Mail Stop 4561
November 8,
2019
Sing Wang
Chief Executive Officer
TKK Symphony Acquisition Corporation
c/o Texas Kang Kai Capital Management (Hong Kong) Limited
2039, 2/F United Center,
95 Queensway Admiralty, Hong Kong
Re: TKK Symphony Acquisition Corporation
Schedule TO-I filed October 17, 2019
Filed by TKK Symphony Acquisition Corporation
File No. 005-90609
Dear Mr. Wang:
We have reviewed the above-captioned filing, and have the following
comments. Where
indicated, the Schedule TO should be amended in response to these comments. If
you disagree,
we will consider the explanation as to why a comment is inapplicable or a
revision is not
necessary. In some of our comments, we may ask for information so we may better
understand
your disclosure. After reviewing this information, we may raise additional
comments.
Please understand that the purpose of our review process is to assist
you in your
compliance with the applicable disclosure requirements and to enhance the
overall disclosure in
your filing. We look forward to working with you in these respects. We welcome
any questions
you may have about our comments or any other aspect of our review.
Offer to Purchase for Cash | Exhibit (a)(1)(a) to Schedule TO
Risk Factors
Risks Related to Doing Business in China, page 26
1. Please add risk factors that discuss the following:
Uncertainties with respect to indirect transfers of PRC taxable
properties;
Implementation of new labor laws and regulations;
Governmental control of currency conversion;
Your auditor not being subject to inspections by the Public Company
Accounting
Oversight Board;
Potential volatility of your ordinary shares; and
Sing Wang
TKK Symphony Acquisition Corp.
November 8, 2019
Page 2
Potential for declines in the market price or trading volume of your
ordinary shares if
analysts publish unfavorable research about your business
2. We note your disclosure on page 33 which states, "Restrictions on
foreign exchange
under PRC laws may limit Glory Star's ability to convert cash derived
from its operating
activities into foreign currencies and may materially and adversely
affect the value of
your investment." Please provide disclosure in your liquidity section of
your MD&A and
footnotes to your financial statements regarding current cash balances
and where they are
located and your ability to repatriate the cash outside of the PRC.
Also, provide this
disclosure when discussing pro forma balance sheet data explaining where
the cash from
the redemption will be located after the business combination is
effective.
3. Considering the statutory or contractual restrictions which affect your
subsidiaries' ability
to make intercompany funds transfers, tell us how you determined that it
was not
necessary for you to provide condensed parent company financial
information and other
data in a financial statement schedule in accordance with Rules 5-04 and
12-04 of
Regulation S-X.
Information about TKK and Glory Star Group
Overview, page 49
4. You state that the number of downloads of Glory Star Group's CHEER App
exceeded 50
million as of August 30, 2019. For context, please disclose the number
of downloads for
the periods presented.
Cheers APP, page 51
5. Please define Gross Merchandise Value and, for context, disclose the
amount of revenue
Glory Star Group derived from these sales.
Organization Structure, page 62
6. Please file the business cooperation agreement, exclusive option
agreement, share pledge
agreement, proxy agreements and powers of attorney, confirmation and
guarantee letter,
spousal consent, master exclusive service agreement and the Glory Star
Group
organizational documents as exhibits to your Schedule TO-I. Refer to
Item 12 of
Schedule TO and corresponding Item 1016(a)(5) of Regulation M-A.
Industry Overview, page 55
7. Please disclose that you commissioned the iResearch report.
Sing Wang
TKK Symphony Acquisition Corp.
November 8, 2019
Page 3
The Business Combination
Background of the Business Combination, page 87
8. Please disclose the specific reasons you decided against pursuing the
business
combination with the target in the Asia Pacific aviation sector.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Glory Star Group, page 124
9. Please disclose the key metrics that management uses to manage the
business for each
period presented.
Liquidity and Capital Resources, page 133
10. Please expand your disclosure to provide more robust analysis of
anticipated cash
requirements, including your ability to meet existing and known or
reasonably likely
long-term cash requirements.
Glory Star Audited Financial Statements
1. Organization and Principal Activities
The VIE contractual arrangements
Share Pledge Agreement, page F-40
11. We note your statement that, "The equity pledges on the VIE's equity
interests are in the
process of being registered with the Market Supervision Administration
Authority in
China." Please explain to us your consideration of how this circumstance
impacts your
ability to consolidate under the VIE guidance.
Risks in relation to the VIE structure, page F-41
12. Please provide VIE disclosure in accordance with ASC 810-10-50-14, for
example
disclose; if the VIE's assets can only be used to settle specific
obligations of the VIE,
disclose lack of recourse related to creditors, and terms that could
require the reporting
entity to provide financial support to the VIE.
2. Summary of Significant Accounting Policies
(m) Revenue Recognition, page F-44
13. We note your critical accounting policy disclosures on page 127. For
licenses of TV
series, please clarify if you recognize revenue at the point in time
when each episode is
made available to the licensee for exhibition and the license period has
begun or over
some other period. To the extent that your revenue recognition policies
differs for
Sing Wang
TKK Symphony Acquisition Corp.
November 8, 2019
Page 4
licenses of content produced solely by you compared to content produced
with others,
please revise your disclosures to separately describe your accounting
policies for each.
Please refer to ASC 606-10-50-12 and ASC 606-10-55-58 through 55-62.
14. Please revise to clarify, if true, that you recognize advertising
revenue as impressions are
delivered. For advertising contracts that involve third-party agencies,
please explain how
you concluded that you were the principal or agent in the related
arrangements. Please
refer to ASC 606-10-50-12(c) and ASC 606-10-55-36 through 55-40.
15. We note your disclosures on page 53 regarding the monetization of your
online games.
Please quantify for us your revenues from online games during the
periods presented. If
material, please revise your financial statement footnotes to describe
your accounting
policies for this revenue stream. Please refer to ASC 606-10-50-12.
12. Income Taxes
Accounting for uncertainty tax position, page F-54
16. We note your statement that, "For the years ended December 31, 2017 and
2018, the
Company identified an uncertain tax position ("UTP") that the cost
allocation between
Horgos and Glory Star Beijing, which are taxed currently at 0% and 25%
respectively,
might not be properly supported. The related impact of such UTP was
amounting to
$498 and $428 for the years ended December 31, 2017 and 2018
respectively, and have
been deducted from accumulated loss when calculating deferred tax
assets." In this
regard, please clarify your accounting for the uncertain tax position
and whether the
impact was recorded in your consolidated statement of income. Please
refer us to your
basis in the accounting literature.
General
17. Please disclose the source of the following assertions:
Glory Star Group operates a leading mobile and online advertising,
digital media, and
entertainment business in China (pages 3, 4, 49, 90, 104 and 124);
and
Glory Star Group has a leading market position (pages 90).
18. It appears that you qualify as an "emerging growth company" as defined
in the Jumpstart
Our Business Startups Act. Please revise your prospectus to:
Describe how and when a company may lose emerging growth company
status;
Briefly describe the various exemptions that are available to you, such
as an
exemption from Section 404(b) of the Sarbanes-Oxley Act of 2002 and
Section 14(a)
and (b) of the Securities Exchange Act of 1934;
State your election under Section 107(b) of the JOBS Act;
If you have elected to opt out of the extended transition period for
complying with
new or revised accounting standards pursuant to Section 107(b),
include a statement
that the election is irrevocable; or
Sing Wang
TKK Symphony Acquisition Corp.
November 8, 2019
Page 5
If you have elected to avail yourself of the extended transition
period for complying
with new or revised accounting standards under Section 102(b)(1),
provide a risk
factor explaining that this election allows you to delay the
adoption of new or revised
accounting standards that have different effective dates for public
and private
companies until those standards apply to private companies. Also
state that as a
result of this election, your financial statements may not be
comparable to companies
that comply with public company effective dates.
We urge all persons who are responsible for the accuracy and adequacy
of the disclosure
in the filing reviewed by the staff to be certain that they have provided all
information investors
require for an informed decision. Since the issuer is in possession of all
facts relating to its
disclosure, it is responsible for the accuracy and adequacy of the disclosures
it has made
notwithstanding any review, comments, action or absence of action by the staff.
You may contact Inessa Kessman, Staff Accountant, at (202) 551-3371, 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 Jeff Kauten,
Attorney-Advisor, at
(202) 551-3447, or in his absence, Larry Spirgel, Office Chief, at (202)
551-3815, with any other
questions.
Sincerely,
/s/ Nicholas P.
Panos
Nicholas P. Panos
Senior Special
Counsel
Office of Mergers
& Acquisitions
cc: Douglas S. Ellenoff, Esq.
Stuart Neuhauser Esq.
Jeffrey W. Rubin, Esq.
Joshua N. Englard, Esq.
Ellenoff Grossman & Schole LLP