MAIL STOP 05-11
March 9, 2005
Mr. Mark A. McLeary
Chief Executive Officer
Med-Tech Solutions, Inc.
Suite 2200
1177 West Hastings Street
Vancouver, B.C., V6E 2K3
Re: Med-Tech Solutions, Inc.
Registration Statement on Form SB-2
File No. 333-122352
Filed January 28, 2005
Dear Mr. McLeary:
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.
General
1. We note certain companies also named Med-Tech Solutions, Inc.
are
engaged in similar industries. Please include information to
eliminate any possible confusion.
2. Please supplementally provide any artwork or photographs that
are
to be inserted in your prospectus. We may have comment on its
contents. Please note that inside front cover graphics should be
clear illustrations of your product or business with concise
language
describing the illustrations.
3. The word "offering" is capitalized throughout the prospectus.
As
appropriate, please revise so that the word appears in lower case.
4. You refer to Med-Tech Solutions as the "Corporation" in your
prospectus. The term "Corporation" is a vague and abstract term.
Use your actual company name, a shortened version of it, or the
pronoun "we" or "us" throughout your document to refer to your
company.
5. We note that you are registering 5,100,000 shares for resale on
your registration statement. This represents approximately 50% of
your total outstanding shares. Generally, we view resale
transactions of this amount as an offering "by or on behalf of the
issuer" for purposes of Rule 415(a)(4) of Regulation C. Under the
rule, equity securities offered by or on behalf of the registrant
cannot be sold "at the market price" unless the offering satisfies
the requirements set forth in the rule. Your offering does not
appear to meet the requirements. Please revise your registration
statement to price all securities offered for the duration of the
offering, and indicate this specific price where appropriate in
the
prospectus. We may have further comment.
6. We note your use of the terms "License", "Product",
"Manufacturing
Agreement" and "Price" in the prospectus. Revise to eliminate the
defined terms from your document.
Prospectus Cover Page
7. Please advise whether the caption immediately above "Table of
Contents" appears on the outside back cover page of the
prospectus.
It is not clear from the Edgarized version.
8. Please relocate the dealer prospectus delivery obligation to
the
outside back cover page of the prospectus. See Item 502(b) of
Regulation S-B.
9. Please revise this page to limit the information to that
required
by Item 501 of Regulation S-B. In particular, please move the
third
and fourth sentences in the paragraph indicating your common stock
is
not traded on any market from the cover page to a section later in
your prospectus.
Summary, page 5
10. The introductory paragraph to your summary states that the
summary does not contain all of the information that may be
important. A summary by its very nature is not required to
contain
all of the detailed information required in a prospectus.
However,
if you include a summary in your prospectus, it must be complete.
Please revise.
11. Please disclose that your auditors have expressed substantial
doubt as to your ability to continue as a going concern. Indicate
as
well the fact that all cash available to date has been raised
through
the issuance of your securities.
12. We note your cross-reference to the "Description of Business"
and
"Risk Factors" sections. Revise the registration statement to
delete
the use of cross-references from the forepart of the prospectus
except for the cross-reference to the risk factors on the cover
page.
13. The summary should not, and is not required to contain the
detailed information in the prospectus. See Item 503 of
Regulation
S-B and Release No. 33-7497. For example, the detailed
description
in "The Offering" section of the minimum number of shares to be
sold
in this offering, common stock outstanding before and after the
offering, use of proceeds and the risk factors are unnecessary
since
you describe them later in the prospectus.
Risk Factors, page 7
14. Clarify in the first paragraph of this section that you
discuss
all "material" risks here.
15. Please avoid the generic conclusion you reach in several of
your
risk factor narratives and subheadings that the risk could
"adversely
affect" your business, financial condition, results of operations
or
ability to raise capital or would "negatively affect" or have a
"material adverse affect" on the same. Instead, replace this
language with specific disclosure of how your business, financial
condition and operations would be affected. See, for example,
risk
factors 1-6 and 9-12.
16. In several of your risk factor subheadings, you allude to a
risk
but do not clearly state the material risk to investors.
Generally,
the subheading should clearly state the particular risk and the
consequences that may result if that risk should occur. Revise
your
subheadings to present the risks you are addressing in concrete
terms. For example, we note that risk factors 3-6, 13, 14, 17 and
20
do not clearly state the risks and potential consequences to an
investor and should be revised accordingly.
17. Some of your risk factors are too broad and generic and should
be
revised to state the material risk that is specific to your
company.
As a general rule, a risk factor is probably too generic if it is
readily transferable to other offering documents or describes
circumstances or factual situations that are equally applicable to
other similarly situated businesses. For instance, risk factors
3,
10, 13, 14, 18, 20 and 22 should be revised, deleted or moved to
another section of the prospectus as appropriate.
18. We note that your sole officer and director controls
approximately 49.5% of your common stock. Please address the
risks
posed by the fact that this person will be able to significantly
influence elections and change-in-control situations.
19. It appears Mr. McLeary will only contribute 8-10 hours per
week
to company business. The disclosure also indicates that you have
no
employees and do not plan to hire any employees over the next 12
months. Given these constraints, we do not understand how you
will
be able to implement your business plan of manufacturing,
marketing
and distributing medical devices. Please address the risk this
poses.
20. Your sole officer and director does not appear to have any
prior
experience manufacturing, marketing or distributing medical
devices.
As noted, you do not intend to hire any employees over the next 12
months. Please address the risks posed by the fact that no person
working directly within your organization has any experience in
this,
or any other similar, industry.
21. Disclosure suggests that you intend to engage in international
sales and marketing. Please disclose the international markets
where
you intend to conduct these operations and the risks specific to
each
area, including currency translation and what efforts you intend
to
undertake to minimize the same.
22. The risk factors need to be set forth in the order of
materiality. In this regard, you must more prominently disclose
the
risk factor entitled "Failure to obtain necessary government
approvals for new products or for new applications for existing
products would mean we could not sell those new products, or sell
any
existing products for those new applications." Additionally, we
do
not understand your reference to existing products in the risk
factor
when you indicate that you have not developed the Gynecone device.
Determination of Offering Price, page 14
23. Supplementally advise the reason why the shares issued in
November 2004 were offered at a price 98% greater than the shares
offered just 2 months prior in September 2004.
Selling Security Holders, page 14
24. Please indicate if any of your selling stockholders are broker
dealers or affiliates of broker-dealers. If the latter, please
include a representation that each affiliate: (1) purchased your
securities in the ordinary course of business and (2) at the time
of
purchase of the securities to be resold, the seller had no
agreements
or understandings, directly or indirectly, with any person to
distribute the securities. If you cannot provide this
representation, please advise supplementally.
25. We note that the shares issued in both September and November
2004 were offered pursuant to the exemption afforded under
Regulation
S. Regulation S requires that all offers be made to non-US
persons,
as defined. Please supplementally provide us with the address for
each selling shareholder. We may have further comment.
Plan of Distribution, page 18
26. We note that the company is paying all of the fees and
expenses
of the offering. Clearly state the amount of estimated offering
expenses.
Directors, Executive Officers, Promoters and Control Persons, page
19
27. Please disclose the business of McLeary Capital Management,
Inc.
28. We note that Mr. McLeary is prepared to adjust the amount of
time
he is willing to devote to company business with respect to
capital
raising and the plan of distribution. Please disclose the maximum
amount of time he is willing to devote on a weekly basis to these
activities and clarify whether he is also willing to do so in
furtherance of your actual plan of operation.
Compensation
29. We note that you do not pay your officers and directors any
salary or consulting fee, but you anticipate doing so should
revenues
exceed expenses. Please disclose what your anticipated
compensation
package will be should revenues exceed expenses.
30. Under "Significant Personnel," please identify the consultants
you have engaged or plan to engage, the services performed or to
be
performed, the extent you rely upon consultants and the terms of
all
agreements. File the same as exhibits.
31. We note your statement that you presently do not pay your
directors or executive officers any salary or consulting fee.
Please
revise your discussion to indicate, if true, that the compensation
discussion addresses all compensation awarded to, earned by, or
paid
to the company`s named executive officer for the fiscal year ended
December 31, 2004.
Interests of Named Experts and Counsel, page 22
32. We note reference to subsidiaries in the introductory
paragraph.
Disclosure on page 30 indicates you do not have any subsidiaries.
As
such, please delete this reference or advise.
Description of Business, page 24
33. Throughout the prospectus, you describe yourself as focused on
the development and marketing of medical pessary devices and on
the
manufacturing, marketing and distribution of the Gynecone device.
The staff is confused by this business description, however, since
it
does not appear that you have or will develop any medical devices
nor
does it appear that you will actually manufacture or distribute
the
Gynecone device. Indeed, it appears that these functions will be
performed by independent third parties. Please clarify your
business
description throughout so that it is clear exactly what you intend
to
do and how best to describe this activity.
34. We are unclear as to the current status of the Gynecone
device.
For example, we note that you have obtained a license from MDMI to
manufacture, market and distribute the device. We also note that
you
have entered into a manufacturing agreement with MDMI. Based on
your
plan of operations, however, it appears that R&D activity is
ongoing
to develop a prototype and that clinical trials have yet to
commence.
Based on this disclosure, it is not clear whether the Gynecone is
ready for manufacture, whether clinical trials have been performed
or
even whether a prototype exists. Please clarify.
35. We note your statement that "Gynecone`s unique smooth edged
egg
design ... is expected to be the safest and most cost effective
products available." We also note other company statements that
appear promotional, rather than factual, and these statements
should
be revised or removed. Please provide disclosure of the
reasonable
basis for such opinions or delete the statements. If a reasonable
basis cannot be provided, the statements should be removed.
36. Under "Manufacturing Agreement," we note that MDMI has agreed
to
manufacture and test the device to the uniform quality standards
established by you which meet your specifications. Please
disclose
how you arrived at these standards and specifications given your
lack
of experience in this field.
37. Under "Action" on page 25, please provide the basis for your
statement beginning with "As opposed to the Milex `Kegal Cone`....
In addition, the last sentence of this paragraph is overly
promotional and should be toned down.
38. Under "Revenue Model" on page 26, please disclose what the
labor
costs will be per piece with large volumes.
39. Under "Revenue Model" on page 26, you state that the target
price
will be $25 for the device. You also state that the Milex cone
costs
$150 for a 6-pack and that the Gynecone will be offered at a lower
cost. We do not understand this position since 6 Gynecone devices
would also cost $150.
40. Under "Marketing Strategy" on page 26, you refer to your
"market
share predictions" and your "selected geographic area." Please
elaborate on each. We note that you intend to establish
distribution
agreements. Clarify whether any such agreements exist and file as
exhibits. In the plan of operation section, discuss what the terms
of
these agreements are/will be and the costs and/or expense (e.g.
commission, fee) associated with the same.
41. Under "Marketing Strategy" on page 26, please elaborate on the
"clinical trials and promotional activities" you will engage in
both
domestically and internationally. Fully discuss the international
aspects of your business plan here and in the plan of operation.
42. Under "Intellectual Property" on page 27, you state your
intellectual property consists of the trade name "Gynecone."
Disclosure on page 30 suggest you have no patents or trade names.
43. We note the various market and scientific studies under
"Industry
Background." Please provide citations to all such studies and
provide the staff with marked copies of the same. We assume that
all
referenced reports are generally available at no charge or for a
de
minimis payment. Please advise.
44. Under "Pelvic Muscle Exercises" on page 29, you reference
continued exercise as a benefit. This seems like a drawback. You
also note that mild symptoms sustain the greatest improvement. To
the extent this is not the case with more severe symptoms, please
consider disclosing as a drawback.
Management`s Discussion and Analysis or Plan of Operations, page
31
45. We note that you do not anticipate generating revenues until
you
complete the marketing, promotion and development of the Gynecone
device. Please indicate when you expect to complete these
activities.
46. Please provide the actual months during which you expect to
complete your various milestones.
47. Please disclose the selected markets where you intend to begin
initial marketing as disclosed under Phase II. Separately discuss
the reasons why you have chosen the initial launch of your
product
outside of the US. In doing so, address the time and costs
involved
to secure FDA-like compliance in these countries.
48. Reference is made to the $35,000 planned expenditures over the
next 12 months on page 32. You allocate $10,000 to marketing
expenses. Is this in addition to the marketing expenses listed
under
Phase II? We also notice under "Liquidity and Capital Resources"
on
page 33 that you will require a further $15,000 to implement an
advertising campaign. When do you anticipate undertaking this
campaign and how will you finance the same?
49. Under "Future Financings" on page 33, please estimate the
amount
of financing you will need to raise after 12 months.
50. We note your statement in the Registration Rights section that
"in the near future, in order for us to continue with the
development
of our business, we will need to raise additional capital."
Reconcile that statement with your other statements indicating
that
you presently have sufficient cash to fund your proposed
expenditures
for the next twelve months.
Certain Relationships and Related Transactions, page 34
51. We note that the President and Director of the company paid
expenses on behalf of the company and the advance is outstanding
as
of October 31, 2004. Supplementally advise us of the amount of
expenses paid on behalf of the company. We may have further
comment.
Financial Statements
52. Please revise Note 1 to disclose the company`s fiscal year-
end.
53. Revise the footnotes to disclose the company`s accounting
policies relating to the license agreement, including the method
of
amortization. Also, please tell us supplementally the basis for
capitalizing the amount paid for the license agreement, given the
company does not have a product that has received the regulatory
approvals necessary for commercial sale.
54. Your attention is directed to Item 310(g) of Regulation S-B
and
the possible need for updated financial statements and related
disclosures.
55. You are reminded that a currently dated consent of the
independent accountants with typed signature should be included in
any amendment to the registration statement.
Where You Can Find More Information
56. Please provide the information required by Item 101(c)(1) &
(2)
of Regulation S-B.
Part II
Item 27. Exhibits
57. Please revise your legality opinion to indicate that the
opinion
opines upon Nevada law including the statutory provisions, all
applicable provisions of the Nevada constitution and all reported
judicial decisions interpreting those laws.
Closing Comments
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
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
for
an informed decision. 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.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness 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 connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
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.
Any questions regarding the accounting comments may be directed
to
Maureen Bauer at (202) 942-1824. Questions on other disclosure
issues may be directed to William Bennett at (202) 942-0135.
Sincerely,
John Reynolds, Assistant
Director
Office of Emerging Growth
Companies
cc: Stephen F.X. O`Neill, Esq.
Fax (360) 332-2291
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Med-Tech Solutions, Inc.
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