Galea Life Sciences
June 22, 2010
US Securities and Exchange Commission
Washington DC 20549
Re: Galea Life Sciences, Inc.
Amendment No.1 to Registration Statement on Form 10
Filed November 30, 2009
File No. 000-15076
Ladies and Gentlemen:
Further to your comment letter dated December 30, 2009 please see the Company's
responses set forth below. The Company's responses follow the reproduction of
each question from your comment letter.
General
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1. Pursuant to section 12(g)(1) of the Exchange Act, your registration
statement on Form 10 filed on September 29, 2009 became effective by
operation of law sixty days after you filed your registration
statement. Accordingly, you are now required to file all of the
reports mandated by Section 12(g) of the Securities Exchange Act of
1934. Please confirm your understanding.
The Company acknowledges that it must file reports mandated by Section
12(g) of the Securities Exchange Act of 1934.
2. Please note that where we provide examples to illustrate what we mean
by our comments, they are examples and not exhaustive lists. If our
comments are applicable to portions of the filing that we have not
cited as examples, make the appropriate changes in accordance with our
comments.
No Answer Required
3. Throughout the registration statement, you cite various estimates,
statistics and other figures. In the registration statement, please
attribute the below statements and other similar statements to the
source from which you obtained the information. Where you cite your
own estimates, please explain how you arrived at those estimates and
disclose any third-party sources you relied upon.
o Page 1: "The Tri-State area has the largest HIVI AIDS population
(over 400,000) in the United States."
Statement has been revised, with the source of such information
now included in the text of the filing.
o Page 2: "Assuming we complete Medicaid pharmacy approval in all
key states, we estimate that Nutraplete will be available to over
950,000 people living with HIV/AIDS, representing about 75%
percent of the total estimated U.S. population of people living
with HIV/AIDS."
Statement has been revised, eliminating numerical estimates.
o Page 10: "This year MOMS Pharmacy intends to expand this program
to New York and Florida, which would potentially bring Nutraplete
to an additional 30,000 patients."
Statement has been revised and eliminating numerical estimates.
Please also expand your disclosure regarding your estimate of
availability of Nutraplete in key states on page 2 and your expansion
of the program to New York and Florida to clarify, if true, that the
company has not generated any revenues to date from sales of its
products to retail customers.
The disclosure has been clarified with regard to the states in which
Nutraplete will be available and that the company has not generated
any revenues by sales to retail customers and all revenue is related
to sales for clinical evaluations.
Item 1. Business. page 1
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4. Please revise your disclosure under "Business Development & History"
to clarify that from February 8, 1996 to July 31, 2009 you have had an
aggregate of $59,018 in revenues, all of which were from sales of
products purchased for clinical evaluations and not sold at retail
and, as of July 31,2009, you have a stockholder's deficit of
$5,464,135.
The disclosure has been amended consistent with this comment.
5. Please clarify throughout your registration statement whether your
products are currently available for retail purchase through Allion
Healthcare, Inc. If your products are currently available through
Allion Healthcare, Inc., please expand your disclosure to clarify why
you have not generated revenue from these sales from inception through
July 31,2009. If your products are not currently available for retail
purchase, please disclose when you expect them to be available.
We provided clarification throughout the filing that Nutraplete is not
currently available through MOMS Pharmacy for retail sales. We have
indicated that it is expected to be available via retail sales in the
third quarter 2010.
6. You disclose that your flagship product is Nutraplete(TM). It does not
appear that you have disclosed any other products in this registration
statement. Please revise your disclosure throughout to clarify that
this is your only product.
This registration statement has been amended consistent with this
comment.
7. You state that Nutraplete(TM) is considered a "functional food" and
includes pharmaceutical grade supplements. Please expand your
disclosure here and on page 8 to clarify what you mean by the terms
functional foods and pharmaceutical.
These terms have been removed to avoid confusion.
8. Please expand your disclosure on page 1 to disclose all the material
terms of your Exclusive Distributorship Agreement with Allion
Healthcare, Inc., including, but not limited to any payment
provisions, exclusivity provisions, obligations/rights to defend,
other rights obtained and material obligations that must be met to
keep the agreement in place, term and termination provisions.
The terms of the Exclusive Distributorship Agreement with Allion have
been added to this section.
9. On page 1, you disclose that about 99% of the people MOMS' serves are
Medicaid recipients. On page 9, however, you disclose that nearly 90%
of the people MOMS' serves are Medicaid recipients. Please revise to
remove this inconsistency.
This disclosure has been revised to reflect that nearly 90% of the
people MOMS serves are Medicaid recipients.
10. You disclose that Nutraplete contains Immunolin, a patented product.
Please expand your disclosure to include the number of patents related
to this product and the expiration dates and jurisdictions of those
patents. See Item 101(c)(1)(iv) of Regulation S-K.
We have removed the reference to the patent for Immunolin to avoid
confusion as Immunolin is used under a license agreement and it is not
the property of the Company.
11. You disclose that Immunolin is licensed from All American
Pharmaceutical & Natural Foods Corporation. Please expand your
disclosure to describe the material terms of this license agreement,
including, but not limited to any payment provisions, a range of
royalty rates, aggregate milestones, usage restrictions, exclusivity
provisions, obligations/rights to defend, other rights obtained and
material obligations that must be met to keep the agreement in place,
term and termination provisions. Please also file a copy of this
agreement as an exhibit to this registration statement pursuant to
Item 60 I (b)(1 0) of Regulation S- K.
We have included the terms of the license agreement for Immunolin. The
agreement is cancellable by the Licensor at any time, is non-exclusive
and does not contain any royalty or payment provisions.
12. You disclose that Nutraplete has applications in vast new markets,
including chemotherapy, infirmity (elderly), gastric bypass and other
immune system- comprised conditions. Please disclose your reasonable
basis for this statement or consider deleting it.
We have changed this disclosure to reflect the Company's exploration
of potential new markets based upon those patient categories require
the same or similar nutritional benefit as provided by Nutraplete.
13. On page 10, you disclose that you are conducting clinical evaluations
in Miami and Seattle, which you anticipate will provide evidence of
Nutraplete's efficacy and benefits to people living with HIV/AIDS.
Please revise your disclosure here to provide a detailed description
of these clinical evaluations, including, but not limited to, the
number of people involved, duration of the evaluation, the items
evaluated or measured and the status of the evaluations. Please remove
the statement that "you anticipate will provide evidence of
Nutraplete's efficacy and benefits to people living with HIV/AIDS" or
disclose your reasonable basis for the statement.
We have updated this section to state: The Seattle Nutraplete
Evaluation is comprised of 20 participants. The objective is to assess
the efficacy of adding Nutraplete to stable HIV-1 infected
individuals. The evaluation period is from 60 to 90 days, depending on
the individual. Results will be based physical examination, lab
results and quality of life data. This evaluation portion has been
completed and we are currently in the final data evaluation stages.
The Miami evaluation is currently in the planning/protocol development
stages.
14. Please disclose the number of people which you employ. If any of those
employees are not full time employees, please disclose an estimate of
the amount of time, or the percentage of his or her time, that he or
she will be able to devote to your affairs.
The only full time employee is Paul Zuromski. At present he receives
no compensation beyond stock awards. Works approximately 40 hours per
week with Galea. Consultants are used on an as-needed basis.
Item 1A. Risk Factors, page 3
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15. Please expand your disclosure to include separate appropriately headed
risk factors that disclose the following risks and all consequences of
those risks:
a. your dependence on one product;
b. your dependence on one distributor;
c. your only revenues from February 8, 1996 through July 31,2009
amount to $59,018 were from sales of products purchased for
clinical evaluations and not sold at retail;
d. as of July 31,2009, you have a stockholder's deficit
of$5,464,135;
e. the fact that your auditor has expressed substantial doubt
regarding your ability to continue as a going concern and the
consequences in terms of your ability to raise capital or borrow
money;
f. your dependence upon monthly funding from your existing debt
holders, including all the factors listed on the top of page 26;
g. as disclosed on page 10, you estimate that you will require $2.5
million as proceeds from the Private Placement Memorandum to fund
operations and marketing initiatives;
h. the fact that as of October 31, 2008, you were in default on the
debentures that you have issued; and
i. the fact that in October 2008, you accepted an offer of
settlement with the U.S. Securities and Exchange Commission in
connection with an administrative proceeding instituted pursuant
to Section 12(j) of the Securities and Exchange Act of 1934 that
resulted in revocation of the registration of each class of your
securities. Please also include in this risk factor a list of
each of the filings the company failed to file prior to this
administrative proceeding and each of the risks to the company in
failing to file the reports mandated by Section 12(g) of the
Securities Exchange Act of 1934.
We have added the above Risk Factors to our Registration Statement.
16. To the extent that you have experienced significant delays in the
delivery or manufacture of your goods or a failure to comply with
regulations, please revise your disclosure to describe those delays,
the reasons for the delays and any consequences of those delays.
We have removed the risk factor title: "WE OPERATE ON VERY TIGHT
DELIVERY SCHEDULES .. .," and have added a risk factor "OUR
THIRD-PARTY MANUFACTURERS MAY NOT CONTINUE TO PRODUCE PRODUCTS THAT
ARE CONSISTENT WITH OUR STANDARDS OR APPLICABLE REGULATORY
REQUIREMENTS, WHICH COULD HARM OUR BRAND, CAUSE CUSTOMER
DISSATISFACTION AND REQUIRE US TO FIND ALTERNATIVE SUPPLIERS OF OUR
PRODUCTS."
17. To the extent that you have experienced difficulties in attracting,
retaining or motivating management and personnel in the past three
years, please revise your disclosure to describe those difficulties,
the reasons for the difficulties any adverse consequences of these
difficulties.
We have not had difficulty attracting, retaining or motivating
management and personnel in the past three years.
18. If you are aware of any claims or litigation against your current
product, please revise to disclose the parties involved, claims made
and recovery sought.
We are not aware of any claims or litigation against our current
product
"OUR PREFERRED STOCK MAY BE USED TO AVOID ... ," page 8
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19. You disclose that your Certificate of Incorporation authorizes the
issuance of 25,000,000 shares of preferred stock. The Articles of
Amendment dated February 5, 2009 and included in Exhibit 3.1 state
that 20,000,000 million shares of preferred stock are authorized.
Please revise to remove this inconsistency.
This has been corrected to reflect that 20,000,000 shares are authorized
Item 2. Financial Information
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Management's Discussion and Analysis of Financial Condition and Results of
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Operations, page 8
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20. Revise your disclosure to include a discussion of your Liquidity,
Capital Resources, and Results of Operations within Management's
Discussion and Analysis. In this regard, please remove the discussion
of results of operations and liquidity currently included in the
audited financial statements. Refer to Item 303 of Regulation S-K, and
address the following:
o Your discussion should cover the two-year period ended October
31, 2008;
o Disclose any material changes in financial condition from the end
of your preceding fiscal year, October 31, 2008, to the date of
your most recent interim balance sheet provided, July 31,2009,
and any material changes in results of operations with respect to
the three and nine months ended July 31, 2009 and the
corresponding year-to-date of the preceding fiscal year; and
o If material changes in your results of operations are a result of
several factors, please quantify the amount of change due to each
factor. Please specifically consider this in your disclosure
regarding general and administrative expenses. Refer to FRC
Section 501.04.
The disclosure has been revised consistent with this comment.
Overview, page 8
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21. You disclose that you intend for the company's stock to begin trading
on the OTC Bulletin Board, if and when the company clears SEC comments
on the Form 10, and FINRA has accepted the company's stock for
quotation. Please revise your disclosure here and on page 13 to
clarify if the company has submitted an application for trading on the
OTC Bulletin Board. If you have not submitted an application, please
disclose when you intend to file an application.
We have added a sentence stating that no application to the OTC
Bulletin Board has yet been made.
Plan of Operation, page 10
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22. You disclose that you estimate that you will require $2.5 million as
proceeds from the Private Placement Memorandum to fund operations and
marketing initiatives. Please disclose the terms and status of the
Private Placement Memorandum. We may have further comments based on
your response.
We no longer have a reference to the need for $2.5 million to fund
operations and have adjusted our plan accordingly.
Item 4. Security Ownership of Certain Beneficial Owners and Management,
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page II
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23. Please revise this table to disclose the natural person(s) who have
voting control over the shares owned by Trafalgar Capital Specialized
Investment Fund.
The table now discloses that Andrew Garai is the natural person who
has voting control over the shares owned by Trafalgar Capital
Specialized Investment Fund.
Item 5. Directors and Executive Officers, page 11
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24. Please revise your description of Paul Zuromski's and Valentino
Trubiani's business experience to disclose the month and year they
held each of the positions listed. Please also include the month and
year during which they were elected to their respective positions with
Galea Life Sciences.
The disclosure has been changed to reflect this comment.
25. You disclose that Alison Rosenberg Cohen was elected a Director of the
company in June 1990 and from 1988-1991 she held various positions
with the company. Please disclose the titles of the positions she
held. Please also supplementally explain how this is consistent with
your disclosure on page I indicating that the company was incorporated
in December 1992 and that the company's inception date listed in your
financial statements is February 8, 1996.
Ms. Cohen was a director of the predecessor company to Galea Life
Sciences. Galea is considered the acquiror for accounting purposes.
Item 6. Executive Compensation, page 12
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26. Please revise your Summary Compensation Table to disclose the dollar
amount of the stock awards recognized for financial statement purposes
in accordance with FASI23R. See Item 402(n)(2)(v) of Regulation S-K.
This table has been revised to disclose the dollar amount of the stock
awards.
27. You disclose in footnote 1 that you intend to enter into an employment
agreement with Paul Zuromski, but you have not paid Mr. Zuromski under
this contract. Please clarify whether this agreement is effective. In
addition, if the terms of the employment agreement are established,
please file a copy of the employment agreement and disclose the terms
in this section of your registration statement. Alternatively, please
confirm that you will file a copy of the employment agreement once the
terms are established.
We have clarified this disclosure consistent with this comment
28. Please disclose the date on which Mr. Zuromski was awarded 1 million
common shares and the aggregate number of shares he has received in
lieu of cash salary up to the date of effectiveness of the
registration statement.
We have disclosed that Mr. Zuromski was awarded the shares on
8/12/2009
Item 7. Certain Relationships and Related Transactions, and Director
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Independence, page 12
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29. On page 36, you disclose that you are indebted to two stockholders in
the amount of approximately $431,000. Please confirm that these
stockholders are not five percent or more stockholders. Alternatively,
please provide the information required by Item 403 of Regulation S-K
and file copies of the loan agreements as exhibits to this
registration statement.
These stockholders are not 5% holders. The notes were recapitalized as
additional paid in capital.
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
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Related Stockholder Matters, page 13
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30. Please disclose the frequency and amount of any cash dividends
declared on each class of its common equity for the two most recent
fiscal years and any subsequent interim period for which financial
statements are required to be presented by Article 3 of Regulation
S-x. If the company has paid no dividends to date, please so state.
See Item 201(c) of Regulation S-K.
We state that the Company has not paid any dividends on its common
shares
Item 10. Recent Sales of Unregistered Equity Securities, page 13
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31. Please file copies of the convertible debenture and warrants which you
issued in February 2008 as exhibits to this registration statement.
Please also revise your disclosure to disclose the exemption relied
upon for this private offering and state briefly the facts relied upon
to make the exemption available as required by Item 701 of Regulation
S-K.
The disclosures have been updated consistent with this comment.
Item 11. Description of Securities to be Registered, page 14
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32. You disclose that the description of your securities is subject to
applicable Nevada law. Pursuant to your disclosure .on the cover page
of this registration statement and your Certificate of Incorporation
and By-laws filed as Exhibits 3.1 and 3.2, respectively, it appears
that you are incorporated in Florida. Please revise or advise.
This typographical error has been corrected
33. Please expand your disclosure to describe your outstanding preferred
stock, convertible debentures and warrants.
This has been updated consistent with this comment.
Item 15. Financial Statements and Exhibits, page 15
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34. Please file a copy of the loan agreement incurred by ITAQ in
connection with the acquisition of a distribution license from a
corporate stockholder in August 1996 as an exhibit to this
registration statement. Please supplementally advise us if you are
currently using this distribution license. If you are, please file a
copy of this distribution license and describe the material terms of
this distribution license in your business section, including, but not
limited to any payment provisions, a range of royalty rates, aggregate
milestones, usage restrictions, exclusivity provisions,
obligations/rights to defend, other rights obtained and material
obligations that must be met to keep the agreement in place, term and
termination provisions.
The company does not utilize the license agreement.
35. Please remove your references to Regulation S-B as that regulation is
no longer applicable.
All references to Regulation S-B have been removed.
Consolidated Statements of Cash Flows, page 21
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36. Please reconcile your cash flows from financing activities for the
period from inception to October 31, 2008 to the amounts for the
corresponding line items (i.e., loans payable - stockholders and
other, note payable - affiliate, and debentures payable) disclosed on
your balance sheet as of October 31, 2008. Please note that
information on the Statements of Cash Flows should be provided on a
gross basis unless it qualifies for netting.
The differences between the balance sheet and the statement of cash
flows are due to pre recapitalization activity. We have provided
reconciliations in the attached schedule.
Galea Life Sciences, Inc.
Reconciliation of Cash Flows to Balance Sheet
10/31/2008
Loan payable - other
Per balance sheet $ 5,205
Activity Pre Recapitalization (3,560)
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Per statement of cash flows $ 1,645
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Note payable - affiliate
Per balance sheet $ 495,928
Activity Pre Recapitalization (495,928)
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Per statement of cash flows $ --
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Debentures payable
Per balance sheet $ 2,688,167
Activity Pre Recapitalization (2,425,000)
Convertible debenture - 10% Cap --
Convertible debenture - Trafalgar --
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Per statement of cash flows 263,167
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37. Please clarify whether the Statements of Cash Flows are of Galea or
Innovative Technology.
The statement of cash flows is that of Galea. The heading has been
changed accordingly.
Notes to Consolidated Financial Statements, page 22
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38. Revise your disclosure to include a note that summarizes the rights
and privileges of your securities outstanding. Specifically, disclose
the liquidation and dividend rights related to your preferred
securities. Refer to ASC 505-10-50-3. Also, label dividends as
preferred within the statement of operations, and address the effect
of dividends on your liquidity position within Management's Discussion
and Analysis.
Disclosures consistent with this comment have been made.
Note 1 - Summary of Significant Accounting Policies, page 22
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39. Revise your disclosure to include an accounting policy for each of
your material balance sheet and statement of operations accounts.
Specifically, address the following:
o Include an accounting policy for your convertible debentures. You
state on page 26, that the registration statement has not become
effective; therefore, the value of the beneficial conversion
feature cannot be measured as of October 31, 2008. Please tell us
whether you have recorded a beneficial conversion feature for any
of your convertible debt instruments, and the guidance that you
have relied upon for your accounting.
o Include an accounting policy for your warrants issued, and
address whether your warrants are liability or equity classified.
Specifically address how you considered the requirement that your
warrants are subject to an effective registration statement, and
identify the accounting guidance you relied upon to form your
conclusion.
The Company has changed Note 1 - Summary of Significant Accounting
Policies to include:
a. The Company's policy regarding revenue recognition and
b. The Company's policy regarding financial instruments
The Company has not recorded a beneficial conversion feature because
the conversion price is in excess of the last issuance of stock which
took place in 2006 (or 85% of market). It should be noted that there
is currently no market for the Company's stock.
Note 2 - Business Combinations, page 26
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40. Please revise your disclosure as appropriate to address the following:
o There is a discrepancy in your disclosure. You disclose on page 9
that ITAQ became the accounting acquirer and you became the
accounting acquiree. However, on page 26, you disclose that ITAQ
is considered for accounting purposes to be the acquiree.
This has been corrected
o Please clarify which of the pre-transaction company's
stockholders' owned the controlling interest of the combined
company subsequent to the transaction. You disclose on page 9
that the original stockholders of ITAQ owned the controlling
interest of the combined company. However, on page 26, you
disclose that your stockholders owned the controlling interest of
the combined company.
The disclosures have been clarified that after the merger transaction
the ITAQ shareholders held a majority of the Company's stock
o Thoroughly describe the transaction you entered into with ITAQ,
including the business reasons for entering into the transaction,
and the basis for your accounting for the transaction.
Please see Note 2 as modified.
o If the merger constituted a business combination, provide the
cost of the acquisition and the amount assigned to each asset and
liability of the acquired entity, clarifying which entity was the
acquired entity for accounting purposes. Consider the need to
provide financial statements pursuant to Rule 3-05 of Regulation
S-x. If the merger was a recapitalization with a shell entity,
please state that fact.
It was a recapitalization.
o Disclose which entity issued the shares and how many shares were
issued to consummate the transaction.
Note 2 has been modified and now states that 23,567,624 were issued to
consummate the transaction.
Condensed Statements of Cash Flows For the Three and Nine Months Ended July
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31, 2009 and 2008, and for the Period From February 8, 1996 (Inception) to
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July 31, 2009, page 48
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41. Please tell us whether you declared dividends on your preferred stock
for the nine months ended July 31,2009, and how this amount is
reflected within you cash flow statement.
Dividends have been accrued but not paid and are included in the line item
denoted as "Increase in accounts payable and accrued expenses."
Notes to Condensed Financial Statements, page 49
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42. Revise your disclosure to include your accounting policy for revenue
recognition. Specifically address whether you recognize revenue on a
net or gross basis, and identify the authoritative guidance that you
relied upon for your accounting. If you recognize revenue on a net
basis, disclose this on the face of your statement of operations;
provide your analysis supporting your conclusion regarding this
accounting treatment under ASC 605-45-45; and provide a detailed
schedule of the items that reduce revenue.
The Company has modified the notes to include its policy regarding
revenue recognition. See Note 2 to the financial statements.
43. Please tell us why you have not recorded an amount for cost of sales
related to the products you sold in the nine months ended July 31,
2009. Additionally, disclose your accounting policy for inventory, or
tell us why such disclosure is not necessary.
The cost of product sold was expensed at the time of purchase because
the Company had not intended to sell it. It was purchased for sampling
and promotion. The Company has modified the notes to include its
policy regarding revenue recognition. See Note 2 to the financial
statements.
4. Loan Payable-Stockholders, page 50
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44. The disclosure states that the notes are non-interest bearing which
conflicts with the disclosure on page 26 in Note 3 that states that
the loan bears interest. Please reconcile the disclosure throughout
the filing.
The disclosures have been corrected and are now in agreement.
The company acknowledges: that it is responsible for the adequacy and
accuracy of the disclosure in the filing; staff comments or changes to
disclosure in response to staff comments in the filing reviewed by the
staff do not foreclose the Commission from taking any action with respect
to the filing; and 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.
Sincerely,
GALEA LIFE SCIENCES INC.
By:/s/ Paul Zuromski
Paul Zuromski
President