Corresp
VIA EDGAR AND BY HAND
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.W.
Washington, D.C. 20549 January 24,2011
Attention: Ms. Kate Tillan
Re: Metalink Ltd.
Form 20-F for the fiscal year ended December 31, 2009
Filed June 30, 2010
FILE NO. 0-30394
Dear Ms. Tillan:
We are writing in response to the comments of the Staff of the Division of
Corporation Finance of the Securities and Exchange Commission (the "COMMISSION")
that were contained in your letter dated December 22, 2010 (the "COMMENT
LETTER") regarding the Annual Report on Form 20-F of Metalink Ltd. (the
"COMPANY" or "WE") filed with the Commission on June 30, 2010 (the "ANNUAL
REPORT") and further to our initial response letter to the Staff's comments,
dated December 14, 2010 (the "FIRST RESPONSE Letter").
We are filing with the Commission via EDGAR concurrently herewith Amendment
No. 1 to the Annual Report ("AMENDMENT NO. 1"). Amendment No. 1 reflects certain
changes that respond to comments No. 1 and 2 in the Comment Letter.
Please note that, as discussed with you, the due date of this response
letter was extended until January 24, 2011.
Set forth below are the headings and text of the comments raised in the
Comment Letter, followed by the Company's responses thereto.
Ms. Kate Tillan
January 24, 2011
Page 2
FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
ITEM 15. CONTROLS AND PROCEDURES, PAGE 90
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES, PAGE 90
1. PLEASE REFER TO PRIOR COMMENT 1. PLEASE ADDRESS THIS COMMENT IN YOUR
AMENDMENT TO YOUR FORM 20-F.
RESPONSE
See the revised disclosure in Amendment No. 1.
INTERNAL CONTROL OVER FINANCIAL REPORTING, PAGE 91
2. PLEASE REFER TO PRIOR COMMENT 2. WE NOTE YOUR RESPONSE TO OUR COMMENT
REGARDING YOUR DISCLOSURE OF THE CONCLUSION ON THE EFFECTIVENESS OF
THE INTERNAL CONTROL OVER FINANCIAL REPORTING AS OF DECEMBER 31, 2007.
AS THE CONCLUSION REGARDING THE EFFECTIVENESS OF YOUR INTERNAL CONTROL
OVER FINANCIAL REPORTING INCLUDED A TYPOGRAPHICAL ERROR, YOU ARE
REQUIRED TO FILE AN AMENDMENT TO THE FORM 20-F TO CORRECT IT.
ACCORDINGLY, PLEASE AMEND YOUR FORM 20-F TO INCLUDE A REPORT OF
MANAGEMENT ON THE COMPANY'S INTERNAL CONTROL OVER FINANCIAL REPORTING,
INCLUDING MANAGEMENT'S ASSESSMENT OF THE EFFECTIVENESS OF THE
COMPANY'S INTERNAL CONTROL OVER FINANCIAL REPORTING AS OF DECEMBER 31,
2009, AS REQUIRED BY ITEM 308T(A) OF REGULATION S-K AS PREVIOUSLY
REQUESTED.
RESPONSE
See the revised disclosure in Amendment No. 1.
CONSOLIDATED FINANCIAL STATEMENT, PAGE F-1
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES, PAGE F-9
M. STOCK-BASED COMPENSATION, PAGE F-12
3. PLEASE REFER TO PRIOR COMMENT 4. WE NOTE YOUR RESPONSE TO OUR COMMENT
THAT YOU UTILIZED SPECIFIC PARAMETERS AS PART OF YOUR BLACK-SCHOLES
OPTION PRICING MODEL AND NOT A RANGE OF INPUTS. ACCORDINGLY, PLEASE
REVISE FUTURE FILINGS TO REMOVE THE DISCLOSURE DISCUSSING "WEIGHTED
AVERAGES" AND PROVIDE DISCLOSURES OF THE SIGNIFICANT ASSUMPTIONS USED
AS REQUIRED BY ASC 718-10-50-2(F)(2).
Ms. Kate Tillan
January 24, 2011
Page 3
RESPONSE
The Company confirms that it will revise future filings to remove the
disclosure discussing "weighted averages" and provide disclosures of
the significant assumptions used as required by ASC 718-10-50-2(F)(2).
4. YOU RESPONSE TO PRIOR COMMENT 5 NOTES THAT YOU USE THE YIELDS ON US
DOLLAR DENOMINATED GOVERNMENT BONDS WITH MATURITIES COMMENSURATE WITH
THE EXPECTED TERM OF THE AWARD. PLEASE EXPAND YOUR RESPONSE TO EXPLAIN
HOW YOU CONSIDERED ASC 718-10-55-28 WHICH NOTES THAT FOR ENTITIES
BASED IN JURISDICTIONS OUTSIDE THE UNITED STATES, THE RISK-FREE
INTEREST RATE IS THE IMPLIED YIELD CURRENTLY AVAILABLE ON ZERO-COUPON
GOVERNMENT ISSUED DENOMINATED IN THE CURRENCY OF THE MARKET IN WHICH
THE SHARE (OR UNDERLYING SHARE), WHICH IS THE BASIS FOR THE INSTRUMENT
AWARDED, PRIMARILY TRADES, WHICH YOUR RESPONSE NOTES IS THE U.S.
DOLLAR. AS SUCH, SINCE YOU USED A CLOSED-FORM MODEL, PLEASE TELL US
WHETHER YOU USED THE IMPLIED YIELD ON U.S. TREASURY ZERO-COUPON ISSUES
WITH A REMAINING TERM EQUAL TO THE EXPECTED TERM.
RESPONSE
The Company used U.S. treasury zero-coupon issues with remaining time
equal the expected term. In cases where the Company found no exact
match between the remaining and expected term, the Company
approximated the rate by using weighted average of issues most close
to the expected term in accordance with ASC 718-10-55-28. The Company
confirms that it will revise future filings to clarify the foregoing.
5. FURTHER TO YOUR RESPONSE TO PRIOR COMMENT 6, PLEASE EXPLAIN WHY THE
EXPECTED LIFE OF YOUR OPTION IN 2007, 2008 AND 2009 IS 2.43, 2.51 AND
2.97 YEARS GIVEN THAT YOU DISCLOSE THE OPTIONS VEST OVER PERIODS UP TO
5 YEARS. REFER TO ASC 718-10-55-31(A) AND QUESTION 3 OF SAB TOPIC
14.D(2). PLEASE ALSO TELL US WHETHER THE OPTION TERMS ARE PLAIN
VANILLA OPTION. REFER TO QUESTION 6 OF SAB TOPIC 14.D(2).
Ms. Kate Tillan
January 24, 2011
Page 4
RESPONSE
The Staff is advised that all our outstanding stock options are plain
vanilla options with characteristics as described in Question 6 of SAB
Topic 14.D(2). Our stock options are (i) granted at the money, (ii) in
case of termination of employment prior to vesting, the grants are
forfeited, (iii) termination after vesting gives employee short time
to exercise, and (iv) the options are non-transferable. We also
confirm that no stock option had expected term shorter than the
vesting period in accordance with ASC 718-10-55-31(A) and Question 3
of SAB Topic 14.D(2). Our disclosure on vesting of stock options being
up to 5 years includes options granted throughout our history and not
just recently, while the information on expected term relates only to
our recent grants that were characterized by much shorter vesting
periods, mainly 1 to 2 years and in some cases 3 years and contractual
life of 4 years. Expected life disclosed is a weighted average of
expected term used in our calculation for all grants throughout the
year. In future filings, we will clarify our disclosure to explain the
changes made to our grants characteristics.
NOTE 8 - SHORT-TERM LOAN, PAGE F-21
6. PLEASE REFER TO PRIOR COMMENT 9. PLEASE REVISE FUTURE FILINGS TO MORE
CLEARLY DISCLOSE THE TERMS OF THE WARRANT THAT REQUIRED YOU TO
CLASSIFY THEM AS A LIABILITY CONSISTENT WITH THE INFORMATION PROVIDED
IN YOUR RESPONSE.
RESPONSE
The Company confirms that it will revise future filings to more
clearly disclose the terms of the warrants that required the Company
to classify them as a liability consistent with the information
provided in our First Response Letter.
7. PLEASE REFER TO PRIOR COMMENT 10. WE NOTE YOUR RESPONSE TO OUR COMMENT
THAT YOU TREATED THE SECOND AMENDMENT TO THE LOAN AGREEMENT AS AN
EXTINGUISHMENT. PLEASE REVISE FUTURE FILINGS TO MORE CLEARLY DISCLOSE
YOUR ACCOUNTING FOR THIS TRANSACTION AND QUANTIFY THE AMOUNTS
SPECIFICALLY RELATED TO THE TRANSACTION RECORDED IN YOUR FINANCIAL
STATEMENTS.
RESPONSE
The Company confirms that it will revise future filings to more
clearly disclose our accounting for this transaction and quantify the
amounts specifically related to the transaction recorded in our
financial statements.
Ms. Kate Tillan
January 24, 2011
Page 5
****
We appreciate your comments and welcome the opportunity to discuss with you
our response provided above. If you have any questions or comments regarding the
foregoing, please do not hesitate to contact me at 972-54-489-4440 or Mrs. Neta
Eshed, General Counsel, at 972-54-950-9933.
Very truly yours,
Oren Brooks
Chief Financial Officer
cc: Gerald L. Baxter, Esq. (Greenberg Traurig LLP) Ido Zemach, Adv. (Goldfarb,
Levy, Eran, Meiri, Tzafrir & Co.)