SCHNEIDER WEINBERGER & BEILLY LLP
Attorneys-at-Law
2200 Corporate Boulevard, N.W., Suite 210
Boca Raton, Florida 33431-7307
Telephone
James M. Schneider, P.A. (561) 362-9595
Steven I. Weinberger, P.A.
Roxanne K. Beilly, P.A. Facsimile
(561) 362-9612
April 12, 2005
VIA EDGAR
United States Securities and Exchange
Commission
450 Fifth Street, NW
Washington, D.C. 20549
Att: Pamela Long, Assistant Director
RE: LIFESTREAM TECHNOLOGIES, INC.
AMENDMENT NO. 1 TO FORM SB-2 FILED MARCH 7, 2005
FILE NO. 333-121991
Gentlemen:
We are counsel to Lifestream Technologies, Inc. Reference is made to
amendment no. 1 to the registration statement on Form SB-2 filed by Lifestream
Technologies, Inc. (the "Company") on March 7, 2005 (the "Registration
Statement"), and the Staff's comments under cover of its letter dated March 21,
2005.
Concurrently with the filing of this letter, the Company has filed
Amendment No. 2 to the Registration Statement ("Amendment No. 2"). Amendment No.
2 includes updated disclosure, including in response to the Staff's comments.
The following numbered responses correspond to the Staff's numbered comments in
its March 21, 2005 letter.
In response to the Staff's comments, we have been requested to advise
you as follows:
Form SB-2
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Risk Factors - Page 3
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1. The last paragraph of this section has been deleted to remove any
inference that any material risks have not been disclosed.
United States Securities and
Exchange Commission
April 12, 2005
Page 2 of 4
The lack of Medicare - Page 8
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2. The prospectus has been revised to remove the statement that
"Congress is favorably considering reimbursement....".
Consumer Marketplace - Page 11
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3. The prospectus has been revised to expand disclosure to clarify how
our products can be used to provide data that the NCEP recommends.
Sales Concentrations with Major Customers - Page 12
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4. The prospectus has been revised to identify the lost customer.
Intellectual Property - Page 13
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5. Amendment No. 1 added a paragraph under Intellectual Property to
describe the Company's patents in detail. However, the prospectus included in
Amendment No. 2 has been further revised to clarify that the HDL test strip
covered by our patent is not the same test strip that is used in our current
cholesterol monitor. The total cholesterol test strip used in our cholesterol
monitor is supplied to us by Roche and is proprietary to Roche. Under a
distribution agreement, Lifestream has been granted exclusivity to sell Roche's
total cholesterol test strip in the United States. Should the Company lose its
exclusivity for the Roche total cholesterol test strip it could be subject to
increased competition, including from Roche.
Management's Discussion and Analysis of Financial Condition and
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Results of Operations - Page 19
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6. Management's Discussion and Analysis or Plan of Operation has been
updated to reference "Business - Sales Concentrations with Major Customers" for
further discussion regarding sales of our products on a home shopping network.
The "Business - Sales Concentration with Major Customers" section of the
prospectus has been revised to clarify the nature of our sales to the home
shopping network.
Consolidated Results of Operations; Fiscal 2004 - Page 22
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7. The prospectus has been revised to expand the discussion of
operating expenses and quantifies the impact of significant factors on operating
expenses.
Security Ownership of Certain Beneficial Owners - Page 39
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8. The prospectus has been revised to identify and reconcile the 69.6
million shares of common stock into which the promissory notes held by RAB would
United States Securities and
Exchange Commission
April 12, 2005
Page 3 of 4
convert with the amounts of those notes and the conversion rates as disclosed in
the section "Certain Relationships and Related Transactions."
Executive Compensation - Page 33
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9. The prospectus has been revised to further clarify the background of
the reduction in salary by Mr. Maus and Mr. Siemens. The Company does not
believe that there is any deferred compensation for either Mr. Maus or Mr.
Siemens. The salary reductions were not deferrals, but rather an agreed upon
reduction in salary with no required payment for the reductions incurred. The
stock compensation later issued to Mr. Maus and Mr. Siemens were post reduction
salary payments subsequently authorized by the Board of Directors of Lifestream.
Description of Securities - Page 40
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10. Disclosure has been expanded to generally describe the provision of
Nevada law relating to indemnification. Additional disclosure has been provided
to describe the limitation on liability provision of the Company's bylaws.
FINANCIAL STATEMENTS - PAGE F-1
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Notes to Financial Statements Page F-9
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Note 13. Convertible Debt - Page F-16
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11. The prospectus has been revised to include a table detailing the
items outlined in the Staff's comment, as well as the amortization of deferred
financing expense during each period presented. We supplementally inform the
Staff that there are many items included in the interest and financing expense
line item as reported on the Company's consolidated income statement that are
not related to convertible debt. Thus, the Company does not believe a complete
reconciliation of interest and financing expenses by issuance in the convertible
debt footnote would be meaningful. We have however included the amount of
interest and financing expenses related to each convertible debt issuance in the
table.
12. The Company incorrectly classified its original issue discount as
an asset rather than as a contra liability. After reviewing the impact of this
misclassification, the Company has determined that the impact on the
consolidated financial statements is not material for any periods presented. The
Company will reclassify the original issue discount in its future filings.
13. The convertible debt footnotes on page F-16 has been revised to
indicate which notes were converted and disclose the carrying amount of each
note and the unamortized discount on each note at the time of the conversion, as
well as the number of common shares issued upon conversion.
United States Securities and
Exchange Commission
April 12, 2005
Page 4 of 4
PART II
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Exhibits - Page II-10
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14. We acknowledge the Staff's comment with respect to the Company's
request for confidential treatment. The exhibit index has been revised to
indicate that confidential treatment has been requested with respect to portions
of the Polymer Technology Systems settlement agreement.
15. Part II of the Registration Statement has been revised to include
the consulting agreements referenced in the Staff's comment as additional
exhibits.
A currently dated consent of the Company's independent registered
public accounting firm is filed as an exhibit to Amendment No. 2.
Please note that Amendment No. 2 reflects (a) the resignation of Edward
Siemens as the Company's Chief Operating Officer, (b) the resignation of William
Gridley as a director of the Company, and (c) the appointment of Edward Siemens
as an interim director. This information has been disclosed by the Company in a
Current Report on Form 8-K filed on April 7, 2005. If you have any further
questions or comments, please contact us.
Very truly yours,
SCHNEIDER WEINBERGER & BEILLY LLP
By: /s/ Steven I. Weinberger
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Steven I. Weinberger