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United States securities and exchange commission logo
November 18, 2021
Lei Huang
Co-Chief Executive Officer
TradeUP Global Corporation
437 Madison Avenue, 27th Floor
New York, New York 10022
Re: TradeUP Global
Corporation
Registration
Statement on Form F-4
Filed October 22,
2021
File No. 333-260418
Dear Mr. Huang:
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 F-4 filed October 22, 2021
Cover Page
1. We note that the target
company has significant operations in China. Please disclose this
prominently on the
prospectus cover page. Your disclosure also should describe the legal
and operational risks
associated with acquiring a company that does business in China.
Your disclosure should
make clear whether these risks could result in a material change in
your or the target
company s post-combination operations and/or the value of your
common stock or could
significantly limit or completely hinder your ability to offer or
continue to offer
securities to investors and cause the value of such securities to
significantly decline
or be worthless. Your disclosure should address how recent
statements and
regulatory actions by China s government, such as those related to data
security or
anti-monopoly concerns, has or may impact the company s ability to conduct
Lei Huang
FirstName LastNameLei Huang
TradeUP Global Corporation
Comapany 18,
November NameTradeUP
2021 Global Corporation
November
Page 2 18, 2021 Page 2
FirstName LastName
its business, accept foreign investments, or list on an U.S. or other
foreign exchange. Your
prospectus summary should address, but not necessarily be limited to,
the risks
highlighted on the prospectus cover page.
2. We note your disclosure on page 213 that "as a Cayman exempted and
offshore holding
company, SAI is permitted under PRC laws and regulations to provide
funding to its
wholly foreign-owned subsidiary in China only through loans or capital
contributions,
subject to the approval of government authorities and limits on the
amount of capital
contributions and loans. In addition, SAI s wholly foreign-owned
subsidiary in China may
provide Renminbi funding to its consolidated VIE only through
entrusted loans." Please
expand your disclosure on the prospectus cover page to provide a
description of how cash
is transferred through the target company's organization and state
whether any transfers,
dividends, or distributions have been made to date. Similarly, please
expand your
disclosure in the prospectus summary to provide a clear description of
how cash is
transferred through the target company's organization. Quantify any
cash flows and
transfers of other assets by type that have occurred between the
target company and
its subsidiaries, and the direction of the transfer. Quantify any
dividends or distributions
that a subsidiary has made to the target company and which entity made
such transfer, and
their tax consequences. Similarly quantify dividends or distributions
made to U.S.
investors, the source, and their tax consequences. Your disclosure
should make clear if no
transfers, dividends, or distributions have been made to date.
Describe any restrictions on
foreign exchange and the target company's ability to transfer cash
between entities, across
borders, and to U.S. investors. Describe any restrictions and
limitations on the target
company's ability to distribute earnings from its businesses to the
parent company and
U.S. investors.
Questions and Answers
Did the TradeUP Board or a committee thereof obtain a third-party valuation or
fairness opinion
in determining whether or not to proceed..., page 11
3. Revise to caution shareholders that the Duff & Phelps fairness opinion
opines on the
fairness of the transaction to TradeUP, as opposed to only those
shareholders unaffiliated
with the sponsor or its affiliates.
Summary, page 20
4. In your summary of risk factors, highlight the risks that acquiring a
company with
substantial operations in China poses to investors. In particular,
describe the significant
regulatory, liquidity, and enforcement risks with cross-references to
the more detailed
discussion of these risks in the prospectus. For example, specifically
discuss risks arising
from the legal system in China, including risks and uncertainties
regarding the
enforcement of laws and that rules and regulations in China can change
quickly with little
advance notice; and the risk that the Chinese government may intervene
or influence your
operations at any time, or may exert more control over offerings
conducted overseas
Lei Huang
TradeUP Global Corporation
November 18, 2021
Page 3
and/or foreign investment in companies with substantial operations in
China, which could
result in a material change in your operations and/or the value of
your common stock.
Acknowledge any risks that any actions by the Chinese government to
exert more
oversight and control over foreign investment in companies with
substantial operations in
China could significantly limit or completely hinder your ability to
offer or continue to
offer securities to investors and cause the value of such securities
to significantly decline
or be worthless.
5. Disclose each permission that SAI is required to obtain from Chinese
authorities to
operate and issue these securities to foreign investors. State whether
SAI or its
subsidiaries are covered by permissions requirements from the CSRC,
CAC or any other
entity, and state affirmatively whether you have received all
requisite permissions and
whether any permissions have been denied.
6. Disclose that trading in your securities may be prohibited under the
Holding Foreign
Companies Accountable Act if the PCAOB determines that it cannot
inspect or fully
investigate your auditor, and that as a result an exchange may
determine to delist your
securities. If the PCAOB has been or is currently unable to inspect
your auditor, revise
your disclosure to so state.
7. Please disclose whether SAI is required to obtain any approvals to
offer securities to
foreign investors, whether it received such approvals and the
consequences to you and
your investors if SAI does not receive or maintain the approvals,
inadvertently conclude
that such approvals are not required, or applicable laws, regulations,
or interpretations
change and SAI is required to obtain approval in the future.
Impact of the Business Combination on New SAI's Public Float, page 30
8. Please revise to disclose all possible sources and extent of dilution
that shareholders who
elect not to redeem their shares may experience in connection with the
Business
Combination. Provide disclosure of the impact of each significant
source of dilution,
including the amount of equity held by founders and warrants retained
by redeeming
shareholders, at each redemption level, including any needed
assumptions.
Reasons for the TradeUP Board Approval of the Business Combination
Valuation supported by financial analysis and due diligence, page 33
9. Revise to specify the due diligence that TradeUP management, the TradeUP
Board,
financial advisor and legal counsel conducted in connection with the
valuation analysis.
FirstName LastNameLei Huang
10. Prominently disclose that the parties considered the proposed
transaction a related party
Comapany NameTradeUP
transaction, and thatGlobal Corporation
the Audit Committee decided to obtain the fairness
opinion because
of these
November related
18, 2021 party
Page 3 implications.
FirstName LastName
Lei Huang
FirstName LastNameLei Huang
TradeUP Global Corporation
Comapany 18,
November NameTradeUP
2021 Global Corporation
November
Page 4 18, 2021 Page 4
FirstName LastName
Risk Factors, page 45
11. Given the Chinese government s significant oversight and discretion
over the conduct of
the target company's business, please revise to separately highlight
the risk that the
Chinese government may intervene or influence your target company's
operations at any
time, which could result in a material change in your operations
and/or the value of your
common stock. Also, given recent statements by the Chinese government
indicating an
intent to exert more oversight and control over offerings that are
conducted overseas
and/or foreign investment in China-based issuers, acknowledge the risk
that any such
action could significantly limit or completely hinder your ability to
offer or continue to
offer securities to investors and cause the value of such securities
to significantly decline
or be worthless.
12. In light of recent events indicating greater oversight by the
Cyberspace Administration of
China over data security, particularly for companies seeking to list
on a foreign exchange,
please revise your disclosure to explain how this oversight impacts
your target company's
business and your offering and to what extent you believe that you are
compliant with the
regulations or policies that have been issued by the CAC to date.
13. We note from the audit opinion that you have a U.S. based auditor that
is registered with
the PCAOB and currently subject to PCAOB inspection. Please disclose
any material
risks to the company and investors if it is later determined that the
PCAOB is unable to
inspect or investigate completely your target company's auditor
because of a position
taken by an authority in a foreign jurisdiction. For example, disclose
the risk that lack of
inspection could cause trading in your securities to be prohibited
under the Holding
Foreign Companies Accountable Act and as a result an exchange may
determine to delist
your securities.
14. Please expand your risk factor disclosure to discuss that the United
States Senate passed
the Accelerating Holding Foreign Companies Accountable Act, which, if
enacted, would
decrease the number of non-inspection years from three years to two,
thus reducing the
time period before your securities may be prohibited from trading or
delisted.
Risks Related to SAI's Business, Industry and Operations
Our business is dependent on a small number..., page 48
15. You disclose on page 48 that SAI depends on a small number of digital
asset mining
equipment suppliers such as Bitmain Technologies, Ltd. Please disclose
the material terms
of SAI's agreement with this supplier as well as any other suppliers
SAI is dependent
upon. Also, file any contracts with the supplier as exhibits or tell
us why this is not
required.
Lei Huang
FirstName LastNameLei Huang
TradeUP Global Corporation
Comapany 18,
November NameTradeUP
2021 Global Corporation
November
Page 5 18, 2021 Page 5
FirstName LastName
Risks Related to TradeUP and the Business Combination, page 82
16. Please highlight the risk that the Sponsor will benefit from the
completion of a Business
Combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
17. Disclose the material risks to unaffiliated investors presented by
taking the target
company public through a merger rather than an underwritten offering.
These risks could
include the absence of due diligence conducted by an underwriter that
would be subject to
liability for any material misstatements or omissions in a
registration statement.
Proposal 1 - The Business Combination Proposal
Certain Unaudited Projected Financial Information of SAI, page 131
18. We note you have provided more than three years of financial
projections. Given your
limited operating history, please explain how it is reasonable to
project this information
out through 2026.
19. We note that the projections are based on numerous variables and
assumptions, including
economic, market and operational assumptions, and that certain
assumptions are derived
from what SAI's management "then believed to be potentially
achievable." Describe what
is meant by "potentially achievable" and whether SAI's management
opined on the
likelihood of certain of these assumptions coming to fruition.
Additionally, disclose any
specific assumptions about growth rates that were used to prepare the
projections.
20. Provide us with the legal basis for the disclaimer on page 132 of "any
obligation to update
or otherwise revise or reconcile the projections to reflect
circumstances existing after the
date the projections were generated or to reflect the occurrence of
future events even in
the event that any or all of the assumptions underlying the
projections are shown to be in
error." Refer generally to Item 10(b)(3)(iii) of Regulation S-K.
U.S. Federal Income Tax Considerations, page 144
21. We note your disclosure that there should be no material U.S. federal
income tax
consequences to U.S. Holders of New SAI Class A ordinary shares and
warrants as a
result of the Business Combination. Please file a tax opinion as an
exhibit to the filing in
support of this conclusion. If you cannot give a will opinion,
please discuss the facts or
circumstances resulting in this uncertainty, the degree of
uncertainty, and add appropriate
risk factor disclosure addressing the risk to investors regarding
uncertain tax treatment.
For guidance, see Section III.C.4 of Staff Legal Bulletin No. 19.
Unaudited Pro Forma Condensed Combined Financial Information
Accounting for the Business Combination, page 163
22. Refer to the table on page 164. With a view towards clarifying
disclosure, please tell us
how you calculated the number of TradeUP shares issued in merger to
SAI Shareholders.
Lei Huang
TradeUP Global Corporation
November 18, 2021
Page 6
Unaudited Pro Forma Condensed Combined Balance Sheet As of June 30, 2021, page
165
23. In light of the timing differences between the transactions, please
include a separate
column to depict the de-consolidation of Beijing SAI and the
subsequent transfer of its
assets and liabilities to your Company, with related explanatory
footnotes. Refer to
Article 11-01(a)(4) of Regulation S-X.
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined
Statements
of Operations, page 170
24. Please include a footnote regarding a revised estimate of your
effective income tax rate
based on your tax jurisdictions overseas following your migration.
25. Refer to the CEO and CFO Employment Agreements entered into concurrent
with your
business combination agreement (page 28). Please tell how you
considered giving pro
forma effect to the cost of these agreements.
26. Please tell us how you considered giving pro forma effect to the
following transactions:
the issuance of 9,864,312 Series Pre-A Preferred Shares;
the acquisition of Nanjing Suan Neng Wu Xian Ltd. ( Nanjing
SuanNeng ); and
the grant of fully vested 8,979,600 restricted Class A Ordinary
Shares to Make World
Better Limited.
Permitted Purchases of our Securities, page 173
27. The disclosure indicates that the Sponsor, directors, officers, or any
of their affiliates may
purchase Class A ordinary shares in privately negotiated transactions
or in the open
market prior to completion of the Business Combination. Explain how
such purchases
would comply with the requirements of Rule 14e-5 under the Exchange
Act.
SAI's Business
Business Overview, page 185
28. We note the discussion of SAI's participation in global carbon
neutrality focused
organizations on page 195. Disclose whether these activities carry any
legal
significance or constitute binding commitments.
29. With respect to any claims throughout your registration statement and in
your Forms 425
regarding your ESG initiatives or commitment to carbon neutrality,
please revise to
disclose the factual basis for such claims or remove them from your
prospectus. You
should also provide more detail as to the current status or
attainability of each such claim.
Examples include:
FirstName
LastNameLei
"SAI is an ESGHuang
champion of the industry."
Comapany NameTradeUP
SAI's Global
"commitment Corporation
to pay carbon tax for non-clean bitcoins."
"SAI...is committed
November 18, 2021 Page 6 to long-term carbon neutrality."
FirstName LastName
Lei Huang
FirstName LastNameLei Huang
TradeUP Global Corporation
Comapany 18,
November NameTradeUP
2021 Global Corporation
November
Page 7 18, 2021 Page 7
FirstName LastName
30. We note your references to SAI s operating statistics collected from
the pilot sites, "which
SAI believes proves that SAI s heating cabinet can functionally
replace many traditional
heating boilers that burn coal and natural gas, and most electric
heating boilers in the
market." Please disclose or provide a summary of the operating data
from the pilot
programs and explain how the data was collected.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources, page 212
31. As indicated on page 214, SAI estimates that its capital expenditures
will increase
moderately in the following two or three years to support the expected
growth of its
business. If reasonably estimable, please disclose your estimated
capital expenditures in
the following two to three years in connection with your migration
overseas and the build-
out of new data centers for hosting and self-mining.
SAI Tech Limited
Consolidated Statements of Operations and Comprehensive (Loss)/ Income, page
F-32
32. Separately disclose on the face of the consolidated Statements of
Operations the cost of
tangible goods sold and cost of services pursuant to Rule 5-03.2 of
Regulation S-X.
Further comply with this comment in your presentation of unaudited
condensed
consolidated Statements of Operations on page F-62.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
p) Segment Reporting, page F-46
33. Please disclose hereunder or in a separate segment note such
information required
pursuant to ASC 280-10-50-41.
8. Redeemable Preferred Shares, page F-72
34. Please state in this note the number of authorized redeemable
preferred shares and
changes in the number of shares for each issue for each period
presented. Refer to Rule 5-
02-27(b) and (c) of Regulation S-X.
35. Please make clear how your (warrant) commitment agreement to issue
9,864,312
Series Pre-A Preferred Shares to three shareholders holding a total
7.99% equity interest
of Beijing Sai was given effect in the financial statements. We note
your statement on
page F-65 that the underlying shares "should be included in the
mezzanine shares
outstanding as of June 30, 2021."
Lei Huang
FirstName LastNameLei Huang
TradeUP Global Corporation
Comapany 18,
November NameTradeUP
2021 Global Corporation
November
Page 8 18, 2021 Page 8
FirstName LastName
SAITECH Limited
Notes to Unaudited Condensed Combined Consolidated Financial Statements
15. Subsequent Events, page F-76
36. Please disclose the terms of your acquisition of Nanjing Suan Neng Wu
Xian Ltd.
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 Kathryn Jacobson, Senior Staff Accountant, at (202)
551-3365 or
Robert Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have
questions regarding
comments on the financial statements and related matters. Please contact
Alexandra Barone,
Staff Attorney, at (202) 551-8816 or Joshua Shainess, Legal Branch Chief, at
(202) 551-7951
with any other questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: David C. Buck