United States securities and exchange commission logo
October 28, 2020
Eli Baker
President, Chief Financial Officer and Secretary
Flying Eagle Acquisition Corp.
2121 Avenue of the Stars, Suite 2300
Los Angeles, CA 90067
Re: Flying Eagle
Acquisition Corp.
Amendment No. 1 to
Registration Statement on Form S-4
Filed October 14,
2020
File No. 333-248638
Dear Mr. Baker:
We have reviewed your amended 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.
Unless we note
otherwise, our references to prior comments are to comments in our
October 6, 2020 letter.
Amendment No. 1 to Registration Statement on Form S-4
Risks Related to Skillz s Business and Industry
A limited number of games historically have accounted for a substantial
portion of our
revenue..., page 56
1. We note from your
revised disclosure in response to prior comment 9 that negotiated
agreements also require
the games remain available exclusively on your platform for at
least 12 months
following termination. Please clarify the terms of this requirement and
specifically address
whether you would continue to host competitions and provide
monetization services
during that extended period under the same terms as prior to the
termination notice.
Eli Baker
Flying Eagle Acquisition Corp.
October 28, 2020
Page 2
2. We note you revised this risk factor to focus on your reliance on a
limited number of
games rather than the number of developers. Please further revise to
also disclose the
percentage of revenue from each of the two third-party developers
named herein for both
fiscal 2019 and to date in fiscal 2020. Similar revisions should be
made elsewhere. In
this regard, we refer also to your revisions made in response to prior
comment 21.
FEAC s Board of Directors Reasons for the Approval of the Business
Combination
Certain Projected Financial Information, page 94
3. Please disclose the projected financial information and material
assumptions underlying
the projections used to calculate the ratios for Skillz in the
comparable company analysis.
Unaudited Pro Forma Condensed Combined Financial Statements
Loss per Share, page 147
4. Please briefly disclose your basis for not presenting pro forma loss
per share separately for
each class as noted in your response to prior comment 17.
5. Please provide us with a reconciliation of how you arrived at the
422.2 million adjusted
shares as provided in your response to prior comment 18 from the
outstanding common
and preferred shares of Skillz as of the June 30, 2020 financial
statements. Also, explain
further the conversion of the Skillz preferred stock into Skillz
common stock on a 1-for-10
basis. In this regard, it appears from the disclosures in Note 7 to
Skillz financial
statements that the Conversion Rate would result in a 1-for-1 exchange
ratio. Please
clarify and revise your disclosures as necessary.
Business of New Skillz, page 164
6. We note your revised disclosures in response to prior comment 19.
Considering your
revenues are based off of paid tournament entry fees, please tell us,
and further revise to
disclose, the number of paid tournaments that you hosted for each
period presented and
the number you expect to host in fiscal 2020. Similar revisions should
be made elsewhere
where you discuss the total number of hosted tournaments.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Skillz
Our Financial Model, page 180
7. In your response to prior comment 24 you state that you monitor the
ability to convert
active users to paying users based on the percentage of acquired users
who deposit cash
through your platform. Please tell us how deposit withdrawals factor
into your conversion
analysis. Also, address the extent to which you consider whether such
deposits are used
FirstName LastNameEli Baker
for paid entry fees and if you do not consider this in your analysis,
please explain why.
Comapany NameFlying
Revise to discloseEagle Acquisition
any quantified Corp.
information used in monitoring such
conversions and
how such amounts
October 28, 2020 Page 2 are determined.
FirstName LastName
Eli Baker
FirstName LastNameEli
Flying Eagle AcquisitionBaker
Corp.
Comapany
October 28,NameFlying
2020 Eagle Acquisition Corp.
October
Page 3 28, 2020 Page 3
FirstName LastName
8. We note your response and revised disclosure in response to prior
comment 25. Please
revise to clarify the meaning of time spent on your platform.
Regarding you explanation
that four minutes per game is the average time it takes to complete a
competition, tell us
the following:
How you monitor end-user time spent on the platform;
How you arrive at the estimated four minutes per game;
Whether you apply this four minutes per game consistently
across games and periods
presented;
How you consider differences among end-user demographics, such
as described on
page 170; and
Whether this estimate varies if a game is part of a league
competition.
9. Please address the following as it relates to your response to prior
comment 26:
You state that a cohort is all users acquired in that month.
Considering you present
cohort information on an annual and interim basis, revise to
clarify that a cohort is all
users acquired in a period (e.g., month, quarter, year);
You state that a user is considered part of a cohort based on
the first time they enter a
paid tournament or make a deposit. Tell us the frequency by which
deposits are
withdrawn by the end-user prior to game play. Clarify why you
include users in the
cohort at the time of deposit;
Describe for us how you determine the standard gross margin
used in calculating user
lifetime value and clarify whether this is consistently applied;
Disclose the type of user acquisition costs that are included
in your calculations and
how they are determined;
Tell us the amount of league prizes for each period presented
and the portion of
revenues or paid entry fees from games played as part of a
league;
Explain why you believe league prizes that are recorded in
sales and marketing
expense are not correlated with revenues and unit economics; and
In an effort to provide further context to this disclosure,
when discussing unit
economics and user payback period, quantify the amount of
end-user incentives that
are presented as sales and marketing costs that are not
considered in what you
describe as unit economics.
10. Please address the following as it relates to your response to prior
comment 28:
Provide us with the contractual excerpt from which this formula
is derived;
Tell us whether this general formula is consistent across all
developer agreements;
Explain why system-wide deposits and system-wide entry fees are
inputs in
determining the amount of net revenues shared with a developer;
Explain why deposits are an input in the formula and how
deposits correlate with
paid entry fees;
Explain how expected deposit withdrawals are determined;
Tell us the gross amount of deposits and withdrawals for each
period presented;
Eli Baker
Flying Eagle Acquisition Corp.
October 28, 2020
Page 4
Tell us how winnings paid out for competitions are included in
this formula;
Tell us the net revenue share rate for your two most significant
developers and how
this compares with your standard terms; and
Tell us how the result of this formula compares with the disclosed
16-20% of total
entry fees that the company withholds as its commission when
awarding prizes.
Material U.S. Federal Income Tax Considerations, page 240
11. In response to prior comment 29, you indicate that you will file an
opinion of counsel as
Exhibit 8.1. Please tell us whether counsel will be opining on whether
the merger
qualifies as a reorganization within the meaning of Section 368(a) of the
Code and/or a
transaction governed by Section 351 of the Code. If so, revise the
discussion of the U.S.
material tax consequences to disclose counsel's opinion. Also, provide
summary and risk
factor disclosure about any uncertain tax treatment and that the merger
will occur even if
it is not tax free to the company and Skillz shareholders.
Item 21. Exhibits and Financial Statement Schedules., page II-2
12. Your response to prior comment 10 concludes that your agreement with your
top
developer is not required to be filed as an exhibit; however, it appears
that your business
may be substantially dependent on this agreement. In this regard, we note
the following:
This developer has accounted for 83% and 66% of your revenue for
the year ended
December 31, 2019 and the 6 months ended June 30, 2020,
respectively;
You have negotiated terms with this developer outside of your
standard terms,
including marketing support and more favorable revenue sharing; and
While the agreement may be terminated by either party on 30 days'
notice, the
agreement also requires that the developer's games remain available
exclusively on
your platform for at least 12 months following the termination of
the agreement.
Accordingly, please file this agreement as an exhibit.
You may contact Joyce Sweeney, Staff Accountant, at (202) 551-3449 or
Kathleen
Collins, Accounting Branch Chief, at (202) 551-3499 if you have questions
regarding comments
on the financial statements and related matters. Please contact Mitchell
Austin, Staff
Attorney, at (202) 551-3574 or Kathleen Krebs, Special Counsel, at (202)
551-3350 with any
other questions.
Sincerely,
FirstName LastNameEli Baker
Division of
Corporation Finance
Comapany NameFlying Eagle Acquisition Corp.
Office of
Technology
October 28, 2020 Page 4
cc: Joel Rubinstein, Esq.
FirstName LastName