SecProbe.io

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December 29, 2004

Mail Stop 0407

Rafeh Hulays
President
Netfone, Inc.
Suite 1108 - 1030 West Georgia Street
Vancouver, BC V6E 2Y3

      RE:	Netfone, Inc.
		Registration Statement on Form SB-2
      Filed December 1, 2004

Dear Mr. Hulays:

      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.

* * * * *

Form SB-2

1. Footnote 2 to the registration fee table indicates that the
"last
sale price" on August 31, 2004 was used to calculate the proposed
maximum offering price.  Given that your common stock is not
traded
on any market, please clarify that the "sale price" is the price
used
for the August 31, 2004 Regulation S offering.  We also note that
you
rely on Rule 457(c) to calculate the registration fee.  That
particular subsection is intended for securities that already have
an
existing trading market.  Given that your securities are not
publicly
traded, please revise to refer to the appropriate subsection of
Rule
457.

Outside Front Cover Page
2. We note that your common stock is not traded on any market and
that you have not applied for any listing or quotation.  Please
clarify whether a primary purpose of this offering is to become a
public company in order to facilitate the trading of your stock on
the National Association of Securities Dealers Inc.`s OTC Bulletin
Board upon effectiveness of this registration statement..."
3. Based on your existing disclosure, the common shares registered
for resale are being offered at a fixed price of $0.05 per share.
However, on page 14, you indicate the selling shareholders may
sell
the shares "at prevailing market prices at the time of the sale,
at
varying prices or at negotiated prices."  If your intent is to
offer
the shares at a fixed price until the shares are traded on a
public
market such as the OTC Bulletin Board (at which point, the shares
would be sold at the prevailing market price), then please clearly
indicate this intent on the cover page.
4. The information on the outside front cover page should be
limited
to disclosure required by Item 501(a) of Regulation S-B or
otherwise
material to an investment decision.  Accordingly, please consider
the
following comments:
* delete the reference to Netfone as "a Nevada Corporation;" and
* move the statement regarding underwriter status of brokers and
dealers to another part of the prospectus.
  	Risk Factors, page 6

We have been unable to fund our operations with internally
generated
funds..., page 6
5. You state in this risk factor that during the fiscal year ended
September 30, 2005, you will need $165,000 to fund the development
of
your business and $144,000 to fund operations.   Furthermore, you
state that it is unlikely that you will generate any material
funds
internally in the near future.  Please reconcile these financial
needs and your inability to generate revenues with the statement
in
the following risk factor that you anticipate the need to raise
only
$50,000 in financing during the fiscal year ended September 30,
2005.

The loss of Rafeh Hulays or any of the present directors..., page
7
6. The risks discussed here appear to be the same as those
discussed
under the subheading "We need to retain key personnel..." on page
8.
Please consider combining these two risk factors into one
discussion.
In addition, it appears from page 27 that you have only one
employee
(presumably Mr. Hulays).  Therefore, the identities of "executive
officers" or "key employees," other than Mr. Hulays, are unclear.
Please revise so that the identities of these "key employees" are
disclosed.
7. We note that Mr. Hulays is your only executive officer.  We
also
note from his biographical information that he does not have
financial accounting experience yet he is serving as the Company`s
principal accounting officer.  Consideration should be given to
including a risk factor highlighting the risk of a public company
not
employing a experienced chief financial or chief accounting
officer.
Indicate whether your independent auditor has expressed any
concern
in a management letter about this.

The VoIP telephony market is subject to rapid technological
change..., page 7
8. Please clarify the nature of the "VoIP platforms" provided by
your
vendors.
We are a small company with limited resources..., page 8
9. The risks discussed here appear to be the same as those
discussed
under the subheading "Intense competition in the markets..." on
pages
9-10.  Please consider combining these two risk factors into one
discussion.

We rely on subcontractors..., page 9
10. Please describe in greater detail the services provided by
your
subcontractors, your current arrangements with these
subcontractors,
and how your dependence on the subcontractors poses a risk to your
business.

   We will rely on third party network service providers..., page
9
11. Please describe in greater detail the nature of your
dependence
on third party network service providers, including how your
technology "interface" with these providers.

If we do not develop and maintain successful partnerships for VoIP
telephony..., page 10
12. Please refer to the last two sentences of this discussion.
Please elaborate on the reasons why you may not be able to develop
the partnerships described in this discussion or why you may not
be
able to capitalize on these partnerships.

The failure of IP networks to meet the reliability..., page 10
13. Your current discussion does not describe the risks clearly.
Is
the risk that emerging broadband IP networks do not currently, and
may not ever, meet reliability and quality standards comparable to
those of circuit-switched telephony networks?  Please revise.

Future legislation or regulation of the internet..., page 10
14. Please refer to the last two sentences of this discussion.
Please clarify how the absence of 911 service relates to the risks
posed by future legislation.

Sales of a substantial number of shares..., page 12
15. We note your statement that the "selling stockholders may be
reselling up to 33% of the issued and outstanding shares of [your]
common stock."  Given that you are registering 4,000,000 of the
12,000,000 currently outstanding shares, it is unclear how the
"33%"
figure was calculated.  Please revise or advise.

Other risks, page 13
16. We note that you have a Canadian subsidiary, Netfone Services,
Inc.  If you intend on maintaining the majority of your future
operations through this subsidiary, consider expanding this risk
factor to highlight the possible difficulty of obtaining judgments
and attaching assets of a foreign operating subsidiary.

Forward-Looking Statements, page 13
17. Since Private Securities Litigation Reform Act of 1995 does
not
provide any safe harbor to the Company in connection with this
offering, why is it necessary to refer to this fact here?  Please
delete or advise of its relevance.  Furthermore, if the Private
Securities Litigation Reform Act of 1995`s protections do not
apply,
why do you refer to its coverage on page 28 of your MD&A?  Please
delete this reference too.

Determination of Offering Price, page 14
18. We note your offering price of $0.05 per share is based on the
"last sale price of [your] common stock on August 31, 2004."
Please
clarify whether you are referring to the August 31, 2004 private
placement, as described on page 15.  If so, it appears that the
$0.05
price in that private placement was for units of one common share
and
two warrants, not just common stock.  Accordingly, please clarify
how
you determined the offering price of $0.05 per share (with a
description of the factors considered), as required by Item 505 of
Regulation S-B.
19. We note your statement that "we...have not generated any
material
revenue to date..."  As your financial statements indicate, you
have
not generated any revenue to date.  Please clarify.  Furthermore,
throughout the prospectus, you make forward-looking statements
that
indicate uncertainty.  In many of these instances, these forward-
looking statements should be rephrased to reflect a more definite
expectation.  For example, in MD&A,

* you state that "[w]e have incurred operating losses since
inception, and this is likely to continue in the year ended
September
30, 2005."  This statement should be changed to "[w]e have
incurred
operating losses since inception, and this will continue in the
year
ended September 30, 2005."

* you state that "[t]he issuance of additional equity securities
by
us could result in a significant dilution in the equity interests
of
our current stockholders."  This statement should be changed to
"[t]he issuance of additional equity securities by us will result
in
a significant dilution in the equity interests of our current
stockholders."

Similar changes should be made throughout the rest of your
prospectus, especially in your risk factors section.

Private Placements, page 15

   August 2004 Private Placement, page 15
20. You state here that both the Series A and Series B share
purchase
warrants expire one year from August 31, 2004.  However, Note 4 to
the financial statements indicate they expired on August 31, 2004.
Please clarify.

Plan of Distribution, page 17
21. We note your reference to "pledgee, donee or other transferee"
of
the selling shareholders.  Please note that your registration
statement must identify all selling shareholders and provide Item
507
of Regulation S-B information with respect to all selling
shareholders.  If you are currently aware of any "pledgee, donee
or
transferee" who intends to use this registration statement, they
must
be identified and Item 507 information must be provided.
Supplementally, confirm your understanding of this obligation. You
may add or substitute selling shareholders through the use of Rule
424(b) prospectus supplements only if certain conditions are
satisfied.  For additional guidance, refer to the July 1997
Telephone
Interpretations B.81 and H.3.
22. We note your discussion of the possibility that the selling
shareholders will use the registered shares to satisfy the margin
requirements of their agreements with brokers.  Supplementally,
please tell us whether any of the selling shareholders have
pledged,
or intend to pledge, the registered shares prior to the
effectiveness
of the registration statement. We may have further comments after
reviewing your response.
23. Please refer to the second full paragraph on page 18 ("To the
extent required...").  Please note that Form SB-2 does not allow
the
incorporation by reference of any information.  Therefore, please
delete the reference to "information" that is "incorporated by
reference in this prospectus."

Management, page 19

		Business Experience, page 19
24. To ensure clarity with respect to each officer`s and
director`s
business experience during the past five years, please disclose
the
dates for each position held.

Directors and Executive Officers of Netfone, page 19
25. We note that at the outset you will have only two directors.
If
both do not agree on a corporate governance matter, how will the
deadlock be broken?  If additional board members are being
solicited,
you should highlight this fact.  Regardless, you should consider
including an additional risk factor discussing the corporate
governance limitations of having a board of only two members.

Security Ownership of Certain Beneficial Owners and Management,
page
20
26. Please discuss in the Risk Factors section the fact that your
officers and directors own approximately 66.66% of the common
shares,
which gives them significant control over the company.  Discuss
all
risks faced by other shareholders as a result of this control,
such
as the relative inability of other shareholders to influence the
company and its decisions.
27. Please note that under Rule 13d-3(d)(1) of the Exchange Act, a
person is deemed to beneficially own securities that he can
acquire
within 60 days through the exercise of warrants.  Please ensure
that
your beneficial ownership table includes all shareholders who,
through their ownership of the Series A and B warrants,
beneficially
own more than 5% of your voting shares.  For example, it appears
that
Mr. Dan Perko beneficially owns more than 5% of the voting shares
due
to his ownership of the common shares underlying the warrants.

Description of Business, page 23
28. Your website (www.netfone.ca) suggests that you provide VoIP
service only in certain Canadian metropolitan areas.  We also note
that your Competitive Factors section on page 25 focuses on the
Canadian market.  Please indicate, if true, that your VoIP service
is
available in only certain Canadian markets.  Similarly, if you
intend
to focus initially on only the Canadian markets, you should
disclose
this information clearly.
29. Please clearly state whether your VoIP service is currently
operational.  We note from page 6 that you currently do not have
any
operations and from page 25 that your marketing efforts are
currently
in the preliminary planning stages.  If your service is not
currently
operational, then indicate, if known, when you expect the service
to
be operational.
30. We note a press release issued by NewMarket Technology, Inc.,
dated October 25, 2004, that announces an agreement between
Netfone
and NewMarket`s subsidiary, Xiptel Communications.  According to
press release, Xiptel will provide VoIP service to Netfone under
the
agreement, which is worth $3 million over three years.
Supplementally, please tell us the status of this agreement and
provide us with copies.  If the agreement is in effect, please
disclose its material terms in the Form SB-2.  Note that Item
601(b)(10) of Regulation S-B requires the filing of any material
contract upon which the registrant`s business is substantially
dependent.  Accordingly, please file the agreement as an exhibit.
Finally, if the agreement is in effect, your MD&A section should
discuss your financial obligations arising from the agreement and
how
you intend to meet those obligations.

   Business Development During Last Three Years, page 23
31. Our Current Business, page 23.  We note that in order to use
your
VoIP service, you will supply a terminal adapter to your
customers.
Please indicate whether customers will be charged for this
adapter.
If so, please indicate whether this charge will be sufficient to
cover your cost in supplying the adapter.  If the customers will
not
pay a charge for the adapter, then please discuss how you will
recover the cost of the adapter, if at all.  Please also disclose
how
you will obtain supplies of the adapter.  See Item 101(b)(5) of
Regulation S-B.
32. Please discuss whether your VoIP service allows customers to
place calls only to other users of your service (or another VoIP
service).  For example, will customers be able to place calls to
users of the traditional telephone networks?
33. Please clarify what you mean by "two flavors."  If you mean
that
you will offer two different packages of VoIP services, then
briefly
describe the differences in the services offered in the two
packages.
34. Please