United States securities and exchange commission logo
April 6, 2022
Christopher Campbell
Chief Executive Officer
Sound Cave Technology Inc.
43 Cathy Jean Crescent
Toronto, Ontario, Canada M9V 4T2
Re: Sound Cave
Technology Inc.
Registration
Statement on Form S-1
Filed March 10,
2022
File No. 333-263405
Dear Mr. Campbell:
We have reviewed your 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.
Registration Statement on Form S-1
General
1. We note disclosure on
page 34 that indicates you are a shell company. Please revise this
disclosure in light of
your status as a development stage company. Alternatively, disclose
prominently in your
prospectus summary and cover that you are a shell company and add
a risk factor that
highlights the consequences of shell company status, including the
impact on investors'
ability to rely on Rule 144 to resell your securities.
Cover Page
2. Please revise your
prospectus cover and summary to specify the OTC Market tier to which
you expect to apply for
quotation, which we note is identified as OTC Pink on page 7 and
OTCQB on page 33.
Additionally revise your disclosure to reconcile the apparent
Christopher Campbell
Sound Cave Technology Inc.
April 6, 2022
Page 2
inconsistency in timing, described on the cover as immediately
following completion of
the offering and on page 2 as upon effectiveness of your registration
statement.
Summary of the Prospectus
Emerging Growth Company, page 3
3. Please revise your disclosure to reflect that you will continue to be
an emerging growth
company for the first five fiscal years after completing the offering,
unless one of the
following occurs:
your total annual gross revenues are $1.07 billion or more;
you issue more than $1 billion in non-convertible debt in the
past three years; or
you becomes a large accelerated filer, as defined in
Exchange Act Rule 12b-2.
Risk Factors, page 5
4. Please expand your disclosure to describe the hurdles you face in
developing,
manufacturing, marketing, and distributing your initial product.
Assess the material risks
to you and investors if one or more of these hurdles is not overcome
in a timely manner or
at all.
5. Please include a risk factor that discloses Mr. Campbell's majority
ownership following
the offering, which may prevent minority shareholders from influencing
significant
corporate decisions, and highlight the potential conflicts of
interest. Please also disclose
your reliance on your key executive and the associated material risks.
6. Please include a risk factor disclosing that you are an emerging
growth company and that
you have elected to opt in to the extended transition period for
complying with new or
revised accounting standards. Describe the risks resulting from this
election, including
that your financial statements may not be comparable to companies that
comply with
public company effective dates.
7. Since you are also a smaller reporting company, please add a separate
risk factor
disclosing that even if you no longer qualify as an emerging growth
company, you may
still be subject to reduced reporting requirements so long as you are
a smaller reporting
company.
8. Please remove or revise the risk factor captioned "Foreign Officers and
Directors could
result in difficulty enforcing rights" to (i) reflect that you are a
company incorporated in
the United States, (ii) clarify that, although your operations are
located in Canada, the
rights of investors under U.S. securities laws are subject to full
enforcement, (iii) identify
FirstName LastNameChristopher Campbell
the agent within the United States you have appointed for service of
process, and (iv)
Comapany NameSound
identify applicableCave Technology
treaty Inc. between the United States
and Canada relating to
arrangements
April 6,enforceability
2022 Page 2 of judgments.
FirstName LastName
Christopher Campbell
FirstName
Sound CaveLastNameChristopher Campbell
Technology Inc.
Comapany
April NameSound Cave Technology Inc.
6, 2022
April 36, 2022 Page 3
Page
FirstName LastName
Use of Proceeds, page 10
9. Please revise this section for consistency with the uses of proceeds
described within the
stages of your business (or operating) plan on pages 19-21, addressing
the following:
The application table allocates most proceeds to "product
development," although the
preceding sentence states, "The net proceeds of this Offering
will be used for working
capital" and your business plan describes multiple additional
uses; please reconcile.
Clearly disclose here that your level of operations, and
ability to implement each
stage of your business plan, depend upon the amount of proceeds
received in the
offering. Reflect the priority of uses in the application table,
with a cross-reference to
your business section for further details.
Reconcile the statement, "It is estimated that product
development will be $40,000 to
$50,000," with your business plan, which appears to indicate at
least half the
proceeds are needed for product development (including design,
prototyping, and
testing).
Remove the statement on page 26 that appears to indicate
$110,000 will enable you
to complete your plan of operations for the next 12 months, or
revise for consistency
with the foregoing, including explanation of relevant terms.
Description of our Business, page 14
10. Please revise this section to provide a clear description of your
business, providing
specific information as to your actual and planned operations. Your
disclosure should
include the following, without limitation:
Describe the current design and/or development stage of your
initial product. If true,
disclose that this is still in concept-stage, no working
prototype has yet been created,
and the technology may not function as planned. Consider defining
what is meant by
your use of the terms "design" and "development" for clarity
throughout the
prospectus.
Describe the major steps and expected timing to complete the
design and/or
development of your product. Explain if testing will be conducted
to determine
whether the electronic technology stands up to real-world use
conditions, such as
repeated washing and drying. Explain your arrangements to have
the design and
prototype[s] tested by "social media influencers, athletes and
other known entities or
brands" (page 20).
Revise your disclosure regarding "securing a manufacturing
facility" to clarify
whether you intend to enter manufacturing arrangements with a
third party in China
to produce one or more prototypes and/or marketable products.
Clearly state, if true,
Christopher Campbell
FirstName
Sound CaveLastNameChristopher Campbell
Technology Inc.
Comapany
April NameSound Cave Technology Inc.
6, 2022
April 46, 2022 Page 4
Page
FirstName LastName
that you expect your third-party manufacturer to source the
supply of garments and
electronic components. Identify the conditions under which you
would invest in local
manufacturing facilities rather than rely on a third-party
manufacturer, and describe
your expected sources of supply in this scenario. Disclose the
expected timing to
commence commercial manufacturing.
Clearly identify your expected initial target market(s),
marketing channels, and
distribution arrangements. Disclose the expected timing to launch
your product for
initial sales and delivery. Remove references to global markets
and teens or young
adults worldwide, or provide details to support such expansive
marketing plans.
Delete references to companies, products, and persons that have
no relationship to
your business, except as may be appropriate to identify your
potential competitors.
Delete references to strategic partnerships, co- and
cross-branding, cross-market,
merchandizing programs, and other purely prospective
opportunities.
Describe how your product is expected to function and be
operated by the user. For
instance, will the bluetooth headphones be in contact with the
user's ears; will others
be able to hear audio and, if so, how will this limit usage; will
an app need to be
developed and downloaded to control volume and other settings?
Describe what type of service and warranties you will provide
for your products, if
any.
With respect to timing, clarify whether the timeframes
disclosed on pages 19-20 are
measured from the completion of the offering, from the date
initial proceeds are
received, or some other date.
11. We note disclosure on page 15 that investors should carefully review
your business plan
in association with the prospectus before purchasing shares. Please
clarify whether this
refers to your "plan of operations" described on pages 19-20 or to a
different plan. If the
latter, please describe that plan in your disclosure and why it
differs from your plan of
operation.
12. The website provided in your prospectus does not appear to be
functional. Please disclose
the timing for when your website will be active with content.
13. With reference to the statement, "The key brands to tie to are iOS
Apple and the major
Android brands including LG," please disclose whether your product
will be designed for
use with a particular mobile operating system to the exclusion of
other operating systems.
Further clarify whether you will need permissions or agreements in
order for your product
to operate via a user's cell phone. Also, if you currently have no
basis to indicate your
undeveloped product could be used with these brands, please revise to
make that clear or
delete the disclosure entirely.
Christopher Campbell
FirstName
Sound CaveLastNameChristopher Campbell
Technology Inc.
Comapany
April NameSound Cave Technology Inc.
6, 2022
April 56, 2022 Page 5
Page
FirstName LastName
Plan of Distribution
Procedures for Subscribing, page 14
14. Please revise your disclosure to address the following, along with
conforming changes to
page ii as appropriate:
Revise your disclosure regarding payment methods and procedures
for consistency
with the provisions of section 2.2 of the subscription agreement
filed as Exhibit 99.1.
Please tell investors how you will inform them as to the identity
of the escrow agent.
If there is an escrow agent, please identify them and reconcile
with the disclosure that
the proceeds are immediately available to you. We further note
that the subscription
agreement does not appear to set forth your delivery address.
Clarify the method and timing for issuance of shares to
subscribers, with reference to
the period of time following your receipt of payment. We note in
this regard that
your transfer agent has yet to be determined.
We note disclosure that you will deliver stock certificates
"approximately 30 days
after the close of the offering or as soon thereafter as
practicable." Revise to clarify
whether stock certificates will be issued to subscribers in
relation to each closing, as
defined in the subscription agreement, or upon completion of the
overall offering.
Directors, Executive Officers, Promoters and Control Persons, page 29
15. Please revise your disclosure to more specifically describe Mr.
Campbell's principal
occupations and employment during the past five years. Please refer to
Item 401(e) of
Regulation S-K.
Board Committees; Corporate Governance, page 30
16. We note disclosure that you expect your Board of Directors to appoint
committees and
such persons thereto as "are expected to be required to meet the
corporate governance
requirements imposed by a national securities exchange" in the near
future. Please revise
or explain how such committees and appointees will be possible given
that you currently
have a sole director. Specify the corporate governance requirements
with which you
intend to comply and your expected timing for compliance. Revise the
following
phrase to reconcile the apparent inconsistency with disclosure
elsewhere that you intend to
apply for OTC quotation: "until we elect to seek listing on a national
securities exchange."
Certain Relationships and Related Transactions, page 32
17. We note that the first dilution table on page 11 identifies a $10,000
capital contribution by
your "existing stockholders." Please revise your disclosure to explain
whether Mr.
Campbell paid this capital contribution in connection with the
issuance to him of
Christopher Campbell
Sound Cave Technology Inc.
April 6, 2022
Page 6
10,000,000 shares. Additionally revise Item 15 of Part II to disclose
the compensation, or
lack thereof, for the issuance of these shares.
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm, page F-2
18. Please have your auditor revise their report:
To correctly state the net loss as $14,732 in the second
paragraph; and
To change the date of the audit report to January 28, 2022.
19. We note your independent auditor is located in New Delhi, India.
Please explain the
relationship between the location from which the audit report was
rendered and
the location of your principal place of business in Toronto, Ontario.
Include a discussion
of where your financial records are maintained and where the audit
work was principally
conducted.
Item 16. Exhibits and Financial Statements Schedules
Exhibit 3.1, page II-2
20. Please refile Exhibit 3.1 in the proper text-searchable format. Please
refer to Section
5.2.3.6 of the EDGAR File Manual (Volume II) EDGAR Filing (Version 60,
December
2021) and Item 301 of Regulation S-T.
Exhibit 5.1, page II-2
21. Please revise the opinion filed as Exhibit 5.1 as follows:
Remove the clause "until the securities are quoted on a
nationally recognized
exchange and thereafter at prevailing market prices or privately
negotiated prices"
from the first paragraph; and
Remove references to "the shares held by the selling
shareholders" from the
penultimate paragraph and the reference to "selling stockholder"
in the legend on the
prospectus cover page.
If, however, you intend to register the resale of your shares, please
revise the disclosure
throughout your registration statement.
Exhibit 23.1, page II-2
22. Please have your auditor revise its consent to refer to the "use" of the
report in the
FirstName LastNameChristopher Campbell
registration statement, rather than to its "incorporation by reference."
Additionally, the
Comapany NameSound
consent Cave
should also Technology
include Inc. acknowledging the reference
to them as an expert
a statement
April 6,in2022
accounting
Page 6 and auditing. Refer to Rule 436 of Regulation C.
FirstName LastName
Christopher Campbell
FirstName
Sound CaveLastNameChristopher Campbell
Technology Inc.
Comapany
April NameSound Cave Technology Inc.
6, 2022
April 76, 2022 Page 7
Page
FirstName LastName
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Dale Welcome at 202-551-3865 or Jean Yu at 202-551-3305
if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jennifer Angelini at 202-551-3047 or Geoffrey Kruczek at 202-551-3641
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing
cc: Byron Thomas