[Letterhead Amy M. Trombly, Esq.]
January 29, 2007
Delivered by electronic submission via EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E., Mail Stop 7010
Washington, DC 20549
Attn: Mr. Mark Shuman
Re: Vital Products, Inc.
Registration Statement on Form SB-2
File Number: 333-127915
Dear Mr. Shuman:
I am securities counsel for Vital Products, Inc. (the "Company"). I enclose
for filing under the Securities Act of 1933, as amended, Amendment No. 7 to
the Registration Statement on Form SB-2, File No. 333-127915, together with
certain exhibits thereto (the "Registration Statement").
The Registration Statement contains revisions that have been made in response
to comments received from the staff of the Securities and Exchange Commission
(the "Staff") in their letter dated January 8, 2008.
Set forth below are the Company's responses to the Staff's comments. The
numbering of the responses corresponds to the numbering of comments in the
letter from the Staff.
Form SB-2/A
General
Comment 1. Provide us with your analysis of whether any shareholders of On
The Go Healthcare who will receive shares of Vital Products in the
distribution you seek to register will be "underwriters" of shares
so received. Your response should analyze the facts related to
the proposed distribution and the roles of On The Go Healthcare
shareholders as they resell their shares in light of the definition
provided in Section 2(a)(11) of the Securities Act. In your
response letter, tell us whether any of the shares to be
distributed will be distributed to affiliates of Vital Products
and whether any of those shares would be "control" securities
subject to Rule 144.
Response 1. The Company has been asked to analyze the roles of On The Go
Healthcare shareholders as they resell the shares issued to them
via the trust in light of the definition of an "underwriter."
Pursuant to Section 2(a)(11) of the Securities Act, an underwriter
is defined as "...any person who has purchased from an issuer with
a view to, or offers or sells for an issuer in connection with,
the distribution of any security, or participates or has a direct
or indirect participation in any such undertaking, or
participates or has a participation in the direct or indirect
underwriting of any such undertaking; but such term shall not
include a person whose interest is limited to a commission from
an underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission. "
The Company respectfully notes that such an analysis would require
the Company to know who the shareholders that ultimately receive
the shares will be. However, the terms of the Trust Agreement
filed on EDGAR as Exhibit 10.4 to the Registration Statement on
Form SB-2, as amended, filed October 26, 2006 provides that "upon
Vital Products, Inc. becoming effective, as designated by the
Securities and Exchange Commission, and its Shares becoming free
trading, the Trustee shall distribute the Shares to the
Beneficiaries...The [B]eneficiaries shall be the named shareholders
of On the Go Healthcare, Inc. as of the date the [S]hares are
traded on the over the counter bulletin board." Therefore, the
Company cannot know who the shareholders will be until the
Registration Statement is declared effective and the shares
underlying the trust are traded on the Over-the-Counter Bulletin
Board. Therefore, the Company cannot identify the shareholders
at this time.
Additionally, the Company cannot determine whether any of the
beneficiaries will be affiliates of the Company at the time of
the distribution of the trust corpus because the beneficiaries
themselves will not be identifiable until the Registration
Statement is declared effective by the Securities Exchange
Commission and the shares trade on the Over-the-Counter Bulletin
Board.
In addition, there is no way for the Company to know what each
beneficiaries' pro rata portion of the securities held in the
trust will be because, according to the Trust Agreement, this
determination is based on a beneficiary's pro rata ownership of
On The Go Healthcare, Inc. on the date the Company's securities
are traded on the Over-the-Counter Bulletin Board.
Assuming that at the time of distribution of the trust corpus,
a beneficiary is deemed to be an affiliate of the Company, the
shares distributed via the trust would constitute "control
securities" subject to Rule 144.
However, the Company believes it is unlikely that any shareholder
will be deemed an affiliate based on ownership of shares of the
Company. Even if one individual shareholder of On The Go Healthcare
were to receive the entire trust corpus of 1,000,000 shares of the
Company's common stock, this will constitute less than 10% of the
issued and outstanding shares as of January 28, 2008.
Comment 2. We note your response to comment 2 of our letter dated
December 27, 2006 regarding the ownership and control of two web
sites, www.vitalbaby.com and www.vitalproductsinc.com. We note
that www.vitalbaby.com appears to be controlled by Leda Health
Innovations. Please confirm, if true, that your are not
affiliated with Leda Health Innovations. We also note that
www.vitalbaby.com refers to "Vital Products Inc.," and contains
your company's current address and phone number. Please tell us
whether Vital Products or any of its affiliates have participated
in or provided direct or indirect funding for the establishment
or maintenance of this web site.
Response 2. On April 30, 2006, the Company transferred all inventory related
to the Heinz products to Leda Health Innovations, Inc. to reduce
its accounts payable at period end. Leda Health Innovations, Inc.
is owned by David Walt who is a shareholder of the Company. The
Company disclosed this related party transaction in the financial
statements for the nine months ended April 30, 2006, included in
the registration statement on Form SB-2 filed October 26, 2006.
In addition, the Company respectfully notes that the
www.vitalbaby.com website does not contain the Company's current
address or phone number; however the website
www.vitalproductsinc.com does contain the Company's address and
phone number. The Company funds and maintains this one-page
website that contains the Company's current product offerings,
the training seat and baby bath as well as the Company's contact
information. The Company does not fund or control the
www.vitalbaby.com website.
Registration Statement Facing Page
Comment 3. We note your response to comment 3 of our letter dated
December 27, 2006. You have not yet filed a fee table that
relates to the transactions currently proposed in the filing.
Please include an updated fee table in your next amendment which
calculates your registration fee based on registration of 3,500,000
common shares at a proposed maximum offering price of $0.50 per
share, and 1,000,000 shares in a distribution to On The Go
Healthcare shareholders which will not involve the payment of
any consideration. Please refer to Rule 457(p) which provides
guidance concerning how previously paid but unused fees may be
applied in payment of filing fees for future registration
statements, under certain conditions.
Response 3. The Company has complied with the Staff's comment.
Cover Page
Comment 4. We note your response to comment 4 of our letter dated
December 27, 2006. In the risk factor on the top of page 10, you
indicate that you "believe the selling stockholders will sell at
a price of $0.50 per share" until your shares are quoted on the
OTC Bulletin Board. This statement contradicts your assertion in
other places in the prospectus that the selling shareholders will
sell at a price of $0.50 per share until your shares are quoted
on the OTC Bulletin Board. Please revise the statement in the
risk factor or explain the discrepancy.
Response 4. The Company has complied with the Staff's comment.
Selling Security Holders, page 12
Comment 5. We note your response to comment 8 of our letter dated
December 27, 2006. Please revise footnote 8 on page 13 of the
prospectus to specifically describe the services provided by
Mr. Kau in exchange for the shares to be resold by him.
Response 5. The Company has complied with the Staff's comment.
Comment 6. Please remove the Trust to Benefit On The Go Healthcare
Shareholders from the list of selling security holders as the
trust is not selling its shares of Vital Products in the manner
in which the other selling shareholders you list will dispose of
their securities. Please move footnote 10 to beneficial
ownership table on page 17.
Response 6. The Company has complied with the Staff's comment.
Plan of Distribution, page 14
Comment 7. Please revise your discussion if the distribution of shares by
the Trust to Benefit On The Go Healthcare Shareholders to the trust
beneficiaries to disclose the conditions under which the Trust
will distribute its shares. Provide appropriate details regarding
the extent to which the trustees retain discretion to retain the
shares rather than distribute them.
Response 7. The Company has complied with the Staff's comment. The Company
respectfully notes that the Trust Agreement provides the Trustee
with power to retain the assets of the trust however the Trust
Agreement does not further elaborate on that power.
Customers, page 18
Comment 8. Your statement in this section that you distribute your products
into "large name groceries" and "mass retailers" appear to conflict
with your subsequent statement in this section that you sell your
products to "mainly small, independent businesses." Please
explain this apparent discrepancy.
Response 8. The Company originally anticipated having its registration
statement declared effective by the Securities and Exchange
Commission in 2005 and its original business plan contemplated that
it would be able to raise money in the public markets. However,
the Company has not been able to raise funding as originally
intended, partly as a result of the Registration Statement not
being declared effective. The Company has been unable to raise
funds necessary continue to distribute its products to large name
grocery and drug store chains and mass retailers and independent
pharmacies. Instead, the Company has had to scale back its
operations and focus on selling to small independent businesses.
The Company has revised its disclosure to reflect this change.
Management's Discussion and Analysis or Plan of Operation, page 20
Comment 9. We note your response to comment 16 of our letter dated
December 27, 2006. Please revise your disclosure to provide an
overview of management's strategic vision, such as their views on
the most significant challenges and uncertainties that the company
confronts, as well as management's views concerning the objectives
and opportunities for the company. Please quantify the expected
effects of these and other known material trends and commitments
on your future results to the extent possible in accordance with
items 303(b)(1)(iii) and (iv) of Regulation S-B and
Section III.B.3 of Release No. 33-8350.
Response 9. The Company has complied with the Staff's comment.
Results of Operations, page 22
Comment 10. You indicate that the decrease in revenues from fiscal year 2006
to 2007 was the result of having too few salespersons. Please
expand your discussion of the reasons for the decrease in your
revenues. For example, please explain if the decrease in revenue
was the result of the inability to reach new customers and/or
fewer sales to existing customers. Please clarify if there was
a reduction in your sales force between 2006 and 2007 and, if
there was, please explain the events that led to the reduction.
Please quantify the effects of the individual factors that
resulted in the decrease in your revenue. For example, if the
decrease was due to a decrease in the number of your customers,
please discuss the customers lost in quantitative terms and
explain the business conditions or developments that led to
the decrease.
Response 10. The Company has complied with the Staff's comment.
Comment 11. We note that selling, general and administrative expense
decreased in fiscal 2007 "due to a decrease in reduction of
payroll expense by approximately $40,000 due to non-essential
needs of such related employees." Please revise to clarify
what is meant by "non-essential-needs" and explain the
relationship between those needs and the payroll expenses.
Response 11. The Company has complied with the Staff's comment.
Financial Statements
General
Comment 12. Please note the updating requirements for the financial statements
as set forth in Item 310(g) of Regulation S-B, and provide a
current consent of the independent accountant in any amendment.
Response 12. The Company has complied with the Staff's comment.
Notes to Financial Statements
Note 3 - Significant Accounting Policies
Equipment, F-9
Comment 13. We note you relied on the use on an independent valuation to
determine the fair value of certain equipment and molds. Please
revise to name the expert who performed the independent valuation
and file the consent of the expert as an exhibit. Alternatively,
you may elect to revise your disclosures to eliminate all
references to the use of experts and/or independent valuations.
Response 13. The Company has complied with the Staff's comment.
Exhibits
Comment 14. We note that you replaced your two secured promissory notes
issued to On The Go Healthcare on February 23, 2006 with two new
promissory notes. Please file these two new promissory notes as
exhibits with your next amendment, or in your response explain
why they are not required to be filed.
Response 14. The Company has corrected its disclosure to explain that the two
secured promissory notes dated February 23, 2006 were not replaced
with two new promissory notes. Pursuant to the terms of the
secured promissory notes, which are included as exhibits 10.1
and 10.2 to the SB-2 filed February 24, 2006, the Company must
repay the secured promissory notes one year after the Securities
and Exchange Commission declares this Registration Statement
effective. Until that time, on July 3, 2006 and each anniversary
thereafter, the face value of the secured promissory notes will
increase by 20% until paid in full.
If you have further questions or comments, please feel free to contact us.
We are happy to cooperate in any way we can.
Regards,
/s/ Amy Trombly, Esq.
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Amy Trombly, Esq.