Mail Stop 4561
April 20, 2018
Alex Mardikian
Chief Executive Officer
OBITX, Inc.
4720 Salisbury Road
Jacksonville, FL 32256
Re: OBITX, Inc.
Amendment No. 1 to Registration Statement on Form S-1
Filed March 23, 2018
File No. 333-222978
Dear Mr. Mardikian:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration statement
and providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments. Unless
we note
otherwise, our references to prior comments are to comments in our March 9,
2018 letter.
General
1. Your revised disclosure in response to prior comment 15 states that your
services to the
digital asset industry "included marketing and advertising, corporate
structuring, and
business processes." We note mCig's press releases, dated January 17,
2018, and
January 24, 2018, reporting that the consulting arm of OBITX, ICOmethod
LLC, assists
customers with their initial coin offerings. Please expand your
disclosure to include a
materially complete discussion of the services that you provide,
including through
ICOmethod and to your principal customer, Render Payment, LLC.
2. Your disclosure indicates that Render Payment, LLC owes you payment for
the
$1,250,000 in services that were rendered to the digital asset industry
during the three
months ended October, 31, 2017. We note that, according to a published
white paper and
Alex Mardikian
OBITX, Inc.
April 20, 2018
Page 2
other third-party reports, Render Payment issued its RPM ERC20 tokens to
service
providers and investors pursuant to an initial coin offering. While we
note your response
to prior comment 15 that you have not yet received any cryptocurrencies
as payment for
services, please disclose whether you intend to receive payment from
Render Payment in
the form of such tokens or other digital assets.
3. In response to prior comment 18, you advise that you do not intend to
mine for digital
assets or cryptocurrencies at this time. We note, however, that mCig's
January 17, 2018
press release reports that your latest ventures "include crypto mining
projects" and that
you have "secured a location and [have been] buying hardware to start
projects
immediately, based on current tests and data." Please revise or advise.
4. On page ii-1, you disclose that you have not sold any securities that
were not registered
under the Securities Act. We note, however, your disclosure in Note 10
to the financial
statements on page F-14 indicates that you have issued unregistered
securities since
inception. Please disclose the information required by Item 701 of
Regulation S-K,
including the exemption from registration that was claimed.
5. We note your response to prior comment 10. We identified two remaining
references to a
date of inception other than March 30, one on page 12 (April 3) and one
on page F-6
(March 13). Please revise accordingly.
Cover Page
6. In response to prior comment 3, you revised your disclosure to indicate
that the selling
shareholders will sell their shares in a range of $0.55 - $1.00 until
your common stock
has been accepted for quotation on the OTCBB, OTCQX, or OTCQB. We note,
however, that your common stock has not yet been accepted for quotation
on any of these
markets, as you state on page 3 that an application will be filed
"within 90 days of the
distribution." Please disclose the fixed price at which selling
shareholders are offering
their securities pursuant to Item 501(b)(3) of Regulation S-K. We note
that you may
provide a price range in a prospectus supplement or post-effective
amendment once your
common stock has been accepted for quotation on one of these markets and
that selling
shareholders may sell at prevailing market prices or privately
negotiated prices once
quotation of your common stock begins.
Business, page 39
7. We note that you generated substantially all your revenue from one
customer for the
period ended October 31, 2017, and that related party transactions
represented all your
revenue during such period. Please disclose this information here and
address the
inherent risk posed by such dependence in a risk factor. Refer to Item
101(h)(4)(vi) of
Regulation S-K. File your contract with Render Payment as an exhibit to
the registration
statement. Refer to Item 601(b)(10) of Regulation S-K.
Alex Mardikian
OBITX, Inc.
April 20, 2018
Page 3
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Operating Results, page 46
8. We note your response to prior comment 24. In your narrative discussion
of Operating
Expenses for the three-month period ended October 31 here and of Gross
Profit and
Operating Expenses for the nine-month period ended October 31 on page
48, it appears
you did not adjust the total amounts, and related percentage to total
revenue, to
appropriately adjust for depreciation and amortization expenses. Please
revise
accordingly.
Liquidity and Capital Resources, page 48
9. Please disclose the current rate at which you use funds in your
operations and state the
minimum period of time that you will be able to conduct planned
operations using
currently-available capital resources. To the extent that you have funds
to operate for
less than one year, disclose the minimum additional capital expected to
be necessary to
fund planned operations for a 12-month period. In light of your
intention to accept
payment for services rendered to the digital assets industry in the form
of digital assets or
cryptocurrencies, you should address any known trends or uncertainties
that are
reasonably likely to result in a material change in your liquidity. In
this regard, we note
your revised disclosure in response to prior comment 8 that "[t]hese
digital assets may be
highly volatile and [you] may not be able to convert them into FIAT,
thereby restricting
the value and use of the digital assets." Refer to Item 303(a)(1) of
Regulation S-K.
Management, page 49
10. We note that based on the website of KrypNetwork, Mr. Mardikian appears
to be serving
as the Chief Marketing Officer of such company. Please disclose this in
the filing and
indicate in an appropriate place in the filing the number of hours per
week that he devotes
to your operations. Please also provide a risk factor that addresses
limitations on the time
and attention that he is able to devote to the company, any potential
conflicts of interest
faced by him as a result of such activity, and any procedures for
addressing potential
conflicts of interest.
Security Ownership of Certain Beneficial Owners and Management, page 51
11. Your beneficial ownership table generally accounts for the shares of
common stock
underlying the shares of Series A Preferred Stock held by mCig in
calculating the amount
and percentage of the outstanding common stock beneficially owned by the
other
identified shareholders. Those shares, however, should not be deemed
outstanding with
respect to any other shareholder. Please revise, and identify the
natural person or entity
that has voting or investment power with respect to the shares of common
stock held by
APO Holdings, LLC. Refer to Instruction 1 to Item 403 of Regulation S-K
and Rule 13d-
Alex Mardikian
OBITX, Inc.
April 20, 2018
Page 4
3 of the Securities Exchange Act. Further, please revise to separately
disclose the
beneficial ownership of the outstanding shares of Series A Preferred
Stock pursuant to
Item 403(a) of Regulation S-K.
You may contact Brittany Ebbertt, Staff Accountant, at (202) 551-3572
or Craig Wilson,
Senior Assistant Chief Accountant, at (202) 551-3226 if you have questions
regarding comments
on the financial statements and related matters. Please contact Bernard Nolan,
Attorney-Adviser,
at (202) 551-6515 or, in his absence, me at (202) 551-3453 with any other
questions. If you
require further assistance, you may contact Barbara C. Jacobs, Assistant
Director, at (202) 551-
3735.
Sincerely,
/s/ Jan Woo
Jan Woo
Legal Branch Chief
Office of
Information
Technologies and
Services
cc: Thomas G. Amon
Law Office of Thomas G. Amon