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SEC Company Response from National Health Partners Inc (CIK 0001306109) — Nov 7, 2005

National Health Partners Inc (CIK 0001306109)
Date: Nov. 7, 2005 · CIK: 0001306109 · Accession: 0000950116-05-003443

AI Filing Summary & Sentiment

Date
November 7, 2005
Author
October 21, 2005.
Form
CORRESP
Company
National Health Partners Inc (CIK 0001306109)

Letter

<PAGE> November 7, 2005 VIA EDGAR AND OVERNIGHT MAIL ---------------------------- Division of Corporation Finance Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Attn: Mr. Alan Morris, Esq.

RE: NATIONAL HEALTH PARTNERS, INC. AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM SB-2, REGISTRATION NO. 333 - 126315

Dear Mr. Morris:

I am writing to you on behalf of National Health Partners, Inc. in regards to Amendment No. 1 to the Registration Statement on Form SB-2, Registration No. 333 - 126315, filed by the company with the Securities and Exchange Commission on September 30, 2005. The company received comments to the registration statement from the SEC by means of a letter faxed to the company on October 21, 2005.

Please find enclosed Amendment No. 2 to the Registration Statement on Form SB-2. In addition, please find below each of the comments provided to the company by the SEC along with the company's response to each comment. Each comment is set forth in italics and is numbered to correspond to the numbered paragraphs in the SEC's comment letter. The company's response to each comment immediately follows the applicable comment.

Please note that the company has provided additional disclosure in this letter subsequent to its responses to each of the comments to assist you in reviewing additional changes reflected in Amendment No. 2 to the Registration Statement on Form SB-2.

Please also note that the company previously submitted an application for confidential treatment to the Office of the Secretary of the SEC concurrently with the filing of Amendment No. 1 to the Registration Statement on Form SB-2 for certain of the information contained in the agreements filed as Exhibits 10.7, 10.8, 10.9, 10.10 and 10.11 to Amendment No. 1 to the Registration Statement on Form SB-2. <PAGE> Securities and Exchange Commission November 7, 2005 Page 2

Risk Factors, page 3 --------------------

1. Please add a risk factor or risk factors that highlight that the trading price of your common stock may not be related to the offering price. Also, quantify the average cost of the shares being sold by your selling shareholders.

The company has added a risk factor entitled "The offering price of the shares of our common stock offered hereby may not bear any relation to the actual trading price of our common stock" that addresses each of these requests.

2. Please add a risk factor that highlights the issuance of shares to consultants and the related risk, such as dilution.

The company has added a risk factor entitled "We have issued a significant number of securities to advisors and consultants to the company and may issue additional securities to advisors and consultants to the company in the future" under "Risks Associated With Our Stock" that highlights the issuance of shares to consultants and the related risk, such as dilution.

We are an early stage company with an unproven business model ... prospects, ---------------------------------------------------------------------------- page 3 ------

3. We note your responses to prior comments 9, 10, 15, 25 and 26. Please revise this section to clarify when the company or its predecessors began implementing the business plan and the current state of operational development of that plan. We note that although your provider contracts were signed as early as April 2001 you still have only limited revenues.

The company has revised this risk factor to clarify when the company began implementing its current business plan and the current state of operational development of its plan. The company notes that it has added additional disclosure under "MD&A - Overview" regarding the implementation of its current business plan and the current state of operational development of its plan.

We have a history of losses and ... losses through the remainder of 2005, page 3 --------------------------------------------------------------------------------

4. We note that you revised the disclosure about being unprofitable in the near term to losses through the remainder of 2005. Please tell us why the disclosure changed, such as whether you recently entered into material contracts.

The company revised the disclosure in this risk factor due to the rapid growth in members and revenues it is beginning to experience through its agreements with Trident Marketing International, Inc. and Hispanic Global LLC. Please note that the company has further revised this risk factor to state that it currently expects net losses to continue into the second quarter of 2006. The company notes that it has provided additional disclosure under "MD&A - Overview" regarding these agreements and its expectations regarding future losses and profitability. <PAGE> Securities and Exchange Commission November 7, 2005 Page 3

The company notes its response to Comment No. 63 regarding agreements relating to Trident and Hispanic Global that have been filed as exhibits to the registration statement.

5. Please add or expand the appropriate risk factor to highlight the compensation you are obligated to pay to your executives. Also, expand your MD&A to include the amount you are obligated to pay and the source of funds for these obligations.

The company has expanded the risk factor now entitled "We have significant contractual obligations and may need to raise additional funds in the future, which funds may not be available or, if available, may not be available on acceptable terms" to highlight its significant contractual obligations. Please note that the company moved the disclosure regarding increases in operating expenses from the immediately preceding risk factor to this risk factor as the company believes increases in operating expenses are more appropriately discussed in this risk factor.

The company has added a section entitled "Contractual Obligations" to its MD&A to discuss its significant contractual obligations and the source of funds for these obligations.

Our use of independent marketing representatives ... state regulations, page 7 ------------------------------------------------------------------------------

6. Please clarify whether the bullets in this risk factor relate to you or the marketing representatives.

The company has clarified in each bullet to whom the particular risk relates. Please note that the company has replaced the word "distributor" with "marketing representative" so that the same term is consistently used throughout the document.

Disclosure Regarding Forward-Looking Statements, page 17 --------------------------------------------------------

7. Please revise your disclosure here and throughout the document to eliminate all references to the cited safe harbor, as it does not apply to statements made by non-reporting companies.

The company has removed all references in the document to the safe harbor for forward-looking statements.

Overview, page 18 -----------------

8. Please refer to prior comment 5. Please revise the references throughout the filing to the "leading" and "largest," such as a "leading national healthcare organization" and "one of the largest and most comprehensive healthcare savings networks in the United States."

<PAGE> Securities and Exchange Commission November 7, 2005 Page 4

In the alternative, please provide us with support for the statements. Also, balance your disclosure concerning affiliations with "some of the largest ... networks in the country" to describe the lack of exclusivity in provider contracts.

The company has removed all references to "leading national healthcare organization" and "one of the largest and most comprehensive healthcare savings networks in the United States." The company has removed or toned down other words and phrases throughout the document that may be deemed overly promotional in nature.

The company has balanced its disclosure regarding the provider networks with which it has a business relationship by toning down the description of the networks and by strengthening the risk factor entitled "we currently rely heavily on a small number of preferred provider organizations, the loss of any one of which or the change in our relationship with any one of which could have a material adverse effect on our business" to highlight the lack of exclusivity in, and termination provisions of, the provider contracts.

Critical Accounting Policies, page 18 -------------------------------------

9. We note that you have revised your critical accounting policies to include revenue recognition as your only critical policy. In light of the fact that you utilize stock and stock options as consideration for services rendered to your company, it appears that stock-based compensation to employees and consultants would qualify as a significant accounting estimate. As appropriate for an investor to better understand the significant estimates and assumptions involved in the application of GAAP, revise your disclosure to discuss the significant estimates inherent in valuing stock-based compensation or tell us why you do not believe this disclosure is necessary. Refer to the interpretative MD&A guidance in our Release 33-8350.

The company has added disclosure of its stock-based compensation policies to its critical accounting policies.

Comparison of Years Ended December 31, 2004 and 2003, page 21 -------------------------------------------------------------

10. We have reviewed your response to prior comment 10. We note that you are unable to determine the amount of revenues derived in each period from new members versus recurring revenues from old members because you do not have sufficient information available to accurately break out revenues in that manner. However, we note your disclosure that the number of members is minimal. We also note your disclosures on page 38 that you pay your provider networks the greater of a flat fee or a monthly rate based on the number of CARExpress members utilizing the network. Please tell us why you cannot provide this information requested.

The company has added disclosure to this section regarding the amount of revenues derived in each period from new members versus recurring revenues from old members. The company notes that at the time the

<PAGE> Securities and Exchange Commission November 7, 2005 Page 5

company previously responded to the request, it believed that it did not have adequate information available to accurately break out revenues in this manner. Upon reanalyzing its records and files, the company determined that it could accurately break out revenues in the manner requested.

11. We have reviewed your response to prior comments 53 and 69 wherein you stated that you have omitted the disclosure of those shares not issued for cash from your liquidity and capital resources discussion. Due to the fact that you issued stock for services, please disclose the amount of shares and compensation expense recorded for each such issuance in your results of operations discussion for all periods presented.

The company has added disclosure to this section regarding the number of shares issued for services and the compensation expense recorded for such issuances to the extent material to the analysis of the applicable periods.

General and Administrative Expense, page 22 -------------------------------------------

12. Please refer to prior comment 9. Your response that commission totaled $3,065 in the six months in 2005 and none in 2004 is inconsistent with your prior disclosure that commissions increased by $5,540 comparing 3 months ended 2005 with 2004. Please advise.

The company determined that the prior disclosure that commissions increased by $5,540 for the 3 months ended March 31, 2005 compared to the 3 months ended March 31, 2004 was incorrect. The information set forth in our response that commissions totaled $3,065 for the 6 months ended 2005 and that the no commissions were paid in 2004 is correct. The company has not separately discussed commission expenses in general and administrative expenses because the amounts incurred for each period were immaterial.

Professional Fees, page 22 --------------------------

13. Please discuss in greater detail the increase of $395,727. For example, describe the services provided. Also, expand page 24 to clarify the reference to the "various business transactions" such as which transactions.

The company has added disclosure to this section to provide a reference to other sections of the prospectus where additional information on the services and the persons performing them can be found. The company notes that the increase of $395,727 has been revised to $364,639 as a result of a reclassification of $93,912 from deferred consulting expense to consulting expense in 2005, which was more than offset by the addition of $125,000 to professional fees in 2004 that were incurred in connection with the issuance of 250,000 shares of common stock in February and March 2004 for services rendered. Please see Note 5 under "Additional Information" below for additional information on the reclassification of deferred consulting expense. <PAGE> Securities and Exchange Commission November 7, 2005 Page 6

The company has clarified the reference to "various business transactions" as requested.

Liquidity and Capital Resources, page 27 ----------------------------------------

14. Please clarify how you used the proceeds from your private placements in 2004 and 2005.

The company has added disclosure to this section describing the uses to which it put the proceeds from its private placements in 2004 and 2005.

Description of Business, page 31 --------------------------------

15. Please expand the appropriate section to discuss the material terms of your agreements with consultants.

The company has added disclosure regarding the material terms of the agreements with its marketing consultants and advisors under "Description of Business - Marketing Consultants and Advisors."

Healthcare Industry, page 31 ----------------------------

16. Please refer to prior comment 13. Please provide us a copy of the authoritative source cited in this section. Mark for ease of reference the portions you believe support your disclosure. Also, provide us with support of your ability to address the entire market. Also, state

Show Raw Text
<DOCUMENT>
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<PAGE>
                                November 7, 2005

VIA EDGAR AND OVERNIGHT MAIL
----------------------------

Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attn: Mr. Alan Morris, Esq.

    RE: NATIONAL HEALTH PARTNERS, INC. AMENDMENT NO. 1 TO REGISTRATION STATEMENT
        ON FORM SB-2, REGISTRATION NO. 333 - 126315

Dear Mr. Morris:

         I am writing to you on behalf of National Health Partners, Inc. in
regards to Amendment No. 1 to the Registration Statement on Form SB-2,
Registration No. 333 - 126315, filed by the company with the Securities and
Exchange Commission on September 30, 2005. The company received comments to the
registration statement from the SEC by means of a letter faxed to the company on
October 21, 2005.

         Please find enclosed Amendment No. 2 to the Registration Statement on
Form SB-2. In addition, please find below each of the comments provided to the
company by the SEC along with the company's response to each comment. Each
comment is set forth in italics and is numbered to correspond to the numbered
paragraphs in the SEC's comment letter. The company's response to each comment
immediately follows the applicable comment.

         Please note that the company has provided additional disclosure in this
letter subsequent to its responses to each of the comments to assist you in
reviewing additional changes reflected in Amendment No. 2 to the Registration
Statement on Form SB-2.

         Please also note that the company previously submitted an application
for confidential treatment to the Office of the Secretary of the SEC
concurrently with the filing of Amendment No. 1 to the Registration Statement on
Form SB-2 for certain of the information contained in the agreements filed as
Exhibits 10.7, 10.8, 10.9, 10.10 and 10.11 to Amendment No. 1 to the
Registration Statement on Form SB-2.
<PAGE>
Securities and Exchange Commission
November 7, 2005
Page 2

Risk Factors, page 3
--------------------

1.       Please add a risk factor or risk factors that highlight that the
         trading price of your common stock may not be related to the offering
         price. Also, quantify the average cost of the shares being sold by your
         selling shareholders.

         The company has added a risk factor entitled "The offering price of the
         shares of our common stock offered hereby may not bear any relation to
         the actual trading price of our common stock" that addresses each of
         these requests.

2.       Please add a risk factor that highlights the issuance of shares to
         consultants and the related risk, such as dilution.

         The company has added a risk factor entitled "We have issued a
         significant number of securities to advisors and consultants to the
         company and may issue additional securities to advisors and consultants
         to the company in the future" under "Risks Associated With Our Stock"
         that highlights the issuance of shares to consultants and the related
         risk, such as dilution.

We are an early stage company with an unproven business model ... prospects,
----------------------------------------------------------------------------
page 3
------

3.       We note your responses to prior comments 9, 10, 15, 25 and 26. Please
         revise this section to clarify when the company or its predecessors
         began implementing the business plan and the current state of
         operational development of that plan. We note that although your
         provider contracts were signed as early as April 2001 you still have
         only limited revenues.

         The company has revised this risk factor to clarify when the company
         began implementing its current business plan and the current state of
         operational development of its plan. The company notes that it has
         added additional disclosure under "MD&A - Overview" regarding the
         implementation of its current business plan and the current state of
         operational development of its plan.

We have a history of losses and ... losses through the remainder of 2005, page 3
--------------------------------------------------------------------------------

4.       We note that you revised the disclosure about being unprofitable in the
         near term to losses through the remainder of 2005. Please tell us why
         the disclosure changed, such as whether you recently entered into
         material contracts.

         The company revised the disclosure in this risk factor due to the rapid
         growth in members and revenues it is beginning to experience through
         its agreements with Trident Marketing International, Inc. and Hispanic
         Global LLC. Please note that the company has further revised this risk
         factor to state that it currently expects net losses to continue into
         the second quarter of 2006. The company notes that it has provided
         additional disclosure under "MD&A - Overview" regarding these
         agreements and its expectations regarding future losses and
         profitability.
<PAGE>
Securities and Exchange Commission
November 7, 2005
Page 3

         The company notes its response to Comment No. 63 regarding agreements
         relating to Trident and Hispanic Global that have been filed as
         exhibits to the registration statement.

5.       Please add or expand the appropriate risk factor to highlight the
         compensation you are obligated to pay to your executives. Also, expand
         your MD&A to include the amount you are obligated to pay and the source
         of funds for these obligations.

         The company has expanded the risk factor now entitled "We have
         significant contractual obligations and may need to raise additional
         funds in the future, which funds may not be available or, if available,
         may not be available on acceptable terms" to highlight its significant
         contractual obligations. Please note that the company moved the
         disclosure regarding increases in operating expenses from the
         immediately preceding risk factor to this risk factor as the company
         believes increases in operating expenses are more appropriately
         discussed in this risk factor.

         The company has added a section entitled "Contractual Obligations" to
         its MD&A to discuss its significant contractual obligations and the
         source of funds for these obligations.

Our use of independent marketing representatives ... state regulations, page 7
------------------------------------------------------------------------------

6.       Please clarify whether the bullets in this risk factor relate to you or
         the marketing representatives.

         The company has clarified in each bullet to whom the particular risk
         relates. Please note that the company has replaced the word
         "distributor" with "marketing representative" so that the same term is
         consistently used throughout the document.

Disclosure Regarding Forward-Looking Statements, page 17
--------------------------------------------------------

7.       Please revise your disclosure here and throughout the document to
         eliminate all references to the cited safe harbor, as it does not apply
         to statements made by non-reporting companies.

         The company has removed all references in the document to the safe
         harbor for forward-looking statements.

Overview, page 18
-----------------

8.       Please refer to prior comment 5. Please revise the references
         throughout the filing to the "leading" and "largest," such as a
         "leading national healthcare organization" and "one of the largest and
         most comprehensive healthcare savings networks in the United States."

<PAGE>
Securities and Exchange Commission
November 7, 2005
Page 4

         In the alternative, please provide us with support for the statements.
         Also, balance your disclosure concerning affiliations with "some of the
         largest ... networks in the country" to describe the lack of
         exclusivity in provider contracts.

         The company has removed all references to "leading national healthcare
         organization" and "one of the largest and most comprehensive healthcare
         savings networks in the United States." The company has removed or
         toned down other words and phrases throughout the document that may be
         deemed overly promotional in nature.

         The company has balanced its disclosure regarding the provider networks
         with which it has a business relationship by toning down the
         description of the networks and by strengthening the risk factor
         entitled "we currently rely heavily on a small number of preferred
         provider organizations, the loss of any one of which or the change in
         our relationship with any one of which could have a material adverse
         effect on our business" to highlight the lack of exclusivity in, and
         termination provisions of, the provider contracts.

Critical Accounting Policies, page 18
-------------------------------------

9.       We note that you have revised your critical accounting policies to
         include revenue recognition as your only critical policy. In light of
         the fact that you utilize stock and stock options as consideration for
         services rendered to your company, it appears that stock-based
         compensation to employees and consultants would qualify as a
         significant accounting estimate. As appropriate for an investor to
         better understand the significant estimates and assumptions involved in
         the application of GAAP, revise your disclosure to discuss the
         significant estimates inherent in valuing stock-based compensation or
         tell us why you do not believe this disclosure is necessary. Refer to
         the interpretative MD&A guidance in our Release 33-8350.

         The company has added disclosure of its stock-based compensation
         policies to its critical accounting policies.

Comparison of Years Ended December 31, 2004 and 2003, page 21
-------------------------------------------------------------

10.      We have reviewed your response to prior comment 10. We note that you
         are unable to determine the amount of revenues derived in each period
         from new members versus recurring revenues from old members because you
         do not have sufficient information available to accurately break out
         revenues in that manner. However, we note your disclosure that the
         number of members is minimal. We also note your disclosures on page 38
         that you pay your provider networks the greater of a flat fee or a
         monthly rate based on the number of CARExpress members utilizing the
         network. Please tell us why you cannot provide this information
         requested.

         The company has added disclosure to this section regarding the amount
         of revenues derived in each period from new members versus recurring
         revenues from old members. The company notes that at the time the

<PAGE>
Securities and Exchange Commission
November 7, 2005
Page 5

         company previously responded to the request, it believed that it did
         not have adequate information available to accurately break out
         revenues in this manner. Upon reanalyzing its records and files, the
         company determined that it could accurately break out revenues in the
         manner requested.

11.      We have reviewed your response to prior comments 53 and 69 wherein you
         stated that you have omitted the disclosure of those shares not issued
         for cash from your liquidity and capital resources discussion. Due to
         the fact that you issued stock for services, please disclose the amount
         of shares and compensation expense recorded for each such issuance in
         your results of operations discussion for all periods presented.

         The company has added disclosure to this section regarding the number
         of shares issued for services and the compensation expense recorded for
         such issuances to the extent material to the analysis of the applicable
         periods.

General and Administrative Expense, page 22
-------------------------------------------

12.      Please refer to prior comment 9. Your response that commission totaled
         $3,065 in the six months in 2005 and none in 2004 is inconsistent with
         your prior disclosure that commissions increased by $5,540 comparing 3
         months ended 2005 with 2004. Please advise.

         The company determined that the prior disclosure that commissions
         increased by $5,540 for the 3 months ended March 31, 2005 compared to
         the 3 months ended March 31, 2004 was incorrect. The information set
         forth in our response that commissions totaled $3,065 for the 6 months
         ended 2005 and that the no commissions were paid in 2004 is correct.
         The company has not separately discussed commission expenses in general
         and administrative expenses because the amounts incurred for each
         period were immaterial.

Professional Fees, page 22
--------------------------

13.      Please discuss in greater detail the increase of $395,727. For example,
         describe the services provided. Also, expand page 24 to clarify the
         reference to the "various business transactions" such as which
         transactions.

         The company has added disclosure to this section to provide a reference
         to other sections of the prospectus where additional information on the
         services and the persons performing them can be found. The company
         notes that the increase of $395,727 has been revised to $364,639 as a
         result of a reclassification of $93,912 from deferred consulting
         expense to consulting expense in 2005, which was more than offset by
         the addition of $125,000 to professional fees in 2004 that were
         incurred in connection with the issuance of 250,000 shares of common
         stock in February and March 2004 for services rendered. Please see Note
         5 under "Additional Information" below for additional information on
         the reclassification of deferred consulting expense.
<PAGE>
Securities and Exchange Commission
November 7, 2005
Page 6

         The company has clarified the reference to "various business
         transactions" as requested.

Liquidity and Capital Resources, page 27
----------------------------------------

14.      Please clarify how you used the proceeds from your private placements
         in 2004 and 2005.

         The company has added disclosure to this section describing the uses to
         which it put the proceeds from its private placements in 2004 and 2005.

Description of Business, page 31
--------------------------------

15.      Please expand the appropriate section to discuss the material terms of
         your agreements with consultants.

         The company has added disclosure regarding the material terms of the
         agreements with its marketing consultants and advisors under
         "Description of Business - Marketing Consultants and Advisors."

Healthcare Industry, page 31
----------------------------

16.      Please refer to prior comment 13. Please provide us a copy of the
         authoritative source cited in this section. Mark for ease of reference
         the portions you believe support your disclosure. Also, provide us with
         support of your ability to address the entire market. Also, state