United States securities and exchange commission logo
December 4, 2020
Suying Liu
Chief Executive Officer
Mountain Crest Acquisition Corp.
311 West 43rd Street, 12th Floor
New York, New York 10036
Re: Mountain Crest
Acquisition Corp.
Proxy Statement on
Schedule 14A
Filed November 9,
2020
File No. 001-39312
Dear Mr. Liu:
We have reviewed your filing 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 these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Proxy Statement on Schedule 14A
Proposal No. 1 The Business Combination Proposal
The Merger Agreement, page 74
1. We note your cautionary
statement concerning the representations and warranties in the
Merger Agreement.
Please note that disclosure regarding an agreement s representations
or covenants in a proxy
statement constitutes disclosure to investors, and you are required
to consider whether
additional disclosure is necessary in order to put the information
contained in, or
otherwise incorporated into that publication, into context so that such
information is not
misleading. Please refer to Report of Investigation Pursuant to Section
21(a) of the Securities
Exchange Act of 1934 and Commission Statement on potential
Exchange Act Section
10(b) and Section 14(a) liability, Exchange Act Release No. 51283
(Mar. 1, 2005).
Accordingly, if you continue to use this cautionary statement in your
proxy statement, please
revise it to remove any implication that the Merger Agreement
does not constitute
disclosure under the federal securities laws and to clarify that you will
Suying Liu
FirstName LastNameSuying Liu
Mountain Crest Acquisition Corp.
Comapany4,
December NameMountain
2020 Crest Acquisition Corp.
December
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FirstName LastName
provide additional disclosure in your public reports to the extent
that you are or become
aware of the existence of any material facts that are required to be
disclosed under federal
securities law and that might otherwise contradict the representations
and warranties
contained in the Merger Agreement and will update such disclosure as
required by federal
securities laws.
Background of the Business Combination, page 83
2. In the sixth paragraph from the bottom of page 84, you state that you
entered non-
disclosure agreements and conducted due diligence on two targets but
did not proceed due
to discrepancies in valuation expectations and commercial terms.
Please revise to
describe these discrepancies in greater detail. In particular, with
respect to the first
company please describe why you initially deemed the proposed deal to
be attractive and
describe the criteria you subsequently applied to determine that the
company was too
small and would therefore hinder public-market receptiveness; and with
respect to the
second company, expand your discussion to explain why you questioned
the company's
projected revenues and EBITDA figures. In addition, please address
what parties or
advisors were involved in these early negotiations, including those
involved in preparing
valuations.
3. Please expand the disclosure in this section to include a more
detailed description of the
negotiations surrounding the material terms of the merger agreement
with Playboy and the
other agreements related to the business combination. For example,
please specify which
of the parties recommended the initial consideration and explain how
the amount was
determined. In addition, provide a summary of the financial, business,
and legal due
diligence questions that arose during your diligence meetings. Please
see Item 14(b)(7) of
Schedule 14A.
4. Refer to the third full paragraph on page 85 where you disclose that
you "agreed to most
of what was previously discussed." Please revise to clarify which
terms were agreed to by
the parties, and which remained subject to further negotiations. To
the extent that items
remained open, explain how the parties positions' differed and how any
disputes were
settled. Make similar revisions throughout this section to describe
the substance of
meeting and calls, including the terms that were discussions and how
issues were
resolved. In this regard, it is insufficient to merely state that
drafts were exchanged
reflecting the parties' negotiations, or that terms were refined, or
to list (without further
discussion) key items or topics that were raised. Your revised
disclosure should ensure
that investors are able to understand how the terms of the deal
evolved during negotiations
and why. To the extent that certain terms were deemed not subject to
negotiation, please
disclose this fact.
5. Please revise your disclosure in this section to include a description
of the negotations
related to the PIPE financing, including how you arrived at the
structure and timing
Suying Liu
Mountain Crest Acquisition Corp.
December 4, 2020
Page 3
of the private placement. In this regard, it is unclear why the PIPE
financing was
proposed, by whom, and the process by which you agreed on the material
terms of the
financing. Please revise accordingly.
6. We note your reference in the second-to-last bullet on page 86 to
extensive meetings with
Playboy's management regarding operations and projections. Please
revise your
disclosure to include additional details about the role of the
financial advisors in
negotiating this transaction, including a description of any reports,
financial reports or
projections, or other materials that may have received or prepared in
connection with the
board's evaluation of proposed deal.
MCAC s Board s Reasons for the Approval of the Business Combination, page
86
7. Refer to your discussion in the bullet entitled "Attractive
Valuation." Please disclose all of
the comparables that you relied upon for your conclusion that the
current valuation is
favorable. In this regard, we note that you identify several companies
but "several others"
are unnamed. Additionally, revise to disclose the data underlying the
multiples described
and show how that information resulted in the values disclosed. Given
the various
product categories covered by Playboy, please also expand to discuss
how you weighted
the consideration given to each category of multiples (e.g., Style &
Apparel, Gaming
& Lifestyle, etc.).
Information about Playboy, page 133
8. Please provide a summary description of the going private transaction
which occurred in
2011 and the subsequent reorganization of Playboy. Succintly explain
how these
transactions affected RT-Icon Holdings' interests in the company and
affected the
company's current level of indebtedness, if applicable. In addition,
please revise to
discuss the steps undertaken by Playboy to transform and streamline
its business model, as
noted in the fifth bullet on page 87, and the associated costs and
benefits of these changes.
Our Strategy, page 135
9. In the last paragraph on page 135, please clarify, if true, that you
do not own the "nearly
2,500 brick and mortar stores and 1,000 ecommerce stores" in China
selling your branded
goods.
Intellectual Property, page 138
FirstName LastNameSuying Liu
10. Please disclose the duration and effect of all intellectual property
rights that are material to
Comapany
yourNameMountain
business. In thisCrest Acquisition
regard, Corp.disclosure on page 134
about the significance
we note your
of your
December licensing
4, 2020 Page 3arrangement to your revenue.
FirstName LastName
Suying Liu
FirstName LastNameSuying Liu
Mountain Crest Acquisition Corp.
Comapany4,
December NameMountain
2020 Crest Acquisition Corp.
December
Page 4 4, 2020 Page 4
FirstName LastName
Management s Discussion and Analysis of Financial Condition and Results of
Operations of
Playboy
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA, page 154
11. You appear to have incurred reduction in force expenses and management
fees and
expenses in all periods presented. Please tell us in detail how you
determined each of
these types of expenses are not normal, recurring, cash operating
expenses. Also, revise
your disclosures to discuss in greater detail the nature and purpose
of each of these non-
GAAP adjustments. Refer to Question 100.01 of the Division's Non-GAAP
Financial
Measures Compliance and Disclosure Interpretations.
Security Ownership of Certain Beneficial Owners, page 173
12. Please revise to disclose the natural person or persons having voting
and dispositive power
over the securities beneficially owned by each entity.
Exclusive Forum, page 187
13. We note that your forum selection provision provides that the federal
district courts of the
United States of America shall be the sole and exclusive forum for the
resolution of any
complaint asserting a cause of action arising under the Securities
Act. Please revise to
state that investors cannot waive compliance with the federal
securities laws and the rules
and regulations thereunder. In that regard, we note that Section 22 of
the Securities Act
creates concurrent jurisdiction for federal and state courts over all
suits brought to enforce
any duty or liability created by the Securities Act or the rules and
regulations thereunder.
Please also revise to disclose any risks or other impacts on
investors, including that
shareholders may be unable to bring suit in the forum they deem most
favorable.
Playboy Enterprises, Inc. Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive (Loss) Income, page F-3
14. For each period included in this filing, please present revenues from
products, services
and other in a separate line items. Similarly revise your cost of
sales presentation. Refer
to Rules 5-03.1 and .2 of Regulation S-X.
15. Please tell us in detail your GAAP basis for excluding the amounts
presented in the loss
on disposals of assets line item from operating (loss) income.
Alternatively, revise your
financial statements accordingly. Refer to ASC 360-10-45-4 through
45-5.
Notes to Consolidated Financial Statements, page F-7
16. In the footnotes to your financial statements and in the management's
discussion and
analysis section, please disclose the information referenced in ASC
420-10-50-1 and SAB
Topic 5.P.4 regarding your restructuring activities (e.g., reduction
in force expenses).
Suying Liu
Mountain Crest Acquisition Corp.
December 4, 2020
Page 5
Note 17. Income Taxes, page F-31
17. Please disclose in greater detail the nature and circumstances
surrounding the following
reconciling items in the reconciliation of the effective income tax rate
to the federal rate
for each period presented: prior year deferred tax assets true up,
foreign taxes and credits
and foreign tax credit true up.
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.
You may contact Suying Li at (202) 551-3335 or Rufus Decker at (202)
551-3769 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Daniel Morris at (202) 551-3314 or Dietrich King at (202) 551-8071 with
any other
questions.
Sincerely,
FirstName LastNameSuying Liu
Division of
Corporation Finance
Comapany NameMountain Crest Acquisition Corp.
Office of Trade &
Services
December 4, 2020 Page 5
cc: Tahra Wright
FirstName LastName