, 2002 and February 28, 2001. Please also eliminate references in this audit report to financial statement notes that do not exist in this filing or update them, as appropriate. Please amend your Form 20-F in response to this comment. RESPONSE: PricewaterhouseCoopers (“PWC”) has revised its audit report to only express an opinion with regards to the financial statements for the year ended February 28, 2003. Accordingly, PWC has further revised its audit report to eliminate any references to the financial statements for any prior years and notes that do not exist in the Form 20-F. The Company will amend its Form 20-F to include the revised audit report (see page 4 of the financial statements). Note 15. Differences Between International Financial Reporting Standards and US Generally Accepted Accounting Principles, page 29 13. Due to the significant differences in your accounting under IFRS and U.S. GAAP, we suggest that you present a balance sheet under U.S. GAAP. In the alternative, add prominent disclosure 4 of the differences in accounting for the convertible debentures with respect to the balance sheet presentation. RESPONSE: The Company will amend its Note 15 to include additional disclosure regarding the differences in accounting treatment for the convertible debentures in the balance sheet under IFRS and U.S. GAAP (see pages 29-31 of the financial statements). 14. Using the reconciled to U.S. GAAP net income and other necessary data, furnish in Note 15 a statement of stockholders' equity under U.S. GAAP for each of the three years ended February 28, 2005. RESPONSE: The Company is amending its Form 20-F to include a statement of stockholders’ equity under U.S. GAAP for each of the three years ended February 28, 2005 (see page 29 of the financial statements). Furthermore, in connection with the Company's response to the Comment Letter, the Company hereby acknowledges that the Company is responsible for the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. We believe that the foregoing and the proposed amendment no. 1 to the Form 20-F/A (attached hereto) addresses the Staff's comments. As discussed, the Company is prepared to file the attached Form 20-F/A with the required certifications once we hear from you. Should you have any further question, please do not hesitate to contact me. Sincerely, CALCITECH LTD. /s/ Roger Leopard Roger Leopard, President cc: Scott E. Bartel, Bullivant Houser Bailey PC Deborah K. Seo, Bullivant Houser Bailey PC 5 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________ FORM 20-F /A AMENDMENT NO. 1 _________________________ o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2005 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report _____________________ For the transition period from _______________ to ________________ Commission File Number 0-20420 CALCITECH LTD. (Exact name of Registrant as specified in its charter) A CORPORATION FORMED UNDER THE LAWS OF BERMUDA (Jurisdiction of Incorporation or Organization) 10 route de l’aeroport 1215 Geneva Switzerland (Address of principal executive offices) Securities registered or to be registered pursuant to Section 12(b) of the Act: NONE Securities registered or to be registered pursuant to Section 12(g) of the Act Common Shares (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE The number of outstanding Common Shares as of February 28, 2005 is 79,899,675 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports