Mail Stop 6010
August 9, 2005
Via Facsimile and U.S. Mail
Mr. Collin J. D`Silva
President and Chief Executive Officer
Transgenomic, Inc.
12325 Emmet Street
Omaha, NE 68164
Re: Transgenomic, Inc.
Form 10-K for the year ended December 31, 2004
Filed April 15, 2005
File No. 0-30975
Dear Mr. D`Silva:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents. Where indicated, we think you should
revise your future filings 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 information so we may better understand
your
disclosure. After reviewing this information, we may 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 on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the Year Ended December 31, 2004
Item 7 - Management`s Discussion and Analysis, page 11
Overview
1. The pro forma presentation of the restructuring plan and
impairment charges has resulted in the creation of multiple non-
GAAP
financial measures. We do not believe that the presentation of a
non-GAAP statement of operations is appropriate unless all
disclosures required by Item 10(e)(1)(i) of Regulation S-K are
included for each separate non-GAAP measure. Please delete this
presentation from all future periodic reports filed under the 1934
Exchange Act.
2. Further, you may not exclude charges or liabilities that
require
cash settlement from non-GAAP liquidity measures or adjust a non-
GAAP
performance measure to eliminate items identified as nonrecurring,
infrequent or unusual, when the nature of the charge is such that
it
is reasonably likely to recur within two years or there has been a
similar charge the last two years. Please revise in future
filings
to comply with Item 10(e)(1)(ii) of Regulation S-K.
3. If you elect to replace these non-GAAP financial measures with
a
new non-GAAP financial measure in future filings, please ensure
each
non-GAAP financial measure complies with all of the requirements
of
Item 10(e) of Regulation S-K. Accordingly, present a
reconciliation
of each non-GAAP financial measure to the most directly comparable
measure calculated in accordance with GAAP. In addition, provide
disclosure of the reasons why management believes presentation of
each of the individual non-GAAP measures provide useful
information
to investors regarding your financial condition and results of
operations. In this regard, if you elect to present a new non-
GAAP
financial measure, please refrain from using a label of "pro
forma."
The term "pro forma" has very specific meaning in accounting
literature and is defined in Article 11 of Regulation S-X. As
such,
it is not applicable for presentation of a non-GAAP financial
measure.
Note E - Debt, page 30
4. We note that you recorded a beneficial conversion premium
relating
to the credit line in August 2004. Please reconcile for us the
$353,000 shown as the beneficial conversion premium in Note E and
the
$2.42 million shown as beneficial conversion premium on the
statements of stockholders` equity.
* * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested 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 to be certain that the
filing includes all information required under the Securities and
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment 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 David Burton, Staff Accountant, at (202)
551-
3626, Kevin L. Vaughn, Staff Accountant, at (202) 551-3643, or me
at
(202) 551-3327 if you have questions regarding these comments.
Sincerely,
Michele Gohlke
Branch Chief
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Mr. Collin J. D'Silva
Transgenomic, Inc.
August 9, 2005
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