Vital Living Faces SEC Probe Over Anthrax Test Claims (Update1)
By David Evans
Matthews, North Carolina, Nov. 28 (Bloomberg) -- Vital Living Products Inc., whose shares rose 61 percent after announcing its anthrax test was ``certified'' by an independent laboratory, is under investigation by the Securities and Exchange Commission.
Sani-Pure Laboratories received a subpoena yesterday from the SEC's San Francisco office demanding a copy of its lab report on the kits, said Sani-Pure director Ronald Schnitzer. The agency only issues subpoenas after approving a formal order of investigation. An SEC spokesman declined to confirm or deny the existence of an investigation, citing agency policy.
Vital Living's shares rose to $2.03 on Oct. 23 from 5 cents on Oct. 1 after the company said its anthrax test kit would be carried at Ace Hardware Corp. stores. Ace, the No. 2 U.S. hardware- store cooperative, and the Grand Rapids, Michigan-based Meijer supermarket chain have both denied Vital Living announcements they would carry the do-it-yourself test kits.
``We've not certified anything,'' said Schnitzer, adding that he never approved the statement issued yesterday by Vital Living describing Sani-Pure's review of its PurTest anthrax screening kit. Sani-Pure prepared a preliminary report for Vital Living after testing 64 kits last week, he said.
``I don't think it has the degree of reliability you want before it's in the marketplace,'' said Schnitzer. ``I think it's going to create more havoc than peace of mind.''
Vital Living fell 27 cents to 38 cents in afternoon trading. Yesterday, the shares gained 25 cents, or 61 percent, to 66 cents after the company's press release about the laboratory test. Two weeks ago, the company, which has lost money every year since it was founded in 1990, said its net worth was negative $2.4 million on Sept. 30, and repeated earlier warnings of ``substantial doubt about the company's ability to continue as a going concern.''
Vital Living Comment
Vital Living President Donald Podrebarac, who said he wasn't aware of a SEC investigation, declined a request for a copy of Sani-Pure's four-page report.
``I'm not going to make the full report available,'' he said. ``People might try to use it in a negative manner.''
Vital Living's press release said Sani-Pure's test results were ``in line with the company's previous statements'' about the kit. On Oct. 29, Vital Living said ``the test detects the presence of anthrax germs and spores.'' Asked yesterday if Sani-Pure tested the kits ability to detect anthrax spores, Podrebarac said, ``I haven't read that part of the report yet. I can't imagine they wouldn't use spores.''
Schnitzer said he told Podrebarac that Sani-Pure never tested the kit's ability to detect anthrax spores. Schnitzer also said Sani-Pure never used anthrax to test the kits, as claimed in Vital Living's press release. Schnitzer said his lab used bacillus cereus, a similar bacteria, to conduct its tests. |
