HART & TRINEN, LLP
ATTORNEYS AT LAW
1624 Washington Street
Denver, CO 80203
William T. Hart, P.C. ________ Email: harttrinen@aol.com
Donald T. Trinen Facsimile: (303) 839-5414
(303) 839-0061
September 5, 2006
Scott Anderegg
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549
Re: Tian'an Pharmaceutical Co., Ltd.
Registration Statement on Form SB-2
File No. 333-135434
This office represents Tian'an Pharmaceutical Co., Ltd. (the "Company").
This letter contains the Company's responses to the comments received from the
Staff by letter dated July 28, 2006. The paragraph numbers in this letter
correspond with the numbered paragraphs in the Staff's comment letter.
Page
Number
C-1 Comment complied with. 29
C-2 Comment complied with. 3
C-3 The Company acquired the PRC corporation by means
of a "reverse triangular merger." In this type of
merger, the Company formed a wholly-owned subsidiary
and then merged the PRC corporation into the subsidiary.
The PRC corporation was the survivor of the merger and
became a wholly owned subsidiary of the company.
We have modified the disclosure in the prospectus to
remove the reference to the "merger" and to
instead refer to the "acquisition" of the PRC
corporation. The technical process used to acquire
the PRC corporation is not important to a potential 4
investor. What is important is that the PRC 11
corporation is a wholly-owned subsidiary of the Company. 15
However, for any potential investor that wants to review the technical
aspects of the transaction, the Plan of Merger has been filed as an exhibit to
the registration statement.
C-4 Comment complied with. 4
C-5 Comment complied with. 4
C-6 The purpose of the disclosure which is the
subject of this comment is to define certain
terms as they appear in the prospectus. As such,
the most appropriate place is at the forepart of
the prospectus. We have used this disclosure in a
registration statement on Form SB-2 of New Taohauyuan
Cultural Tourism Co., Ltd. (file no. 333-121187).
This registration statement received a full review
and the staff did not have any problems with having
the disclosure which is the subject of this comment as
part of the prospectus summary. N/A
C-7 Comment complied with. 8
C-8 As explained in the section of the prospectus captioned
"Business - Sales and Distribution", the Company does not
believe that the loss of any one distributor will result
in a material decrease in the Company's sales. Accordingly,
the loss of a distributor is not a risk. Obviously, a loss
of most of the Company's distributors would likely have a
material adverse effect on the Company's operations.
However, this is a risk common to any business which uses
distributors. N/A
C-9 The requirement to set aside statutory reserves is
not a risk but a fact. The PRC requirement to set
aside statutory reserves is no different then the
requirement of U.S. employers to pay income taxes
or match the Social Security and Medicare contributions
of their employees. N/A
C-10 Comment complied with. 6
C-11 Comment complied with. 7
C-12 As explained in the MD&A section, the results of
operation for 2005 are not comparable to 2004 since
the Company began using its own manufacturing facility
in May 2005.
The results of Operations for the six months ended
June 30, 2006 are not comparable with the prior period
since: 12
o The Company began sales of its second product
in January 2006 and
o During the first three months of 2005 the Company
did not generate any sales as it was focusing on
obtaining GMP compliance.
C-13 For the reasons explained above, it is difficult to
compare the year ended December 31, 2005 with the
prior period. We have expanded the disclosure regarding
the use of the Company's manufacturing facility but
are unable to identify any particular "items of the
manufacturing facility" that led to an increase in the
gross profit percentage. 12
C-14 Comment complied with. 12
C-15 The internal plans to generate sufficient capital to
market the Company's products and to expand its product
line are disclosed on page 13 of the prospectus. 13
C-16 The Company's Statement of Cash Flows is uncomplicated.
Other than the fact that the Company's operations generate
cash, the Company cannot provide more detail regarding the
subsitive reasons for its sources and uses of cash. 14
C-17 Comment complied with. 14
C-18 Comment complied with. 13
C-19 Comment complied with. 14
C-20 Comment complied with. 15
C-21 Comment complied with. 15
C-22 The reference to BioLife has been removed. 15
C-23 Comment complied with. 15
C-24 Comment complied with. 16
C-25 Comment complied with. 18
C-26 Comment complied with. 19
C-27 Comment complied with. 16
C-28 We have modified the disclosure which is the
subject of this comment to state that the Company
will not be taxed as a controlled foreign
corporation. Since the Company will not be a
controlled foreign corporation, it will not
incur any U.S. Federal income tax. A tax opinion
is not required by the instructions to Form SB-2
or Regulation S-B. 21
C-29 Comment complied with. 25
C-30 Comment complied with. 24, 25
C-31 The purpose of the transaction was to create a
holding company in Nevada which would have the PRC
corporation as a wholly-owned subsidiary. After
the transaction the percentage ownership of the
shareholders in the Nevada corporation was
identical to their percentage ownership in the PRC
corporation. For financial reporting purposes, and
from a general economic standpoint, there was no
value associated with this transaction. N/A
C-32 Comment complied with. 27
C-33 None of the shareholders have the right to acquire
any additional shares from the Company. N/A
C-34 Gelin Healthy Production is an equity investor
as opposed to an equity investee. As a result,
Item 310(b)(2)(iii) of Regulation S-B is not
applicable. N/A
C-35 Comment complied with. 30
C-36 This is to confirm our understanding that short
sales of common stock "against the box" that are
covered with shares subject to the Company's
registration statement cannot be made before the
registration statement becomes effective. N/A
C-37 Comment complied with. 31
38. The non-controlling interest in the stockholders'
equity section of the financial statements represents
the 3.7% of Xi' An Tian'an Pharmacy Marketing Co.,
Ltd., which is not owned by the Company. This transaction
is discussed in Note 7 to the financial statements and
in Note 2 under "Principles of Consolidation" as a Note 2,
significant accounting policy. Note 7
39. The 100 shares were issued for the sole purpose of
having a shareholder of the Company approve the
acquisition of the PRC company. N/A
40. The financial statements have been revised to separate
the acquisition and disposal of fixed assets and to
reflect each on a gross basis. In 2004, only $805 was Statement
attributable to disposal, and there were no disposals of
in 2005. Cash Flows
41. Both the Company and the PRC corporation were under
common control at the time of the acquisition. The
Company treated the acquisition as a reverse merger.
The Company recorded the assets at fair value which
was equal to the carrying amounts of the assets and
liabilities. No goodwill was recorded. As the trans-
action was between entities under common control,
the acquisition was accounted for under the purchase
method of accounting with the net assets transferred
at their carrying amount. The carrying amount and fair
value were the same. Note 1
42. The types of expenses included in general and
administrative fees are discussed in the Management's
Discussion and Analysis section of the prospectus.
The Company has included in this amount only expenses
related to operating activities. Expenses related to
the production of inventory are included in cost
of sales. N/A
43. The revised financial statements disclose the types
of expenses included in advertising expense.
Advertising expense includes marketing brochures as
well as displays in retail outlets in the PRC. Note 2
44. In the revised financial statements the Company has
modified its disclosure in accordance with SFAS 142. Note 2
45. As disclosed in Note 3, the Company has not acquired
any land use rights that it is currently amortizing.
A sentence has been added in the policy disclosure to
further clarify this point. Additionally, the Company
believes that since any land use rights are part of its
capitalized expenditures, they would be considered
fixed rather than intangible assets. There are none of
these costs, so a reclassification is not necessary. Note 2
46. The $594,574 represents the cost of Level 10 at the
International Trade Centre, No. 196 Xiaozhai East Road,
Xi'an China. The Company is renting this space to a
third party. N/A
47. In the revised financial statements the disclosure
required by FASB 109 has been clarified. The Company
did not have any temporary or permanent differences
nor a valuation allowance. The Company has provided
a reconciliation for each period of the current tax
provision. There is no deferred tax provision. Note 6
48. The Company has provided a tax reconciliation to agree
the current provision to the taxable income. Note 6
49. This $60,646 was not a permanent difference and has
been revised in the financial statements. The $60,646
was just a payment made in 2006 for 2005 taxes and is
included in accrued taxes on the Company's consolidated
balance sheet. Note 6
50. The VAT the Company collects on sales is not included
in sales. N/A
51. The Company actually entered into a joint venture with
Xi' An Tian'an Pharmacy Marketing Co., Ltd. The wording
on Note 7 has been changed to read "Subsidiary". This was
not a business combination and the reference to this has
been removed. The Company has consolidated 96.3% of the
operations of this company in its consolidated financial
statements and the remaining 3.7% is reflected as a
non-controlling interest. Note 7
52. The Company recorded the pharmaceutical license from
Xi' An Gelin Healthy Production Research Institute
at historical cost, which is incompliance with SAB
Topiuc 5:G for exchanges of nonmonetary assets by
shareholders. N/A
53. In the disclosure, the word "they" does refer to
Green Health, however, the Company, paid Green
health this fee, and the Company classified the
payment as other receivable. The disclosure has been
amended to clarify this point. Note 8
If you should have any questions concerning the foregoing, please do not
hesitate to contact the undersigned.
Very Truly Yours,
HART & TRINEN, L.L.P.
William T. Hart
WTH:ap