GRACIN & MARLOW, LLP
The Chrysler Building
405 Lexington Avenue, 26th Floor
New York, New York 10174
(212) 907-6457
June 26, 2013
VIA EDGAR
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United States Securities
and Exchange Commission 100 F Street, NE
Mail Stop 4720
Washington, D.C. 20549
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| Attention: |
Tom Kluck
Branch Chief
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| Re: | eBullion, Inc.
Registration Statement on Form S-1
Filed May 1, 2013
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File No. 333-188
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Dear Mr. Kluck:
Thank you for your May 17, 2013 letter regarding eBullion, Inc. (“eBullion”). In order to assist you in your review of eBullion’s Form S-1, we hereby submit a letter responding to the comments and Amendment No. 1 to Form S-1 marked to show changes. For your convenience, we have set forth below the staff’s numbered comments in their entirety followed by our responses thereto.
General
1. Please provide us with support for all quantitative and qualitative business and industry data used in the prospectus. For example only, we note your disclosure in the “Business” section starting on page 13. Clearly mark the specific language in the supporting materials that supports each statement. The requested information should be filed as EDGAR correspondence or, alternatively, should be sent in paper form accompanied by a cover letter indicating that the material is being provided pursuant to Securities Act Rule 418 and that such material should be returned to the registrant upon completion of the staff review process.
Response: We have attached the support as requested.
United States Securities and Exchange Commission
June 26, 2013
Page 2
2. Please supplementally provide us with copies of all written communications, as defined in Rule 405 under the Securities Act, that you, or anyone authorized to do so on your behalf, present to potential investors in reliance on Section 5(d) of the Securities Act, whether or not they retain copies of the communications. Similarly, please supplementally provide us with any research reports about you that are published or distributed in reliance upon Section 2(a)(3) of the Securities Act of 1933 added by Section 105(a) of the Jumpstart Our Business Startups Act by any broker or dealer that is participating or will participate in your offering.
Response: We have been informed by the Company that they did not have any written communications that were presented to potential investors. There are currently no research reports about the company that are published.
3. We are unable to locate the disclosure required by Item 201 of Regulation S-K. Please revise your disclosure as appropriate or advise.
Response: Please see the disclosures under the sections entitled “Holders” “Dividends” Equity Compensation Plans” and “Determination of Offering Price”.
Prospectus Summary, page 1
Business Overview, page 1
4. We note your disclosure that Man Loong licenses its electronic trading platform from True Technology. Please clearly identify the parties that own True Technology and their relationships to you.
Response: We have identified the parties that own True Technology and Man Loong’s relationship with them.
Risk Factors, page 4
5. Please clarify that you have included all material risks in this section and revise your disclosure as appropriate. In addition, please revise your disclosure to add a risk factor, as applicable, to address the risks relating to the limited prior experience of your management in operating a public company.
Response: We have clarified that we have included all material risks in this section and have added the additional disclosure, as requested.
6. We note your discussion of the risks to your trade commissions related to economic conditions under the risk factor entitled “Our revenue is based upon Man Loong’s trade commissions . . . ” on page 4 and the risks to your commissions from your role as a service provider due to competition under the risk factor entitled “A substantial portion of our revenue and operating profits . . . ” on page 4. Please revise your disclosure to clarify whether you are discussing different commissions in each of these risk factors or whether these risk factors are discussing the same commissions. Please also revise your disclosure to consistently identify the portion of your revenue that is derived from such commissions.
Response: We have made the requested revisions to clarify that the references were to the same commissions and that all of the Company’s revenue is derived from commissions.
United States Securities and Exchange Commission
June 26, 2013
Page 3Man Loong may be exposed to unidentified or unexpected risks . . . , page 4
7. We note your disclosure that “Man Loong relies on a combination of technical and human controls and supervision to protect it against certain risks” and that “Man Loong may elect to adjust its risk-management policies to allow for an increase in risk tolerance.” Please revise your disclosure to identify the certain risks that you are referencing and to further explain how and when Man Loong may adjust its risk management policies.
Response: We have revised the disclosure to identify the risks referenced in the risk factor. Man Loong will continue to adjust its risk management policies as needed.
We do not own the trading platform upon which our business operates . . . , page 5
8. We note your statement that the license agreement wherein Man Loong licenses the software that is utilized to run its electronic trading platform “can be terminated upon [y]our breach of the terms of the agreement.” However, on page 20, we note your disclosure that “True Technology has the right to terminate the License Agreement . . . at any time.” Please revise your disclosure, as appropriate, to clarify the risk regarding the termination of the license agreement by True Technology.
Response: We have revised the disclosure to clarify the termination provisions of the License Agreement.
Man Loong’s operations will be dependent upon its ability to protect . . . , page 7
9. We note that your risk factor discusses your pending and existing patents. However, on page 20, the discussion regarding your intellectual property does not include a discussion of such patents. Please revise your disclosure as appropriate.
Response: We have revised the disclosure to remove the references risk factor.
Business, page 13
10. Please discuss in greater detail how the company facilitates trades on behalf of nonmembers. For example, please discuss whether the company acts as an agent for buyers or sellers or both. Also, discuss whether the company facilitates trades between buyers and sellers where an initial spot contract is entered into between such parties; also discuss the principal terms of these agreements. If the company is facilitating trades where buyers and sellers acquire or dispose of existing spot contracts, please describe the principal terms of such contracts including when such contracts were initially entered compared to their settlement date.
Response: We have added additional disclosure regarding the company’s trading activities.
United States Securities and Exchange Commission
June 26, 2013
Page 411. Please discuss whether there are any intermediaries involved in these transactions that act as a clearing house or assume counterparty risk.
Response: We have added additional disclosure to address this comment.
12. Please discuss how commissions are paid to the company and what determines the amount of each commission.
Response: We have added additional disclosure regarding how commissions are paid and how the Company determines the amount of each commission.
13. Please describe in greater detail the spot market in the Hong Kong market.
Response: We have added disclosure regarding the spot market in the Hong Kong market in greater detail.
14. Please discuss in greater detail the settlement of the spot contracts that the company facilitates trades. Please discuss whether your clients or buyers take physical possession of the commodities and discuss the company’s involvement in this process, if any.
Response: We have added the requested disclosure.
Chinese Gold and Silver Trading Society, page 15
15. We note your disclosure on page 17 of the trading hours for the electronic trading platform and that “electronic trading lasts 19.5 hours.” However, on page 17 and elsewhere, you disclose that you provide “effective 24-hour access to the bullion market through Man Loong’s electronic trading platform.” Please revise your disclosure as appropriate or advise.
Response: We have revised our disclosure to indicate that trading lasts 19.5 hours but that the Company provides information services 24 hours a day.
Our Products, Services and Customers, page 18
16. We note your statement that “[r]ecently, all of Man Loong’s revenue is derived from commissions” and that “in the past [Man] Loong has been a counterparty for certain limited trading activity.” Please revise your disclosure to clarify how Man Loong acted as a counterparty in such transactions, when Man Loong’s business as a counterparty in these transactions ceased, how much of Man Loong’s revenues during the prior fiscal year were derived from such business and whether Man Loong may continue this business in the future.
Response: We have revised the disclosure to clarify that Man Loong no longer acts as a counterparty and clarified our disclosure that Man Loong’s revenues during the prior fiscal year were all commission revenues.
United States Securities and Exchange Commission
June 26, 2013
Page 517. We note your disclosure that Man Loong “contracts with agents who pay Man Loong a fixed commission on each precious metal spot contract trade that their customers execute.” Please revise your disclosure to describe your network of agents. For example only, please disclose the number of agents with whom you have entered into agreements and the geographic regions covered by your agents. Please also describe the key terms of the contracts between you and your agents.
Response: We have revised the disclosure as requested.
18. We note your disclosure that a spot contract is a contract to buy or sell a commodity on the transaction date at the spot price. Please disclose whether the settlement date occurs within a couple of days of the trade date. Also, clearly disclose whether spot contracts are the only type of contracts in which the company facilitates trades. In addition, affirmatively disclose whether the company facilitates trades in futures contracts, forwards contracts or swaps.
Response: We have added the requested disclosure.
19. We note your disclosure that substantially all of Man Loong’s past revenue was derived from commissions that it earned from executing trades for third parties. Please discuss in greater detail the other sources of revenues.
Response: We have clarified that all revenue was from commissions.
Our Electronic Trading Services, page 18
20. We note your disclosure that Man Loong’s platform allows customers to acquire and dispose of their spot contracts. Please disclose whether these spot contracts have a settlement date that is within a couple of days of the trade date.
Response: We have added disclosure that the spot contracts have no definitive settlement date.
21. We note your disclosure that Man Loong licenses its trading platform from True Technology. We also note that Man Loong entered into an agreement on April 1, 2013 with True Technology Company Limited for the provision of hosting services. Please revise your disclosure to clarify whether the trading platform license is included in the agreement executed on April 1, 2013. We may have further comment.
Response: We have clarified that the license is included in the agreement.
Research and Development, page 20
22. We note your disclosure regarding the efforts of Man Loong to determine customer demands. Please revise your disclosure to provide an estimate of the amount spent during each of the last two fiscal years on research and development activities. Please refer to Item 101(h)(4)(x) of Regulation S-K.
Response: We have added the requested disclosure.
United States Securities and Exchange Commission
June 26, 2013
Page 6Intellectual Property, page 20
23. We note your disclosure that you have entered into confidentiality agreements with your employees and independent contractors. Please revise your disclosure to identify and discuss the material provisions of these confidentiality agreements.
Response: We have revised our disclosure as requested.
24. We note your disclosure regarding your Software Development License and Maintenance Agreement with True Technology. Please revise your disclosure to provide the duration of the agreement and the license granted therein. Please refer to Item 101(h)(4)(vii) of Regulation S-K.
Response: We have added the requested disclosure.
Management’s Discussion and Analysis of Financial Condition and Results . . . , page 23
25. We believe your MD&A section could benefit from an expanded “Overview” section that offers investors an introductory understanding of eBullion, Inc. and the matters with which management is concerned primarily in evaluating the company’s financial condition and operating results. A good introduction, accordingly, might include a discussion of the following: the economic or industry-wide factors relevant to the company; a discussion of how the company earns or expects to earn revenues and income; the identity of the company’s primary business lines, location(s) of operations and principal services; and insight into material opportunities, challenges, risks, and material trends and uncertainties. For a more detailed discussion of what is expected in both this subheading and the MD&A section in general, please refer to SEC Release No. 33-8350 Dec. 19, 2003. See also, Item 303 of Regulation S-K.
Response: We have added the requested disclosure.
26. You disclose that an agency agreement with a shareholder expired on September 1, 2012. Please revise your filing to disclose the impact this expired agreement will have on your operations. Please refer to Item 303 of Regulation S-K.
Response: We have added the requested disclosure.
27. Please revise your filing to provide more robust explanations of the changes in your results of operations. Please refer to Item 303 of Regulation S-K.
Response: We have added the requested disclosure.
United States Securities and Exchange Commission
June 26, 2013
Page 7Liquidity, page 24
28. Please revise your disclosure, as appropriate, to include the information required by Item 303(a)(1) of Regulation S-K or advise. For example only, please identify any known trends or any known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in your liquidity increasing or decreasing in any material way.
Response: We have added the requested disclosure.
Directors, Executive Officers, Promoters and Control Persons, page 25
29. We note your disclosure regarding your directors and executive officers. Please revise your disclosure to include the information required by Item 401(e)(1) of Regulation S-K. For example only, for each individual identified, please disclose the principal occupations and employment during the past five years, identifying the positions held by such individual and noting the year in which such individual commenced and concluded his or her service in such position.
Response: We have added the requested disclosure.
Executive Compensation and Other Information, page 26
Executive Compensation, page 26
30. We note your statement that the summary compensation table includes all compensation to your “principal executive officer, principal financial officer and each executive officer whose compensation exceeded $100,000 during each of the fiscal years ended March 31, 2013 and 2012.” Please revise your disclosure regarding executive compensation, including the summary compensation table, to include the compensation of Man Loong’s principal executive officer who was serving in that capacity during the last completed fiscal year and the two most highly compensated executive officers, other than the principal executive officer, who were serving as executive officers at the end of the last completed fiscal year. Please refer to Item 402(m)(2) of Regulation S-K. Please also include the narrative disclosure to your summary compensation table as required by Item 402(o) of Regulation S-K.
Response: Complied with. We have added the requested disclosure. Please note that there are only two executive officers of Man Loong.
31. We note that your summary compensation table includes footnotes (1) and (2), without any accompanying text. Please revise this disclosure as appropriate or advise.
Response: We have removed the footnotes.
United States Securities and Exchange Commission
June 26, 2013
Page 8Director Compensation, page 27
32. We note your disclosure that Mr. Havlin “has received $5,200 for consulting services.” Please revise your disclosure to clarify when Mr. Havlin received these fees, to describe the capacity in which Mr. Havlin received these fees and to discuss the services for which Mr. Havlin received these fees. We may have further comment.
Response: We have added the requested disclosure
Security Ownership of Certain Beneficial Owners and Management, page 27
33. We note that your beneficial ownership table includes seven individuals, five of whom are identified elsewhere in your prospectus as your executive officers and/or directors. We also note that in the beneficial ownership table you disclose that your directors and executive officers as a group, which you indicate includes five individuals, own 50,780,000 shares or 100% of your common stock. However, on page 27 of your prospectus, we note that you indicate that the table was prepared based on 51,260,000 shares of common stock outstanding. In addition, the summation of the number of shares for the five individuals included in the table that are identified elsewhere in the prospectus as directors and/or executive officers does not equal 50,780,000 shares. Please revise your disclosure as appropriate to resolve these inconsistencies or advise. In addition, we note that the table includes footnotes (1) and (4), but the accompanying footnote text identifies footnotes (1) and (2). Please revise your disclosure as appropriate.
Response: We have revised the disclosure.
Selling Stockholders, page 28
34. We note that you disclose that “[n]one of the investors . . . other than Mr. Havlin and Ms Li are affiliated with the Company.” However, in the next sentence, you state that “[n]one of the selling shareholders other than Ms Li has at any time during the past three years acted as one of [y]our or Man Loong’s employees, officers or directors or has had a material relationship with [you] or Man Loong.” Please revise your disclosure, as appropriate, to resolve this inconsistency or advise.
Response: We have revised the disclosure.
Certain Relationships and Related Transactions, page 31
35. Please ensure that you include disclosure regarding all of the transactions required by Item 404(d) of Regulation S-K. For example only, we note that you reference a related party receivable of $20,027 under the “Liquidity” section on page 24, that you have included an agency agreement with Mr. Wong Hak Yim, your director, as exhibit 10.5 to your registration statement and that your selling stockholder table on page 28 indicates that you sold shares to Mr. Havlin, your director, and Ms. Li, your Chief Financial Officer and director, during April of 2013. Please revise your related party transaction disclosure to include the information required by Item 404(a) of Regulation S-K for these transactions or advise.
Response: We have added the requested disclosure.
United States Securities and Exchange Commission
June 26, 2013
Page 936. For each transaction identified pursuant to Item 404 of Regulation S-K, please disclose the information required by Item 404(a) of Regulation S-K, as appropriate. For example only, for each transaction, please provide the name of the related person and the basis on which the person is a related person, please provide the related person’s interest in the transaction and please disclose the approximate dollar value of the amount involved in the transaction.
Response: We have added the requested disclosure.
Description of Securities, page 32
37. We note your disclosure related to your common stock. Please revise your disclosure to include the information required by Item 202 of Regulation S-K. For example only, with regard to your common stock, please outline briefly, as appropriate, dividend rights, redemption provisions, voting rights, including any provisions specifying the vote required by security holders to take action, any classification of the board of directors and the impact of such classification where cumulative voting is permitted or required, liquidation rights, preemption rights, and any restriction on alienability. Please refer to Item 202(a) of Regulation S-K.
Response: Complied with. We have added the requested disclosure.
Where You Can Find More Information, page 33
38. We note your disclosure regarding the SEC’s Public Reference Room. Please revise your disclosure to include the proper address for the Public Reference Room. Please refer to Item 101(h)(5)(iii) of Regulation S-K.
Response: Complied with. We have changed the street address to 100 F Street, Room 1580.
Financial Statements of Man Loong Bullion Company Limited for the nine months ended
December 31, 2012 and 2011
Notes to the Financial Statements, page F-23
7. Income Taxes, page F-33
39. You disclose that you “had no differences between the book and tax basis of assets and liabilities which gave rise to deferred income tax assets or liabilities.” Further, we note that you have recorded Commissions received in advance of $80,267. Please tell us how you determined there was no difference between the book and tax basis for this item.
Response: Commission revenues received in advance were not recorded as revenue for book purposes and are not taxable under applicable tax laws of Hong Kong. Accordingly the book and tax bases of commissions received in advance were the same.
In this Amendment, we have incorporated the financial statements of Man Loong for the full years ended March 31, 2013 and 2012. As of those dates we had no commissions received in advance. We have recorded deferred taxes in the March 31, 2013 financials and the difference between the book and book and tax basis of our assets are related to depreciation on equipment and is fully described in Note 7.
United States Securities and Exchange Commission
June 26, 2013
Page 10Financial Statements for eBullion, Inc.
Footnotes to Financial Statements, page F-42
Note 1 – Organization and Summary of Significant Accounting Policies, page F-42
40. Please revise your filing to disclose your fiscal year end.
Response: We have revised to disclose our fiscal year end.
Outside Back Cover Page of Prospectus
41. Please include the disclosure required by Item 502(b) of Regulation S-K or advise.
Response: Please be advised that there are no dealers involved with the sale of the securities under this prospectus and therefore no disclosure is needed.
Item 15. Recent Sales and Issuances of Unregistered Securities, page II-2
42. We note your disclosure that you issued an aggregate of 500,000 shares of common stock pursuant to Section 4(a)(2) in March and April of 2013. However, we note that you filed a Form D related to this offering on April 29, 2013, indicating that the first sale occurred on April 5, 2013, that the offering was pursuant to Rule 506 of Regulation D and that “there was a concurrent offering to individuals residing outside of the U.S. in which $240,740 was sold.” Please revise your disclosure in the registration statement to resolve these inconsistencies or advise.
Response: We believe that the appropriate disclosure is listed in Item 15….“accredited investors” or “non-U.S. persons” as defined by Regulation D and Regulation S”.
Item 16. Exhibits, page II-2
43. Please ensure that you include all of the exhibits required by Item 601 of Regulation S-K. For example only, we note that you reference two new agent agreements executed subsequent to the end of the third quarter on page 23 and that you reference confidentiality agreements that Man Loong has entered into with its employees and independent contractors on page 20. Please file these agreements as exhibits or explain why you believe you are not required to do so.
Response: We have attached these agreements as requested. Please note, that the two new agency agreements that were entered into subsequent to year end are the same form as the form of agency agreement that has previously been filed as an exhibit and therefore were not separately filed as exhibits.
United States Securities and Exchange Commission
June 26, 2013
Page 11Exhibit 23.1a
44. Please have your auditor revise their consent to reference the complete date of their report (i.e. April 12, 2013).
Response: The auditor has revised their consent to reference the complete date of their report.
Exhibit 23.1b
45. Please tell us why your auditor included a reference to their nine month review in their consent.
Response: The auditor has revised their consent to remove the reference to their nine month review.
Item 17. Undertakings, page II-3
46. Please revise your undertakings to include the undertaking required by Item 512(a)(5)(ii) of Regulation S-K or advise.
Response: Complied with. We have added additional disclosure to our undertakings.
We acknowledge that the adequacy and accuracy of the disclosure in our filings is our responsibility. We acknowledge that the staff comments or changes to disclosure do not foreclose the Commission from taking any action with respect to the filings. We acknowledge that the company may not assert staff comments as a defense in any proceedings initiated by the Commission or any person under the federal securities laws of the United States.
If you have any questions or need additional information, please contact the undersigned at (516) 496-2223 or (212) 907-6457.
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Sincerely,
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/s/ Leslie Marlow
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Leslie Marlow
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