SEC Comment Letter for Cocrystal Pharma, Inc. (COCP) (CIK 0001412486) (COCP) — Sep 21, 2012
Cocrystal Pharma, Inc. (COCP) (CIK 0001412486)
Date: Sept. 21, 2012 · CIK: 0001412486 · Accession: 0000000000-12-051817
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-146182
Letter
September 21, 2012 Via E -mail Mr. Elliot Maza Chief Executive Officer Biozone Pharmaceuticals, Inc. 550 Sylvan Avenue Suite 101 Englewood Cliffs, NJ 07632
Re: Biozone Pharmaceuticals, Inc. Amendment to Form 10 -Q for the Quarterly Period Ended March 31, 2012 Filed August 17 , 2012 File No. 333-146182
Dear Mr. Maza :
We have limited our review of your filing to the issues we have addressed in our comments. In our comments , we ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within 10 business days by providing the requested information or by advising us when you will provide the requested response . If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. Please furnish us a letter on EDGAR under the form type label CORRESP that key s your responses to our comments.
After reviewing the information you provide in response to these comments , we may have additional comments and/or request that you amend your filing .
1. You restated your financial statements to record a beneficial conversion feature of $5,750,000. This amount appears to exceed the proc eeds allocated to the OPKO n otes at issuance. ASC 470 -20-30-8 states that if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the benefici al conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. In addition, it appears you recorded the beneficial conversion feature to interest expense rather than accreting over the term of the OPKO notes as ASC 470 -20-35-7 would appear to suggest. Please provide us your analysis demonstrating how your accounting complies with GAAP including how you comply with ASC 470 -20-25-2, ASC 470-20-30-8 and ASC 470-20-35-7. In your analysis include how you dete rmined the amount of the beneficial conversion feature recorded , your allocation of the proceeds to t he OPKO notes and warrants and the journal entries made to record the beneficial conversion and allocation.
Mr. Elliot Maza Biozone Pharmaceuticals, Inc. September 2 1, 2012 Page 2
2. In addition, you disclose that you recorded the warrants at fair value using the Black -Scholes method . Your warrant agreement in Exhibit 10.3 of the Form 8 -K filed on March 1, 2012 appears to include adjustments to the exercise price in Section 2b which appear to be a down - round provision . Please explain to us how you considered this down -round protection provision in determining the fair value of these warrants. In this regard, it appears that a binomial or simulation model would be appropriate to consider the potential adjustment to the exercise price while a single -path option pricing model, such as the Black -Scholes model, cannot properly consider such adjustments.
We urge all persons who are responsible for the accuracy and a dequacy of the disclosure in this filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the ac curacy and adequacy of the disclosures they have made.
In responding to our comments, please provide a written statement from the company acknowledging 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 this 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.
You may c ontact Dana Hartz, Staff Accountant, at (202) 551 -3648 or Mary Mast, Senior Staff Accountant, at (202) 551 -3613 if you have questions regarding these comments. In this regard, do not hesitate to contact me at (202) 551 -3679.
Sincerely,
/s/ Jim B. Rosenberg
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September 21, 2012 Via E -mail Mr. Elliot Maza Chief Executive Officer Biozone Pharmaceuticals, Inc. 550 Sylvan Avenue Suite 101 Englewood Cliffs, NJ 07632 Re: Biozone Pharmaceuticals, Inc. Amendment to Form 10 -Q for the Quarterly Period Ended March 31, 2012 Filed August 17 , 2012 File No. 333-146182 Dear Mr. Maza : We have limited our review of your filing to the issues we have addressed in our comments. In our comments , we ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within 10 business days by providing the requested information or by advising us when you will provide the requested response . If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. Please furnish us a letter on EDGAR under the form type label CORRESP that key s your responses to our comments. After reviewing the information you provide in response to these comments , we may have additional comments and/or request that you amend your filing . 1. You restated your financial statements to record a beneficial conversion feature of $5,750,000. This amount appears to exceed the proc eeds allocated to the OPKO n otes at issuance. ASC 470 -20-30-8 states that if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the benefici al conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. In addition, it appears you recorded the beneficial conversion feature to interest expense rather than accreting over the term of the OPKO notes as ASC 470 -20-35-7 would appear to suggest. Please provide us your analysis demonstrating how your accounting complies with GAAP including how you comply with ASC 470 -20-25-2, ASC 470-20-30-8 and ASC 470-20-35-7. In your analysis include how you dete rmined the amount of the beneficial conversion feature recorded , your allocation of the proceeds to t he OPKO notes and warrants and the journal entries made to record the beneficial conversion and allocation. Mr. Elliot Maza Biozone Pharmaceuticals, Inc. September 2 1, 2012 Page 2 2. In addition, you disclose that you recorded the warrants at fair value using the Black -Scholes method . Your warrant agreement in Exhibit 10.3 of the Form 8 -K filed on March 1, 2012 appears to include adjustments to the exercise price in Section 2b which appear to be a down - round provision . Please explain to us how you considered this down -round protection provision in determining the fair value of these warrants. In this regard, it appears that a binomial or simulation model would be appropriate to consider the potential adjustment to the exercise price while a single -path option pricing model, such as the Black -Scholes model, cannot properly consider such adjustments. We urge all persons who are responsible for the accuracy and a dequacy of the disclosure in this filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the ac curacy and adequacy of the disclosures they have made. In responding to our comments, please provide a written statement from the company acknowledging 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 this 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. You may c ontact Dana Hartz, Staff Accountant, at (202) 551 -3648 or Mary Mast, Senior Staff Accountant, at (202) 551 -3613 if you have questions regarding these comments. In this regard, do not hesitate to contact me at (202) 551 -3679. Sincerely, /s/ Jim B. Rosenberg Jim B. Rosenberg Senior Assistant Chief Accountant