Via Facsimile and U.S. Mail
Mail Stop 6010
November 8, 2005
Mr. James Hayward
Chief Executive Officer
Applied DNA Sciences, Inc.
9229 W. Sunset Boulevard, Suite 830
Los Angeles, California 90069
Re: Applied DNA Sciences, Inc.
Amendment #4 to Registration Statement on Form SB-2
Filed October 28, 2005
File Number 333-122848
Dear Mr. Hayward:
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 on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM SB-2
General
1. Prior to requesting acceleration for effectiveness, please
amend
your Form 10-KSB for the year ended September 30, 2004 and your
Forms
10-QSB for the quarters ended December 31, 2004, March 31, 2005
and
June 30, 2005, as applicable, to comply with our comments on your
Form SB-2.
2. Prior to requesting acceleration for effectiveness, please
refer
to Item 310(g)(2) of Regulation S-B and file an amended
registration
statement on Form SB-2 to include your most recent audited
financial
statements for your fiscal year ended September 30, 2005. In doing
so, please also file as an exhibit an updated, signed consent
report
from your independent accountants.
3. We note your response to prior comment 1. Please confirm that
the
reference to Korea in the chart on page 20 is to South Korea and
that, pursuant to your language regarding countries that the
United
States has designated as state sponsors of terrorism, you do not
have, or intend to have, contacts with North Korea.
Liquidity and Capital Resources, pages 17-18
4. Please update the information regarding the beneficial
conversion
feature recorded and the penalties incurred to date due to failure
to
have a registration statement effective by July 15, 2005.
Consolidated Financial Statements
Statements of Losses, page F-3
5. We acknowledge your response to comment 13 per our letter dated
September 12, 2005. We again request that you revise your
statements
of operations for the year ended September 30, 2003 to separately
present the license fee paid to Biowell Technology as research and
development expense. Please also revise your statement of
operations
for the year ended September 30, 2004, as well as your cumulative
statement of operations, to reflect the research and development
expense that you incurred during those periods, as represented to
us
in your response.
Notes to Consolidated Financial Information
Note A- Summary of Accounting Policies, page F-17
6. Per your response to comment 13, we note that you incurred
research and development expense during the period from September
16,
2002 through September 30, 2004. Please revise your disclosure
accordingly.
Note D- Capital Stock- pages F-21 - F-27
7. We acknowledge your response to comment 15 per our letter dated
September 12, 2005, as well as the information provided in
"Exhibit
A" to your response. We again request the following.
* Please provide us with a detailed analysis that quantifies the
aggregate understatement/overstatement of compensation expense
that
occurred in the third and fourth quarters of 2002 and the first
quarter of 2003. Your analysis should include: the valuation
date/period in which the service transaction occurred; the
valuation
calculation, including your accounting basis for ascribing value
to
the shares issued; and the trading price of your common shares at
the
date the services were provided, if applicable;
* With respect to Exhibit A, please clarify for us your basis for
the
restated amounts. Specifically, please specify whether the "price
restated" column is based on the trading price or some other value
of
your common shares. Additionally, please clarify whether the
"date"
column relates to the date that the consulting services were
provided
and correlate that to the period in which you issued the shares.
Unaudited Condensed Consolidated Statements of Cash Flows, page F-
49
8. We acknowledge your response to comment 17 per our letter dated
September 12, 2005. Please provide us with additional information
about or reconcile for us the following items for the nine months
ended June 30, 2005:
* The "proceeds from loans" of $843,971;
* The "common stock canceled- previously issued for services
rendered" of $(642,098) as it relates to the corresponding
statements
of stockholders` deficit;
* The "common stock issued in exchange for consultant services
rendered" of $13,037,773 as it relates to the corresponding
statements of stockholders` deficit;
* The "amortization of beneficial conversion feature- convertible
notes" of $8,836,000 as it relates to the corresponding statements
of
stockholders` deficit; and
* The "proceeds from sale of common stock, net of cost" of
$8,141,055
and the "proceeds from subscription of common stock" of $2,340,000
as
each relates to the corresponding statements of stockholders`
deficit.
Notes to Unaudited Condensed Consolidated Financial Information
Note G- Subsequent Events, page F-68
9. We acknowledge your response to comment 19 per our letter dated
September 12, 2005 and request the following.
* Please refer to Note 2. of Item 310 of Regulation S-B and to the
interpretive guidance on the distinction between a "business" and
an
"asset" provided in Item 11-01(d) of Regulation S-X. Please then
provide us with the relevant information about your acquisition of
Rixflex Holdings that supports your conclusion that you have not
acquired a business.
* Please also provide us with your analysis under EITF 98-3 that
supports your determination that you will not account for the
Rixflex
Holdings acquisition as that of a business.
* Please disclose the purchase price for your acquisition of
Rixflex
Holdings and provide a preliminary purchase price allocation
according to the applicable provisions of SFAS No. 141. Please
also
provide us with information that outlines your specific analysis
of
the substance of the transaction pursuant to paragraph 17 of SFAS
No.
141.
10. We note that you entered into a transaction with Trilogy
Capital
Partners, Inc. in June 2005, pursuant to which you issued a
warrant
to purchase 7.5 million shares of your common stock. We also note
that the warrant contains a cashless exercise provision. Please
provide us with your analysis as to whether this warrant qualifies
as
a derivative instrument within the scope of SFAS No. 133, which
would
necessitate that you account for the warrant at fair market value
and
record changes in that fair market value within earnings.
Additionally, please provide us with an analysis under EITF No.
00-19
that supports your classification of the warrant as an equity
instrument. Please provide all significant terms of your other
warrants outstanding and your analysis under SFAS 133 and EITF No.
00-19. Specifically state if the agreement includes any
requirements
to register, any requirements for net cash settlement (such as a
cashless exercise feature), and any liquidating damages or
penalties
that could be incurred. Address whether or not you have sufficient
authorized shares for all warrants and convertible instruments
outstanding.
11. Additionally, please revise your financial statement
disclosures
to appropriately reflect the fact that both transactions outlined
above occurred during the nine months ended June 30, 2005. Your
characterization of each within "subsequent events" is misleading
to
investors.
Form 10-QSB/A#2 for the Fiscal Quarter Ended March 31, 2005
General
12. We acknowledge your response to comment 20 per our letter
dated
September 12, 2005, as well as the information provided in Note E
to
your unaudited condensed consolidated financial statements for the
period ended June 30, 2005. Please amend your March 31, 2005 Form
10-
QSB to appropriately present the financial statements as
"restated"
and to provide the footnote which outlines the circumstances
surrounding the restatement and its impact on your results of
operations, inclusive of the disclosures required by APB No. 20.
Additionally, we note that the net loss per share amounts
reflected
on page F-66 appear to be incorrect; please revise your
disclosures
to reflect the corrected net loss per share amounts or tell us why
you believe your net loss per share amounts are correct.
Notes to Unaudited Condensed Consolidated Financial Information
Note B- Capital Stock, page 25
13. We acknowledge your response to comment 18 per our letter
dated
September 12, 2005, as well as the information provided in
"Exhibit
B" to your response. We again request that you provide us with
additional information that correlates the $2.9 million
restatement
amount to the individual transactions outlined in Note B to your
unaudited condensed consolidated financial statements. Based on
the
information in Note B, it appears that only $1.4 million of the
3/31/05 restatement relates to the valuation of common stock
issued
to non-employee consultants, while $1.5 million relates to your
retirement of convertible debt via the issuance of common stock.
* * *
As appropriate, please amend your registration statement in
response to these comments. 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 file
your cover 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 direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Amy Bruckner (202) 551-3657 or Mary Mast at
(202) 551-3613 if you have questions regarding comments on the
financial statements and related matters. Please contact John
Krug
at (202) 551-3862 or me at (202) 551-3715 with any other
questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Andrea Cataneo
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas, 21st Floor
New York, New York 10018
??
??
??
??