CLAUDIA J. ZAMAN ATTORNEY AT LAW
27430 Riverside Lane
Valencia CA 91354
(661) 287-3772
(818) 475-1819 Facsimile
February 20, 2007
United States Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Mail Stop 3561
Washington, D.C. 20549
Attention: Maureen Bauer, Staff Accountant
Re: National Healthcare Technology, Inc.
Response Letter Dated August 16, 2006
Form 10-QSB for the Fiscal Period Ended June 30, 2006
Form 10-QSB for the Fiscal Period Ended September 30, 2006
Form 10-QSB/A1 for the Fiscal Period Ended September 30, 2005
File No. 0-28911
Dear Ms. Bauer:
In response to your letter of December 21, 2006 regarding the
above-referenced issuer, please be advised that the issuer is responding to the
Staff's comments in this letter. As requested in your letter, this letter
references where each response to your specific comment was made. For ease of
reference, we have followed the numbering format of your letter in responding:
Form 10-KSB for the Fiscal Year Ended December 31, 2005
Part II, Item 8A
1. The Company proposes to revise its disclosure in the second proposed
paragraph as follows:
Disclosure controls and procedures are designed to provide reasonable assurance
of any entity achieving its disclosure objectives. Our chief executive officer
and chief financial officer have concluded that our disclosure controls and
procedures were not effective as of December 31, 2005 and the Company has since
implemented disclosure controls and procedures to ensure that the Company has
the proper disclosure controls and procedures to keep this from happening again.
2. The proposed disclosures have been revised as requested and the proposed
disclosure is as follows:
Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the period ended December 31, 2005 (the
"Evaluation Date"). During the course of the audit for our year ended December
31, 2005 in May, 2006, our auditor discovered numerous errors in our financial
statements in our financial statements in our quarterly report for the period
ended September 30, 2005 as disclosed in our Form 8-K/A filed on June 14, 2006.
As a result of these errors, and others, we restated our Form 10-QSB for the
quarter ended September 30, 2005, and will restate the financial statements for
the period ended June 30, 2005, in our Form 8-K/A filed on January 24, 2006. Our
conclusion to restate our Form 10-QSB for the quarter ended September 30, 2005
and Form 8-K/A filed on January 24, 2006, resulted in the Company recognizing
that its controls and procedures were not effective as of the period ended
December 31, 2005 and constituted material weaknesses which began after the
close of the Exchange Agreement on or about July 16, 2005. The material
weaknesses were primarily the result of our having no controller and no
qualified personnel and as a result, transactions were omitted, recorded
incorrectly, or recorded without support.
Limitations on the Effectiveness of Internal Controls
Disclosure controls and procedures are designed to provide reasonable assurance
of any entity achieving its disclosure objectives. Our chief executive officer
and chief financial officer have concluded that our disclosure controls and
procedures were not effective as the fiscal year ended December 31, 2005 and the
Company has since implemented disclosure controls and procedures to ensure that
the Company has the proper disclosure controls and procedures to keep this from
happening again. The likelihood of achieving such objectives is affected by
limitations inherent in disclosure controls and procedures. These include the
fact that human judgment in decision-making can be faulty and that breakdowns in
internal control can occur because of human failures such as simple errors or
mistakes or intentional circumvention of the established process.
There were no changes in the Company's internal controls over financial
reporting, known to the Chief Executive Officer and Chief Financial Officer,
which occurred during the most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
In May, 2006, we remediated the material weakness in internal control over
financial reporting by having our Chief Executive Officer and Chief Financial
Officer review in detail all adjustments affecting the issuances of our
securities and we retained an outside consultant to make accounting entries.
3. The Company will revise its disclosures in its quarterly reports for
September 30, 2005, March 31, 2006, June 30, 2006 and September 30, 2006 to
clearly state whether the Company believed that its disclosure controls and
procedures were or were not effective at the end of each respective period.
Financial Statements, page F-1
Note 5 - Equity Transactions, page F-13
4. The Company has reviewed your comments concerning its issuance of warrants
prior to becoming a publicly traded company in July, 2005. According to SFAS 123
R, Para 83:
"Nonpublic entities, including those that become public entities after
June 15, 2005, that used the minimum value method of measuring equity
share options and similar instruments for either recognition or pro forma
disclosure purposes under Statement 123 shall apply this Statement
prospectively to new awards and to awards modified, repurchased, or
cancelled after the required effective date. Those entities shall continue
to account for any portion of awards outstanding at the date of initial
application using the accounting principles originally applied to those
awards (either the minimum value method under Statement 123 or the
provisions of Opinion 25 and its related interpretive guidance). "
The Company used a volatility rate of 0.001% for all the options and
warrants granted as of or and prior to July 18, 2005 as it was not a public
company at that time and the fair value of its shares had no demonstrated
volatility as such. The Company entered into a reverse merger on July 18, 2005
and became public. Therefore, all the options and warrants issued after July 18,
2005 have been recorded with a volatility rate based on the historical
volatility the Company's shares demonstrated after July 18, 2005.
Exhibits 31.1 and 31.2 Certification
5. The Company will provide the exact certifications as required by Item
601(b)(31) of Regulation S-B as follows:
I, [identify certifying individual], certify that:
1. I have reviewed this [specific report] of National Healthcare Technology,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 (e) and 15d-15(e) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusion about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
(d) Disclosed in this report any change to the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
small business issuer's auditors and the audit committee of the small business
issuer's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
Form 10-QSB for the Fiscal Period Ended March 31, 2006
Part I. Item 2.
Management's Discussion and Analysis, page 3
6. The Company measured the fair value of the warrants on the grant date and
estimated that there would be no forfeitures. The Company recognized the expense
over the requisite service periods, pursuant to SFAS 123 (R). However, when the
officers resigned and the warrants were forfeited, the Company adjusted based on
the actual facts.
Form 10-QSB for the Fiscal Periods Ended June 30, 2006 and September 30, 2006
Part I, Item 1, Financial Information
7. Each issuance of stock for the above-noted periods was valued based upon the
undiscounted quoted market price of the Company's common stock on the date of
issuance.
8. The unamortized prepaid consulting relates to stock issued to consultants for
future services.
Per EITF 96-18, the measurement date is the earlier of:
1. The date at which a commitment for performance by the counterparty to earn
the equity instruments is reached (a "performance commitment"); or 2. The date
at which the counterparty's performance is complete.
The shares were valued at the date of commitment, as the criteria of EITF 96-18,
1 applies, and recorded as prepaid consulting. The amount is being charged to
expenses as the related services are performed.
In connection with the Company's responses to your comments, the requested
statement is attached.
Under separate cover, copies of the proposed amended filings have been
sent to your office along with redlined copies for your review.
Please contact me with any questions.
Sincerely,
CLAUDIA J. ZAMAN ATTORNEY AT LAW
/s/ Claudia Zaman
-----------------------
CLAUDIA J. ZAMAN
I, Jon Carlson, CEO of National Healthcare Technology, Inc. (the
"Company") do hereby acknowledge the following:
o The Company is responsible for the adequacy and accuracy of the
disclosure in the filings;
o Staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action with
respect to the filings; and
o The Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
Dated: February 20, 2007
/s/ Jon Carlson
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Jon Carlson, CEO