DAVID M. LOEV, ATTORNEY AT LAW
2777 ALLEN PARKWAY, SUITE 1000
HOUSTON, TX 77019
TELEPHONE (713) 524-4110
FACSIMILE (713) 524-4122
July 14, 2006
Chris Edwards VIA FED-EX
Division of Corporate Finance ----------
United States Securities and Exchange Commission AND VIA EDGAR
100 F. Street, N.E. -------------
Washington, D.C. 20549
Phone: (202) 551-3742
RE: Pediatric Prosthetics, Inc.
Registration Statement on Form 10-SB
Filed February 13, 2006
File Number: 0-51804
Dear Mr. Edwards:
We have enclosed three red-lined copies of the amended registration
statement for your review. In response to your comment letter dated March 10,
2006, Pediatric Prosthetics, Inc. ("Pediatrics," the "Company," "we," us") has
the following responses:
General
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1. We have included the Company's interim financial statements pursuant to
Item 310(g) of Regulation S-B as you have requested.
2. Pediatric did not report as a development stage enterprise because it had
commenced planned principal operations and reported revenues of $157,530 in
the fiscal year ended June 30, 2004. As a result, Pediatric determined that
it did not meet the criteria for reporting as a development stage
enterprise based on paragraph 8 of SFAS No. 7 that states:
"For purposes of this Statement, an enterprise shall be
considered to be in the development stage if it is devoting
substantially all of its effort to establishing a new business and
either of the following conditions exists:
a. Planned principal operations have not commenced.
b. Planned principal operations have commenced, but there has
been no significant revenue therefrom."
Cautionary Statement
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3. We have deleted the references to Section 21E of the Exchange Act, as you
have requested.
4. We have removed the word "will" as you have requested.
Item 1. Description of Business
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5. Pediatrics has revised the registration statement to disclose the
information you requested.
6. Pediatric has revised the registration statement to disclose the
information you have requested.
7. Pediatric has disclosed that it does not wish the information on its
website to be incorporated by reference into the registration statement.
8. Pediatric has revised the registration statement to include the information
you requested and has attached a sample of its Host-Affiliate contract as
an exhibit to the registration statement filing.
9. Pediatric has revised the registration statement to include the information
you requested. Pediatric does not have any material agreements with any
federal or state agencies.
10. Pediatric has disclosed the names of its principal suppliers as you have
requested. Pediatric does not have any material contracts with its
principal suppliers.
The Market Place
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11. Pediatric has revised the two sections of the Registration Statement to
which you refer to be consistent.
Competition
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12. Pediatric has disclosed that it has no relationship with the Shriner's
Hospital System, but that such hospital does offer free medical care to
children. Pediatric has no contracts with Shriner's.
Employees
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13. We have added disclosure describing the functions of our employees and
which employees work for us on a full-time basis.
14. We have identified the outside consultants we contract with to provide
therapy, public relations and business and financial services as you have
requested.
Reports to Security Holders
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15. We have updated the registration statement to include your new address.
Government Regulation
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16. We have revised the registration statement to disclose the information you
requested.
17. We have revised the registration statement to disclose the information you
requested.
18. We have disclosed the cost of complying with the HIPPA privacy standards
and the steps Pediatric has taken to meet such standards.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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19. We have updated the registration statement to include the disclosures you
requested.
20. We have revised the registration statement to include updated disclosure
regarding our Management's Discussion and Analysis as you have requested.
21. We have revised the registration statement to include the disclosure you
have requested and have included what Pediatric's selling, general and
administrative expenses were for each of the periods presented as you
requested.
22. We have removed and revised our Management's Discussion and Analysis of
Financial Condition section extensively, and as a result, the mention of
our capability of providing services to as many as 500 children has been
removed as well.
23. Pediatric's has described its national publicity campaign in greater detail
disclosing the items that made up the campaign and the costs of the
campaign.
Critical Accounting Policies
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Revenue Recognition
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24. Pediatric has determined that it is more appropriate to recognize revenue
for sales generated through the billing departments of the Host-affiliates
under the accrual method. As such, Pediatric has revised its revenue
recognition policy for this item accordingly. Additionally, Pediatric
analyzed prior periods and determined that the difference between revenue
previously recognized on the cash method and the revenue that would have
been recognized on the accrual method was not material.
We have also amended the registration statement to include the
information you requested in your second paragraph.
Costs of Sales
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25. We have disclosed the specific costs which made up Costs of Sales as you
have requested.
Depreciation Expenses
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26. Pediatric has revised the registration statement to include its leasehold
improvements and other fixed assets added in 2004.
Liquidity
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27. We have revised the Liquidity and Capital Resources section of our
registration statement extensively and have included in such revisions our
cash requirements for the next twelve months.
Item 5. Directors, Executive Officers, Promoters and Control Persons
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28. We have revised the registration statement to disclose the term of office
of our Directors.
29. Pediatric has described Mrs. Gonzalez's work experience and biographical
information under the section entitled "Item 5. Directors, Executive
Officers, Promoters, Control Persons And Significant Employees."
Item 6. Executive Compensation
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30. We have revised the amended registration statement to state that the shares
of common stock issued in consideration for services were valued at $0.10
per share.
31. We have revised the amended registration statement to include the
information you requested.
Part II
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Item 1. Market Price of and Dividends on the Registrant's Common Equity and
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Related Stockholder Matters
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32. We have removed the historical price information previously disclosed in
our prior 10-SB filing and have added disclosure of the fact that Pediatric
does not currently have a public trading market as you have requested.
33. We have revised the registration statement to include the information you
requested.
Item 4. Recent Sales of Unregistered Securities
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34. Pediatric has revised the registration statement to disclose the specific
exemption relied upon for the unregistered and registered sales discussed
in this section as you requested.
35. Pediatric has revised the registration statement to disclose the
information you requested.
36. Pediatric has described the transactions to which you referred in your
response letter in greater detail as you requested.
Statement of Operations
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37. Pediatric has amended its filing to comply with the disclosure requirements
of SAB Topic 11:B and Section F of SAB 107. Specifically, Pediatric is (1)
deleting the sub-total gross margin, (2) labeling costs of sales on the
statement of operations as "Cost of sales (except for items shown
separately below)" as provided in SAB Topic 11:B and (3) including all
stock-based compensation in the "Selling, general and administrative
expenses" caption as instructed in Section F of SAB 107.
Note 8 - Commitments and Contingencies
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38. We provide an unlimited one-year warranty on each of our prostheses, which
covers both materials and workmanship. Our sub-component suppliers also
provide us a one-year warranty on all components, whether electrical or
structural. As a result, we are only responsible for the cost of the
re-installation of failed sub-components. The amount of warranty costs
borne by us to date has been insignificant. We have revised Note 8 to
include disclosure of the terms of our warranty obligations
Very Truly Yours,
/s/ John S Gillies
----------------------------
John S. Gillies,
Associate,
David M. Loev, Attorney at Law
CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF PEDIATRIC PROSTHETICS, INC.
I Linda Putback-Bean, as Chief Executive Officer, hereby certify and
acknowledge that Pediatric Prosthetics, Inc. (the "Company"):
1) the Company is responsible for the adequacy and accuracy of the disclosure
in their filings;
2) staff comments or changes to disclosure in response to staff comments do
not foreclose the Commission from taking any action with respect the
filing; and
3) the Company may not asset staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws
of the United States.
PEDIATRIC PROSTHETICS, INC.
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/s/ Linda Putback-Bean
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Linda Putback-Bean
Chief Executive Officer
Date 7-14-06
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