January 24, 2006
Mail Stop 4561
Robert B. Dillon, President
Exobox Technologies Corporation
6303 Beverly Hill, Suite 210
Houston, TX 77057
Re: Exobox Technologies Corporation
Registration Statement on Form 10-SB
Filed December 21, 2005
File No. 0-51689
Dear Mr. Dillon:
We have reviewed your filing and have the following comments.
Please note that your filing will go effective by lapse of time
sixty
days from the date upon which you filed this registration
statement
pursuant to Section 12(g) of the Securities Exchange Act of 1934.
Considering the nature and extent of our comments, we urge that
you
either promptly amend the registration statement in order to allow
the staff sufficient time for review prior to effectiveness or
withdraw the filing as soon as possible in order that it not go
effective by lapse of time. Please file an amendment by February
3,
2006 to comply with the staff`s comments. If you cannot amend the
filing by that time to comply with the staff`s comments, you
should
consider withdrawing the filing before it becomes effective by
operation of law on February 20, 2006 and then refiling it at such
time as you can comply. Please note that you should file the
request
for withdrawal by February 17, 2006.
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 any other aspect of our review. Feel free to call us
at
the telephone numbers listed at the end of this letter.
Form 10-SB
General
1. We note that Part I of your Form 10-SB contains statements that
you are relying on the statutory safe harbor afforded by Section
27A
of the Securities Act and Section 21E of the Securities Exchange
Act
of 1934. Please be advised that these safe harbors are not
available
to non-reporting issuers. Please revise your disclosure to remove
the safe harbor language or disclose that such safe harbors are
not
available to Exobox. We note similar disclosure in various press
releases as well.
Business
2. Please consider including disclosure of the address of your
website. See Item 101(c)(3) of Regulation S-B.
History and Organization
Business Strategy
3. Please fully describe the business history of Exobox
Technologies
Corporation, a Nevada corporation and Exobox Technologies
Corporation, a Delaware corporation, including all former names.
As
a part of this discussion, please disclose the terms of the
reverse
acquisition and the parties involved, the price paid, how the
price
was determined, the number of holders of record of each company,
and
the business purpose of the transaction. In this regard, we note
that both companies were non-reporting entities at the time of the
acquisition. Further Exobox Technologies, a Nevada corporation,
appears to have been a "blank check" company, since according to
note
1 of its financial statements it had no operations as of July 31,
2005 and was "seeking a merger partner."
4. Please revise your business discussion to clarify the current
status of your business operations, your proprietary technology,
and
products (i.e., SUEZ and SOS software). Your current description
is
extremely general. You need to provide an investor with a clear
understanding of your business, your day-to-day operations, the
current status of your products, timetables associated with the
products, and the costs involved at each stage. Clarify whether
you
intend to use third-party vendors to develop your products in the
future. In this regard, we note a November 28, 2005 Business Wire
article stating that your agreement with OSR provides that OSR
will
develop and provide Exobox a commercially viable product for
Windows
within eleven months, for a turnkey fee once it has completed the
software development plan; we are unable to locate comparable
disclosure in your filing.
5. We note that your second risk factor discloses that Exobox will
require $3,000,000 in additional financing to fund completion of
your
product development. Please disclose in this section and
elsewhere,
as necessary, how that figure was derived.
6. Please define the term, "CRC checking," as used in these
sections.
7. Please disclose the results of the evaluation of your product
by
the National Institute of Standards and Technology and by OSR Open
Systems Resources, Inc. In this regard, please briefly identify
these organizations and disclose that you now have an agreement
with
OSR for them to adapt your product for use in a Microsoft Windows
environment. Please disclose the material terms of the agreement.
8. Please support your claims for the proactive nature and
effectiveness of your product, describing the environment in which
it
has been shown to be so.
9. Explain the role of MCC Financial Services in Exobox and any
compensatory arrangements. We note two press releases announcing
the
retention of that firm.
Management`s Discussion and Analysis
General
10. We note that you have not reported any revenue. In view of
this,
explain how you have considered providing the disclosure required
by
Item 303(a) of Regulation S-B.
Results of Operations
11. Please expand the discussion of the changes in costs to
include
reasons for those changes rather than simply quantifying the
changes.
We particularly note the significant decrease in research and
development expense. Please include a discussion of the reason(s)
for this change.
Liquidity and Capital Resources
12. You disclose that you had working capital of $857,370 as of
October 31, 2005. Explain to us how this amount was determined.
13. Please describe the principal terms of the PIPE financing,
including the identity of the company with whom you have made the
arrangements - Manillo Investors. Clarify, if true, that you have
arranged for this financing in order to pay for development of
your
product by OSR.
Item 5. Directors, Executive Officers, Promoters, and Control
Persons
14. Please identify the specific employers for each named person
for
each of the past five years. See Item 401 of Regulation S-B.
Executive Compensation
15. Please see Item 402(b) of Regulation S-B, which specifies that
the compensation reported in the Summary Compensation Table, must
be
for the last fiscal year. In your case, that would be July 31,
2005,
and any subsequent payments should be discussed in the narrative.
16. Your risk factor discussion states that you have six
employment
agreements. We presume that these agreements are with named
executive officers. As such, please disclose the material terms
and
file the agreements as exhibits. Material commitments under these
agreements should be disclosed in Management`s Discussion and
Analysis.
Recent Sales of Unregistered Securities
17. Please revise this section to disclose all issuances of
unregistered securities by Exobox Nevada and Exobox Delaware for
the
past three years. See Item 701 of Regulation S-B. Disclose the
specific exemption upon which each entity relied in each issuance
of
its securities and include the facts and circumstances that
support
your claim to that exemption. Where you have relied upon Section
4(2)
and/or Rule 506, please state whether the investors were
accredited
or sophisticated with access to information.
Financial Statements
General
18. Based on information contained in various parts of your
filing,
it appears that the transaction between Exobox and Exobox Delaware
represents, for accounting purposes, a recapitalization of Exobox
Delaware. If so, then the transaction would not be considered a
business combination for accounting purposes. In that case,
presentation of financial statements of the accounting acquiree,
Exobox, or pro forma financial information reflecting the
transaction
would not be appropriate. Given this, explain to us your basis
for
concluding that presentation of this information is appropriate.
19. Explain to us, in reasonable detail, your basis for
concluding
that Exobox Delaware is the accounting acquirer. As part of your
response, clearly describe all material terms and rights of the
preferred shares. Also, explain how the conversion terms of the
preferred shares operate. Consider providing an example
demonstrating the number of shares that would be issued if the
conversion occurred on October 31, 2005.
Financial Statements for the interim period ended October 31, 2005
Statement of Expenses
20. The net loss per common share calculation for the interim
period
presented appears to have been based on 451,994 weighted average
common shares outstanding. However, it appears that there were
5,000,000 common shares outstanding at July 31, 2005 and
10,867,500
shares outstanding at October 31, 2005. Please explain to us the
how
weighted average number of shares used for your earnings per share
calculations is consistent with actual common shares outstanding
during the respective periods.
Notes to Financial Statements
Note 3 - Patents
21. Tell us how you assess your deferred patent costs for
recoverability. We reference paragraphs 11-17 of SFAS 142.
Note 4 - Preferred Stock and Common Stock
22. Reconcile your disclosure in Note 4 that each preferred share
issued in the September 15, 2005 transaction is convertible at a
rate
of 90.785877% to the disclosure in the business section which
indicates that the preferred shares are convertible at a rate of
97%.
23. Please explain to us in thorough detail how you have applied
the
guidance in EITF Issue 00-19 in evaluating whether the conversion
features of the convertible preferred stock and warrants issued as
part of the "Units" sold to private investors in October and
November
of 2005 include embedded derivatives that you should account for
at
fair value under SFAS 133. Similarly, address the terms of the
Series A and Series B convertible preferred stock issued as part
of
the reverse acquisition on September 15, 2005. For further
guidance
see pages 30 through 32 in the Division of Corporation Finance
Current Accounting and Disclosure Issues Guide at
http://www.sec.gov/divisions/corpfin/acctdis120105.pdfin.
Note 7 - Commitments
24. Disclose the nature and terms of the agreement entered into
beginning January 1, 2006 for software design services to be
provided
or acquired from a third party. Further, within MD&A, describe
what
these services are and how you intend to utilize these software
design services.
Annual Financial Statements for the Years Ended July 31, 2005 and
July 31, 2004
Report of Independent Registered Public Accounting Firm
25. We note that the audit report issued with respect to the
financial statements of Exobox Technologies Corp. (formerly known
as
Exobox Technologies LLC) does not address the cumulative financial
information for the period from inception through July 31, 2005.
Please note that auditor association with cumulative data on an
annual basis is required as long as the registrant is in the
development stage.
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 filing 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.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments 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 our review of your filing or in
response to our comments on your filing.
You may contact Marc Thomas at (202) 551-3452 or Brad
Skinner
at (202) 551-3489 if you have questions regarding comments on the
financial statements and related matters. Please contact Hugh
Fuller
at (202) 551-3852 or me at (202) 551-3730 with any other
questions.
Sincerely,
Barbara C. Jacobs
Assistant Director
CC: Robert L. Sonfield, Jr.
Managing Director
Sonfield & Sonfield
770 South Post Oak Lane, Suite 435
Houston, TX 77056
Facsimile: (713) 877-1547