United States securities and exchange commission logo
July 9, 2021
Kevin Chin
Chief Executive Officer
VivoPower International PLC
The Scalpel, 18th Floor, 52 Lime Street
London EC3M 7AF
United Kingdom
Re: VivoPower
International PLC
Form 20-F for the
Fiscal Year ended June 30, 2020
Filed September 8,
2020
Response Letter
Dated June 2, 2021
File No. 001-37974
Dear Mr. Chin:
We have reviewed your June 2, 2021 response to our comment letter
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. Unless we note otherwise, our references to prior comments are
to comments in our
April 29, 2021 letter.
Form 20-F for the Fiscal Year ended June 30, 2020
Information on the Company
History and Development of the Company, page 22
1. We note that you issued
a press release on June 17, 2021 to announce a definitive
agreement under which
Canadian industrial equipment distributor Acces Industriel Mining
Inc., will distribute
electric light vehicles in Canada, using your conversion kits. You
report that the
counterparty intends to purchase 1,675 Tembo e-LV conversion kits and
that you estimate these
orders to be worth US$120 million in total value.
Kevin Chin
FirstName
VivoPowerLastNameKevin Chin
International PLC
Comapany
July 9, 2021NameVivoPower International PLC
July 9,2 2021 Page 2
Page
FirstName LastName
However, in the next-to-last paragraph of your press release you refer
to these as "the
potential" e-LV conversion kits that "could be sold" under the
arrangement and state that
these "could be worth approximately $120 million in revenues."
We previously advised you of our Commission policy on projections
which cautions
against making projections for which you do not have a reasonable
basis and against
making projections of revenue without corresponding projections of
income, to avoid
misleading inferences through the selective projection of only
favorable items, such as
revenues in the absence of costs. In your press release, you provide
an estimate of
revenues but no estimate of income or costs. You also explain that
management prepared
the value estimate "based on its good faith judgment using what it
believed to be
reasonable assumptions regarding the future sales of e-LVs to
end-customers in Canada"
although you have not provided details about material assumptions
underlying the
estimate, other than indicating the quantity of products involved.
We believe that you should expand upon your disclosures to describe
your assumptions
with sufficient details to understand how they have been formulated,
and if you are able to
show that you have a reasonable basis for the assumptions, you should
include a
corresponding projection of income or a similar measure that would
indicate the
economics that you expect to recognize in your financial statements in
accordance with
IFRS. For example, you should address the following points.
Indicate whether the $71.6 million per conversion kit reflected
in your estimate is the
price that your distributor has agreed to pay for any conversion
kits that it ultimately
acquires, based on explicit terms of the agreement, or explain
how you have
formulated your expectation if there is some other basis.
Explain how you have sized-up the market for specialized
electric vehicles in Canada
and your share of that market, as may include identifying
potential customers,
gauging demand at the price utilized in your estimate, and your
competitive position
and readiness to perform under the arrangement.
State the amount of capital expenditures that would be incurred
to acquire or develop
any facilities necessary to produce the volumes that you have
indicated, and describe
any historical experience, contractual arrangements or other
information that
constitutes support for these assumptions.
Indicate the extent of any investment, hiring and training
needed to staff facilities that
would be involved in fulfillment under the arrangement.
Describe the status of the counterparty as it relates to being
prepared and ready to
perform the work anticipated, such as the nature of its
operations, extent of
experience converting traditionally powered vehicles to electric
vehicles, and the
adequacy of its current facilities and workforce.
Kevin Chin
FirstName
VivoPowerLastNameKevin Chin
International PLC
Comapany
July 9, 2021NameVivoPower International PLC
July 9,3 2021 Page 3
Page
FirstName LastName
Your disclosures about distributor arrangements should more clearly
distinguish between
estimated values ascribed to contracts for the sale of products, based
on the specific terms
of agreements that you have secured, and values associated with
projections of activity
that involve broader considerations. Please refrain from describing
projections of
revenues as "total value" and "worth" as these terms may be commonly
understood to
represent measures of income or profitability, taking into
consideration the costs that
would be incurred in the course of realizing the projected revenues.
In conjunction with any projections, you should also include
representation of your
management as to whether these are considered to be the most probable
amounts
and consistent with your expectations. Please address the foregoing
with incremental
disclosures and submit the underlying agreement for our review.
2. We note that you have proposed to make incremental disclosure in
response to prior
comments one and two, regarding your $250 million revenue projection
based on
the distribution arrangement in Australia to clarify that your
estimate does not represent a
firm commitment for purchase orders, and actual results may differ
materially.
However, you also propose to state, in general terms, that estimated
values of your
framework agreements reflect both existing and anticipated
customer purchase orders,
and are based upon the good faith judgment of the distribution
counterparties
management. The reference to existing customer purchase orders
should be revised to
disassociate this statement from your arrangement with GB Auto, where
there were no
purchase orders for the sale of converted vehicles, and with regard to
estimates based on
the judgment of counterparties, it should be clear whether your
management considers
these to reflect the most probable assumptions and amounts.
Please further expand your proposed incremental disclosures to adhere
to the guidance in
the preceding comment in this letter as it relates to distinguishing
between contract
valuations and projections, disclosing projections of revenues in the
absence of
corresponding projections of income, and the examples for identifying
and describing
material assumptions for which you are able to show a reasonable
basis.
As your agreement with GB Auto does not address the provision of
vehicles, work to be
completed, or values to be ascribed to any component or paid by either
party, you should
also revise the proposed language stating that the agreement is
unique in that the
estimated value reflects the full supply of the ruggedized and
customized vehicles, to
emphasize that terms supporting revenue recognition for the full value
of converted
vehicles have not been established, and that certain language in the
agreement, regarding
the absence of an agency relationship, is also not consistent with
your assumption.
Please quantify the effects on the previously projected amounts of
material assumptions
underlying those amounts that either did not have or no longer have a
reasonable
basis. Please reformulate your disclosures as indicated above and in
the preceding
Kevin Chin
VivoPower International PLC
July 9, 2021
Page 4
comment, and file your information without further delay.
You may contact Joseph Klinko - Staff Accountant, at (202) 551-3824, or
Lily Dang -
Staff Accountant, at (202) 551-3867 with any questions.
FirstName LastNameKevin Chin Sincerely,
Comapany NameVivoPower International PLC
Division of
Corporation Finance
July 9, 2021 Page 4 Office of Energy &
Transportation
FirstName LastName