SEC Company Response from Citius Pharmaceuticals, Inc. (CTXR) (CIK 0001506251) (CTXR) — Apr 19, 2011
Citius Pharmaceuticals, Inc. (CTXR) (CIK 0001506251)
Date: April 19, 2011 · CIK: 0001506251 · Accession: 0001019687-11-001263
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-170781
Letter
RE: TRAIL ONE, INC.
trailone_corres.htm
TRAIL ONE, INC.
1844 South 3850 West
Salt Lake City, UT 84104
April 19, 2011
United States Securities and Exchange Commission
Washington D.C. 20549
Amendment No. 3 to Registration Statement on Form S-1
Filed on April 13, 2011
File No. 333-170781
Attention: Tonya Bryan of Julie F. Rizzo’s office
To Whom It May Concern:
In response to your letter dated March, 30, 2011, TRAIL ONE, INC. wishes to address the following comments.
General Overview
1. Please revise to include pages 1 through 5 as your page numbers currently begin on page 6. In addition, please update the reference to the risk factors section on the prospectus cover page.
We have noted this comment and we have revised our page numbering system to include pages 1 through 5, with the Prospectus Summary beginning on page number 1.
Registration Statement Cover Page
Calculation of Registration Fee Table
2. It appears that the Amount of Registration Fee of $.45 was calculated using a different rate than the rate of $71.30 per million dollars that was in effect at the time of the initial filing of this registration statement. Please advise or revise your fee table accordingly.
We have noted your comments and have revised our fee table to reflect the rate of $116.10 per million which was in effect at the time of the initial filling of this registration statement by calculating the pro-rata fee of $0.57 using the following calculations: ($8,000/$1,000,000 * $116.10 = $0.93).
3. Additionally, it appears that you are determining the registration fee pursuant to Rule 457(a) as opposed to rule 457(o). Please advise or revise you fee table accordingly.
We have noted your comment and have revised our fee table to 457(a) as opposed to rule 457 (o).
United States Securities and Exchange Commission
April 19, 2011
Page 2
Prospectus Summary, page 6
General Introduction, page 6
4. We note your response to our prior comment one and reissue our comment in part. Please advise how you intend to market to the wholesale market when you will not produce any license plate tags until you have sold the product to the end user. In addition, please clarify what product will actually be sold to the whole sale customer and at what price.
We intend to market our sales to both the wholesale and retail markets on a ‘pre-order basis’. With respect to the wholesale market, we will solicit bulk sales to wholesalers who will order our products from a catalogue prior to the commencement of our manufacturing process which they will then be able to re-sell to the general public, as well as, through licensing ventures whereby we will sell licenses to enable a retailer to manufacture and sell our products directly to the consumers themselves. Our retail sales will be made to the general public who will order our products on a, ‘made to order basis’ through the internet or salesmen.
Also, we acknowledge the Commission’s comments with respect to the products and anticipated sales prices, and have revised the disclosure throughout as follows:
Trail One, Inc. is presently marketing a license plate tag for automobiles. Trail One, Inc. will market an aluminum license plate tag for automobiles. It is an aluminum license plate bracket which will be decorated in any manner requested by the wholesale customer, and sold to the wholesale customer, at prices ranging from $80 to $700. Since its inception, on September 9, 2010 Trail One has incurred losses to September 30, 2010.
Trail One, Inc. is presently attempting to market its sole intended product (which has not yet been produced), an aluminum license plate tag for automobiles in the Salt Lake City, Utah area.
License plate tags are more commonly known as license plate frames/holders. Our product is a computer generated license plate tag, produced by using a highly sophisticated laser guided CNC metal cutting flat surface screened lathe/cutter, which will be made to order to each specific customer’s wants and desires with an individualized custom look. The material used for each license plate tag will be aluminum. Then each individualized license plate tag will be embellished with personalized script/saying to that own person’s taste. We intend to sub-contract the actual manufacturing of each license plate tag to a manufacturer to our approved specifications, but will be taking the product to market by our own marketing efforts. Each tag will be a special order by the end user. The end user will be able to order the tag directly from Trail One or by placing a specialty order with a wholesaler. We are attempting to position ourselves to market our product to both the wholesale and retail markets, but at this time Trail One does not have any wholesalers marketing the product. We intend to market our sales to both the wholesale and retail markets on a ‘pre-order basis’. With respect to the wholesale market, we will solicit bulk sales to wholesalers who will order our products from a catalogue prior to the commencement of our manufacturing process which they will then be able to re-sell to the general public, as well as, through licensing ventures whereby we will sell licenses to enable a retailer to manufacture and sell our products directly to the consumers themselves. Our retail sales will be made to the general public who will order our products on a, ‘made to order basis’ through the internet or salesmen.
5. We note your response to our prior comment two and reissue our comment in part. You disclose on pages 6, 22 and 28 that your monthly burn rate is $1,000. We also note your disclosures on pages 6, 15, and 27 where you state that your monthly burn rate is $43,958 during the first fiscal year, $10,000 during six months, and $4,000 per month, respectively. Please revise your disclosure for consistency or advise.
We have noted your comments and have revised our burn rate throughout to be consistent based on a projected monthly burn rate of $2,500.
United States Securities and Exchange Commission
April 19, 2011
Page 3
6. We note your disclosure in the third to last paragraph of this section that you plan to raise capital to fund your business through equity security sales. This disclosure appears to conflict with your disclosures in the last paragraph of the Business Development section that you plan to raise money through debt instruments or private financing. Please advise or revise your disclosure for consistency here and elsewhere in the registration statement as applicable. Additionally, please revise your disclosure to clarify that there is no guarantee you will be able to raise funds through equity security sales and that you have no agreements in place to raise money through debt instruments or private financing here and throughout you registration statement as applicable.
We have noted this comment and have revised the disclosure on pages 1 and 2 as follows:
We expect to continue to incur losses for at least the next 12 months. We do not expect to generate revenue that is sufficient to cover our expenses, and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next twelve months. We will need to obtain additional financing to conduct our day-to-day operations, and to fully execute our business plan. We plan to raise the capital necessary to fund our business through the sale of equity securities, debt instruments or private financing. (See "Plan of Operation")
Our independent auditors have added an explanatory paragraph to their report of our audited financial statements for the year ended September 30, 2010, stating that our net loss of ($15,500), lack of revenues and dependence on our ability to raise additional capital to continue our business, raise substantial doubt about our ability to continue as a going concern. Our financial statements and their explanatory notes included as part of this prospectus do not include any adjustments that might result from the outcome of this uncertainty. They are no guarantee that we will be able to raise funds through the sale of equity securities and we have no agreement in place to raise money through debt instruments or private financing. If we fail to obtain additional financing, either through an offering of our securities or by obtaining loans, we may be forced to cease our planned business operations altogether.
Business Development, page 7
Subsequent Sale Strategy, page 7
7. We note your response to our prior comment five and reissue our comment in part. Please revise the first paragraph of this section to remove all marketing language. We note, for example, “our products offers a very high rate of exclusivity,” “high end automobile enthusiast, including middle to high income earning individuals in the public section,” “high end retailers,” “high end catalog companies that cater specifically to the elite/rich & famous clientele,” and “our product to be distinguished, exclusive and refined.” Please revise similar disclosures on pages 23 and 32 of your filing.
We have noted your comment and have revised throughout as follows:
We have established a one-prong sales approach; our approach utilizes direct sales through Ralph Montrone. Our direct sales will be conducted by Mr. Montrone. He will market the product locally in the Salt Lake City, Utah area to automobile specialty shops. His current marketing strategy consists of various Point of Sale material including posters and flyers developed by Mr. Montrone in the past several months.
We intend to derive income from these sales and our goal is to establish brand recognition.
United States Securities and Exchange Commission
April 19, 2011
Page 4
8. We note your response to our prior comment seven. Because you state that you have no agreement in place to advertise with SEMA, International Auto Show, World of Wheels – Indianapolis, or DUB Auto Show Tour, please remove references to these entities on page 7, 23 and 32.
We have noted your comment and have revised throughout as follows:
Trail One, Inc. will commence marketing license plate tags for sale to the general public. The Company is presently developing its marketing program to sell license plate tags to the general public. . We also intend to market our product through our website: www.trailonecnc.com which is currently under development/construction. The Company has not sold the product to anyone at this time. Trail One, Inc. is considered a development stage company because it has not commenced its major operations. In addition the Company has not achieved any revenue in connection with its business to date. As a result we are a startup company, that is, we have no operating history or revenue, and are at a competitive disadvantage.
Risk Factors, page 8
9. Please revise the second sentence of this paragraph to clarify which risks and uncertainties are “described below” and the third sentence of this section to clarify “any of the following risks.” Additionally, please revise the last sentence of this section to clarify that all known material risks are discussed in the Risk Factor Section.
We have noted your comment and have revised the disclosure as follows:
The Company's financial condition, business, operation and prospects involve a high degree of risk. You are urged to carefully read and consider the risks and uncertainties described on page 10 of this prospectus entitled Risk Factors” as well as the other information in this report before deciding to invest in our Company. All known materials risks are discussed in the Risk Factors section of this prospectus. If any of the risks described on Page 10 of this Prospectus entitled Risk Factors are realized, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means that our stockholders could lose all or a part of their investment.
Risk Factors, page 11
We Require Additional Capital Which We May Not Be Able to Raise, page 11
10. We note your response to our prior comment eight. Please also reconcile your disclosure here that you will require approximately $95,000 with your disclosure in the Prospectus Summary, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Plan of Operation sections that you will require $75,000 in funds. Additionally, please clarify where you accounted the cost of $10,000 for development of relationships with strategic partners that appears on page 15. Similarly, revise your disclosure to clarify what is included in “regulatory processes “and disclose the applicable cost or advise.
We have noted your comments and have revised the $95,000 stated in the Company’s disclosure in the Prospectus Summary to $75,000 to reconcile with Management’s Discussion and Analysis of Financial Condition and Results of Operations and Plan of Operation sections that we will require $75,000 in funds.
Additionally, we have deleted the statement wherein the Company claims that it expects to spend $10,000 for the development of “strategic business partners”.
United States Securities and Exchange Commission
April 19, 2011
Page 5
11. We note your disclosure in this risk factor that you have spent approximately $18,000 through December 31, 2010 and in the eighth paragraph on page 29 that you estimate the costs to register the 8,000,000 shares of common stock at $18,000. We also note your disclosure in the Operating Expenses paragraph on page 25 and the last full paragraph on page 26 in which it appears you have spent more than $18,000 through December 31, 2010. Please advise or revise your disclosure for consistency.
We acknowledge the commission’s comments and have revised our disclosures throughout to reflect our new estimated cost to register the shares of common stock at $40,000, which is consistent with the approximate $24,500 we have spent through December 31, 2010 and our estimated monthly burn rate of $2,500.
12. Please also revise this risk factor to clarify whether you have any agreement in place with any investment bankers or potential investors to provide you with any financing. Additionally, please revise your disclosure to explain what is meant by negotiating “the best transaction possible”.
We have noted your comments and have revised the disclosure as follows:
Although we have from time to time reviewed opportunities provided to us by investment bankers or potential investors in regard to additional equity financings, there can be no assurance that additional financing will be available when needed, or if available, will be available on acceptable terms. The Company also does not have any agreement in place with any investment bankers or potential investors to provide the Company with any financing. Insufficient funds may prevent us from implementing our business strategy and will require us to further delay, scale back or eliminate our marketing program, or to scale back or eliminate our other operations.
In order to obtain working capital we will continue to:
●
seek capital through debt or equity financing which may include the issuance of convertible debentures or convertible preferred stock whose rights and preferences are superior to those of the common stockholders, and
●
seek advantageous financial transactions for the Company while taking into account the impact on our shareholders, dilution, loss of voting power and the possibility of a change-in-control.
In the event that we issue convertible preferred stock, page 12
13. Please revise this risk factor to place the title in all capital letters to conform with the titles of the other risk factors in this section. Additionally, please revise this risk factor to state that, if true, substantial dilution can occur to existing shareholders if convertible debentures are issued without a limit on the number of shares that can
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filename1.htm
trailone_corres.htm
TRAIL ONE, INC.
1844 South 3850 West
Salt Lake City, UT 84104
April 19, 2011
United States Securities and Exchange Commission
Washington D.C. 20549
RE: TRAIL ONE, INC.
Amendment No. 3 to Registration Statement on Form S-1
Filed on April 13, 2011
File No. 333-170781
Attention: Tonya Bryan of Julie F. Rizzo’s office
To Whom It May Concern:
In response to your letter dated March, 30, 2011, TRAIL ONE, INC. wishes to address the following comments.
General Overview
1. Please revise to include pages 1 through 5 as your page numbers currently begin on page 6. In addition, please update the reference to the risk factors section on the prospectus cover page.
We have noted this comment and we have revised our page numbering system to include pages 1 through 5, with the Prospectus Summary beginning on page number 1.
Registration Statement Cover Page
Calculation of Registration Fee Table
2. It appears that the Amount of Registration Fee of $.45 was calculated using a different rate than the rate of $71.30 per million dollars that was in effect at the time of the initial filing of this registration statement. Please advise or revise your fee table accordingly.
We have noted your comments and have revised our fee table to reflect the rate of $116.10 per million which was in effect at the time of the initial filling of this registration statement by calculating the pro-rata fee of $0.57 using the following calculations: ($8,000/$1,000,000 * $116.10 = $0.93).
3. Additionally, it appears that you are determining the registration fee pursuant to Rule 457(a) as opposed to rule 457(o). Please advise or revise you fee table accordingly.
We have noted your comment and have revised our fee table to 457(a) as opposed to rule 457 (o).
United States Securities and Exchange Commission
April 19, 2011
Page 2
Prospectus Summary, page 6
General Introduction, page 6
4. We note your response to our prior comment one and reissue our comment in part. Please advise how you intend to market to the wholesale market when you will not produce any license plate tags until you have sold the product to the end user. In addition, please clarify what product will actually be sold to the whole sale customer and at what price.
We intend to market our sales to both the wholesale and retail markets on a ‘pre-order basis’. With respect to the wholesale market, we will solicit bulk sales to wholesalers who will order our products from a catalogue prior to the commencement of our manufacturing process which they will then be able to re-sell to the general public, as well as, through licensing ventures whereby we will sell licenses to enable a retailer to manufacture and sell our products directly to the consumers themselves. Our retail sales will be made to the general public who will order our products on a, ‘made to order basis’ through the internet or salesmen.
Also, we acknowledge the Commission’s comments with respect to the products and anticipated sales prices, and have revised the disclosure throughout as follows:
Trail One, Inc. is presently marketing a license plate tag for automobiles. Trail One, Inc. will market an aluminum license plate tag for automobiles. It is an aluminum license plate bracket which will be decorated in any manner requested by the wholesale customer, and sold to the wholesale customer, at prices ranging from $80 to $700. Since its inception, on September 9, 2010 Trail One has incurred losses to September 30, 2010.
Trail One, Inc. is presently attempting to market its sole intended product (which has not yet been produced), an aluminum license plate tag for automobiles in the Salt Lake City, Utah area.
License plate tags are more commonly known as license plate frames/holders. Our product is a computer generated license plate tag, produced by using a highly sophisticated laser guided CNC metal cutting flat surface screened lathe/cutter, which will be made to order to each specific customer’s wants and desires with an individualized custom look. The material used for each license plate tag will be aluminum. Then each individualized license plate tag will be embellished with personalized script/saying to that own person’s taste. We intend to sub-contract the actual manufacturing of each license plate tag to a manufacturer to our approved specifications, but will be taking the product to market by our own marketing efforts. Each tag will be a special order by the end user. The end user will be able to order the tag directly from Trail One or by placing a specialty order with a wholesaler. We are attempting to position ourselves to market our product to both the wholesale and retail markets, but at this time Trail One does not have any wholesalers marketing the product. We intend to market our sales to both the wholesale and retail markets on a ‘pre-order basis’. With respect to the wholesale market, we will solicit bulk sales to wholesalers who will order our products from a catalogue prior to the commencement of our manufacturing process which they will then be able to re-sell to the general public, as well as, through licensing ventures whereby we will sell licenses to enable a retailer to manufacture and sell our products directly to the consumers themselves. Our retail sales will be made to the general public who will order our products on a, ‘made to order basis’ through the internet or salesmen.
5. We note your response to our prior comment two and reissue our comment in part. You disclose on pages 6, 22 and 28 that your monthly burn rate is $1,000. We also note your disclosures on pages 6, 15, and 27 where you state that your monthly burn rate is $43,958 during the first fiscal year, $10,000 during six months, and $4,000 per month, respectively. Please revise your disclosure for consistency or advise.
We have noted your comments and have revised our burn rate throughout to be consistent based on a projected monthly burn rate of $2,500.
United States Securities and Exchange Commission
April 19, 2011
Page 3
6. We note your disclosure in the third to last paragraph of this section that you plan to raise capital to fund your business through equity security sales. This disclosure appears to conflict with your disclosures in the last paragraph of the Business Development section that you plan to raise money through debt instruments or private financing. Please advise or revise your disclosure for consistency here and elsewhere in the registration statement as applicable. Additionally, please revise your disclosure to clarify that there is no guarantee you will be able to raise funds through equity security sales and that you have no agreements in place to raise money through debt instruments or private financing here and throughout you registration statement as applicable.
We have noted this comment and have revised the disclosure on pages 1 and 2 as follows:
We expect to continue to incur losses for at least the next 12 months. We do not expect to generate revenue that is sufficient to cover our expenses, and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next twelve months. We will need to obtain additional financing to conduct our day-to-day operations, and to fully execute our business plan. We plan to raise the capital necessary to fund our business through the sale of equity securities, debt instruments or private financing. (See "Plan of Operation")
Our independent auditors have added an explanatory paragraph to their report of our audited financial statements for the year ended September 30, 2010, stating that our net loss of ($15,500), lack of revenues and dependence on our ability to raise additional capital to continue our business, raise substantial doubt about our ability to continue as a going concern. Our financial statements and their explanatory notes included as part of this prospectus do not include any adjustments that might result from the outcome of this uncertainty. They are no guarantee that we will be able to raise funds through the sale of equity securities and we have no agreement in place to raise money through debt instruments or private financing. If we fail to obtain additional financing, either through an offering of our securities or by obtaining loans, we may be forced to cease our planned business operations altogether.
Business Development, page 7
Subsequent Sale Strategy, page 7
7. We note your response to our prior comment five and reissue our comment in part. Please revise the first paragraph of this section to remove all marketing language. We note, for example, “our products offers a very high rate of exclusivity,” “high end automobile enthusiast, including middle to high income earning individuals in the public section,” “high end retailers,” “high end catalog companies that cater specifically to the elite/rich & famous clientele,” and “our product to be distinguished, exclusive and refined.” Please revise similar disclosures on pages 23 and 32 of your filing.
We have noted your comment and have revised throughout as follows:
We have established a one-prong sales approach; our approach utilizes direct sales through Ralph Montrone. Our direct sales will be conducted by Mr. Montrone. He will market the product locally in the Salt Lake City, Utah area to automobile specialty shops. His current marketing strategy consists of various Point of Sale material including posters and flyers developed by Mr. Montrone in the past several months.
We intend to derive income from these sales and our goal is to establish brand recognition.
United States Securities and Exchange Commission
April 19, 2011
Page 4
8. We note your response to our prior comment seven. Because you state that you have no agreement in place to advertise with SEMA, International Auto Show, World of Wheels – Indianapolis, or DUB Auto Show Tour, please remove references to these entities on page 7, 23 and 32.
We have noted your comment and have revised throughout as follows:
Trail One, Inc. will commence marketing license plate tags for sale to the general public. The Company is presently developing its marketing program to sell license plate tags to the general public. . We also intend to market our product through our website: www.trailonecnc.com which is currently under development/construction. The Company has not sold the product to anyone at this time. Trail One, Inc. is considered a development stage company because it has not commenced its major operations. In addition the Company has not achieved any revenue in connection with its business to date. As a result we are a startup company, that is, we have no operating history or revenue, and are at a competitive disadvantage.
Risk Factors, page 8
9. Please revise the second sentence of this paragraph to clarify which risks and uncertainties are “described below” and the third sentence of this section to clarify “any of the following risks.” Additionally, please revise the last sentence of this section to clarify that all known material risks are discussed in the Risk Factor Section.
We have noted your comment and have revised the disclosure as follows:
The Company's financial condition, business, operation and prospects involve a high degree of risk. You are urged to carefully read and consider the risks and uncertainties described on page 10 of this prospectus entitled Risk Factors” as well as the other information in this report before deciding to invest in our Company. All known materials risks are discussed in the Risk Factors section of this prospectus. If any of the risks described on Page 10 of this Prospectus entitled Risk Factors are realized, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means that our stockholders could lose all or a part of their investment.
Risk Factors, page 11
We Require Additional Capital Which We May Not Be Able to Raise, page 11
10. We note your response to our prior comment eight. Please also reconcile your disclosure here that you will require approximately $95,000 with your disclosure in the Prospectus Summary, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Plan of Operation sections that you will require $75,000 in funds. Additionally, please clarify where you accounted the cost of $10,000 for development of relationships with strategic partners that appears on page 15. Similarly, revise your disclosure to clarify what is included in “regulatory processes “and disclose the applicable cost or advise.
We have noted your comments and have revised the $95,000 stated in the Company’s disclosure in the Prospectus Summary to $75,000 to reconcile with Management’s Discussion and Analysis of Financial Condition and Results of Operations and Plan of Operation sections that we will require $75,000 in funds.
Additionally, we have deleted the statement wherein the Company claims that it expects to spend $10,000 for the development of “strategic business partners”.
United States Securities and Exchange Commission
April 19, 2011
Page 5
11. We note your disclosure in this risk factor that you have spent approximately $18,000 through December 31, 2010 and in the eighth paragraph on page 29 that you estimate the costs to register the 8,000,000 shares of common stock at $18,000. We also note your disclosure in the Operating Expenses paragraph on page 25 and the last full paragraph on page 26 in which it appears you have spent more than $18,000 through December 31, 2010. Please advise or revise your disclosure for consistency.
We acknowledge the commission’s comments and have revised our disclosures throughout to reflect our new estimated cost to register the shares of common stock at $40,000, which is consistent with the approximate $24,500 we have spent through December 31, 2010 and our estimated monthly burn rate of $2,500.
12. Please also revise this risk factor to clarify whether you have any agreement in place with any investment bankers or potential investors to provide you with any financing. Additionally, please revise your disclosure to explain what is meant by negotiating “the best transaction possible”.
We have noted your comments and have revised the disclosure as follows:
Although we have from time to time reviewed opportunities provided to us by investment bankers or potential investors in regard to additional equity financings, there can be no assurance that additional financing will be available when needed, or if available, will be available on acceptable terms. The Company also does not have any agreement in place with any investment bankers or potential investors to provide the Company with any financing. Insufficient funds may prevent us from implementing our business strategy and will require us to further delay, scale back or eliminate our marketing program, or to scale back or eliminate our other operations.
In order to obtain working capital we will continue to:
●
seek capital through debt or equity financing which may include the issuance of convertible debentures or convertible preferred stock whose rights and preferences are superior to those of the common stockholders, and
●
seek advantageous financial transactions for the Company while taking into account the impact on our shareholders, dilution, loss of voting power and the possibility of a change-in-control.
In the event that we issue convertible preferred stock, page 12
13. Please revise this risk factor to place the title in all capital letters to conform with the titles of the other risk factors in this section. Additionally, please revise this risk factor to state that, if true, substantial dilution can occur to existing shareholders if convertible debentures are issued without a limit on the number of shares that can