United States securities and exchange commission logo
June 7, 2022
Paul Mann
Chairman, Chief Executive Officer and Chief Financial Officer
ASP Isotopes Inc.
433 Plaza Real, Suite 275
Boca Raton, Florida 33432
Re: ASP Isotopes Inc.
Amended Draft
Registration Statement on Form S-1
Submitted May 11,
2022
CIK No. 0001921865
Dear Mr. Mann:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amended Draft Registration Statement on Form S-1, submitted on May 11,
2022
Prospectus Summary, page 1
1. We note that your
summary appears to only discuss the positive aspects of the
Company. The prospectus
summary should provide a brief, but balanced, description of
the key aspects of the
Company as of the latest practicable date. Please revise the
summary to also discuss
any negative aspects of the Company`s experience, strategy, and
prospects. In
particular, please revise the prospectus summary to provide:
a statement that
the Company has no products approved for commercial sale, has no
existing customers
and has not generated any revenue to date;
a statement that
the Company has not yet built a functioning Mo-100 or U-235
manufacturing
plant or even demonstrated the ability to produce Mo-100 or U-235
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using the ASP technology;
a statement that the Company has not yet sought any regulatory
approval for
application of Mo-100;
a brief description of the regulatory approvals that are
required for your products; and
a statement that neither the Company nor Klydon has any
existing patents, pending
patent applications or copyrights.
In addition, please note that where the Risk Factor section is more
than 15 pages long, you
should include in the summary section a bulleted or numbered list no
more than two pages
long describing the principal risk factors. Please revise the "Risk
Factors" section on page
2 of the prospectus to include this summary in addition to a cross
reference. Please refer to
Item 105(b) of Regulation S-K.
Risks Related to Our Limited Operating History, Financial Position and Need For
Additional
Capital
Even if this offering is successful, we will require substantial additional
capital to finance our
operations, which may not be available..., page 9
2. We note your disclosure on page 103 of the prospectus that, under
certain circumstances
where a future financing source is introduced to you by the
Representative, you have
agreed to pay the Representative a cash fee equal to 8.0% of the
aggregate gross proceeds
received by you from any financing or capital raising transaction of
any kind within the 12
months following the effective date of the registration statement.
Please mention this tail
compensation when discussing the possibility that you may need to seek
additional funds
sooner than you currently plan.
Risks Related to the Development and Commercialization of Our Future Isotopes
We are early in our research and development efforts for Mo-100 and U-235 using
the ASP
technology. If we are unable to advance our..., page 10
3. We refer to your disclosure here that you expect to complete the proof
of concept phase of
the Mo-100 development plan during 2022 and your disclosure on pages
48 and 89 that
the Company's management expects that it could take up to 15 months to
complete the
initial proof of concept phase. Please reconcile these disclosures.
Regulatory approval for production and distribution of radiopharmaceuticals
used for medical
imaging and therapeutic treatments may..., page 12
4. We note your disclosure on page 12 that you "may" need to obtain
approval from the
FDA, European Medicines Agency (EMA) or other comparable foreign
regulatory
authorities prior to sale of Mo-100 and your disclosure on page 74
that some of your
future isotopes "will also likely be regulated" by healthcare
regulators such as the Food
and Drug Administration (FDA) in the USA, Health Canada in Canada, the
European
Medicines Agency in Europe and similar regulators in other countries.
Please revise your
disclosure here and throughout the prospectus to clearly state whether
you believe you
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will need approval from regulatory authorities in order to
commercialize Mo-100. If you
believe the need for regulatory approval is uncertain, please discuss
the specific reasons
for this uncertainty, when and how a determination will be made and
the impact this
uncertainty will have on your business and operations.
Risks Related to Our Intellectual Property
We may be unable to adequately protect our intellectual property and
proprietary rights and
prevent others from making unauthorized use..., page 16
5. We note the disclosure in Note 8. License Agreements to the
Consolidated Financial
Statements on page F-13 that under the Mo-100 and U-235 license
agreements
any development efforts improving the intellectual property performed
by either Klydon
or the Company will be the property of Klydon. Please expand on your
disclosure in this
risk factor to discuss any material risks regarding Klydon's ownership
of the intellectual
property used in your business. Additionally, please reconcile the
fact that Klydon will
retain ownership of the intellectual property with your statements on
page 20 of the
prospectus that you anticipate you "will file patent applications both
in the United States
and in other countries, as appropriate" and that you "intend to seek
to protect [your]
proprietary position by filing patent applications in the United
States and abroad related to
[your] current and future development programs and future isotopes to
the extent
permitted by applicable law."
Risks Related to Regulatory Compliance
Our business is and could become subject to a wide variety of extensive and
evolving laws and
regulations. Failure to comply with such..., page 16
6. We note your disclosure here that "[t]he design, construction and
operation of the Mo-
100 enrichment plant are highly regulated and require government
licenses, approvals and
permits, and may be subject to the imposition of conditions." We also
note references
throughout the prospectus to the need to obtain "applicable regulatory
approvals." Please
expand your disclosure here and elsewhere in the prospectus to briefly
explain the
material governmental approvals you or Klydon need to build and
operate the plant,
including the status and expected timing for applying for and/or
receiving such approvals.
Risks Related to Our Dependence on Third Parties
Klydon currently performs or supports many of our operating activities and will
continue to do
so after the closing of this offering..., page 24
7. There are several references here and elsewhere in the prospectus to
PDS South Africa. It
appears this entity may be the predecessor to ASP Isotopes South
Africa (Proprietary)
Limited. Please clarify these references.
Use of Proceeds, page 41
8. Although we note your disclosure that you intend to have broad
discretion over the use of
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net proceeds from the offering, please revise your use of proceeds
disclosure to indicate
how far in the development process you estimate that the allocated
proceeds from the
offering will enable you to reach. For example, please indicate if you
expect to be able to
fund the Phase 1, Phase 2 and/or commercialization phase of the Mo-100
development
plan without raising additional capital or fund the acquisition of all
of the outstanding
shares or substantially all of the assets of Klydon. In this regard,
we note your disclosure
on page 9 of the prospectus that while you believe, based on your
current operating plan,
that following the offering you will have sufficient cash on hand to
fund operations for at
least the next 12 months you will require substantial additional
capital to support your
business operations.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Exclusive Mo-100 License, page 47
9. Please revise your description of the Mo-100 License Agreement to
describe the material
terms of the agreement. In particular, please describe:
the nature and scope of the intellectual property rights
transferred under the
agreement as it appears neither the Company nor Klydon has any
existing patents,
patent applications or copyrights;
the duration of the agreement and any royalty term;
any termination provisions other than if the licensee ceases to
carry on activities of
Mo-100 enrichment for a period longer than 24 consecutive months;
any up-front or execution payments;
the aggregate amounts paid or received to date under this
agreement;
the aggregate future potential milestone payments to be paid or
received; and
royalty rates or a royalty range.
Exclusive U-235 License, page 48
10. Please revise your description of the U-235 License Agreement to
describe the material
terms of the agreement. In particular, please describe:
the nature and scope of the intellectual property rights
transferred under the
agreement as it appears neither the Company nor Klydon has any
existing patents,
patent applications or copyrights;
the duration of the agreement; and
any termination provisions other than if the licensee ceases to
carry on activities of
U-235 enrichment for a period longer than 24 consecutive months.
Letter of Intent for Klydon Shares or Assets, page 48
11. We note that on September 30, 2021, ASP South Africa entered into a
letter of intent with
Klydon and its largest shareholder with respect to the acquisition of
all of the outstanding
shares or substantially all of the assets of Klydon. Please tell us
how you considered the
guidance in Rules 8-04 and 8-05, as well as Article 11 of Regulation
S-X in determining
whether additional financial statements and pro-forma financial
information of
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Klydon should be included in your filing. Your response should include
your significance
calculation and all other relevant facts and circumstances that
support your conclusion.
12. Please expand on your disclosure regarding your letter of intent with
Klydon and its
largest shareholder to explain the current status of this acquisition
and the expected impact
an acquisition of Klydon would have on your business, the offering and
your various
existing agreements with Klydon.
Other Material Agreements, page 48
13. We note your disclosure regarding the key terms of your other material
agreements.
Please file the Lease for Molybdenum Processing Plant and Political
Risk Insurance
Policy with Optio Group as exhibits to the Registration Statement or
provide us your basis
for determining it is not required pursuant to Regulation S-K, Item
601(b)(10).
Liquidity and Capital Resources
Future Funding Requirements, page 52
14. We note your disclosure here that your commercial revenues, if any,
will be derived from
sales of Mo-100 which you do not expect to be commercially available
"until at least
2024." On page 57 of the prospectus, you note that you "expect to
commence
commercialization of Mo-100 in 2023." Please reconcile these
disclosures. Additionally,
we note your statement on page 66 of the prospectus that you "expect
limited commercial
activity for Mo-100 in the United States during the next two to three
years" and
"anticipate that most of [your] initial revenues from future sales of
[your] Mo-100 will be
derived form countries in Asia and EMEA (Europe, Middle East and
Africa)." To the
extent you anticipate sales will initially be derived from these
countries, please state this
clearly in the prospectus summary and risk factors section.
Critical Accounting Policies and Significant Judgments and Estimates
Stock-Based Compensation, page 54
15. Once you have an estimated offering price or range, please explain to
us how you
determined the fair value of the common stock underlying your equity
issuances and the
reasons for any differences between the recent valuations of your
common stock leading
up to the initial public offering and the estimated offering price.
This information will help
facilitate our review of your accounting for equity issuances
including stock
compensation. Please discuss with the staff how to submit your
response.
Business
Our Strategy
Complete development and commissioning of Mo-100 enrichment facility located in
Pretoria,
South Africa., page 57
16. We note your statement that you intend to leverage your unique
technical expertise to
complete the development of your first Mo-100 enrichment facility
located in Pretoria,
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South Africa. However, you appear to be outsourcing this work the
Klydon. Please
provide clear disclosure throughout regarding which entity will be
constructing and
commissioning the enrichment facility.
Mo-100 produced using ASP technology could support an alternative and
potentially more
convenient production route for Tc-99m, page 58
17. We note your disclosure here that "[a]ssuming that the Mo-99 produced
from our Mo-
100 is determined to be equivalent to currently available Mo-99 and
the technetium
generator has already received regulatory approval with relevant
healthcare regulators, we
believe this route to market will not require additional regulatory
approvals from the
relevant healthcare regulator." Please expand on this disclosure to
explain which
regulatory agency or agencies would need to determine that the Mo-99
produced from
your Mo-100 is equivalent to currently available Mo-99 and the process
and expected
timing for receiving such a determination.
Continue identifying potential offtake customers and strategic partners for
Mo-100, page 58
18. We note your statement that you have had or are currently in active
dialogue or entered
into non-binding LOIs with over four potential offtake customers.
Please provide an
approximate range or a specific number of such potential offtake
customers. Additionally,
please revise your disclosure to name the strategic advisor with whom
you have entered
into a consulting and sales commission agreement to support your
efforts to identify
potential customers in China.
Our Strengths
Proven ASP technology developed by Klydon, page 59
19. Please remove the reference to "proven" ASP technology and balance
your disclosure
regarding the efficacy and commercial scalability of the ASP
technology to note that you
have not demonstrated the ability to produce Mo-100 or U-235 using the
ASP technology.
Additionally, we note your disclosure here and elsewhere in the
prospectus that you have
exclusive worldwide licenses from Klydon for the production of Mo-100
and U-235 and
your disclosure on page 72 of the prospectus that you are "currently
conducting a
feasibility study with respect to constructing an enrichment facility
in either the
United States or an international location." However, on page 17 of
the prospectus you
note that your exclusive license from Klydon is limited to South
Africa for the
development of the ASP technology and production of the
Molybdenum-100. Please
reconcile these disclosures here and elsewhere in the prospectus.
The Mo-99 Market, page 66
20. We note your reference to estimates prepared by Future Market Insights
Inc. regarding the
size of Molybdenum 99 market revenues in 2020. Please tell us whether
the Company
commissioned such estimates from Future Market Insights Inc. To the
extent it was
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commissioned by the Company, please file such party's consent as an
exhibit to the
registration statement. Please see Securities Act Rule 436.
Management
Executive Officers and Directors, page 76
21. For the Chairman and each Non-Employee Director, please briefly
discuss the specific
experience, qualifications, attributes or skills that led to the
conclusion that such person
should serve as a director of the Company. Please also disclose the
ages of Mr. Donfeld
and Dr. Strydom. Please refer to Items 401(a) and 401(e).
Chief Scientific Adviser Agreement with Dr Ronander, page 89
22. We refer to your disclosure that Dr. Ronander has agreed to serve as
chief scientific
adviser to the board of directors. Elsewhere in the prospectus, you
refer to Dr. Ronander
as "your Chief Scientific Adviser." Please clarify if Dr. Ronander is
providing services to
the Company or the board of directors. Additionally, please tell us
what consideration you
gave to whether Dr. Ronander is an "executive officer" of the Company
as such term is
defined in Rule 3b-7 of the Exchange Act or a "named executive
officer" of the Company
pursuant to Item 402(a)(3) of Regulation S-K.
Consulting Agreements with Dr Strydom and Dr Ronander, page 89
23. Please revise your description of the Consulting Agreements with Dr.
Strydom and Dr.
Ronander to describe the material terms of the agreements. In
particular, please describe:
the amount and timing of cash payments in connection with
licensing upfront
payments are paid to the company;
the termination provisions of such agreements; and
the nature of the potential licensing transaction relating to the
enrichment of uranium.
Indemnification Arrangements with Drs Ronander and Strydom, page 89
24. Please expand on your disclosure regarding your agreement to indemnify
Drs. Ronander
and Strydom for up to $3.2 million in connection with any claim by a
creditor of Klydon.
Please explain the circumstances that led to these indemnities and
whether you view any
payment obligation under these indemnities as probable. Please
disclose whether Klydon
is providing indemnity against these claims as well.
Letter of Intent for Klydon Shares or Assets, page 89
25. Please identify the the shareholder of Klydon with whom you have
entered the letter of
intent.
Principal Stockholders, page 90
26. Please revise the footnotes to the beneficial ownership table to
disclose the natural persons
who hold voting and/or dispositive control over the shares held by
Broadband Capital
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Investments LLC and the entities affiliated with Titan Multi-Strategy
Fund I, Ltd.
Description of Capital Stock
Registration Rights, page 92
27. We note your reference to an Investor Rights Agreement on page 92.
This section includes
a cross reference to the "Shares Eligible for Future Sale" section of
the prospectus.
However, the Investor Rights Agreement does not appear to be discussed
in that section.
Please clarify or revise your disclosure as appropriate. Additionally,
please file the
Investor Rights Agreement as an exhibit to the Registration Statement
or provide us your
basis for determining it is not required pursuant to Regulation S-K,
Item 601(b)(10).
Exclusive Forum, page 94
28. We note your disclosure on page 94 and elsewhere in the prospectus
that the exclusive
forum provision in your amended and restated certificate of
incorporation will not apply to
suits brought to enforce a duty or liability created by the Exchange
Act. Please ensure that
the exclusive forum provision in your amended and restated certificate
of incorporation
states this clearly.
Representative's Warrants, page 102
29. We note that you plan to issue representative's warrants but do not
see them listed in the
fee table. Please tell us whether you plan to register the
representative's warrants and the
shares of common stock underlying the warrants and revise the fee
table accordingly.
1. Organization, page F-7
30. Please disclose your accounting for the October 2021 acquisition of
the assets of
Molybdos by your South African subsidiary for ZAR 11,000,000
(approximately USD
$734,000.) Disclose the nature of and the valuation for the assets
purchased. Explain how
this transaction is reported in your statements of cash flows on page
F-6. In your response
please identify the specific paragraphs within the authoritative
literature that you have
relied upon to support your accounting and presentation, for example,
the ASC 805
framework. Please assure that you have provided all of the required
disclosures in your
financial statements as applicable.
8. License Agreements, page F-13
31. Please revise the filing to include the disclosures required by ASC
850-10-50 for all the
related party transactions with Klydon.
9. Stockholders Equity
Common Stock Warrants, page F-14
32. You explain that in September 2021, you issued warrants fair valued at
$1,735,841, and
awarded founder stock fair valued at $500,000 for no cash
consideration. Please tell us
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June 7, 2022
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your consideration of disclosing the information related to these awards
on the face of
your Consolidated Statement of Cash Flows as non-cash transactions
similar to
your presentation of the Right-of-use assets obtained in exchange for
lease liability. Refer
to ASC 230-10-50-3 and 50-4.
33. We note that one of the significant inputs in the Black-Sholes model is
the estimated fair
value of your common shares. Please revise to disclose the estimated fair
value of the
common shares at each common stock warrant valuation date.
Exhibits and Financial Statement Schedules, page II-3
34. We note that you intend to file an Advisory Agreement by and between the
registrant and
ChemBridges LLC, dated October 27, 2021 as exhibit 10.8 to the
registration statement.
Please include a description of the Advisory Agreement in the prospectus.
General
35. Please provide us with supplemental copies of all written communications,
as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
have presented or expect to present to potential investors in reliance on
Section 5(d) of the
Securities Act, whether or not you retained, or intend to retain, copies
of those
communications.
You may contact Ibolya Ignat at 202-551-3636 or Kevin Kuhar at
202-551-3662 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Conlon Danberg at 202-551-4466 or Christopher Edwards at 202-551-6761
with any
other questions.
Sincerely,
FirstName LastNamePaul Mann
Division of
Corporation Finance
Comapany NameASP Isotopes Inc.
Office of Life
Sciences
June 7, 2022 Page 9
cc: Mr. Donald Ainscow, Esq.
FirstName LastName