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December 18, 2018
Tianhua Wu
Chief Executive Officer and Director
Up Fintech Holding LTD
18/F, Gandyvic Building, No. 1 Building,
No. 16 Taiyanggong Middle Road, Chaoyang District,
Beijing, 100020 PRC
Re: Up Fintech Holding LTD
Draft Registration Statement on Form F-1
Submitted November 20, 2018
CIK No. 0001756699
Dear Mr. Wu:
We have reviewed your draft 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 providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. 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 the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form F-1 Submitted on November 20, 2018
The Offering
Key Operating Data, page 13
1. We note your disclosure of the number of registered users and customer
accounts as part
of your key operating data. Please disclose in a footnote to the table
how many of
the total registered users and customers have had activity or no
activity in the last twelve
months.
Risk Factors, page 14
2. Include a new risk factor on the risk that the deposit agreement may be
amended or
Tianhua Wu
FirstName LastNameTianhua Wu
Up Fintech Holding LTD
Comapany18, 2018 Fintech Holding LTD
December NameUp
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terminated without the holder's consent.
We face risks related to natural disasters, health epidemics, terrorist attacks
and other
outbreaks...., page 35
3. Please revise this risk factor to adequately describe the risk and
explain how the risk
affects your business. For instance, are your management, information
technology or other
critical functions or assets centered in a single city or geographic
region such that an event
in that city could adversely impact your operations? See Item 503(b)
of Regulation S-K.
Our management will have considerable discretion as to the use of the net
proceeds..., page 57
4. For clarity, please revise this risk factor to disclose your current
capital position as well as
your expected capital position after the offering.
Use of Proceeds, page 60
5. Please amend your disclosure to include the estimated amount of
proceeds you plan to
allocate for each of the uses identified on page 60. If the company
has specific purposes in
mind for the use of proceeds, you must disclose the estimated net
amount of the proceeds
broken down into each principal intended use. This is required even if
management will
have broad discretion in allocating the proceeds. See Item 504 of
Regulation S-K.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Non-GAAP Financial Measures, page 79
6. We note your calculation of Adjusted Net Loss, a non-GAAP financial
measure, does not
include any tax effect related to your adjustments. Please revise your
calculation and
disclosures, here and elsewhere throughout the registration statement,
to show the tax
effect of the corresponding adjustments as a separate line item. Refer
to Question 102.11
of the Compliance and Disclosure Interpretations on Non-GAAP Financial
Measures.
Key Components of Results of Operations
Revenues, page 80
7. We note that a significant portion of your revenues is from charging
commission fees
based on the amount of transaction volume, or the number of shares,
lots or contracts in
each order. In addition, we note that financing service fees on margin
financing
transactions. Please expand to disclose the key pricing terms
associated with your
revenues, including average commission rates charged per transaction,
other fees, and
interest rates charged on margin financing transactions. To the extent
that there are
fluctuations in any of your fee rates, include a discussion of those
changes and
any impacts those changes have on your revenues.
Tianhua Wu
FirstName LastNameTianhua Wu
Up Fintech Holding LTD
Comapany18, 2018 Fintech Holding LTD
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Results of Operations, page 88
8. Please revise your MD&A to include a comprehensive discussion and
analysis of
the trends and circumstances driving the significant changes in your
balance sheet line
items for the periods provided. Refer to Item 303(a) of Regulation
S-K.
Business, page 105
9. Please revise this section to clarify that Interactive Brokers is a
key service provider on
whose services your business is dependent, consistent with the
disclosure in the risk factor
regarding your relationship with Interactive Brokers on page 18.
Please also file any
material contracts with Interactive Brokers as exhibits under Item
601(b)(10) of
Regulation S-K.
Regulation , page 123
10. Under an appropriate caption, please discuss the regulations under
which you received a
rectification notice in July 2016 from the CSRC. Please elaborate on
the substance of the
notice and measures you have taken to comply with its requirements,
and clarify whether
you expect that the CSRC will confirm whether you have satisfied those
requirements.
Similarly, please elaborate on the substance of the SAFE notice you
received in March
2016 and whether you expect that SAFE will confirm whether you have
responded
satisfactorily to its inquiry.
Report of Independent Registered Public Accounting Firm, page F-2
11. The auditor's report must be addressed to the shareholders and the
board of directors,
pursuant to AS 3101, paragraph 07. Please have the auditor revise its
report to
specifically address shareholders.
Consolidated Balance Sheet, page F-3
12. We note that you present a line item for "subscription receivable from
Series A equity
interest with preferential rights" in the amount of $(3,633,087)
within mezzanine equity as
of December 31, 2016. Please tell us and revise to disclose the nature
of this item and
how it is flowing through your financial statements, including an
explanation of your
accounting for the initial measurement, subsequent measurement or
settlement with
reference to authoritative literature.
Consolidated Statements of Operations, page F-4
13. We note the disclosure of your various research and development
activities throughout the
filing, including discussion around development of your platform on
page 117. Please tell
us and disclose in future filings the total amount of research and
development costs
charged to expense for each year presented in the consolidated
statements of operations as
required by ASC 730-10-50-1. In addition, revise to disclose your
accounting policy
Tianhua Wu
FirstName LastNameTianhua Wu
Up Fintech Holding LTD
Comapany18, 2018 Fintech Holding LTD
December NameUp
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associated with the research and development activities, inclusive of
your capitalization
policy of any of those costs as software on the balance sheet.
Notes to the Consolidated Financial Statements
Note 1. Organization and Principal Activities
History of the Group and reorganization under identical common ownership, page
F-10
14. We note your disclosure that you will present shares and per share
information, including
basic and diluted EPS, retrospectively upon completion of the
re-domiciliation. In
addition, we note the disclosure on your capitalization table on page
62 that your preferred
shares will automatically convert upon completion of this offering.
Please address the
following:
Tell us whether you intend to provide a pro forma balance sheet
and statement of
operations (including EPS) to give effect to the automatic
conversion;
Tell us in greater detail the specific impacts you intend to
present on a retrospective
basis, and separately on a pro forma basis, relating to the
re-domiciliation or other
events. In addition, tell us when you expect the re-domiciliation
to be complete; and
Provide us with the relevant authoritative guidance supporting
your planned
presentation as it relates to the two bullets above.
Note 2. Summary of Significant Accounting Policies
Revenue Recognition
Financing Service Fees, page F-18
15. We note that you earn financing service fees over the period that the
margin loans are
outstanding. Please tell us and disclose the amount of margin loans
outstanding in your
consolidated balance sheet as of December 31, 2017 and 2016, as well
as the line item that
they are reflected in. In addition, tell us and disclose the details
of your accounting policy
for determining the allowance for doubtful accounts on your margin
loan transactions,
including any relevant quantitative information on your collateralized
transactions.
Note 8. Income Taxes, page F-27
16. We note that you have $4.6 million and $3.2 million of deferred tax
assets, net of
valuation allowances of $1.2 million and $0.5 million, as of December
31, 2017 and 2016,
respectively. Please provide us with a comprehensive analysis that
supports your
determination of the tax valuation allowance at December 31, 2017 and
2016, including
your basis for concluding that realization of net deferred tax assets
is more likely than not
as required by ASC 740-10-30-5(e). As part of your response, include a
discussion of the
negative and positive evidence you considered and contemplated by ASC
740-10-30-22
Tianhua Wu
FirstName LastNameTianhua Wu
Up Fintech Holding LTD
Comapany18, 2018 Fintech Holding LTD
December NameUp
December 18, 2018 Page 5
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FirstName LastName
through 24. To the extent applicable, revise your disclosures here or
within the critical
accounting policies to provide a more robust description of the
specific positive and
negative evidence you considered, as well as any possible tax planning
strategies or other
future events.
Note 9. Equity Interest with Preferential Rights, page F-29
17. We note your disclosure of the redemption terms (i.e., redemption
events and redemption
price) for the Series A, B and B+ equity interest with preferential
rights, which you
classified within mezzanine equity. However, we do not see any
accretion for changes in
redemption value of the preferred shares from the date of issuance
reflected in your
financial statements. Please explain your accounting treatment and
identify the specific
guidance you used. Tell us how your current presentation complies with
paragraph 15 of
ASC 480-10-S99-3A, including your consideration of whether the
instrument will become
redeemable upon the passage of time.
Note 11. Share-Based Compensation, page F-33
18. We note your disclosure that the options will vest and become
exercisable in three
installments beginning on the second anniversary of the vesting
commencement date.
Please address the following:
Revise your disclosures to clearly define the vesting commencement
date and describe
when vesting of the options will begin;
Tell us whether the terms of the awards contain an explicit or
implicit market, service
or performance condition and how you intend to recognize
compensation expense over
the vesting period, including any consideration of whether there
is a service inception
date that precedes the grant date in accordance with ASC
718-10-55-108; and
Disclose the amount of total compensation expense relating to your
nonvested share
options not yet recognized and the weighted average period for
which it is to be
recognized in accordance with ASC 718-10-50-2(i) in addition to
the amounts you
already disclose relating to your RSUs.
General
19. We note the prospectus includes information from an industry report
commissioned by
you and prepared by iResearch Report. Please file the consent of
iResearch to the
inclusion of information and references to itself and to the report as
an exhibit to this
registration statement or provide us your analysis supporting your
determination that you
are not required to do so. Please refer to Rule 408(a) of Regulation
C.
20. Please supplementally provide us with copies of all written
communications, as defined in
Tianhua Wu
Up Fintech Holding LTD
December 18, 2018
Page 6
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.
You may contact Stephen Kim at 202-551-3291or Robert Klein at
202-551-3847 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jessica Livingston at 202-551-3448 or Pam Long at 202-551-3765 with any
other
questions.
Sincerely,
FirstName LastNameTianhua Wu
Division of
Corporation Finance
Comapany NameUp Fintech Holding LTD
Office of Financial
Services
December 18, 2018 Page 6
cc: Ke Geng
FirstName LastName