SEC Company Response from LIQTECH INTERNATIONAL INC (LIQT) (CIK 0001307579) (LIQT) — Oct 11, 2011
LIQTECH INTERNATIONAL INC (LIQT) (CIK 0001307579)
Date: Oct. 11, 2011 · CIK: 0001307579 · Accession: 0001078782-11-002948
AI Filing Summary & Sentiment
Reasoning
Referenced dates: September 21, 2011
Letter
United States Securities and Exchange Commission Division of Corporation Finance Blue Moose Media, Inc. Current Report on Form 8-K Filed August 25, 2011 File No. 0-53769
Dear Mr. Ingram:
As counsel to Blue Moose Media, Inc. (the “Company”), we have prepared this letter on the Company’s behalf in response to the Staff’s comment letter dated September 21, 2011 (the “Comment Letter”) regarding the above-referenced Form 8-K (the “Current Report”).
For the convenience of the Staff’s review, we have set forth the comments contained in the Comment Letter above the Company’s response.
If you have any questions regarding the responses to your comments, please feel free to call me at the number indicated above.
General
1.
The EDGAR system reflects August 25, 2011 as “Date of report (Date of earliest event reported).” Please revise.
We have so revised the document.
Forward- Looking Statements, page iii
2.
Since Blue Moose Media, Inc. or Blue Moose is a penny stock issuer, Blue Moose is ineligible to rely on the safe harbor provision of the Private Litigation Reform Act of 1995 for forward looking statements. See Section 27A(b)(1)(C) of the Securities Act and Section 21E(b)(1)(C) of the Exchange Act, and replace the words “may not be available” with the words “are not available” in the second paragraph’s last sentence.
We have so revised the document.
3.
Please clarify the reference to the Securities Merger Act of 1934 here and to the Merger Act under “Section 16(a) Beneficial Ownership Reporting Compliance” on page 21.
We have so revised the document.
Page 2 of 9
Summary, page 1
4.
Please tell us how you are accounting for the warrants you reference in the first and third paragraphs of your summary. Please reference the appropriate authoritative guidance in your response.
The warrants referenced in the first and third paragraph were sold for cash in connection with the sale of underlying common shares. The proceeds from the sale of the unit was allocated to the warrants and underlying common stock in accordance with ASC Topic
Description of Business, page 2
5.
Please disclose the specific factual basis for and the context of all Blue Moose’s beliefs, estimates, and opinions in this section. This pertains particularly to disclosure of all projections, statistics, and assertions. Note that Blue Moose must have a reasonable basis for all projections, statistics, and assertions. If not, Blue Moose should remove them from the filing. If Blue Moose relies on a third party source for the information, please disclose whether the source is available publicly, represents the most recently available data, and remains reliable. To expedite our review, please provide us copies of each source, marked clearly to highlight the portion or section that contains this information, and cross reference it to the appropriate location in the Form 8-K.
We have removed these projections, statistics and assertions from the document.
6.
Please disclose the distribution methods of Blue Moose’s products. See Item 101(h)(4)(ii) of Regulation S-K.
Please see revised disclosure added to final paragraph of "Description of Business – Overview".
7.
Please disclose competitive business conditions and Blue Moose’s competitive position in the industry and methods of competition. See Item 101(h)(4)(iv) of Regulation S-K.
Please see additional disclosure added as "Competition" heading to Description of Business.
8.
Please state the duration or term of any patent held by Blue Moose. See Item 101(h)(4)(vii) of Regulation S-K. Further, provide us the serial number assigned to any pending patent application by the United States Patent and Trademark Office so that we may access the information online.
Please see additional disclosure added as second paragraph of "Description of Business – Overview". As requested our patent application for Ceramic Dead End Filters in the United States has been assigned #12/937,643
Our Company, page 2
9.
The disclosure indicating that U.S. operations are located in Minneapolis, Minnesota is inconsistent with disclosure under “Properties” on page 16 that U.S. operations are located in White Bear Lake, Minnesota. Please reconcile the disclosures.
We have revised the document to reflect that our U.S. operations are located in White Bear Lake, Minnesota.
Page 3 of 9
Our Operations, page 2
10.
We note your disclosure that you have three principal areas of business as follows: manufacture and sale of diesel particulate filters for the control of soot exhaust particles from diesel engines; manufacture and sale of ceramic membranes for the filtration of water and manufacture and sale of kiln furniture to support ceramics during the firing process. Please tell us what consideration you have given to the guidance found in ASC Topic 280.
The Company has three different products Diesel Particulate Filters, Water Filters and Kiln Furniture, and different customers purchase these products. However, the Company’s management has not organized the operations in a manner wherein they would be considered to have three business or reportable segments. The manufacturing of these three products uses virtually the same production process and equipment. The products are (i) manufactured from the same raw materials, (ii) extruded or cast, using the same machinery, (iii) fired in the same furnaces and (iv) coated using the same processes. While orders are usually shipped from the closest manufacturing location to reduce shipping cost, a particular order can be shipped from either Denmark or Minnesota. In addition, the Company uses the same sales force to sell each of their products.
Management generally evaluates operating results at the sales order level not by product level. As the products are manufactured using the same raw materials, employees, process and equipment, management focus is in utilizing production process in a manner which it expects will be the most profitable. Management would be unable to allocate the assets i.e., equipment to the underlying products.
Management does not identify separate distinguishable reporting segments and thus has not included such disclosure in the Financial Statements or the Current Report. To report such information would require the Company to sort and summarize revenue and manufacturing cost information by sale, determine the basis or cost elements to allocate other related operating expense and assets which would be costly to the Company and not provide management with any future benefit.
Manufacturing, page 4
11.
Please disclose whether you have entered into an agreement with any supplier, and, if so, tell us what consideration you have given to filing any agreement with a supplier as an exhibit to the Form 8-K. See Item 601(b)(10) of Regulation S-K.
We have no agreements with any suppliers other than standard purchase orders for each purchase made by the Company
12.
If applicable, please identify any principal supplier. See Item 101(h)(4)(v) of Regulation S-K. We note the risk factor disclosure on page 5 that there is a limited supply of silicon carbide available to Blue Moose.
We have added this disclosure.
Page 4 of 9
Sales, page 4
13.
Please disclose the amount of revenues attributable to each major customer during the past two fiscal years. We note the disclosure in note 13 to the financial statements on page F-19.
We have revised the disclosure under the "Sales" caption to reflect this information
14.
Please disclose whether you have entered into an agreement with any major customer, and, if so, tell us what consideration you have given to filing any agreement with a major customer as an exhibit to the Form 8-K. See Item 601(b)(10) of Regulation S-K.
We have no agreements with any customer other than customer purchase orders for each sale.
Research and Development, page 4
15.
Please disclose the amount spent during each of the last two fiscal years on research and development activities, and, if applicable, the extent to which the cost of the activities is borne directly by customers. See Item 101(h)(4)(x) of Regulation S-K.
We have revised the disclosure under the "Research and Development" caption to reflect this information. None of these costs were borne directly by customers.
16.
Please disclose the amount of funds provided by governmental entities or others during each of the last two fiscal years for projects of Blue Moose. We note the disclosure on page 3 that Blue Moose received a $2 million grant from The Danish National Advanced Technology Foundation to develop a SiC-based membrane that can perform reverse osmosis.
We have revised the disclosure under the "Ceramic Silicon Carbide Membranes for Liquid Filtration " caption to reflect this information.
Risk Factors, page 4
17.
It appears that some of Blue Moose’s assets and some of its directors and officers may be located outside of the United States. Advise us what consideration Blue Moose has given to risk factor disclosure of effecting service of process within the United States or elsewhere against the company or these individuals and of bringing an original action against the company or these individuals within the United States or elsewhere.
We have added this as a Risk Factor.
Officers and directors may have conflicts of interests..., page 4
18.
Please disclose the amount of time that directors and officers dedicate to the company and its business.
We have revised to disclosure under this Risk Factor to reflect this information.
We have agreed to indemnification of officers and directors..., page 5; Insufficient funds to develop our business, page 5; We face competition and technological advances by competitors, page 5; There is a limited trading market for our Common Stock, page 8; The market price and trading volume of our Common Stock may be volatile, page 8
19.
Please revise the caption or heading of each risk factor to state briefly the risk’s consequences or effects.
We have made changes to such headings where appropriate
Page 5 of 9
We rely on sub-contractors to meet current demand for our products..., page 6
20.
We note the disclosure that Blue Moose does not have sufficient manufacturing capacity to meet the current demand for its products and relies on a single subcontractor to enable it to meet this demand. Please disclose whether Blue Moose has entered into an agreement with the single subcontractor, and, if so, advise us what consideration Blue Moose has given to filing the agreement as an exhibit to the Form 8-K. See Item 601(b)(10) of Regulation S-K.
We are not party to any agreement with our subcontractor
We will incur significant costs as a result of operating as a public company..., page 8
21.
Please disclose the known or estimated costs that Blue Moose will incur as a result of operating as a public company.
We have revised the disclosure under this Risk Factor to reflect this information.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 10
Results of Operations, page 10
June 30, 2011 Compared to June 30, 2010, page 12
22.
We note your reference to EBITDA, a non-GAAP financial measure, here and on page 12. Please revise your filing to include all of the required disclosures under Item 10 of Regulation S-K, or remove this measure from your filing.
We have removed this measure from our filing.
23.
Your disclosure quantifies the changes in revenues and expenses, but does not explain the reasons for these changes. Please revise your filing to provide a more comprehensive discussion of the factors which led to changes in your operations. This comment also applies to your discussion of December 31, 2010 compared to December 31, 2009.
We have so revised the document to explain the reasons for these changes
Liquidity and Capital Resources, page 13
24.
We note your disclosures related to your lines of credit. Please supplementally tell us whether these facilities require you to comply with certain covenants. If you are required to comply with covenants please revise your filing to clearly disclose whether you were in compliance at the end of the reporting period. Please be advised, if it is or becomes reasonably likely that you may not comply with any of your debt covenants, please revise future filings to disclose the required ratios/amounts as well as the actual ratios/amounts as of each reporting date. See Sections I.D and IV.C of the SEC Interpretive Release No. 33-8350.
As disclosed in the discussion of "Liquidity and Capital Resources" all of our lines of credit are due on demand and therefore, any covenants are irrelevant to our ability to maintain these lines of credit.
25.
Please tell us what consideration Blue Moose has given to filing the standby line of credit agreements as exhibits to the Form 8-K. See Item 601(b)(10) of Regulation S-K.
See answer to Item 24.
Page 6 of 9
Cash Flows, page 13
26.
Your discussions of changes in cash flows provided by operating activities appear to merely repeat information found on your balance sheets. Please provide a more enhanced discussion related to the reasons for changes in your balance sheet captions, specifically current assets and current liabilities.
We have revised the disclosure to explain the reasons for these charges.
Significant Accounting Policies, page 14
27.
Please revise your disclosures to supplement, not duplicate, the description of accounting policies that are disclosed in the notes to your financial statements. Your disclosure here should provide greater insight into the quality and variability of information regarding your financial condition and operating performance. For example, you should discuss tax planning strategies you employ which are factored into your determination of the recoverability of tax losses and the judgment utilized in determining your allowance for doubtful accounts. Please note these are suggestions and this is not intended to be an exhaustive list. Please refer to the SEC’s Interpretation: commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations [Release Nos. 33-8350, 34-48960, FR-72]\
We have revised the accounting policies to provide greater insight into the quality and the variability of information and how it may impact our operating performance
Properties, page 16
28.
Please tell us what consideration Blue Moose has given to filing the lease agreements for its corporate headquarters and production facility in Denmark and for its United States operations in Minnesota as exhibits to the Form 8-K. See Item 601(b)(10) of Regulation S-K.
We believe that our leases are standard forms used in Denmark and the United States. In addition the leases for our Denmark properties are in Danish and over 40 pages. Since we are a small company it would create a hardship on us if we had to devote time and effort and translate these leases into English.
Directors and Executive Officers and Key Employees, page 18
29.
Describe briefly the business experience of Mr. Aldo Petersen during the past five years. See Item 5.02(c)(2) of Form 8-K and Item 401(e)(1) of Regulation S-K.
We have clarified this disclosure to provide the information.
30.
For each director or person nominated or chosen to become a director, discuss briefly the specific experience, qualifications, attributes, or skills that led to the conclusion that the person should serve as a director at the time that the disclosure is made in light of the company’s business and structure. See Item 401(e)(1) of Regulation S-K.
We have p
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CORRESP 1 filename1.htm 8-K/A1 SEC Response MORSE, ZELNICK, ROSE & LANDER A LIMITED LIABILITY PARTNERSHIP 405 PARK AVENUE NEW YORK, NEW YORK 10022-2605 212-838-1177 FAX – 212-838-9190 October 11, 2011 WRITER’S DIRECT LINE (212) 838-4175 Mr. Jay E. Ingram, Legal Branch Chief United States Securities and Exchange Commission Division of Corporation Finance Washington, DC 20549 Re: Blue Moose Media, Inc. Current Report on Form 8-K Filed August 25, 2011 File No. 0-53769 Dear Mr. Ingram: As counsel to Blue Moose Media, Inc. (the “Company”), we have prepared this letter on the Company’s behalf in response to the Staff’s comment letter dated September 21, 2011 (the “Comment Letter”) regarding the above-referenced Form 8-K (the “Current Report”). For the convenience of the Staff’s review, we have set forth the comments contained in the Comment Letter above the Company’s response. If you have any questions regarding the responses to your comments, please feel free to call me at the number indicated above. General 1. The EDGAR system reflects August 25, 2011 as “Date of report (Date of earliest event reported).” Please revise. We have so revised the document. Forward- Looking Statements, page iii 2. Since Blue Moose Media, Inc. or Blue Moose is a penny stock issuer, Blue Moose is ineligible to rely on the safe harbor provision of the Private Litigation Reform Act of 1995 for forward looking statements. See Section 27A(b)(1)(C) of the Securities Act and Section 21E(b)(1)(C) of the Exchange Act, and replace the words “may not be available” with the words “are not available” in the second paragraph’s last sentence. We have so revised the document. 3. Please clarify the reference to the Securities Merger Act of 1934 here and to the Merger Act under “Section 16(a) Beneficial Ownership Reporting Compliance” on page 21. We have so revised the document. Page 2 of 9 Summary, page 1 4. Please tell us how you are accounting for the warrants you reference in the first and third paragraphs of your summary. Please reference the appropriate authoritative guidance in your response. The warrants referenced in the first and third paragraph were sold for cash in connection with the sale of underlying common shares. The proceeds from the sale of the unit was allocated to the warrants and underlying common stock in accordance with ASC Topic Description of Business, page 2 5. Please disclose the specific factual basis for and the context of all Blue Moose’s beliefs, estimates, and opinions in this section. This pertains particularly to disclosure of all projections, statistics, and assertions. Note that Blue Moose must have a reasonable basis for all projections, statistics, and assertions. If not, Blue Moose should remove them from the filing. If Blue Moose relies on a third party source for the information, please disclose whether the source is available publicly, represents the most recently available data, and remains reliable. To expedite our review, please provide us copies of each source, marked clearly to highlight the portion or section that contains this information, and cross reference it to the appropriate location in the Form 8-K. We have removed these projections, statistics and assertions from the document. 6. Please disclose the distribution methods of Blue Moose’s products. See Item 101(h)(4)(ii) of Regulation S-K. Please see revised disclosure added to final paragraph of "Description of Business – Overview". 7. Please disclose competitive business conditions and Blue Moose’s competitive position in the industry and methods of competition. See Item 101(h)(4)(iv) of Regulation S-K. Please see additional disclosure added as "Competition" heading to Description of Business. 8. Please state the duration or term of any patent held by Blue Moose. See Item 101(h)(4)(vii) of Regulation S-K. Further, provide us the serial number assigned to any pending patent application by the United States Patent and Trademark Office so that we may access the information online. Please see additional disclosure added as second paragraph of "Description of Business – Overview". As requested our patent application for Ceramic Dead End Filters in the United States has been assigned #12/937,643 Our Company, page 2 9. The disclosure indicating that U.S. operations are located in Minneapolis, Minnesota is inconsistent with disclosure under “Properties” on page 16 that U.S. operations are located in White Bear Lake, Minnesota. Please reconcile the disclosures. We have revised the document to reflect that our U.S. operations are located in White Bear Lake, Minnesota. Page 3 of 9 Our Operations, page 2 10. We note your disclosure that you have three principal areas of business as follows: manufacture and sale of diesel particulate filters for the control of soot exhaust particles from diesel engines; manufacture and sale of ceramic membranes for the filtration of water and manufacture and sale of kiln furniture to support ceramics during the firing process. Please tell us what consideration you have given to the guidance found in ASC Topic 280. The Company has three different products Diesel Particulate Filters, Water Filters and Kiln Furniture, and different customers purchase these products. However, the Company’s management has not organized the operations in a manner wherein they would be considered to have three business or reportable segments. The manufacturing of these three products uses virtually the same production process and equipment. The products are (i) manufactured from the same raw materials, (ii) extruded or cast, using the same machinery, (iii) fired in the same furnaces and (iv) coated using the same processes. While orders are usually shipped from the closest manufacturing location to reduce shipping cost, a particular order can be shipped from either Denmark or Minnesota. In addition, the Company uses the same sales force to sell each of their products. Management generally evaluates operating results at the sales order level not by product level. As the products are manufactured using the same raw materials, employees, process and equipment, management focus is in utilizing production process in a manner which it expects will be the most profitable. Management would be unable to allocate the assets i.e., equipment to the underlying products. Management does not identify separate distinguishable reporting segments and thus has not included such disclosure in the Financial Statements or the Current Report. To report such information would require the Company to sort and summarize revenue and manufacturing cost information by sale, determine the basis or cost elements to allocate other related operating expense and assets which would be costly to the Company and not provide management with any future benefit. Manufacturing, page 4 11. Please disclose whether you have entered into an agreement with any supplier, and, if so, tell us what consideration you have given to filing any agreement with a supplier as an exhibit to the Form 8-K. See Item 601(b)(10) of Regulation S-K. We have no agreements with any suppliers other than standard purchase orders for each purchase made by the Company 12. If applicable, please identify any principal supplier. See Item 101(h)(4)(v) of Regulation S-K. We note the risk factor disclosure on page 5 that there is a limited supply of silicon carbide available to Blue Moose. We have added this disclosure. Page 4 of 9 Sales, page 4 13. Please disclose the amount of revenues attributable to each major customer during the past two fiscal years. We note the disclosure in note 13 to the financial statements on page F-19. We have revised the disclosure under the "Sales" caption to reflect this information 14. Please disclose whether you have entered into an agreement with any major customer, and, if so, tell us what consideration you have given to filing any agreement with a major customer as an exhibit to the Form 8-K. See Item 601(b)(10) of Regulation S-K. We have no agreements with any customer other than customer purchase orders for each sale. Research and Development, page 4 15. Please disclose the amount spent during each of the last two fiscal years on research and development activities, and, if applicable, the extent to which the cost of the activities is borne directly by customers. See Item 101(h)(4)(x) of Regulation S-K. We have revised the disclosure under the "Research and Development" caption to reflect this information. None of these costs were borne directly by customers. 16. Please disclose the amount of funds provided by governmental entities or others during each of the last two fiscal years for projects of Blue Moose. We note the disclosure on page 3 that Blue Moose received a $2 million grant from The Danish National Advanced Technology Foundation to develop a SiC-based membrane that can perform reverse osmosis. We have revised the disclosure under the "Ceramic Silicon Carbide Membranes for Liquid Filtration " caption to reflect this information. Risk Factors, page 4 17. It appears that some of Blue Moose’s assets and some of its directors and officers may be located outside of the United States. Advise us what consideration Blue Moose has given to risk factor disclosure of effecting service of process within the United States or elsewhere against the company or these individuals and of bringing an original action against the company or these individuals within the United States or elsewhere. We have added this as a Risk Factor. Officers and directors may have conflicts of interests..., page 4 18. Please disclose the amount of time that directors and officers dedicate to the company and its business. We have revised to disclosure under this Risk Factor to reflect this information. We have agreed to indemnification of officers and directors..., page 5; Insufficient funds to develop our business, page 5; We face competition and technological advances by competitors, page 5; There is a limited trading market for our Common Stock, page 8; The market price and trading volume of our Common Stock may be volatile, page 8 19. Please revise the caption or heading of each risk factor to state briefly the risk’s consequences or effects. We have made changes to such headings where appropriate Page 5 of 9 We rely on sub-contractors to meet current demand for our products..., page 6 20. We note the disclosure that Blue Moose does not have sufficient manufacturing capacity to meet the current demand for its products and relies on a single subcontractor to enable it to meet this demand. Please disclose whether Blue Moose has entered into an agreement with the single subcontractor, and, if so, advise us what consideration Blue Moose has given to filing the agreement as an exhibit to the Form 8-K. See Item 601(b)(10) of Regulation S-K. We are not party to any agreement with our subcontractor We will incur significant costs as a result of operating as a public company..., page 8 21. Please disclose the known or estimated costs that Blue Moose will incur as a result of operating as a public company. We have revised the disclosure under this Risk Factor to reflect this information. Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 10 Results of Operations, page 10 June 30, 2011 Compared to June 30, 2010, page 12 22. We note your reference to EBITDA, a non-GAAP financial measure, here and on page 12. Please revise your filing to include all of the required disclosures under Item 10 of Regulation S-K, or remove this measure from your filing. We have removed this measure from our filing. 23. Your disclosure quantifies the changes in revenues and expenses, but does not explain the reasons for these changes. Please revise your filing to provide a more comprehensive discussion of the factors which led to changes in your operations. This comment also applies to your discussion of December 31, 2010 compared to December 31, 2009. We have so revised the document to explain the reasons for these changes Liquidity and Capital Resources, page 13 24. We note your disclosures related to your lines of credit. Please supplementally tell us whether these facilities require you to comply with certain covenants. If you are required to comply with covenants please revise your filing to clearly disclose whether you were in compliance at the end of the reporting period. Please be advised, if it is or becomes reasonably likely that you may not comply with any of your debt covenants, please revise future filings to disclose the required ratios/amounts as well as the actual ratios/amounts as of each reporting date. See Sections I.D and IV.C of the SEC Interpretive Release No. 33-8350. As disclosed in the discussion of "Liquidity and Capital Resources" all of our lines of credit are due on demand and therefore, any covenants are irrelevant to our ability to maintain these lines of credit. 25. Please tell us what consideration Blue Moose has given to filing the standby line of credit agreements as exhibits to the Form 8-K. See Item 601(b)(10) of Regulation S-K. See answer to Item 24. Page 6 of 9 Cash Flows, page 13 26. Your discussions of changes in cash flows provided by operating activities appear to merely repeat information found on your balance sheets. Please provide a more enhanced discussion related to the reasons for changes in your balance sheet captions, specifically current assets and current liabilities. We have revised the disclosure to explain the reasons for these charges. Significant Accounting Policies, page 14 27. Please revise your disclosures to supplement, not duplicate, the description of accounting policies that are disclosed in the notes to your financial statements. Your disclosure here should provide greater insight into the quality and variability of information regarding your financial condition and operating performance. For example, you should discuss tax planning strategies you employ which are factored into your determination of the recoverability of tax losses and the judgment utilized in determining your allowance for doubtful accounts. Please note these are suggestions and this is not intended to be an exhaustive list. Please refer to the SEC’s Interpretation: commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations [Release Nos. 33-8350, 34-48960, FR-72]\ We have revised the accounting policies to provide greater insight into the quality and the variability of information and how it may impact our operating performance Properties, page 16 28. Please tell us what consideration Blue Moose has given to filing the lease agreements for its corporate headquarters and production facility in Denmark and for its United States operations in Minnesota as exhibits to the Form 8-K. See Item 601(b)(10) of Regulation S-K. We believe that our leases are standard forms used in Denmark and the United States. In addition the leases for our Denmark properties are in Danish and over 40 pages. Since we are a small company it would create a hardship on us if we had to devote time and effort and translate these leases into English. Directors and Executive Officers and Key Employees, page 18 29. Describe briefly the business experience of Mr. Aldo Petersen during the past five years. See Item 5.02(c)(2) of Form 8-K and Item 401(e)(1) of Regulation S-K. We have clarified this disclosure to provide the information. 30. For each director or person nominated or chosen to become a director, discuss briefly the specific experience, qualifications, attributes, or skills that led to the conclusion that the person should serve as a director at the time that the disclosure is made in light of the company’s business and structure. See Item 401(e)(1) of Regulation S-K. We have p