SEC Company Response from SINOVAC BIOTECH LTD (SVA) (CIK 0001084201) (SVA) — Nov 28, 2005
SINOVAC BIOTECH LTD (SVA) (CIK 0001084201)
Date: Nov. 28, 2005 · CIK: 0001084201 · Accession: 0001127855-05-000759
AI Filing Summary & Sentiment
Referenced dates: OCTOBER 21, 2005, October 12, 2005, September 28, 2005
Letter
Via EDGAR SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, D.C. U.S.A., 20549-0405 Attention: Mr. Mark Brunhofer, Staff Accountant, Division of Corporation Finance
Dear Mr. Brunhofer:
Re:
Sinovac Biotech Ltd. (the “Company”)
File No. 1-32371
FILING OF AMENDED FORM 20-F IN ACCORDANCE WITH
SEC COMMENT LETTER DATED OCTOBER 21, 2005
We are counsel for the above-referenced Company and advise that the Company has now amended its annual report on form 20-F (the “Annual Report”) in accordance with the comments of the reviewing staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”), as set forth in the SEC’s comment letter, dated October 12, 2005 (the “SEC Letter”).
On behalf of the Company we confirm that we enclose two copies of the black-lined and comparative copy of amendment number 3 to the Annual Report of the Company
Association of Law Corporations
Securities and Exchange Commission
November 21, 2005
Page 2
which indicates each of the revisions which have been made to the enclosed Annual Report since the Company’s amended filing on September 21, 2005, submitted electronically pursuant to Regulation S-T.
The following responses address the comments in the SEC Letter, by way of reference to the numbered SEC comments and indication of associated page numbers within the enclosed Annual Report. We confirm that the page numbers referenced in this response letter relate to the information set forth in the hard copy version of the enclosed black-lined Annual Report, as delivered by courtesy copy, and may not directly correspond to the unmarked or Edgar versions thereof.
Item 17: Financial Statements, page 69
Consolidated Statements of Operations, page 74
1. The Staff comments have been noted and we confirm that the Company has revised the financial statements to show interest and financing expenses as negative numbers.
Note 1: Nature of Business, page 76
2. The Staff comments have been noted and we confirm that the consolidated statement of stockholders’ equity and the consolidated statement of operations have been revised:
a. To reflect the equivalent of all restated shares of Sinovac Beijing outstanding immediately before the reverse acquisition transaction, 19,607,843 shares
b. To reflect the effective spin-off of 9,607,843 shares, representing the minority interest created in the transaction.
c. To reflect the weighted average shares outstanding on a 100% basis rather than a 51% basis. The Company has revised the loss per share for 2002 through the reverse acquisition in 2003. The weighted average share computations are shown below:
Securities and Exchange Commission
November 21, 2005
Page 3
Number of
Shares
Days
Weighting
Weighted
Average
Initial Sinovac Beijing shareholding
*
14,709,804
1.0000
14,709,804
Balance, December 31, 2001
14,709,804
14,709,804
Balance, December 31, 2001
14,709,804
1.0000
14,709,804
Acquired drug license
*
1,760,784
0.6712
1,181,896
Balance, December 31, 2002
16,470,588
15,891,700
Balance, December 31, 2002
16,470,588
1.0000
16,470,588
Debt exchange for shares
*
3,137,255
0.5041
1,581,520
Spin-off of minority interest
(9,607,843)
0.2712
(2,605,963)
Net-Force
17,091,033
0.2712
4,635,650
Balance, December 31, 2003
27,091,033
20,081,796
*
Number of Sinovac Beijing shares
immediately before reverse acquisition
19,607,843
Note 7: Licenses and Permits, page 84
3. The Staff comments have been noted and we confirm that the Company’s email correspondence, dated September 28, 2005 and October 3, 2005, have been filed on the same day as this response letter under the EDGAR form-type label CORRESP.
4. The Staff comments have been noted and we confirm that the consolidated financial statements have been revised so as to charge the purchase prices of hepatitis A&B and influenza vaccines to operations as purchased in-process research and development expenses.
5. The Staff comments have been noted and we confirm that the consolidated financial statements have been revised to reflect amortization expense from the date of purchase, April 2001, rather than the date that production began.
Note 9: Income Taxes Page 88
6. The Staff comments have been noted and we confirm that the Company has revised the disclosure in Note 9 to disclose the facts and circumstances that occurred in 2004, resulting in management’s conclusion that a 100% valuation allowance was
Securities and Exchange Commission
November 21, 2005
Page 4
not needed. The Company has also expanded Item 5 of the Form 20-F to disclose that deferred income tax valuation allowance is a critical accounting estimate.
We trust that each of the foregoing and the enclosed amendments to the Company’s Annual Report filing are clear and satisfactory for this point in time and satisfy the comments of Staff contained in the SEC letter. However, should the SEC have any further questions or comments, or require any further information or documentation respecting the Company, please do not hesitate to contact the writer at any time.
On behalf of the Company, we sincerely thank and appreciate the SEC’s prompt attention to and ongoing cooperation in this matter.
Yours very truly,
DEVLIN JENSEN
Per:
/s/ Mike Shannon
MICHAEL T. SHANNON
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CORRESP 1 filename1.htm Untitled Page Vancouver Office: D E V L I N P.O. Box 12077 J E N S E N Suite 2550 Barristers & Solicitors 555 West Hastings St. Vancouver, B.C. Canada V6B 4N5 Tel: (604) 684-2550 Fax: (604) 684-0916 E-mail: mshannon@devlinjensen.com File Reference: 4020\045a Via EDGAR November 21, 2005 SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, D.C. U.S.A., 20549-0405 Attention: Mr. Mark Brunhofer, Staff Accountant, Division of Corporation Finance Dear Mr. Brunhofer: Re: Sinovac Biotech Ltd. (the “Company”) File No. 1-32371 FILING OF AMENDED FORM 20-F IN ACCORDANCE WITH SEC COMMENT LETTER DATED OCTOBER 21, 2005 We are counsel for the above-referenced Company and advise that the Company has now amended its annual report on form 20-F (the “Annual Report”) in accordance with the comments of the reviewing staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”), as set forth in the SEC’s comment letter, dated October 12, 2005 (the “SEC Letter”). On behalf of the Company we confirm that we enclose two copies of the black-lined and comparative copy of amendment number 3 to the Annual Report of the Company Association of Law Corporations Securities and Exchange Commission November 21, 2005 Page 2 which indicates each of the revisions which have been made to the enclosed Annual Report since the Company’s amended filing on September 21, 2005, submitted electronically pursuant to Regulation S-T. The following responses address the comments in the SEC Letter, by way of reference to the numbered SEC comments and indication of associated page numbers within the enclosed Annual Report. We confirm that the page numbers referenced in this response letter relate to the information set forth in the hard copy version of the enclosed black-lined Annual Report, as delivered by courtesy copy, and may not directly correspond to the unmarked or Edgar versions thereof. Item 17: Financial Statements, page 69 Consolidated Statements of Operations, page 74 1. The Staff comments have been noted and we confirm that the Company has revised the financial statements to show interest and financing expenses as negative numbers. Note 1: Nature of Business, page 76 2. The Staff comments have been noted and we confirm that the consolidated statement of stockholders’ equity and the consolidated statement of operations have been revised: a. To reflect the equivalent of all restated shares of Sinovac Beijing outstanding immediately before the reverse acquisition transaction, 19,607,843 shares b. To reflect the effective spin-off of 9,607,843 shares, representing the minority interest created in the transaction. c. To reflect the weighted average shares outstanding on a 100% basis rather than a 51% basis. The Company has revised the loss per share for 2002 through the reverse acquisition in 2003. The weighted average share computations are shown below: Securities and Exchange Commission November 21, 2005 Page 3 Number of Shares Days Weighting Weighted Average 2001 Initial Sinovac Beijing shareholding * 14,709,804 247 1.0000 14,709,804 Balance, December 31, 2001 14,709,804 247 14,709,804 2002 Balance, December 31, 2001 14,709,804 365 1.0000 14,709,804 Acquired drug license * 1,760,784 245 0.6712 1,181,896 Balance, December 31, 2002 16,470,588 365 15,891,700 2003 Balance, December 31, 2002 16,470,588 365 1.0000 16,470,588 Debt exchange for shares * 3,137,255 184 0.5041 1,581,520 Spin-off of minority interest (9,607,843) 99 0.2712 (2,605,963) Net-Force 17,091,033 99 0.2712 4,635,650 Balance, December 31, 2003 27,091,033 365 20,081,796 * Number of Sinovac Beijing shares immediately before reverse acquisition 19,607,843 Note 7: Licenses and Permits, page 84 3. The Staff comments have been noted and we confirm that the Company’s email correspondence, dated September 28, 2005 and October 3, 2005, have been filed on the same day as this response letter under the EDGAR form-type label CORRESP. 4. The Staff comments have been noted and we confirm that the consolidated financial statements have been revised so as to charge the purchase prices of hepatitis A&B and influenza vaccines to operations as purchased in-process research and development expenses. 5. The Staff comments have been noted and we confirm that the consolidated financial statements have been revised to reflect amortization expense from the date of purchase, April 2001, rather than the date that production began. Note 9: Income Taxes Page 88 6. The Staff comments have been noted and we confirm that the Company has revised the disclosure in Note 9 to disclose the facts and circumstances that occurred in 2004, resulting in management’s conclusion that a 100% valuation allowance was Securities and Exchange Commission November 21, 2005 Page 4 not needed. The Company has also expanded Item 5 of the Form 20-F to disclose that deferred income tax valuation allowance is a critical accounting estimate. We trust that each of the foregoing and the enclosed amendments to the Company’s Annual Report filing are clear and satisfactory for this point in time and satisfy the comments of Staff contained in the SEC letter. However, should the SEC have any further questions or comments, or require any further information or documentation respecting the Company, please do not hesitate to contact the writer at any time. On behalf of the Company, we sincerely thank and appreciate the SEC’s prompt attention to and ongoing cooperation in this matter. Yours very truly, DEVLIN JENSEN Per: /s/ Mike Shannon MICHAEL T. SHANNON