March 24, 2005
Mail Stop 0306
Mr. Robert P. Hickey
President, CEO and CFO
Life Medical Sciences, Inc.
P.O. Box 219
Little Silver, NJ 07739
RE: Life Medical Sciences, Inc.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
File No. 000-20580
Dear Mr. Hickey:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Item 8A. Controls and Procedures
1. We note your statement that "the chief executive officer, after
evaluating the effectiveness of the Company`s disclosure controls
and
procedures (as defined in the Securities Exchange Act of 1934
Rules
13a-14(c) and 15-d-14(c)) as of the end of the period covered by
this
annual report has concluded that as of the Evaluation Date, our
disclosure controls and procedures were adequate and designed to
ensure that material information relating to us and required to be
disclosed in the reports we file or submit to the Securities and
Exchange Commission would be made known to him."
* Please revise this disclosure to refer to the correct Exchange
Act
rules governing disclosure controls and procedures, which are
Rules
13a-15(e) and 15d-15(e).
* It does not appear that your certifying officer has reached a
conclusion that your disclosure controls and procedures are
effective. Please revise to address your officer`s conclusions
regarding the effectiveness of your disclosure controls and
procedures.
* The language that is currently included after the word
"adequate"
in your disclosure appears to be superfluous, since the meaning of
"disclosure controls and procedures" is established by Rule 13a-
15(e)
of the Exchange Act. Please revise your disclosure as previously
indicated, and revise to remove this superfluous language.
However,
if you do not wish to eliminate this language, please revise so
that
the language that appears after the word "effective" (if you in
fact
conclude that your disclosure controls and procedures are
effective)
is substantially similar in all material respects to the language
that appears in the entire two-sentence definition of "disclosure
controls and procedures" set forth in Rule 13a-15(e).
2. Please revise your disclosure concerning changes in your
internal
control over financial reporting in Item 8(b) to indicate whether
there was any change in your internal control over financial
reporting that occurred during the quarter ended December 31, 2004
that has materially affected or is reasonably likely to materially
affect your internal control over financial reporting, as required
by
Item 308(c) of Regulation S-B as amended effective August 13,
2003.
Statements of Operations and Statements of Cash Flows - Pages F-4
and
F-6
3. It appears that you have accounted for the receipt of funds
from
PSE&G in fiscal 2004 and 2003 related to the sale of certain of
your
net operating losses under the New Jersey Tax Benefit Transfer
Program as a tax benefit.
* Please tell us the accounting guidance that you relied on to
record
these transactions.
* It appears that you have presented the funds received from the
sale
of the net operating losses as cash inflows from operations.
Given
that you have utilized these funds to finance the operations of
the
business and intend to continue this practice, please tell us why
you
believe your current presentation is appropriate.
Note C. Acquired Technology - Page F-9
4. Please tell us and revise future filings to disclose how you
determined the fair value and the useful lives of the polymer
technology assets purchased from Phairson. Please tell us the
accounting guidance upon which you based your determination.
5. We note on page F-10 that you granted an option, exercisable
for
seven years, to purchase up to 100,000 shares of Common Stock at
$0.09 per share to Dr. Gere S. diZerega in connection with the
acquisition of the polymer technology assets. Please tell us and
revise future filings to disclose how you accounted for the grant
of
these options.
Note F. Stockholders` Equity
(4) Options - Page F-11
6. We note that on April 23, 2004 you granted 50,000 fully-vested
options to a former director. Please tell us if you recorded
compensation expense related to this option grant.
Exhibit 31.1
7. We note that the certification filed as Exhibit 31.1 to your
Form
10-KSB was not in the proper form. The required certification must
be
in the exact form prescribed; the wording of the required
certification may not be changed in any respect. Certain portions
of
the certification relating to internal control over financial
reporting may be omitted as stated in Section III.E. of SEC
Release
No. 33-8238. Accordingly, please file an amendment to your Form
10-
KSB that includes the entire filing together with the
certification
of your current CEO/CFO in the form currently set forth in Item
601(b)(31) of Regulation S-B.
* * * *
As appropriate, please amend your December 31, 2004 Form 10-
KSB
and respond to these comments within 10 business days or tell us
when
you will provide us with a response. You may wish to provide us
with
marked copies of the amendment to expedite our review. Please
furnish a cover letter with your amendment that keys your
responses
to our comments and provides any requested supplemental
information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a 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 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.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tom Dyer, Staff Accountant, at (202) 824-5564 or
me
at (202) 942-2813 if you have any questions. In this regard, do
not
hesitate to contact Martin James, the Senior Assistant Chief
Accountant, at (202) 942-1984.
Sincerely,
Daniel Gordon
Branch Chief
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Mr. Robert P. Hickey
Life Medical Sciences, Inc.
March 24, 2005
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