United States securities and exchange commission logo
August 5, 2021
Roger Hamilton
Chief Executive Officer
Genius Group Ltd.
8 Amoy Street, #01-01
Singapore 049950
Re: Genius Group Ltd.
Registration
Statement on Form F-1
Filed July 6, 2021
File No. 333-257700
Dear Mr. Hamilton:
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-1 Filed July 6, 2021
Prospectus Summary, page 4
1. Please disclose your
history of net losses in your Prospectus Summary.
Overview
Our Company, page 5
2. Please discuss your
historical results with equal or greater prominence to the pro forma
amounts presented for
the IPO Acquisitions here, on page 72, and elsewhere in your filing
where the pro forma
amounts are presented. In addition, disclose that the four companies
you call "The IPO
Acquisitions" are not currently part of your consolidated results as they
are not currently owned
by you.
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3. The $15.1 million in pro forma gross profit that you disclose here and
on page 72 does not
agree with the pro forma amount on page 51. Also, the $3.8 million of
pro forma adjusted
EBITDA that you disclose here and on page 72 does not agree to that
reflected on page
64. Please revise so that the pro forma gross profit and pro forma
adjusted
EBITDA discussed here and on page 72 agrees with your pro forma
financial information
disclosed on pages 51 and 64 of the filing. Also, please revise your
discussion here and
on page 72 to also disclose that you incurred a pro forma operating
loss of $1.7 million
for 2020 and a pro forma net loss of $1.6 million for this period.
4. It appears that the majority of your disclosure throughout, including
the performance
measures and metrics, relate only to GeniusU. Please revise here and
elsewhere
throughout your prospectus to include materially complete disclosure
for each of the
companies that are or will be part of the Genius Group and will be
material to the
combined company, including a clear description of how each of the
companies generates
revenue. In particular, please explain how the companies that do not
appear to generate
revenue through students or education classes, such as Entrepreneur
Resorts, fit into the
current disclosure included throughout, as it appears that
Entrepreneur Resorts generates
revenue through membership fees, hotel stays, and restaurants. Please
also indicate the
contribution to revenue for each of the companies that are or will be
part of the Genius
Group so that investors understand the importance of each to your
overall business.
5. Please disclose the measure (ex: revenues, number of students, etc.)
by which you believe
you are a "world leading entrepreneur Edtech and education group."
Please also disclose
how you define an "entrepreneur Edtech group" and how this differs
from a general
Edtech company. We also note your disclosure on page 92 that you
believe there are no
global companies directly competing with you to develop a uniquely
entrepreneurial
curriculum. Given this statement, please explain how you are a world
leading
entrepreneur Edtech company. Please also explain how entrepreneurial
curriculum relates
to certain of your businesses such as Education Angels, E-Square and
the University of
Antelope Valley.
6. We note that your growth model is to acquire accredited schools,
colleges and
universities. Please explain what it means that these schools are
accredited, including the
specific standards under which they are accredited.
7. You note that your training products and tools are used by leading
companies such as
Google, IBM and Microsoft, as well as other companies that are listed
on page 75. Please
tell us whether these companies currently use your training and
assessment products, the
extent and time period of their use, how they use these products and
the fee structure (ex:
a flat fee for use for all employees at these companies, fees charged
per student, etc.) and
whether they are representative of your current customers. Please also
indicate how you
generate revenue from such customers. In the alternative, please
delete these references.
8. Where you state that you have an average annual revenue growth rate of
50% year-over-
year, and 143% in 2020, please separately present organic growth so
that investors can
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FirstName LastNameRoger Hamilton
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understand the extent to which your growth is due to acquisitions.
Please include similar
disclosure in your chart on page 8.
9. Where you state that you have 1.8 million students, please clarify
that 1.77M are "free
students," and you have only 33,000 paying students. Please also
clarify elsewhere in
your prospectus how you generate revenue, if at all, from "free
students."
A Brief History, page 7
10. On page 8, you disclose that combined revenues in 2019 of the Pre-IPO
Group, which
includes Entrepreneur Resorts, acquired in July 2020, were $9.9
million and a net loss
before tax was $1.6 million after eliminations. Please note that it
does not
appear appropriate to reflect the results of Entrepreneur Resorts
which was not acquired
until July 2020 in your 2019 results. Please revise or advise as
appropriate.
11. The total assets at the end of 2020 on a pro forma basis of $109.5
million and the total pro
forma liabilities of $20.9 million as disclosed in the second
paragraph on page 8 do not
agree to the amounts in the pro forma balance sheet on pages 52 and
53. Please reconcile
and revise these disclosures.
The Offering , page 17
12. In the first bullet point at the bottom on page 17, you indicate that
your outstanding shares
excludes 5,046,894 shares underlying options with a weighted average
exercise price of
$6.41 per share. Please reconcile this amount with the share options
disclosed in the table
on page 107 which indicates that you have issued 499,830 stock options
to date, as
adjusted for your stock split. Also, please reconcile these amounts
with the amounts
disclosed in Note 21 to your audited financial statements.
Additionally, if the options
disclosed in Note 21 have not been revised to give retroactive effect
to your 6 for 1 stock
split, please revise the number of outstanding options disclosed in
Note 21 to give
retroactive effect to the stock split.
Non-GAAP Financial Measures - Adjusted EBITDA
Genius Group Operating Data (Pre-IPO Group Excluding IPO Acquisitions), page 20
13. In addition to EBIDTA margin, please disclose the comparable margin
calculated in
accordance with IFRS.
14. Since your financial statements are prepared in accordance with IFRS,
please label these
measures as non-IFRS financial measures.
15. Please clarify the calculations included for the operating data
included in this section. For
example, it is unclear how you have calculated Average Annual Revenue
per Student of
$15.48, or Average Acquisition Cost per Student of $0.76. If you are
using overall
revenue for the entire Pre-IPO Group, please tell us why you believe
this is appropriate
given that certain companies in the group, such as Entrepreneur
Resorts, do not appear to
have students or partners. Please also tell us whether you include the
number of free
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FirstName LastNameRoger Hamilton
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students in your calculation of certain operating data, such as the
Average Acquisition
Cost per Student, and if so, why. In addition, where you state that
the average customer
retention is three years on the platform, please indicate whether you
are referring to paid
or free students. Please also disclose the rate at which free students
have become paid
students in prior periods. Finally, please tell us whether these
metrics are relevant to the
Pre-IPO Group as a whole, or relate only to GeniusU Ltd.
Risk Factors, page 22
16. Please add a risk factor discussing the fact that your auditor has
expressed substantial
doubt about your ability to continue as a going concern.
Use of Proceeds, page 44
17. You note that you intend to use a portion of the net proceeds for
"strategic acquisitions to
cover the cash portion of the acquisition costs for the IPO
Acquisitions." Please make
clear whether the net proceeds will be used only for the IPO
Acquisitions, or also for
additional acquisitions. If it will be used for additional
acquisitions, please give a brief
description of the businesses you may acquire and information on the
status of the
acquisitions. See Item 3.C. of Form 20-F.
Dilution, page 48
18. We are unable to determine how you calculated or determined your net
tangible book
value of the Pre-IPO Group as of December 31, 2020 or the pro forma
net tangible book
value of the Pre-IPO Group plus the IPO Acquisitions as of December
31, 2020. Please
provide us with your computations of these amounts in total and on a
per ordinary share
basis.
Summary Combined Unaudited Pro Forma Financial Data for Genius Group (Including
IPO
Acquisitions), page 50
19. Please include a column that presents the pro forma adjustments for
all identified material
IFRS differences of the acquisitions that are not prepared under IFRS.
Include footnotes
as necessary that clearly explain how adjustment amounts were
determined.
20. Please revise the introductory paragraph to the pro forma financial
information for the
Genius Group to disclose the material terms of each acquisition
transaction reflected
therein, including the nature and amount of the consideration issued
for each acquisition
transaction.
21. Pleases revise to disclose the Genius Group's historical basic and
diluted earnings per
share and pro forma basic and diluted earnings per share on the face
of the pro forma
statement of profit and loss. The notes to the pro forma financial
information should also
be revised to explain the assumptions used to calculate pro forma
basic and diluted
earnings per share.
Roger Hamilton
Genius Group Ltd.
August 5, 2021
Page 5
22. Reference is made to footnote (4). Please revise the notes to the pro
forma financial
information to disclose the methods and significant assumptions used
to determine the fair
values of the various categories of intangible assets recognized in
connection with the
acquisition transactions. Also, please explain the basis or rationale
for using a share price
of $5.81 per share for purposes of valuing the shares to be issued in
the acquisition
transactions.
23. The disclosure on page 8 of the financial statements for the
University of Antelope Valley,
Inc. indicates that they elected to apply the alternative accounting
and disclosures for
certain variable interest entities provided to private companies under
U.S. GAAP, which
allowed them to deconsolidate their variable interest in UAV, LLC
beginning January 1,
2018. If Genius Group will be required to consolidate this variable
interest entity under
IFRS upon their acquisition of this entity and the completion of their
IPO, please revise
the pro forma financial information to give effect to the
consolidation of this entity in
connection with the acquisition transaction. If you do not believe
this variable interest
entity will be required to be consolidated under IFRS, please explain
your basis for this
conclusion.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
60
24. In light of the significant growth in member numbers on your platform
during the
pandemic, often enrolling in free courses, please clarify any trends
as to whether these
new members have generated significant revenues or trends related to
converting new free
members into paid members. Further, please clarify whether you have
experienced
significant turnover among your members, partners, faculty members,
and City Leaders in
recent periods.
Key Business Metrics, page 61
25. Please clarify whether the metrics listed in this section are
distinguishable from those
presented on pages 20-21 of your registration statement, and whether
your calculation of
these metrics differs based upon whether they fall under the category of
Genius Group
Measures or Edtech Measures. Please also revise to quantify the metrics
and present a
clear definition of how the metrics are calculated in this section. For
the additional
metrics discussed under "Genius Group Measures," such as "billings as a
percentage of
completion of work in progress," or "newly-obtained contracts," please
similarly quantify
and define how the metrics are calculated, or tell us why you believe
such disclosure is not
required. Refer to Release No. 33-10751, Commission Guidance on
Management's
FirstName LastNameRoger Hamilton
Discussion and Analysis of Financial Condition (February 25, 2020). In
addition, tell us
Comapany NameGenius
and revise Group
to disclose whyLtd.
these metrics provide meaningful information
to an investor
considering that
August 5, 2021 Page 5 they appear to only include data for the Pre-IPO
Group.
FirstName LastName
Roger Hamilton
FirstName LastNameRoger Hamilton
Genius Group Ltd.
Comapany
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Results of Operations
Year Ended December 31, 2020
Operating Expenses, page 63
26. We note your disclosure here and on page F-8 indicates that you have
taken measures to
control costs and have availed yourself of government funding and
support schemes to
cater to the unprecedented pandemic scenario. Please revise your
disclosure here or
elsewhere as appropriate to discuss these measures in greater detail
and quantify such
measures to the extent practicable.
Liquidity and Capital Resources, page 66
27. We note that your "ability to continue as a going concern for the
foreseeable future
involves significant judgment." Please revise to disclose the amount
you will need to
meet material cash requirements from known contractual and other
obligations in the next
twelve months, and specify whether you are dependent on the proceeds
of the offering to
meet your short-term liquidity requirements.
28. Please revise to discuss the material terms of, and current
obligations under, your
convertible debt described in Note 19 of the notes to your financial
statements.
Operating Activities, page 66
29. Your discussion of cash flows from operating activities appears to
focus on how this
amount was derived in each period. The discussion should be a
comparative analysis of
material changes in this amount between periods. In your analysis,
please note that
references to results of operations, which are prepared on the accrual
basis of accounting,
and working capital movements may not provide a sufficient basis for
an investor to fully
understand comparative changes in terms of cash. Your discussion
should address the
drivers underlying each factor cited. For example, please discuss the
specific items that
created favorable and unfavorable movements in working capital in
terms of cash and the
reasons underlying such movements. Refer to Item 5 of Form 20-F for
guidance.
Contractual Obligations, page 67
30. Please discuss the material terms of your contractual obligations
under the operating
leases held by Tau Game Lodge Pty Ltd, Matla Game Lodge Pty Ltd, and
Genius Central
Singapore Pte Ltd, and file the operating leases as exhibits to the
registration statement.
In the alternative, tell us why you believe you are not required to do
so.
Liquidity Considerations, page 67
31. The amounts of cash used in operations in 2020 and 2019 of $2.5
million and $1.4
million, respectively, as discussed on page 67 do not agree with the
amounts reflected in
the consolidated statements of cash flows on page F-7. Please
reconcile and revise these
disclosures.
Roger Hamilton
Genius Group Ltd.
August 5, 2021
Page 7
Business Impact of the COVID-19 Pandemic, page 70
32. Please disclose any material negative impacts of COVID-19 on the IPO
Acquisition
companies. In this regard, we note your disclosure on page 71,
disclosing that the IPO
Acquisition companies were all impacted by COVID-19 to some degree.
Business, page 72
33. Please provide more detail regarding your faculty members, partners
and City
Leaders, and clarify the size and scope of the course offerings and
events they offer in
your Education Revenue segment. Please also clarify whether any
faculty
member, partner, or City Leader generates a material amount of your
Digital Education
Revenue and In-Person Education Revenue, or if you have a
concentration of revenue in
any particular types of courses or events.
34. Please explain why you have analogized your growth plan to the
fifteen-year plan set by
the United Nations to achieve the 17 United Nations Sustainable
Development Goals. We
note that you provide a test for students that identifies a students'
purpose related to such
sustainable development goals, but it is unclear how this relates to
your fifteen-year plan.
Please also explain why you believe that you have a "critical mass of
entrepreneurs" using
your education tools and how you determine that such users qualify as
entrepreneurs.
35. Where you note that GeniusU is a member of the United Nations Global
Compact, please
indicate that this is a voluntary initiative that is open to all
businesses and firms.
36. Please revise this section to include a comprehensive description of
the business and
operations of each of the companies that will be part of the Genius
Group, as this section
appears to focus almost exclusively on the GeniusU Edtech platform.
Our Competitive Strengths
Our Data and Systems, page 90
37. We note that you partnered with Salesforce to provide your underlying
Customer
Relationship Management ("CRM") system on which you built your GeniusU
platform.
Please clarify whether your partnership with Salesforce is material to
your business. If
material, please also summarize the material terms of the partnership
and, if there is an
associated contract, please file it as an exhibit or tell us why you
believe this is
unnecessary.
Our Blended Edtech strategy, page 91
FirstName LastNameRoger Hamilton
38. Please tell us why you believe it is appropriate to compare your
strategy with that of
Comapany NameGenius
Amazon, Group and
Apple, Google Ltd. Microsoft given the size, age and nature
of your business. In
Augustthe alternative,
5, 2021 Page 7please delete this statement.
FirstName LastName
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Regulation
University Regulation in the U.S. relevant to UAV, page 100
39. We note that you are currently undertaking a reaffirmation process
that will be completed
in 2021. Please tell us whether this is a routine approval process, or
whether the
reaffirmation process was initiated by WASC for a particular reason.
Please also indicate
the current status of the reaffirmation process and when in 2021 you
expect the process to
be completed.
Related Party Transactions, page 110
40. We note your disclosure on pages 110-11 regarding transactions with
related parties.
Please revise to provide the complete disclosure called for by Item
7.B of Form 20-F and
specifically address each related party transaction for the preceding
three financial years
through the date of the information currently provided. As a related
matter, please revise
to disclose the $400,000 loan payable to related parties for the
acquisition
of Entrepreneurs Institute, which is discussed on page F-32.
Genius Group Limited and Subsidiaries Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies
Revenue from contracts with customers, page F-19
41. Please revise your disclosure to describe in greater detail the
nature, significant terms, and
performance obligations for each of your revenue streams. Please
ensure that your revised
disclosure is specific as to the nature of your performance
obligation(s), rather than
describing them generally and explain how you are compensated in these
arrangements as
well as who your customer is.
Note 4 - Business Combinations, page F-21
42. We note your disclosure that you acquired 100% of the voting equity
interest of
Entrepreneurs Institute and 97.8% of the voting equity interest of
Entrepreneur Resorts,
both of which are entities under common control. Please revise your
accounting policy to
disclose your accounting policy for business combinations involving
entities under
common control in accordance with IAS 8. Your revised policy should
clearly state
whether you apply a predecessor value method or the acquisition method
in accordance
with IFRS 3 and that you apply the accounting policy consistently to
similar transactions.
43. Your disclosure on page F-23 indicates that you acquired a 97.8%
voting equity interest
in Entrepreneur Resorts for $30,997,810 made up of $30,997,810 of
Genius Group Ltd.
ordinary shares. Please explain why this amount differs from
$17,798,374 value assigned
to these shares as indicated in your consolidated statement of changes
in stockholders
equity on page F-6.
44. Please revise the notes to your financial statements to include the
disclosures required by
Roger Hamilton
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Genius Group Ltd.
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B64(q) of IFRS 3 for your acquisition transactions during 2019 and
2020.
Note 12 - Intangible Assets, page F-28
45. Please revise the table at the bottom of page F-28 to separately
break-out the nature and
amounts of the intangible assets acquired in the Entrepreneur Resorts
acquisition
transaction. Your revised disclosures in the table should be
consistent with the format
reflected in the table for 2019 at the top of page F-29.
Note 14 - Other Non-Current Assets, page F-30
46. Your disclosure in Note 14 indicates that other non-current assets at
December 31, 2020
consists of a deposit on your proposed acquisition of University of
Antelope Valley.
Please explain why this amount continues to be reflected as an asset
in the pro forma
balance sheet on page 52 which gives effect to the University of
Antelope Valley
acquisition as if it occurred on December 31, 2020.
Exhibits
47. Reference is made to your Exhibit 23.1. Please have your independent
accountant revise
its consent to refer to the appropriate date of the audit report.
Also, the date of the consent
is of a date earlier than the date of the audit report. Please have
you independent
accountant revise as necessary so it is dated as of or subsequent to
the date of the audit
report. Additionally, please have your independent accountant revise
their consent to
reference their report included in the registration statement on Form
F-1 of Genius Group
Limited rather than their annual report on Form F-1.
48. Reference is made to your Exhibit 23.5. The consent of Lightheart,
Sanders and
Associates is currently stale as it older than 30 days. Please revise
to include a currently
dated consent of this independent accounting firm. Also, the consent
references inclusion
of their reports in a report on Form 20-F. Please revise the consent
to reference the
inclusion of their reports in the Genius Group's registration
statement on Form F-1.
General
49. We note that your website for Entrepreneur Resorts contains a section
inviting investors to
become a venue partner with Entrepreneur Resorts and asks investors to
sign up for a
Webcast and Q&A on how to become an Impact Investor with Genius U. We
note similar
opportunities presented on your Genius Group website. Please tell us
whether you have
issued any shares or other interests in your company pursuant to the
investment
opportunity advertised on your website and provide us with a legal and
factual analysis
indicating whether this constitutes an offer of your securities and
whether you are in
compliance with Section 5 of the Securities Act of 1933.
50. We note on your website for Genius Group you indicate that the company
has grown
2,400% in six years, has grown by over 50% per year for the last five
years, and had over
Roger Hamilton
Genius Group Ltd.
August 5, 2021
Page 10
$29 million in revenue in 2019. Please explain your basis for these
statements as they
are not consistent with the financial information presented in the
registration statement.
51. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications. Please contact the staff
member associated
with the review of this filing to discuss how to submit the materials, if
any, to us for our
review.
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 Patrick Kuhn at 202-551-3308 or Linda Cvrkel at
202-551-3813 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Nicholas Lamparski at 202-551-4695 or Erin Jaskot at 202-551-3442 with
any other
questions.
Sincerely,
FirstName LastNameRoger Hamilton
Division of
Corporation Finance
Comapany NameGenius Group Ltd.
Office of Trade &
Services
August 5, 2021 Page 10
cc: Benjamin S. Reichel
FirstName LastName