Company Name: Diversified Tech, Inc.
Public Availability Date: 05-12-1988
INQUIRY LETTER 1DANIEL W. JACKSON
THE WALKER CENTER, SUITE 560,
175 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
TELEPHONE (801) 328-1800 January 14, 1988 United States Securities and Exchange Commission
C/O Richard Wulff
Chief of Office of Small Business Policy
450-5th St. N.W.
Washington, DC 20549 Re: Diversified Tech, Inc. File No. 0-13010 Dear Mr. Wulff: Pursuant to our telephone conversation on Wednesday, January 13, 1988, I am
submitting the following additional information in support of Diversified Tech,
Inc.'s request for relief from the disqualifications found in Reg §230.252(a) (CCH
Federal Securities Law Reports, para. 2360). On or about September 17, 1984, Diversified Tech, Inc. initiated an offering of
its common stock to bona fide residents of the states of California, Idaho,
Missouri, New Jersey, New York, Texas and Utah. This offering was initiated in
reliance on the exemption from registration found under Regulation D, Rule 505.
The last sale of stock by the Company under that offering was made on January
12, 1985. Thereafter, the offering was closed by the Company with the total
receipt of $447,750. The private investigation regarding the Company's Form S-1 registration was
initially begun under section 20(a) of the Securities Act and section 21(b) of
the Exchange Act. Following extensive negotiations, the Company submitted its
offer of settlement whereby in consented to the initiation of the section 8(d)
proceedings. On April 19, 1985 the order instituting proceedings pursuant to section 8(d) and
the negotiated stop order were executed by the Commission. The face sheet of the
order erroneously contains the date April 19, 1984, rather than the correct date
of April 19, 1985. I have enclosed a copy of Mr. Wheelers cover letter dated
April 19, 1985 for your review. Therefore, the Company's September, 1984 offering under Regulation D was closed
and all stock sold thereunder prior to both the date the Company submitted its
offer of settlement and the April 19, 1985 order initiating proceedings and
entering the stop order. The disqualification created by the execution of that
order was not in effect at the time the Company was offering or selling stock
under the September 1984 Reg D. offering. If you have any additional questions, please contact me at your convenience. Sincerely, Daniel W. Jackson DWJ/ms enc. INQUIRY LETTER 2DANIEL W. JACKSON THE WALKER CENTER, SUITE 560, 175 SOUTH MAIN STREET SALT LAKE CITY, UTAH 84111 TELEPHONE(801) 328-1800 December 22, 1987 United States Securities and Exchange Commission
C/O Richard Wulff
Chief of Office of Small Business Policy
450 - 5th St. N.W.
Washington, DC 20549 Re: Diversified Tech, Inc., File No. 0-13010 Dear Mr. Wulff: Diversified Tech, Inc., (hereinafter Diversified) is a small publicly owned
corporation whose common stock is traded nationally on the NASDAQ quotation
system. On April 19, 1984, a stop order was entered against Diversified pursuant to
Section 8(d) of the Securities Act of 1933. (A copy of the order instituting
proceedings pursuant to Section 8(d) of the Securities Act of 1933 and Findings
and Stop Order is attached hereto as Exhibit A). Pursuant to the regulations
promulgated by the Commission, to wit, Reg. §230.252(c), (CCH Federal Securities
Law Reports, Para 2360) the entry of the above-mentioned stop order disqualifies
Diversified from issuing its securities under the exemption from registration
provided by Regulation D. (§§230.251 and 230.262 CCH Federal Securities Law
Reports, Para. 23612 and para. 2370). By this request, Diversified seeks a determination by the Commission that in
relation to a proposed offering by Diversified, it is not necessary under the
circumstances that the exemption be denied. GENERAL BACKGROUND INFORMATION From July 1983 through the present, Diversified has been involved in the
acquisition, development and marketing of medical technology licensed from the
Soviet Union. Pursuant to license agreements with Licensintorg, the Soviet
licensing agency, Diversified acquires exclusive license rights to medical
technologies that have been invented in the Soviet Union and employed on a
commercial basis in that country. The Company's first license agreement involved
a biodestructible polymer ("BOP") which is used in various orthopedic and
neurosurgical applications. Following its acquisition of the BOP license rights Diversified has expended
approximately three million dollars in the development of an automated
manufacturing process for the commercial production of the polymer orthopedic
rods and the acquisition of two additional technologies under separate license
agreements. These new technologies consist of a polymer wafer for deliver of
ocular drugs referred to as SODI and Trinitrolong which is a polymer wafer used
in the treatment of cardiac angina. In November, 1987, the Company initiated commercial sales of the orthopedic rod
by filing an order placed by Medexport, a Soviet government agency. The Company
has also experienced limited sales of that Product in France, Belgium and West
Germany as it begins to emerge from a development stage company into an
operating entity. The Company has assets totalling approximately $1,989,532 and has experienced an
operating deficit of $4,360,501 since its incorporation in 1980. The Company
presently has 6,596,858 shares outstanding in the hands of approximately 1,200
shareholders. The Company filed a voluntary section 12 (Securities Exchange Act)
registration statement in November, 1985 and has always been current in the
quarterly and annual reporting requirements of §13. (A copy of the company's
last 10Q report is attached hereto as Exhibit B). PRIOR PROCEEDINGS: The enforcement proceedings initiated pursuant to §8(d) of the Securities Act of
1933 resulted from the filing and subsequent effectiveness of a Form S-1
registration statement by the Company on or about April 15, 1983. Due to the
unintentional lack of a corresponding delay amendment, the Registration
Statement became effective by lapse of time on May 4, 1983. Following notice
that the delay amendment had not been filed and the registration statement had
become effective, on June 7, 1985, the Company through the law firm of
Finkelstein, Thompson & Levenson, initiated proceedings to withdraw the offering
covered by the registration statement. Management was informed by the law firm
that the registration statement was withdrawn and the problem solved.
Subsequently, it was learned that such was not the case. Furthermore, the
Company disseminated additional information to the public regarding the
information contained in the registration statement and sought a ten-day
suspension of trading of the Company's common stock. (A copy of the letter
advising the Commission of such and requesting the ten-day suspension is
attached hereto as Exhibit C). Thereafter on June 10, 1983, an Order was entered by the Commission directing
private investigation and designating officers to take testimony. On September
26, 1984, counsel for Diversified submitted its "wells submission" to the
commission in the matter of Diversified Tech, Inc. File No. HO-1530. (A copy of
the "wells submission" is attached hereto as Exhibit D). Following numerous discussions with counsel in charge of the informal
investigation, on October 24, 1984, Diversified requested that the staff obtain
authorization to negotiate a settlement pursuant to section 8(d) of the Exchange
Act. Thereafter on April 19, 1984, an order was entered pursuant to stipulation
instituting proceedings pursuant to section 8(d) of the Securities Act of 1933
and issuing the Commission's findings and stop order. GOOD CAUSE The initial private investigation and subsequent stipulated stop order under
section 8 of the Exchange Act was based upon information that was in the hands
of the public, pursuant to the distribution of preliminary prospectuses and an
effective registration statement, from April 13, 1983 until June 7, 1983 when
additional information was released to the public. At no time were any shares of stock offered or sold pursuant to the registration
statement. Rather upon notice of the effectiveness of the registration
statement, management of the Company, moved immediately to withdraw the
registration statement, issue additional information concerning the Company to
the public and sought a suspension of trading to attempt to stem the impact of
any deficiencies in the information available to the public following the
registration statement. Following the initiation of the informal investigation, the Company voluntarily
became a fully reporting company and has timely filed all information required
by section 13 for the last two years. The Stipulated findings of the Commission pointed to certain informational
deficiencies in the Form S-1 registration statement. These alleged deficiencies
included: a. The lack of a plan to obtain governmental approval for the research and
development of the orthopedic pin which was necessary before commercial
production could begin; b. The projected costs of from 1.7 to 3 million dollars for research, testing
and development of the orthopedic pin; c. The estimated time of 3 to 5 years required for development of the orthopedic
pin; and d. The requirement of the licensing agreement, by which Diversified was bound,
that commercial production of the orthopedic pin would be achieved by December,
1985. During the four and one half years since the initiation of the informal
proceeding, Diversified has terminated its association with Medco Research, Inc.
and executed a separate license agreement with Licensintorg for the exclusive
marketing of the orthopedic pin in certain specified territories. 1 In relation
to that license agreement, the Company expended more than three million dollars
for the testing and development of the orthopedic pin and an associated
commercial manufacturing process. As a result of the Company's efforts, commercial production of the orthopedic
pin has been achieved, a major commercial sale of the product has been
consummated and approval to initial additional commercial sales in various
Western European countries obtained. Therefore, from the time of the initiative
of the informal investigation the Company has not only provided extensive
information to the investing public, but has accomplished the very objectives
that the Commission was concerned were not adequately disclosed in the
registration statement. At the present time, Diversified needs to raise additional capital to sustain
its operations during the final aspects of its development stage and carry the
Company into its operational stage. In addition, the Company needs additional
capital for the development and testing of its new technologies to wit, SODI and
Trinitrolong. Management of the Company estimates that approximately three
million dollars in additional capital will be necessary to accomplish the
transition into the operational stage and development of additional
technologies. The Company has entered into an Agreement with Peter Kenning of H. A. Kenning
Investments Incorporated concerning the offer and sale of the Company's
restricted common stock to accredited and some nonacredited investors for the
purpose of acquiring this necessary capital. The Company and Mr. Kenning intend
to direct this offering to accerdited investors and physicians who are
particularly interest in the medical technologies licensed by Diversified. The Company is seeking the present exemption from the disqualification
established by §230.252(c) because the possibility exists that a small portion
of the physicians and other individuals who will be offered the stock may not be
"accredited investors" as that term is defined in §230.501 (a). Therefore, to
insure complete compliance with the statutory regulations regarding registration
of securities and the applicable exemptions thereto, the Company requests the
opportunity to employ the exemption from registration available under §230.505
of Regulation D. The following factors create good cause for the determination by the Commission
that it is not necessary for the exemption be denied: a. The nature of the alleged violation of Section 8 by the Company; b. The remedial actions undertaken by the Company in relation to the alleged
section 8 violations; c. The significant passage of time from the alleged violations and the present
proposed offering; d. The subsequent registration of the Company under Section 12 and timely
quarterly and yearly reporting of pertinent information as required by §13 of
the Exchange Act; e. The accomplishments of the Company since the issuance of the stop order and
the necessity of additional capital for the continuing operation of the Company;
and f. The nature of the proposed offering which will be made primarily if not
exclusively to accredited investors and knowledgeable investors. Based on all of the above, Diversified Tech, Inc. respectfully requests that the
Commission determine that it is not necessary under the circumstances that the
exemption found under Regulation D be denied to the Company in relation to the
proposed offering. Respectfully, Daniel W. Jackson DWJ/ms enc.
STAFF REPLY LETTER January 20, 1988 Daniel W. Jackson, Esq.
The Walker Center, Suite 560
175 South Main Street
Salt Lake City, Utah 84111 Re: Diversified Tech, Inc. ("Diversified") Dear Mr. Jackson: This is in response to your letters dated December 22, 1987 and January 14, 1988
requesting relief pursuant to Rule 505(b)(2)(iii)(C) of Regulation D under the
Securities Act of 1933 from the disqualification of Diversified so that a
proposed offering may be effectuated in reliance upon Rule 505. As more fully described in your letters, the facts are as follows. On April 19,
1985, a stop order pursuant to section 8(d) of the Securities Act was entered
against Diversified's registration statement which had become effective by lapse
of time on May 4, 1983. No shares of stock were sold pursuant to this
registration statement and at the time of effectiveness Diversified sought to
withdraw the filing, issued additional information to the public, and sought a
suspension of trading to stem the impact of any deficiencies in the registration
statement. Subsequently, Diversified registered its securities under section
12(g) of the Securities Exchange Act of 1934 and has filed all of the
information required by section 13 of such Act for the last two years. Based upon the information presented, as more fully detailed in your letters,
the Division pursuant to delegated authority, has determined that a showing of
good cause has been made pursuant to Rule 505(b)(2)(iii)(C). Accordingly, the
application by Diversified for relief from the disqualifying provisions for
purposes of the proposed Rule 505 offering is granted. Sincerely, Richard K. Wulff, Chief
Office of Small Business Policy 1On November 13, 1986 Licensintorg gave notice to Medco Research, Inc. that the
license agreement which was the subject of the Form S-1 registration statement
had been terminated and a new license agreement issued to Diversified in
December, 1986 for the territories of the United States and Canada.
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