SecProbe.io

CORRESP
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June 3, 2005

Mr. Michael Moran

Branch Chief

Securities and Exchange Commission

450 Fifth Street, N.W., Mail Stop 3-8

Washington, D. C. 20549

Re:  Xponential, Inc., File No. 1-13919

Dear Mr. Moran:

Following are responses to comments from your
letter dated March 30, 2005 regarding Xponential, Inc.’s Form 10-KSB
for the year ended June 30, 2004.
For convenience, the comments are repeated herein and bolded.  The responses follow immediately thereafter.

Form 10-KSB
for the Year Ended June 30, 2004

Item 6.  Management’s Discussion and Analysis or Plan
of Operation, page 9

General, page 9

1.              Explain fully the
reasons for changes in each of the elements and components of the pawn loan loss
allowance, even if the total provision for pawn loan losses did not change
materially from period to period, so that a reader can understand how changes
in risks in the portfolio during each period relate to the pawn loan loss
allowance established at the period end.
Quantify and explain:

•                  How changes  in pawn loan quality
and terms that occurred during the period are reflected in the allowance,

•                  How changes in estimation and methods and assumptions are reflected in
the allowance,

•                  How actual changes and expected trends in non-performing loans affected
the allowance, and

•                  How the level of your allowance compares with historical net loss
experience.

6400
Atlantic Blvd., Suite 190, Norcross, Georgia  30071

Phone: 678-720-0660    Fax: 678-720-0671

Response:

Pawn loans are secured, non-recourse loans
secured by personal property held by Xponential, Inc. (the “Company”) as
collateral for repayment of the loans.
Loans are advanced based on a percentage of the anticipated resale price
of the property.  Consequently, with the
exception of car title loans, the Company is in possession of collateral that
exceeds the value of the loan amount advanced by the Company.  Accordingly, because the Company has little
or no risk given its underwriting requirements, it maintains no loan loss
allowance.

At the time a loan defaults and is deemed
uncollectible in accordance with Company policy and/or statutory requirements,
the collateral is transferred to inventory at the lower of cost (the amount
loaned – excluding accrued interest or repair costs) or market value.  In Georgia, pawn loans default after 40 days
(30 day loan plus a 10 day grace period).
Company policy allows customers an additional 20 day grace period for a
total grace period of 30 days.  In North
Carolina, loans default after 90 days (30 day loan plus a 60 day grace period),
which is consistent with Company policy.

Liquidity
and Capital Resources, page 13

2.              In an effort to
disclose the variable liquidity and cash flows factors necessary to understand
and evaluate your business, in future filings please revise your tabular
disclosure to include the estimated amount of interest payments associated with
your outstanding debt and the aggregate amounts of unpaid obligations presented
for periods beyond five years from your balance sheet date.  If it is not practicable to make such
estimates, please disclose this in future filings.  See Item 303 (b)(1)(i) of Regulation
S-B.

Response:

The Company will include tabular disclosures
beginning with its Form 10-KSB for the year ended June 30, 2005,
including estimated amount of interest payments associated with its outstanding
debts and aggregate amounts of unpaid obligations presented for periods beyond
five years from the balance sheet date or will disclose that it is not practicable
to make such estimates.

Consolidated
Balance Sheet, page 19

3.              Your disclosure
indicates that Series A Preferred Shares will be redeemed beginning April 30,
2005.  Please tell us if you have
classified the amount to be redeemed within twelve months of your balance sheet
date as a current liability.  If not,
please tell us why.  Also, mandatorily
redeemable preferred stock should be described as ‘shares subject to mandatory
redemption’ so as to distinguish them from other liabilities.  These shares are also prohibited from being
classified between the liability section and the equity section of
the balance sheet.   Please consider
revising your description and

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classification of these shares or advise us
why this is not applicable to you.  See
paragraph 19 and B.57 of SFAS No. 150.
To the extent you revise your consolidated balance sheet, please assess
whether or not you believe it is appropriate to file amendments to your
previously filed reports.  We may have
further comments.

Response:

The Company will modify future filings to
reflect that the Series A Preferred Shares are “shares subject to mandatory
redemption” and include the redeemable preferred stock in its current and long
term liabilities as required by SFAS No. 150.  The Company did not classify the $500,000 mandatory
redemption of the Series A Preferred Shares due April 30, 2005 as a
current liability in its June 30, 2004 Form 10-KSB or in its
subsequent September 30, 2004 Form 10-QSB, but did correct the
presentation in its Form 10-QSB for the quarter ended December 31,
2004 and plans to continue to do so in all future filings.

Consolidated
Statement of Cash Flows, page 22

4.              Please present pawn
loans made in a separate line item from repayments of pawn loans in the
investing activities section of your statement.  See paragraphs 11 through 13.A. of SFAS No. 95.

Response:

In accordance with paragraphs 12 and 13 of
SFAS No. 95, we believe that due to the short term nature of pawn loans,
the quick turnover, and the large volume of small loans, that pawn loans are
appropriately reported on a net basis.  We
will disclose the gross amounts of loans made, repaid or defaulted to provide
sufficient detail of our lending activities consistent with other similar
corporations.  We also believe that since
making short term pawn loans is one of the primary operating activities and use
of working capital in the business of the Company, these activities are
properly classified as an operating activity.
All future filings will present the pawn loan activity as an operating
activity beginning with the Form 10-QSB for the quarter ending March 31,
2005.  See attached Schedule 1
representing the cash flow activities as presented in the most recent filing.

5.              Please disclose how
you treat the cash flows related to the sale of forfeited collateral in your
statements of cash flows and when the related cash flows are recorded.  Supplementally, tell us:

•                  How you calculate the amounts included as cash inflows from investing
activities,

•                  The amounts included as cash inflows from operating activities,

•                  When the related cash inflows for each classification are recorded, and

•                  Your basis for including the amounts you do in each classification when
you do.

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Response:

We obtain over 90% of our inventory sold in
our stores from defaulted loans.  This is
a primary operating activity of the Company.
The Company currently reports the net change in inventory, which
consists primarily of inventory acquired through defaulted pawn loans as an
adjustment to net cash used in operating activities.  Although there are no direct cash flows related
to acquisition of inventory from defaulted loans, we will separately disclose
that activity in future filings as a reclassifying activity for our loan
activity. Cash flows related to disposition of inventory are recorded at the
time of the sale and payment by the customer in its net income.

As a result of our conversion to a new computer
software system during the fiscal year ended June 30, 2004, we were unable
to differentiate inventory acquired through pawn forfeitures from inventory
acquired from direct purchases. All inventory transferred from the old system
could not be classified as purchased or defaulted inventory.  Consequently, sales of inventory during
fiscal 2004 could not be identified as sales from purchased inventory or
inventory acquired from defaulted loans.
Modifications have been made to the software to provide this information
which will be available for the fiscal year ended June 30, 2005.

Notwithstanding the ability to distinguish
proceeds from inventory acquired through sales of purchased inventory versus
defaulted loans, we believe that the net change in inventory as an operating
activity is the appropriate presentation based the nature of our business and
will provide more meaningful disclosure in conjunction with reclassifying the
Company’s pawn lending activities as an operating activity.

6.              It appears that your
consolidated statement of cash flows reflects changes from balance sheet
reclassifications that do not impact cash and cash equivalents. For example,
your inventory account increased by approximately $428,000 for the year ended June 30,
2004 and such amount equals the uses of cash from increases in inventory as
disclosed in your statement of cash flows.
However, your inventory balances are impacted by certain balance sheet
reclassifications that should not result in any changes to your statements of
cash flows, such as the transfer of a pawn loan receivable to inventory when
your customer forfeits the pawn loan.
This balance sheet reclassification could have the unintended effect of
reflecting such amounts as a use of cash from an increase in inventory offset
by a source of cash from a reduction in a receivable.  The more appropriate presentation would be to
eliminate such balance sheet reclassifications for purposes of preparing your
consolidated statement of cash flows.
Please revise your consolidated statement of cash flows to remove the
impact of this balance sheet reclassification or tell us why you believe your
current presentation is appropriate.  To
the extent you revise your consolidated statement of cash flows, please assess
whether or not you believe it is appropriate to file amendments to your
previously filed reports.  We may have
further comments.

4

Response:

As described in Response 5 above, all
activity from inventory and loans will be included in the operating cash flows
of the Company. We believe the proposed presentation of the net change in
inventory and pawn loans as operating activities including the disclosure of
inventory acquired from defaulted pawn loans will provide an appropriate amount
of disclosure for this activity. As discussed previously, we will make these modifications
in future filings.

7.              Payments for
business combinations are reflected in the statement of cash flows net of cash
acquired.  Please tell us how you
recorded the net assets acquired of other pawn brokers in your consolidated
statement of cash flows.  See paragraph
132 of SFAS No. 95.

Response:

The Company did not acquire any other pawn
brokers in Fiscal 2004.  The Company did
purchase a portfolio of pawn loans and inventory, customer lists, furniture and
fixtures to open two new locations in Fiscal 2004. No cash was acquired in the
acquisitions.  The Company recorded the
purchase of assets at cost and integrated the servicing of the loans into
existing locations.

Notes to Consolidated Financial Statements, page 23

(1) Organization and Business, page 23

8.              Exhibit 21.1
discloses two subsidiaries, Pawn Mart, Inc. and Xponential Advisors, Inc.  Please tell us and include in your future
filings the business nature of Xponential Advisors, Inc. and your basis of
consolidation.  Further, please tell us
the present status of Securities, the broker-dealer entity that was acquired in
your purchase of CMHI.

Response:

Xponential Advisors, Inc. is a wholly
owned subsidiary of Xponential, Inc. that provides management expertise in
restructuring and expanding existing operations of companies in which the
Company invests.  During Fiscal 2004,
Xponential Advisors earned management advisory fees totaling $244,000 related
to Xponential’s investment in American IronHorse Motorcycle Company, Inc.  We will include the description of Xponential
Advisors activities in more detail in future filings.

CMHI sold its broker-dealer and securities operations
in October 2000.  CMHI had no operations
from the time of the sale until the merger with the Company in August
2002.  CMHI owned securities and other
investments acquired by the Company in the merger.  The Company has focused primarily on its pawn
operations since the merger.

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(2)  Summary of Significant Accounting
Policies, page 23

9.              Describe your
systematic analysis and procedural discipline, as required by FRR-28, for determining
the amount of your loan loss allowance.
Supplementally tell us and disclose:

•                  How you determine each element of the allowance,

•                  Which loans are evaluated individually and which loans are evaluated as
a group, if  applicable,

•                  How you determine both allocated and unallocated portions of the
allowance for loan losses, and

•                  How you determine the loss factors you apply to your graded loans to
develop a general allowance.

Response:

Due to the short term nature of the loans,
the Company does not record a loan loss allowance.  All loans are made with the stipulation that
the collateral’s value is adequate to pay the loan upon default. Forfeited
loans are written off in accordance with Company policy (see Response 1).  Inventory received from defaulted loans is
valued at the lower of cost or market on a specific loan basis.  The Company records gross profit upon the
sale of its repossessed collateral.
Financial results demonstrate that the value of the Company’s collateral
exceeds the loan amounts secured by the collateral.  If a loan loss allowance is required, we will
analyze our entire portfolio as a group due to the homogeneous nature of the
portfolio.

Accordingly, we do not believe that any
reserves for loan losses are required under FRR-28 and that the Company’s
policies and procedures are adequate.

(i)  Investment in American IronHorse
Motorcycle Company, Inc., page 25

10.       You disclose that you have
a 9.7% and 13.97% ownership interest in IronHorse as at June 30, 2004 and December 31,
2004, respectively.  We note that you
account for this investment under the cost method.  Please tell us your consideration of all the
facts and circumstances in determining whether you have the ability to exercise
significant influence such that the equity method, rather than the cost method,
would be required.  Specifically tell us:

•                  The capitalization structure of the investee;

•                  Voting rights, veto rights and other protective and participating
rights that you hold, and

•                  Your participation on the investee’s board of directors, executives and
other governing committees.

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Please refer to APB 18 paragraph 17.

Response:

American IronHorse Motorcycle Company, Inc.
(“IronHorse”) is a privately-held company that the Company provided financing
for, assisted in a financial restructuring; and provided equity capital to in a
series of transactions beginning in September 2003.  We have considered all factors in determining
that the cost method of accounting is the appropriate method to account for our
investment in IronHorse.  Following are
responses to the specific points raised in your letter:

•                  Capitalization structure of investee (IronHorse) –

IronHorse’s capital structure consists of common
stock, three classes of convertible preferred stock (Series A, B and C)
and convertible debt.  There are also outstanding
options and warrants to purchase common stock.
(See attached Schedule 2.)

The Company owned no preferred stock, options
to purchase common stock, or convertible debt of IronHorse as of June 30,
2004 or December 31,