Via Facsimile and U.S. Mail
Mail Stop 6010
July 11, 2005
Mr. John Stanton
Chief Executive and Financial Officer, and Chairman
Nanobac Pharmaceuticals, Inc.
2727 W. Martin Luther King Jr. Boulevard
Suite 850
Tampa, FL 33607
Re: Nanobac Pharmaceuticals, Inc.
Form 10-KSB/A for the Fiscal Year Ended December 31, 2004
Filed June 17, 2005
File No. 033-80612
Dear Mr. Stanton:
We have reviewed your response letter dated June 17, 2005 as
well as the above referenced 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 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/A for the year-ended December 31, 2004 filed June 17,
2005
Management`s Discussion and Analysis
23004 Compared to 2003
Selling, General and Administrative, page 22
1. We have reviewed your response to comment number 1. Your
response
does not appear to adequately justify recording the expense as the
stock was authorized and issued by the Board of Directors.
Paragraph
5 of SOP 90-7 states that " the provisions of a confirmed plan
bind
the debtor, [and] any entity issuing securities under the plan,
...."
As the reorganization plan was confirmed in November 2002, it
would
appear that the Company was obligated at that point to issue the
shares. The bankruptcy plan, filed with the Commission,
specifically
states that the shares were to be issued subsequent to the merger
with HealthCentrics. It would appear that the appropriate period
was
immediately after the acquisition in December 2002. Additionally,
it
appears that you have valued the shares authorized as of the
issuance
date (e.g. January 2003 and January 2004), instead of the value
immediately subsequent to the merger with HealthCentrics. Please
provide to us management analysis, including appropriate cites to
accounting literature, which supports the timing of the expenses
recorded and the appropriateness of the value assigned. Lastly,
please indicate to us the reference within the plan of
reorganization, submitted as an exhibit to your Form 8-K, dated
November 20, 2002 that stipulates that requirement to issue 75
million shares.
2. We have reviewed your response to comment number 2 and the
revised
disclosures in your amended Form 10-KSB. We do not feel that you
have adequately justified the use of the non-GAAP financial
measure,
"loss from continuing operations excluding no-cash items," nor
have
you fully complied with the provisions of Item 10 of Regulation S-
B.
Specifically:
a) Management uses the financial measure to assess liquidity, the
most directly comparable GAAP financial measure would be net cash
flows from of operating activities. Current reconciliation to
loss
from continuing operations is inappropriate.
b) Current disclosures do not provide for presentation of equal or
greater prominence with the most comparable GAAP financial
measure.
c) It is unclear as to why this measure is beneficial to investors
and how it more closely approximates the amount of cash losses the
company is experiencing. It would appear that net cash flows from
operating activities, as presented in the Consolidated Statements
of
Cash Flows, is the amount of cash the company losses for the
period
presented.
Note 10. Stockholders` equity
Common Stock, Preferred Stock and Warrant Issuances, page F-18
3. We have reviewed your response to comment number 6. Please
provide management`s analysis as to why recording changes in fair
value through the other comprehensive income is appropriate.
Please
note that paragraph 9 of EITF 00-19 stipulates that changes in
fair
value should be reported through earnings.
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provide the
requested information. 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 responses to our comments.
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 comments on the financial statements and
related
matters. Please contact me at (202) 551-3679 with any other
questions.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief
Accountant
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Mr. John Stanton
Nanobac Pharmaceuticals, Inc.
July 8, 2005
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