November 3, 2004
B. Steven Springrose
President and Chief Executive Officer
Biotel Inc.
11481 Rupp Drive
Burnsville, Minnesota 55337
Re: Biotel Inc.
Registration Statement on Form 10-SB
Filed October 14, 2004
File No. 0-50914
Dear Mr. Springrose:
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 10-SB
Item 1. Description of Business
General
1. We note your response to prior comment 2 and the additional
disclosure on page 1. Please disclose the business activity of
the
registrant, Biotel Inc., since its incorporation through 1998 when
it
began serving as a non-operating holding company.
2. Refer to our prior comment 6. Update your financial
statements,
as necessary, prior to effectiveness. Refer to the guidance at
Item
310(g) of Regulation S-B.
3. We note your responses to comment 5 and 16. Please file the
agreements if your business is substantially dependent on such
material contracts. See Item 601 of Regulation S-B.
4. Additionally, we note your response to prior comment 53.
Please
be advised that we will issue comments in a separate letter on
your
confidential treatment application.
5. We note your response to prior comment 10. Please discuss the
material terms of the agreement, such as the adjustments and
milestones.
Environmental Matters - Page 5
6. We note your response to prior comment 13 and the additional
disclosure on page 5. Please add appropriate risk factor
disclosure
regarding uncertainty of any future material costs.
7. Additionally, please supplementally clarify the difference
between
an environmental "investigation" and environmental "oversight,"
such
as the effect on potential liabilities.
Risk Factors - Pages 7 to 10
One customer generated a significant portion of our revenues.
- -
Page 6
8. Please amend your risk factor heading to reflect the fact that
two
customers generated, and are expected to generate, a significant
portion of your revenues.
Item 2. Management`s Discussion & Analysis - Pages 10 to 14
Results of Operations
Twelve Months Ended June 30, 2004 and 2003
9. Refer to our prior comment 27. Revise your discussion of net
revenues to quantify, to the extent practicable, the impact of any
significant factors on your revenues. For example, we note your
references to new OEM customers at Braemar and Carolina Medical
but
you do not tell investors how each factor contributed to the
increase
in 2004.
10. Refer to prior comment 29. Tell us more about how you account
for "non-recurring engineering services" sold to customers. How
do
you accumulate and account for these costs? When do you receive
and
recognize the related revenues? Are there any customer acceptance
protocols?
11. Additionally, your use of the term "non-recurring" engineering
activities may be confusing to investors. From your discussion it
appears as though you regularly undertake custom engineering
projects
for your customers. Please revise to eliminate the term "non-
recurring" when describing these engineering activities or tell us
supplementally why the term is properly used.
Liquidity and Capital Resources
12. Expand your discussion to address the reason for significant
changes in your accounts receivable balance at period end.
Discuss
the reasons for the changes and how it impacts your liquidity.
Item 5. Directors and Executive Officers - Pages 16 to 19
Executive Officers and Directors - Page 16 to 18
13. We note your response to prior comment 37. Please provide the
disclosure required by Item 401(b) of Regulation S-B.
Part F/S
Notes to Consolidated Financial Statements - Page F-8
Note 10 - Significant Customer Concentrations - Page F-16
14. Revise to separately disclose the percentage of total revenue
from each customer that accounted for 10% or more of total
revenues
and identify the segment(s) under which these revenues are
reported.
For reference see paragraph 39 of SFAS 131.
Note 12 - Income Taxes - Page F-17
15. We see that during the year ended June 30, 2004 you determined
that the deferred tax asset of $335,667 was more likely than not
to
be realized in subsequent years and eliminated the valuation
allowance of $470,250 established in prior years. Please expand
the
disclosures herein and in Management`s Discussion and Analysis to
address the factors considered by management in determining it is
more likely than not the referenced deferred tax assets as of June
30, 2004 will be realized. Your revisions should address the
factors
outlined in paragraphs 20 to 25 of Statement 109.
* * *
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 this action 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.
You may contact Eric Atallah at (202) 824-5266 or Jay Webb
at
(202) 942-1812 if you have questions regarding comments on the
financial statements and related matters. Please contact Adelaja
Heyliger at (202) 824-5082 or me at (202) 942-1927 with any other
questions.
Sincerely,
Thomas A. Jones
Senior Attorney
cc (via fax): Rick Hauser, Esq. Gray, Plant, Mooty, Mooty &
Bennett, P.A. 612.632.4095
Biotel Inc.
November 3, 2004
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