 | 301 Yamato Road, Suite 1240 Boca Raton, FL 33431 Publicly Traded Stock: TRTB |
April 6, 2015
Mara L. Ransom
Assistant Director
United States Securities and Exchange Commission
Division of Corporate Finance
Washington, D.C. 20549
| Re: | True 2 Beauty, Inc. |
| Registration Statement on Form S-1 | |
| Filed February 2, 2015 | |
| Amendment No. 1 to Registration Statement on Form S-1 | |
| Filed February 6, 2015 | |
| File No. 333-201811 | |
| Amendment No. 2 to Registration Statement on Form S-1 | |
| Filed March 20, 2015 | |
| File No. 333-201811 |
Dear Ms. Ransom:
On behalf of True 2 Beauty, Inc., a Nevada company (the “Company”, “we” or “our”), we hereby provide responses to comments (the “Comments) of the staff of the U.S. Securities and Exchange Commission (the “Staff”) issued in a letter dated April 3, 2015 (the “Staff’s Letter”) regarding the Company’s above-referenced Registration on Form S-1, as filed with the U.S. Securities and Exchange Commission (the “Commission”) on February 6, 2015. In order to facilitate your review, we have responded to each of the Comments set forth in the Staff’s Letter, on a point-by-point basis. The Comments are set forth below in bold font and our response follows each respective Comment. Terms used but not defined herein have the respective meanings assigned thereto in the Form S-1.
RiskFactors, page6
| 1. | Consideringyourresponseto comment 16,pleaseprovide arisk factorthatdisclosesyourdependenceupon AppliedDNASciences andthefactthatyourbusiness planmayfail ifyouragreement with AppliedDNASciences is notacted uponbythem inaccordancewith itstermsbecauseyou maynot beable to successfullyinclude“Marks”on theproducts thirdparties sell. Clarifywhetheryouwillproceed withyour businessplaneven ifyou cannot apply“Marks” to some orall of theproductsthat aresold onyourexchange. |
| 301 Yamato Road, Suite 1240 Boca Raton, FL 33431 Publicly Traded Stock: TRTB |
Response to Comment 1
We have added the following risk factor:
Should we fail to secure a permanent agreement with Applied DNA Sciences or another authentication company, we will have to curtail our business plan and our revenues and results of operation will be negatively impacted.
“Our subsidiary, LegacyXChange, Inc., has an agreement with Applied DNA Sciences to provide a “Mark” using their technology and work cooperatively to develop the logistical procedures to mark, follow chain of custody, and authenticate “Marks” for a wide range of product surfaces, which agreement expires on April 30, 2015. Although it is our intent to negotiate and conclude a formal written contractual relationship to establish permanent exclusivity with respect to Applied DNA’s plant DNA on an ongoing revenue share basis, there is no assurance that we will secure such agreement. If we fail to conclude a permanent agreement with Applied DNA or secure an agreement with another authentication service that will provide comparable services, we will be forced to limit our business plan to collectibles and memorabilia, primarily consisting ofsports, celebrity and pop culture related items, without the benefit of offering marking and authentication services. This will result in significant curtailment of our business plan, which will result in our revenues and results of operation being negatively affected and we may even be forced to cease our business, in which case you will lose your entire investment.”
Determination of OfferingPrice, page26
| 2. | Wenoteyourrevisions inresponse topriorcomment 3. Youstatethat thetradingpriceofyourshares on theOTC PinksfromSeptember2014 toOctober2014 was $0.02 to $0.03.However, areview ofyour tradinghistoryindicatesthatyourstockwasquotedatalow of$0.01anda highof$0.04.Please adviseor revise.This commentalsoappliestoyour disclosureon page35under“Market forCommon Equityand RelatedStockholderMatters.” |
Response to Comment 2
We have corrected the previously stated prices in the sections titled “Determination of Offering Price: and “Market for Common Equity and Related Stockholder Matters.”
| 301 Yamato Road, Suite 1240 Boca Raton, FL 33431 Publicly Traded Stock: TRTB |
Description ofBusiness,page27
| 3. | Wenoteyourresponse tocomment 15 in ourletterdatedMarch 2, 2015.Pleasereviseyourdisclosuretoelaborate on the value to purchasers orsellers tohavesecondaryitemsmarkedastheywill not beregistered in thedatabasethatprovides authentication. |
Response to Comment 3
We have added the following disclosure noted in bold below:
DESCRIPTION OF BUSINESS
“Industry Background
Online Shopping
The collectible and memorabilia business is a multi-billion-dollar industry, ranging from sports related products to home, business and personal goods. Many companies specialize in authenticating items of value, using expert opinions, holograms, videos, and other means of guaranteeing items are real. We intend to enhance the existing market for authentic memorabilia utilizing anti-counterfeiting technologies to enable each item sold on the site to have a “Mark” applied to either it’s surface or sealed packaging around the item. These “ Marks” in most cases will be invisible unless a dye is added to ensure visibility by the naked eye. “Marks” will either contain Plant DNA or Rare Earth Minerals, depending upon the particular items surface. The “Marks” will be applied through the use of either ink or a small brush. These “Marks” will adhere to surfaces through the lifespan of the item, and in most cases cannot be removed or counterfeited unless the item is destroyed. These “Marks” will provide the basis for tracking ownership and ongoing verification to ensure the item has been “Marked “ by LegacyXChange.Our site will offer 2 classifications of products for sale; Original and Secondary, products sold in both classes will be “Marked”. Original are “Marked” before they are sold, Secondary are “Marked” once they have been sold. Every item sold and “Marked” on our site will be registered in our database, assuring buyers the ability to authenticate “Marks” and track repetitive sales of items on the site, to allow for a revenue share program.”
| 4. | Wenoteyourresponse tocomment 16 in ourletterdatedMarch 2, 2015.Regardless oftheremainingterm of thecontract itappearsthat this is amaterialcontracttoyourbusinessandas such isrequired to befiled.Pleaserefer toItem 601(b)(10)of RegulationS-K. |
Response to Comment 4
We have filed the agreement with Applied DNA Sciences as Exhibit 10.1
| 301 Yamato Road, Suite 1240 Boca Raton, FL 33431 Publicly Traded Stock: TRTB |
Management’sDiscussionandAnalysis ofFinancial Condition and ResultsofOperations
Critical AccountingPoliciesandEstimates,page38
| 5. | Youraccountingforconvertiblepromissorynotesand therelated embeddedderivativesaresignificant items inyourconsolidated financialstatements.Accordingly,pleaserevise toinclude adiscussion ofsuchitems withinyourcritical accounting policiesandestimates ortell us why youbelievetheydo notrepresentcriticalaccountingpolicies.Thisdisclosureshouldsupplement, notduplicate, the description of accountingpoliciesthatarealreadydisclosedin thenotes to the financialstatements.Refer toSection V ofSECReleaseNo. 33-8350. |
Response to Comment 5
We have revised our filingtoinclude adiscussion forconvertiblepromissorynotesand therelated embeddedderivativeswithinourcritical accounting policiesandestimates.
Comparison ofResults ofOperations fortheThree and NineMonths EndedDecember 31,2014and 2013
Otherincome(expense),page43
| 6. | Withinyourdiscussion andanalysisofresults ofoperations,pleasedisclose theunderlying reasonforthechanges in addition toidentifyingthesignificant changes inparticular line items. Forexample, whileyou disclose thatyourecognizeda derivativeliabilityduringthe periodendedDecember 31,2014andincurred aloss from the changeinfairvalue ofderivativeliabilities of approximately$551,000,you donotidentifythefactors that causedthechangeinfair value. |
Response to Comment 6
| Withinourdiscussion andanalysisofresults ofoperations, we have disclosed theunderlying reasonforthechanges in addition toidentifyingthesignificant changes inparticular line items includingidentifyingthefactors that causedthechangeinfair value. |
ConsolidatedFinancial Statements,March 31, 2014and 2013
Notes to ConsolidatedFinancialStatements
Note2–Basis ofPresentation, GoingConcern and SummaryofSignificant AccountingPolicies
| 301 Yamato Road, Suite 1240 Boca Raton, FL 33431 Publicly Traded Stock: TRTB |
Stock-basedcompensation,pageF-10
| 7. | We note your response to prior comment 22. Please tell us whether the shares sold for cash at an average price of $0.0551 during the fiscal years ended March 31, 2013 and 2014, and the nine months ended December 31, 2014 were to unrelated third parties. If some or all of the sales were to related parties, please tell us in detail how this affected your determination of fair value of the shares issued to non-employees. |
Response to Comment 7
The shares sold for cash at an average price of $0.0551 during the fiscal years ended March 31, 2013 and 2014, and the nine months ended December 31, 2014 were to unrelated third parties. No sales were made to related parties.
Item 15.Recent Sales ofUnregistered Securities,pageII-2
| 8. | Wenotethat inyour responseto comment 13 in ourletterdatedMarch 2, 2015 thatyousold $400,000 in Notes.Thistransaction is notreflected inyourItem 15 disclosures.Please revise toinclude thesenotesandensureyourdisclosurereflects theamountsyouareseekingtoregister. |
Response to Comment 8
We have added the following disclosure to the “Recent Sales of Unregistered Securities” Section:
“In October and November 2014, we entered into 7 convertible promissory note agreements (“Convertible Notes” or “Convertible Note”), providing for the issuance of 10% convertible promissory notes with an aggregate principal amount of $400,000. The Convertible Notes are due and payable on the third anniversary of the date of issuance through October 2017. The below named investors are entitled, at their option, at any time after the issuance of these Convertible Notes, to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into our common stock at a conversion price for each share of common stock equal to $0.02. The 7 convertible note agreements we entered into are: (a) a $95,000 Convertible Note on October 15, 2014 with Ascendant Partners LLC; (b) a $75,000 Convertible Note with Dina M. Palermo/Jeffrey Smith JTWROS on October 21, 2014; (c) a $150,000 Convertible Note with the Eisenberg Family Foundation on October 23, 2014; (d) a $25,000 with Plantation Partners LLC on October 23, 2014; (e) a $5,000 Convertible Note with Gerald E. Commissionn on November 5, 2014; (f) a $25,000 Convertible Note with DTMFS LP on November 11, 2014; and (g) a $25,000 Convertible Note with David Stefansky on November 19, 2014.The 7 convertible notes reflect conversion rights of 26,000,000 shares, 20,000,000 shares of which correspond to the aggregate principal loan amount of $400,000 and 6,000,000 shares that correspond to interest accrued should the notes be carried to maturity.”
| 301 Yamato Road, Suite 1240 Boca Raton, FL 33431 Publicly Traded Stock: TRTB |
In theevent werequestacceleration oftheeffective dateofthe pendingregistrationstatement, we acknowledgethat:
| · | should the Commissionor thestaff,actingpursuant todelegatedauthority,declarethefilingeffective, itdoes notforeclose the Commissionfromtakinganyaction withrespectto the filing; |
| · | the action ofthe Commission orthestaff,actingpursuant todelegatedauthority, indeclaringthefilingeffective,does notrelievethecompanyfrom its full responsibilityforthe adequacyandaccuracyof thedisclosurein the filing; and |
| · | the Companymaynot assertstaffcomments and the declaration of effectiveness as adefense in anyproceedinginitiatedbythe Commission oranyperson under thefederalsecuritieslaws oftheUnitedStates. |
You maycontact, William Bollander, CEO,at (800) 630-4190 or Frederick Lehrer, the Company’s legal counsel, at (321) 972-8060 ifyouhaveanyquestions regarding responses and comments or with any other questions.
| Sincerely, | |
| /s/ William Bollander | |
| William Bollander | |
| CEO |