MAIL STOP 3561
May 19, 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
Amendment No. 1 Filed April 12, 2005
Dear Mr. McLeary:
We have reviewed your amended 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.
Summary, page 5
1. You state in the second paragraph on page 5 that you intend to
"establish distribution agreements with major independent medical
device distributors." Clarify whether any such agreements exist
and
with whom. In the business section, disclose the material terms
of
these agreements and file as exhibits.
2. The section titled "Competitive Advantage" is overly
promotional
and repeats disclosure located elsewhere. Please delete this
section
from the summary.
Risk Factors, page 7
3. Please avoid the generic conclusions 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," "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, 10, 11 and 15. See also prior comment 15.
4. Please indicate in risk factor 14 the reason why initial sales
of
the Gynecone device will originate in Asia. We note in the
narrative
that your flexibility may be somewhat limited by agreements you
have
entered into with your foreign distributors. Elaborate on this
limitation, disclose the material terms of these agreements and
file
the same as exhibits.
5. Reference is made to risk factor 15. Since all companies rely
on
their key personnel, clearly explain how this specific risk
applies
to your company.
6. We note your response to comment 17. After further
consideration
it continues to appear to us that the risk factors addressing
future
clinical studies or physicians associations announcing positions
and
rapidly evolving technology and intense competition are generic in
nature and equally applicable to similarly situated businesses.
Please relocate the disclosure later in the prospectus.
Directors, Executive Officers, Promoters and Control Persons, page
19
Compensation
7. Under "Significant Personnel," please identify the third
parties
with whom you conduct your business, the services offered by the
same, and the cost to the company for these services. File all
agreements as exhibits. If none exist, so state.
Preferred Stock, page 21
8. Briefly indicate the amount of preferred stock outstanding.
Description of Business, page 23
9. In prior comment 33, we expressed our confusion over your
business
description, which we reiterate. After further reading, it
appears
you are a licensee of the Gynecone, yet you do not identify
yourself
as such. It also appears that you will rely entirely on third
parties to manufacture and distribute this product, yet you
describe
yourself as being "focused on the distribution and marketing of
medical pessary devices" with a plan of operation that seeks
"funding
to develop and market the Gynecone...." It does not appear that
you
have more than one product, so we do not understand reference to
"devices." It also does not appear you are the entity developing
the
Gynecone, so we do not understand reference to "develop."
Finally,
it does not appear you are the entity distributing the device, so
we
do not understand reference to "distribution," and to the extent
you
do undertake marketing activities, these efforts actually appear
to
be performed by the distributor. Fully address each of these
matters
to present clear and accurate disclosure of your business
description
and your plan of operation.
10. We remain unclear as to the current status of the Gynecone
device. In this regard, we note that you have developed 500
prototypes of the Gynecone device, however this does not
adequately
address the exact status of the device and when you expect to
bring
it to market. Fully discuss and disclose all efforts undertaken
to
date and those that remain. See prior comment 34.
11. We note that you intend to finalize a distribution agreement
with
an established medial device distribution company in the
Philippines
by June 2005. Update as to the status of this agreement, fully
discuss its material terms, identify the distributor and file the
agreement as an exhibit. To the extent the agreement has not been
finalized, you do not know its terms, or you do not know the
identity, revise the disclosure appropriately.
12. Under MDMI Manufacturing Agreement on page 24, you state that
you
have agreed to indemnify MDMI for errors or defects arising from
specifications provided by you to MDMI relating to the design of
the
Gynecone device. We do not understand. Since MDMI designs and
manufactures the device, why would you provide specifications? In
this regard, we also refer to your response 36.
13. Refer to the disclosure under Revenue Model on page 26.
Clarify
whether the $60-$157 price for vaginal cones is on a per unit
basis.
Explain "cost plus" and the basis for your assertion that that the
labor component will be strictly controlled. Finally, it is not
clear exactly how much the Gynecone will cost the company per
unit.
It appears that materials may run $5.17 and labor $10.17, but it
is
not clear what packaging or sterilization costs will be. We also
do
not know what the distribution cost or marketing cost will be per
unit.
14. Under Marketing Strategy on page 26, you refer to "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. See prior comment 40.
15. We note that your distributors are expected to obtain all
required regulatory approvals to market the Gynecone device. To
the
extent they are unable to do so, this would appear to create a
material uncertainty. Consider addressing as a risk factor.
16. Under "Marketing Strategy" on page 26, you refer to
"promotional
activities" you will engage in both domestically and
internationally.
Fully elaborate on these activities. See prior comment 41.
17. Under "Intellectual Property" on page 27, you state that your
intellectual property consists of the trade name "Gynecone."
Disclosure on page 30 states you have no intellectual property.
Please reconcile. See prior comment 42.
Management`s Discussion and Analysis or Plan of Operations, page
32
18. Please update the Milestones and Objectives table as
appropriate.
In doing so, clarify and update "validation of the proposed
Gynecone
device" in Phase I. In Phase II, explain and elaborate on
"Initial
clinical evaluation and refinement of working prototypes." Update
and elaborate on "marketing in Philippines to secure distribution
channels and generate leads" and explain to what "Protection of
intellectual property" refers. You state in Phase II that you
expect
to finalize distribution agreements in the Philippines between
July
and September 2005. Disclosure elsewhere suggests June 2005.
19. Please elaborate on Professional Fees and Travel Expenses in
the
table beneath Milestones and Objectives. What do these fees and
expenses entail?
20. Provide your available cash balance as the most recent date.
It
appears from the tables that your expenditures over the next 12
months will total $75,000, including the fees associated with this
offering. The disclosure suggests that your expenses will total
$75,000, less $10,000 in offering expenses already paid. You go
on
to state that you presently have funds sufficient to pursue your
stated plan of operation. Given that your available cash balance
($64,780) is less than your planned expenditures, we do not
understand this statement.
21. You indicate in the business section that you will spend
$25,000
on research and development over the next twelve months. Revise
your
disclosure to include this expenditure in your Milestones and
Objections table. You currently indicate that you will expend
$20,000 for R&D activities, selecting sites for release of
commercialized product and developing packaging for the Gynecone
device.
Market for Common Equity and Related Stockholder Matters, page 35
22. We note your use of an imbedded list in this section. Revise
the prospectus to delete the use of all imbedded lists. Rather
than
include these lists in paragraph form, break them out into bullet
points, with one bullet point for each item listed.
Financial Statements
License Agreement
23. Please expand Note 1(g) to disclose the significant
assumptions
used to estimate future undiscounted cash flows under the license
agreement. Also disclose the expected useful life of the license
agreement and the method of amortization that will be used.
24. Please provide a note to the interim financial statements
stating
that all adjustments which in the opinion of management are
necessary
in order to make the financial statements not misleading have been
provided. See Instruction 2 to Item 310(b) of Regulation S-B.
Part II
Signatures
25. As required by Instruction 1 to the Signature requirements of
the
Form, the signature of the principal financial officer must be
included. Please include the appropriate signature or title.
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 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) 551-3237. Questions on other disclosure
issues may be directed to William Bennett at (202) 551-3389.
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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