SEC Comment Letter for XSINVENTORY (CIK 0001220379) — Mar 8, 2005
XSINVENTORY (CIK 0001220379)
Date: March 8, 2005 · CIK: 0001220379 · Accession: 0000000000-05-010897
AI Filing Summary & Sentiment
File numbers found in text: 333-118632
Show Raw Text
<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
MAIL STOP 0511
February 25, 2005
Mr. Michael J. Evangelista
President
XSInventory
2950 E. Flamingo Rd., Suite E-6D
Las Vegas, NV 89121
Re: XSInventory
Registration Statement on Form SB-2
File No. 333-118632
Amendment filed on February 1, 2005
Dear Mr. Evangelista:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. Provide a current consent in any amendment, and provide the
updated, audited financial statements as required by Item 310(g)
of
Regulation S-B.
Prospectus Cover Page
2. We note that this is a "minimum or maximum" or "part or none"
offering. When discussing the effects of the offering on the
prospectus cover page, it is not appropriate to include disclosure
regarding the "middle" amount. Please revise.
3. You should delete the last phrase of the sentence concerning
the
segregated account that begins with the words, "in that we have a
Series 63..."
4. Please create a risk factor explaining the risks regarding the
segregated account arrangement. This risk factor should state
that
because the funds are being placed in this account rather than an
escrow account, creditors of the company could try to attach, and
ultimately be successful in obtaining or attaching the funds
before
the offering closes. You should state that investors would lose
all
or part of their investments if this happened, regardless of
whether
or not the offering closes.
Summary, page 1
5. On page 6, you state that even if you sell all the securities
offered, the majority of the proceeds of the offering will go to
pay
your two current employees. Please disclose this in the second
paragraph of the summary.
Use of Proceeds, page 1
6. Quantify the offering expenses here.
Risk Factors, page 3
7. You state in the third risk factor regarding your founder`s
lack
of experience that you intend to hire when you are sufficiently
capitalized. Clarify here that the offering will not sufficiently
capitalize your company and that future offerings will be
necessary
to sufficiently capitalize your company.
8. We note your response to comment 4. Please revise risk factor
10
to relocate the auditor related disclosure to risk factor 1 and
revise the subheading to risk factor 1 to include a statement that
"your auditors have raised a substantial doubt about your ability
to
continue as a going concern." Also, we note your statement that
if
you "are unable to continue as a going concern, it is likely that
you
will lose your investment." Unless there is a scenario where
investors will not completely lose their investment when you cease
being a going concern, please revise the noted statement to remove
the word "likely." Likewise, in numerous places throughout the
risk
factors section and the rest of the prospectus, you state that
investors could or may lose their investments if the risks come to
fruition. You should change could or may to will in these
circumstances.
9. In risk factor 9, we note your statement that you believe you
may
be able to generate positive feedback from your sales and
accomplish
other things. State here that you may not be successful in doing
these things.
About This Prospectus, page 8
10. You state that you will offer securities only in jurisdictions
where offers and sales are permitted. Please expand this
disclosure
to state in what jurisdictions offers and sales will not be
permitted.
Available Information, page 8
11. You state that you will be filing periodic and current reports
under Section 13 of the Securities Act. Your reference should be
to
Section 13(a) of the Exchange Act. Please revise.
Use of Proceeds, page 9
12. We note that you have not allocated any funds to your non-
offering legal expenses until you are able to raise $67,500 in
this
offering. Please revise to clarify how you will prepare your
required periodic reports if you raise less than the middle
amount.
We note that you have allocated up to $17,500 for this purpose.
It
appears this amount should be in the table no matter how much
money
you raise, since you will have to file these reports regardless of
the proceeds amount.
13. We note your disclosure that the "Subscription Processing"
will
be $600 if the minimum or middle amount is raised. Please revise
to
reconcile that with exhibit 10.5 which states that Ms. Amigone
"will
pro rate the difference between the" minimum and maximum based on
the
funds raised.
14. It is not clear how you plan to expend the proceeds on your
inventory if you raise between the minimum and middle amounts.
Considering your primary source of revenues is the sale of your
inventory, please revise to clarify how inventory spending will
increase as offering proceeds increase.
Plan of Distribution, page 12
15. On page 13, we note your statement that your "arrangement with
Ms. Amigone" consists of her providing a separate account to hold
the
funds until the minimum criteria is met. Exhibit 10.5 does not
include any discussion of the separate account. Please revise to
clarify if the arrangement is evidenced by a document, and if so,
please file such document with your next amendment.
Directors, Executive Officers, Promoters and Control Persons, page
14
16. Please revise to disclose the period that Gisela DeMint has
been
employed by your company.
Description of Business, page 20
17. Please revise to discuss the average amount of items you have
up
for bidding in any given period. Also, discuss the typical markup
you are able to enjoy employing your current method of
distribution.
18. On page 23, we note your disclose of the listing fees as of
2003.
If possible, please provide the most recent listing fee structure.
19. We note your statement that your "customer response program
consist of evaluating the feedback received by other sellers."
Please revise to elaborate on the "feedback" you evaluate and how
such efforts are a viable marketing strategy. Also, clarify
whether
you limit the "other sellers" to those that sell similar products
to
yours.
20. We note your statement that other sellers ship their products
in
30 days, while you only ship in three days, is based on your
personal
experience. Please clarify if the sellers that ship products
after
30 days are selling similar products to yours. Since this is
based
on your own experience, please provide the proportion of sellers
that
have shipped after 30 days of receiving an order.
21. We note your intellectual property consist of your name,
"domain
name," and client list. It does not appear that you have a
website.
Please revise to disclose your domain name. Please revise to
explain
why your client list is included in this subsection. Do you
typically get repeat customers?
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 26
22. We reissue comment 23.
Plan of Operation
23. Please revise to delete the first two paragraphs in this
subsection as they are repetitive of your business disclosure.
Factors that May Affect the Company`s Future Operating Results,
page
31
24. We note your response to comment 29. We note your statement
that
"[t]o achieve profitable operations, we alone or with others, must
successfully establish methods of acquiring products for resale. .
.
." Please revise to clarify the noted statement. If true, please
revise to clearly state that you have no intention of merging,
acquiring, or forming a business combination with any other
entity.
Report of Independent Registered Public Accounting Firm, page F-1
25. We note the statement that management`s plan regarding the
going
concern is "described in Note 4." Supplementally, please cite the
language in Note 4 that describes "management`s plan" to deal with
your going concern issue.
Financial Statements
Note 1-Inventory, page F-6
26. We note your discussions in the "Business" section, on page
20,
that you purchase products from companies who are liquidators of
other Companies` inventories or who have purchased inventories as
a
result of a bankruptcy or insolvency liquidation. Please revise to
include such description/ nature of your inventory in your notes
to
financial statements to enhance the reader`s understanding.
Exhibits
27. We note that exhibits 3(i)(a), 10.3, 10.5, and 23.2 are not
executed. Please file executed agreements.
28. We note your disclosure on page 33 that Mr. Evangelista
executed
a lock-up agreement controlling 1,520,000 shares. Exhibit 10.1
only
covers 950,000 shares. Please revise to reconcile.
29. We note that paragraph 6(a) of your subscription agreement
requires investors` acknowledgment that they have "read and
understand" your prospectus. Please revise to remove that
representation.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert staff comments and the declaration
of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
Any questions regarding the accounting comments may be
directed
to Raj Rajan at (202) 942-1941. Questions on other disclosure
issues
may be directed to the Examiner, Duc Dang at (202) 824-5508.
Sincerely,
John Reynolds, Assistant
Director
Office of Emerging Growth
Companies
cc: David Stoecklein
Fax: (619) 595-4883
??
??
??
??
XSInventory
Page 1 of 6
</TEXT>
</DOCUMENT>