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Re:
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X Rail Enterprises, Inc.
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Registration Statement on Form S-1
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Submitted January 12, 2018
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CIK No. 0001697935
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File No. 333-222530
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| 1. |
We note that your common stock is quoted on the OTC Pink marketplace. Our accommodation permitting the resale of shares to be issued under an equity line agreement is available only where there is an existing public market for the securities as evidenced by trading on a national securities exchange or through the facilities of the OTC Bulletin Board or the OTCQX or OTCQB tiers of OTC Link ATS. For guidance, refer to Securities Act Sections Compliance and Disclosure Interpretation 139.13. Please remove the resale offering by GPL Ventures, LLC of up to 80,000,000 shares of common stock issuable under the securities purchase agreement. You may register this resale offering when there is an existing public market for your common stock. Alternatively, you may register the resale of the equity line securities after each put.
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| 2. |
With respect to the shares underlying the notes, it appears you are attempting to register an at-the-market offering by selling in the absence of an existing trading market for your common stock. Please disclose the fixed price or range that the selling stockholders will sell for the duration of the offering or until the time your common stock is quoted on the OTCBB or the OTCQX or OTCQB tiers.
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| 3. |
We note you are registering the offering of 416,538,466 shares of common stock. Given the size of the offering relative to the number of outstanding shares held by persons other than affiliates, the nature of the offering and the selling stockholders, this transaction appears to be a primary offering. Because you are not eligible to conduct a primary offering on Form S-3, you are not eligible to conduct a primary at-the-market offering under Rule 415(a)(4).
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The number of selling stockholders and the size of the offering relative to the number of outstanding shares held by persons other than affiliates;
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The relationship of each selling stockholder with you, including an analysis whether the selling stockholder is an affiliate of the company;
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Any relationship among the selling stockholders;
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The dollar value of the shares included in this registration in relation to the proceeds that you received from the selling stockholders in the respective convertible note transactions, excluding any amounts of proceeds that were or will be returned to the selling stockholders or their affiliates in the form of fees or other payments;
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The discount at which the selling stockholders will purchase common stock underlying the respective convertible notes on conversion; and
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Whether or not either of the selling stockholders is in the business of buying and selling securities.
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There is now one selling stockholder, EMA Financial, LLC in the resale registration statement. Comporting with past SEC guidance we have reduced the number of shares to be registered in the registration statement for resale by EMA Financial, LLC to 10,462,020 shares, which is an amount less than 30% of the 831,639,132 outstanding shares held by non-affiliates of the registrant. The number of shares to be registered in the resale registration statement represents 0.7% of the 1,411,548,750 total shares outstanding.
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EMA Financial, LLC is an investor and not affiliated with the Company in any manner whatsoever. Apart from the one financing transaction noted in the registration statement, there is no relationship between the registrant and EMA Financial, LLC.
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As more fully disclosed in the registration statement, the terms of the financing transaction for the EMA Note provide that a 50% discount will apply to the conversion into common stock, provided however, that in the event that the Company's stock price falls below a certain price threshold, an additional 15% discount will apply to any such conversion.
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The value of shares included in this registration is $25,108.00 compared to the $76,500.00 in net proceeds received by the Company from EMA Financial, LLC from the sale of the EMA Note.
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EMA Financial, LLC is not an underwriter. EMA Financial, LLC is not in the business of buying and selling securities. The offering is a resale and not made by or on behalf of the registrant or its subsidiaries.
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| 4. |
Please file as exhibits to the registration statement the November 2017 Purchase Agreement with EMA Financial, LLC and the Securities Purchase Agreement with GPL Ventures.
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| 5. |
Please consider the age of financial statement requirements in Article 8-08 of Regulation S-X prior to filing an amended registration statement.
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| 6. |
Please disclose in a footnote the natural person(s) exercising voting and dispositive powers with respect to the shares offered by each of EMA and GPL Ventures, LLC.
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| 7. |
Please discuss your ability to repay the EMA Note and GPL Note, respectively, based on the maturity and repayment terms of the notes, additional recent convertible note issuances, and your disclosure regarding your current sources of liquidity.
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| 8. |
Please disclose the net proceeds received from the issuance of convertible notes to each of Power Up Lending Group LTD, Adar Bays, LLC, Auctus Fund, LLC and GPL Ventures.
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| 9. |
You state here that the selling stockholders may also sell shares in reliance on Rule 144. You also state on the prospectus cover that GPL Ventures, LLC "is an underwriter". Please clarify that to the extent a selling stockholder is an underwriter within the meaning of Section 2(a)(11), it may not rely on the Rule 144 safe harbor.
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| 10. |
We note your disclosure regarding short sales by selling stockholders. Please clarify whether any of the note agreements or securities purchase agreements with either selling stockholder include provisions prohibiting or conditioning short selling. If so, please describe those provisions here.
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