Room 4561
March 23, 2006
Eugene Sharer
Interim Chief Financial Officer
Airbee Wireless, Inc.
9400 Key West Avenue, Suite 100
Rockville, Maryland 20850
Re: Airbee Wireless, Inc.
Form 10-Q for the quarter ended September 30, 2005
Filed November 14, 2005
Form 8-K
Filed January 5, 2006
File No. 000-50918
Dear Mr. Sharer:
We have reviewed the above referenced filing and have the
following comments. Please note that we have limited our review
only
to the accounting and financial matters addressed in the comments
below. We may ask you to provide us with supplemental information
so
we may better understand your disclosure. Please be as detailed
as
necessary in your explanation. After reviewing this information,
we
may 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 10-Q filed on November 14, 2005
Note 8 - Stockholder`s Equity
1. We note that in April, 2005 Cornell Capital Partners received
592,000 shares of common stock and warrants to purchase another
200,000 shares of common stock exercisable at $1.27 per share as a
one-time commitment under the Standby Equity Distribution
Agreement
for issuance costs valued at $740,000. We further note from the
Registration Rights Agreements dated April 20, 2005 that you are
required to pay liquidated damages. Tell us how you considered
whether the warrants are a derivative instrument and provide us
with
your analysis. Refer to Section II B 1 of the Current Accounting
and
Development Issues in the Division of Corporation Finance, located
on
our website at http://www.sec.gov/divisions/corpfin /acctdis
120105.pdf , for guidance regarding whether the warrants should be
accounted for under the scope of SFAS 133. See paragraph 66 of
EITF
00-19.
Note 12 - Commitments and Contingencies
2. We note that you advanced $535,000 in cash to Indentity.
Describe
any other financial support you provided to Identity under the
merger
agreement including any guarantees. Indicate the relevant terms
of
the merger agreement that provided for this support and indicate
how
the rescission affected this support. If the agreement provided
for
guarantees, tell us how you have accounted for these guarantees.
Your response should address how you considered the guidance in
FIN
45.
Liquidity and Capital Resources
3. Tell us how you comply with EITF Topic D-98 and ASR 268 for
classifying the equity securities sold to Cornell Capital
Partners,
LP. In this regard, since a condition for selling shares of the
company stock under the Distribution agreement is the company
obtaining an effective registration statement for the shares of
the
Company`s stock, explain why these shares are not classified as
temporary equity.
4. You disclose that your trade payables and accrued expenses at
September 30, 2005 of $1,401,706 are outstanding. Provide us a
summary of the vendors and the amounts due to them including the
number of days outstanding. Indicate whether any of these vendors
have claims or liens on your assets. Tell us and disclose in
future
filings the terms for extended payment that are agreed to with the
vendors. Clearly indicate the impact of defaulting on any of
these
vendors in terms of your liquidity and your operations (e.g., will
you lose a key supplier or provider).
Exhibit 31.1 and 31.2-302 Certifications
5. In future filings remove the title of the officers from the
first
sentence, and remove your reference to "annual" or "quarterly" in
item No. 1 of the 302 certifications.
Form 8-K filed on January 5, 2006
6. We note that on December 29, 2005, you entered into entered
into a
Securities Purchase Agreement and executed a secured convertible
debenture ("debenture") for $500,000 to Montgomery Equity
Partners,
Ltd. We further note from the Registration Rights Agreements
dated
December 29, 2005 that you are required to pay liquidated damages.
Since the debenture is convertible at a variable conversion rate,
the
debenture will not be considered a conventional convertible debt
instrument. See paragraph 4 of EITF 00-19. Refer to Section II B
2
of the Current Accounting and Development Issues in the Division
of
Corporation Finance, located on our website at
http://www.sec.gov/divisions/corpfin/acctdis120105.pdf , for
guidance
regarding whether the conversion right in the convertible
debentures
represents an embedded derivative. Provide us with you analysis
following this guidance including whether the instrument is
subject
to SFAS 150 paragraph 12. Be advised that since the debentures
contain a variable conversion rate it appears that you will not
satisfy the condition to have sufficient authorized shares. See
paragraph 19 of EITF 00-19. Further, you must also re-assess all
convertible instruments under this paragraph since this debenture
will result in you not having sufficient authorized shares for
those
instruments as well. The result will be that all the convertible
instruments with embedded derivatives and outstanding warrants
will
be within the scope of SFAS 133 and subject to fair value
accounting
as a liability.
7. We note that on December 29, 2005, you issued 2.0 million
warrants
in connection with the Securities Purchase Agreement to Montgomery
Equity Partners, Ltd. Tell us how you considered whether these
warrants are a derivative instrument and provide us with your
analysis. Tell us how you considered whether the warrants are a
derivative instrument and provide us with your analysis. Refer to
Section II B 1 of the Current Accounting and Development Issues in
the Division of Corporation Finance, located on our website at
http://www.sec.gov/divisions/corpfin /acctdis 120105.pdf , for
guidance regarding whether the warrants should be accounted for
under
the scope of SFAS 133. See paragraph 66 of EITF 00-19.
* * * * *
As appropriate, please amend your filing and respond to
these
comments within ten business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your 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.
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 connection with our review of
your
filing or in response to our comments on your filing.
If you have any questions, please call Morgan Youngwood at
(202)
551-3479 or myself at (202) 551-3730.
Sincerely,
Stephen Krikorian
Accounting Branch Chief
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Eugene Sharer
Airbee Wireless, Inc.
March 23, 2006
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