Via Facsimile and U.S. Mail
Mail Stop 6010
June 3, 2005
Mr. John D. Stanton
Chief Executive and Chief Financial Officer
Nanobac Pharmaceuticals, Inc.
2727 Martin Luther King Jr. Boulevard
Suite 850
Tampa, FL 33607
Re: Nanobac Pharmaceuticals, Inc.
Form 10-KSB for the fiscal year ended December 31, 2004
File No. 033-80612
Dear Mr. Stanton:
We have reviewed your filing and have the following
comments.
We have limited our review of the above referenced filing to only
those issues addressed. In our comments, we ask you to provide us
with supplemental 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
Management`s Discussion and Analysis
2004 Compared to 2003
Selling, General and Administrative, page 22
1. We note that you have included within selling, general and
administrative expenses for the years ended December 31, 2004 and
2003, $2.6 million and $.75 million, respectively, in charges for
stock issued as part of the Plan of Reorganization, which was
confirmed by the Bankruptcy Court in 2002. Please provide to us
management`s basis for determining these expenses appropriately
were
included in the 2004 and 2003 Consolidated Statement of Operations
and not part of the application of fresh-start accounting upon
emergence of bankruptcy.
2. It appears that the measures, "SG&A expenses net of charges for
stock issuances" and "Loss from continuing operations excluding
non-
cash items" disclosed in your financial statements are non-GAAP
financial measures. While the acceptability of a non-GAAP
financial
measure that eliminates recurring items from the most comparable
GAAP
measure depends on all facts and circumstances, we do not believe
that a non-GAAP measure that has the effect of smoothing earnings
is
appropriate. In addition, we note that the items you exclude have
the following attributes.
? There is a past pattern of these items occurring in each
reporting period;
? The financial impact of these items will not disappear or
become
immaterial in the future; and
? There is no unusual reason that the company can substantiate
to
identify the special nature of these items.
These attributes raise significant questions about management`s
assertions as to the usefulness of this measure for investors and
the
appropriateness of its presentation in accordance with Item 10(h)
of
Regulation S-B. Please refer to Questions 8 and 9 of Frequently
Asked Questions Regarding the Use of Non-GAAP Financial Measures.
Please describe to us how your current disclosures comply with the
provisions of Item 10 of Regulation S-B.
Notes to Consolidated Financial Statements
Note 1. Nature of Operations and Summary of Significant Accounting
Policies
Intangible Assets and Goodwill, page F-7
3. We note that you have a significant amount of intangible assets
consisting of patents and product rights, which resulted from the
NanobacLabs Pharmaceuticals (NanobacLabs) and Nanobac OY. Please
provide to us a disaggregation of the amounts assigned to patents
and
products rights by individual drug or research program.
Net Loss per Share, page F-8
4. We note your presentation and calculation of the basic and
fully
dilutive shares outstanding. Please provide to us why you have
included a reconciling item, "Treasury stock which could be
purchased" and how this presentation and your calculation of the
weighted average common stock equivalents complies with SFAS 128,
Earnings per Share.
Note 2. Acquisition
NanobacLabs Pharmaceuticals, Inc., page F-11
5. We note from your 10-KSB/A filed on March 30, 2004 that there
was
$5,815,393 in goodwill and $2,200,000 in deferred tax liability
included in the assets acquired and liabilities assumed in the
NanobacLabs acquisition. On page F-11 of the 10-KSB under review
you
state there is $3,615,393 in goodwill and no deferred liability
associated with this acquisition. It appears that the deferred
tax
liability was netted from the goodwill acquired. Tell us your
basis
in GAAP for netting these items.
Nanobac OY, page F-12
6. Within your Form 8-K dated November 11, 2003, management stated
that financial statements of Nanobac OY were not available at the
time yet would file the financial statements as soon as
practicable
by amending the Form 8-K. Please file the financial statements of
Nanobac OY or tell us why financial statements are not required.
Note 10. Stockholders` equity,
Common Stock, Preferred Stock and Warrant Issuances, page F-18
7. Please provide to us management`s basis for the current
accounting
treatment for the stock issued upon entering into the Subscription
Agreements entered into during 2004. Please identity the
authoritative literature relied upon. Please specifically address
the applicability and your compliance with SFAS 150, Accounting
for
Certain Financial Instruments with Characteristics of both
Liabilities and Equity, and EITF 00-19, Accounting for Derivative
Financial Instruments Indexed to and Potentially Settled in, a
Company`s Own Stock.
* * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Your letter
should
key your responses to our comments. Detailed letters greatly
facilitate our review. Please file your letter on EDGAR under the
form type label CORRESP. 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 filings reviewed by the staff to
be
certain that they have provided all information investors require.
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 filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff 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 Christine Allen, Staff Accountant, at (202)
551-3652 or Kevin Woody, Branch Chief, at (202) 551-3629 if you
have
questions regarding the comments. In this regard, do not hesitate
to
contact me, at (202) 942-1803.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief
Accountant
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Mr. John D. Stanton
Nanobac Pharmaceuticals, Inc.
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