SEC Comment Letter for ASTROTECH Corp (ASTC) (CIK 0001001907) (ASTC) — Jan 16, 2008
ASTROTECH Corp (ASTC) (CIK 0001001907)
Date: Jan. 16, 2008 · CIK: 0001001907 · Accession: 0000000000-08-002817
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-27206
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION CF/AD5 100 F STREET, NE WASHINGTON, D.C. 20549-3561 DIVISION OF CORPORATION FINANCE January 15, 2008 Via Mail and Fax Brian K. Harrington Chief Financial Officer SPACEHAB, Incorporated 12130 Highway 3, Building 1 Webster, TX 77598-1504
RE: SPACEHAB, Incorporated Form 10-K for the Year Ended June 30, 2007 Form 10-Q for the Period Ended September 30, 2007 File Number: 000-27206
Dear Mr. Harrington:
We have reviewed your correspondence dated December 14, 2007. We believe you should amend you filings as indicated in comment numbers 1 and 2. If you disagree, we will consider your explanation as to why an amendment is not necessary. Please be as detailed as necessary in your explanation. In comment number 3, we ask you to provide us with further information so we ma y better understand you r accounting. After reviewing this information, we may have addi tional comments. Please file your response to our comments via EDGAR, under the label “corresp,” within 10 business days from the date of this letter.
Form 10-K for the Year Ended June 30, 2007
Consolidated Statements of Cash Flows, page 46
1. Refer to your response to our prior comment number 2. While the restricted cash will be used to construct a building, we continue to believe the change in restricted cash that resulted from its initial receipt sh ould be presented with changes in other operating assets and liabilities in the ope rating activities section to offset the corresponding change in advances for cons truction contract recognized upon receipt of the restricted cash. It appears you r presentation oversta tes cash provided by operating activities in 2007 and will understate it in the ye ars in which the advances account is reduced. In addition, your presenta tion results in an apparent outflow of cash for investing activities in 2007 when in fact no such outflow occurred. By offsetting the change in restricted cash ag ainst the change in advances within cash
SPACEHAB, Incorporated January 15, 2008 Page 2 provided by operating activitie s, you would properly reflect the receipt and use of these funds as having no impact on any cat egories of cash flows. Accordingly, we continue to believe you should amend your f iling to restate your statements of cash flows for this matter.
2. Additionally, restricted cash that is asso ciated with a noncurrent asset should be classified as noncurrent pu rsuant to ARB 43, Chapter 3, Section A, paragraph 6. Given the materiality of restricted cash to your current assets , we believe you should amend the balance sheet in your Form 10-K for the year ended June 30, 2007 and Form 10-Q for the period ended Septem ber 30, 2007 to revise the presentation accordingly.
Form 10-Q For the Period Ended September 30, 2007
Item 2. Management’s Discus sion and Analysis …, page 14 Capitalization, page 21
3. Refer to your response to our prior comment number 11. Although the debt transactions may have been in the form of exchanges, for accounting purposes it appears these transactions were in substance induced conversions in that the debt appears to have been converted in accordan ce with the original terms of the debt instruments, with the Series C preferred stock issued in the transactions as additional consideration for the purpose of inducing c onversion. In this regard, note that paragraph 2 of APB 26 does not apply to debt that is converted to equity securities of the debtor pursuant to conversion privileges provided in the terms of the debt at issuance or conversions of convertible debt when conversion privileges included in terms of the debt at issuance are changed, or additional consideration is paid , to induce conversion of the debt to equity securities. Similarly, the exchange transaction with the Series B preferred stock for comm on stock and Series C preferred stock also appears to be in substance an induced conversion. In view of the preceding, please present to us your accounting for the induced debt conversions pursuant to FAS 84 and EITF 85-17 and for the induced prefe rred stock conversion pursuant to EITF D- 42, or explain to us why you believe your pr esent accounting for these transactions is appropriate after considerat ion of the cited guidance.
You may contact Doug Jones at 202-551-3309 or Lyn Shenk at 202-551-3380 with any questions. You may also contact me at 202-551-3812.
Sincerely,
Michael Fay
Accounting Branch Chief
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
CF/AD5
100 F STREET, NE
WASHINGTON, D.C. 20549-3561
DIVISION OF
CORPORATION FINANCE
January 15, 2008
Via Mail and Fax
Brian K. Harrington
Chief Financial Officer
SPACEHAB, Incorporated
12130 Highway 3, Building 1
Webster, TX 77598-1504
RE: SPACEHAB, Incorporated
Form 10-K for the Year Ended June 30, 2007
Form 10-Q for the Period Ended September 30, 2007
File Number: 000-27206
Dear Mr. Harrington:
We have reviewed your correspondence dated December 14, 2007. We believe
you should amend you filings as indicated in comment numbers 1 and 2. If you disagree,
we will consider your explanation as to why an amendment is not necessary. Please be as
detailed as necessary in your explanation. In comment number 3, we ask you to provide
us with further information so we ma y better understand you r accounting. After
reviewing this information, we may have addi tional comments. Please file your response
to our comments via EDGAR, under the label “corresp,” within 10 business days from the date of this letter.
Form 10-K for the Year Ended June 30, 2007
Consolidated Statements of Cash Flows, page 46
1. Refer to your response to our prior comment number 2. While the restricted cash will
be used to construct a building, we continue to believe the change in restricted cash
that resulted from its initial receipt sh ould be presented with changes in other
operating assets and liabilities in the ope rating activities section to offset the
corresponding change in advances for cons truction contract recognized upon receipt
of the restricted cash. It appears you r presentation oversta tes cash provided by
operating activities in 2007 and will understate it in the ye ars in which the advances
account is reduced. In addition, your presenta tion results in an apparent outflow of
cash for investing activities in 2007 when in fact no such outflow occurred. By
offsetting the change in restricted cash ag ainst the change in advances within cash
SPACEHAB, Incorporated
January 15, 2008
Page 2
provided by operating activitie s, you would properly reflect the receipt and use of
these funds as having no impact on any cat egories of cash flows. Accordingly, we
continue to believe you should amend your f iling to restate your statements of cash
flows for this matter.
2. Additionally, restricted cash that is asso ciated with a noncurrent asset should be
classified as noncurrent pu rsuant to ARB 43, Chapter 3, Section A, paragraph 6.
Given the materiality of restricted cash to your current assets , we believe you should
amend the balance sheet in your Form 10-K for the year ended June 30, 2007 and
Form 10-Q for the period ended Septem ber 30, 2007 to revise the presentation
accordingly.
Form 10-Q For the Period Ended September 30, 2007
Item 2. Management’s Discus sion and Analysis …, page 14
Capitalization, page 21
3. Refer to your response to our prior comment number 11. Although the debt
transactions may have been in the form of exchanges, for accounting purposes it
appears these transactions were in substance induced conversions in that the debt appears to have been converted in accordan ce with the original terms of the debt
instruments, with the Series C preferred stock issued in the transactions as additional consideration for the purpose of inducing c onversion. In this regard, note that
paragraph 2 of APB 26 does not apply to debt that is converted to equity securities of
the debtor pursuant to conversion privileges provided in the terms of the debt at issuance or conversions of convertible debt when conversion privileges included in
terms of the debt at issuance are changed,
or additional consideration is paid , to
induce conversion of the debt to equity securities. Similarly, the exchange transaction with the Series B preferred stock for comm on stock and Series C preferred stock also
appears to be in substance an induced conversion. In view of the preceding, please present to us your accounting for the induced debt conversions pursuant to FAS 84 and EITF 85-17 and for the induced prefe rred stock conversion pursuant to EITF D-
42, or explain to us why you believe your pr esent accounting for these transactions is
appropriate after considerat ion of the cited guidance.
You may contact Doug Jones at 202-551-3309 or Lyn Shenk at 202-551-3380
with any questions. You may also contact me at 202-551-3812.
Sincerely,
Michael Fay
Accounting Branch Chief