United States securities and exchange commission logo
October 25, 2021
Gavin Burnett
Chief Executive Officer
Locafy Ltd
246A Churchill Avenue
Subiaco WA 6008, Australia
Re: Locafy Ltd
Draft Registration
Statement on Form F-1
Submitted September
27, 2021
CIK No. 0001875547
Dear Mr. Burnett:
We have reviewed your draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement submitted on Form F-1 on September 27, 2021
Market, Industry and Other Data, page ii
1. You state that you have
not independently verified information by third-party sources
regarding your industry
and the market in which you operate. Please note that you are
responsible for the
entire contents of the registration statement. Revise your disclosure to
remove any implication
that you are not responsible for assessing the reasonableness and
soundness of the market
and industry data included in your disclosures.
Risk Factors, page 13
2. Please add a risk
factor that you rely on government subsidies and research and
development grants. We
note that income from these sources were a significant portion of
Gavin Burnett
FirstName
Locafy LtdLastNameGavin Burnett
Comapany
October 25,NameLocafy
2021 Ltd
October
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your revenue and income in 2020 and 2021.
We use third-party services and technologies..., page 13
3. We note your disclosure in this risk factor and on page 15 of the
importance of Amazon
Web Services in hosting your services. Please disclose the material
terms of your
agreement with such service, including the term and any termination
provisions.
If we fail to maintain an effective system of internal control over financial
reporting..., page 24
4. You state that you have identified material weaknesses in your
internal control over
financial reporting and that you expect to implement remedial
measures. Please disclose
how long you estimate it will take to complete your plans and any
associated material
costs that you have incurred or expect to incur.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
33
5. You state elsewhere that your growth strategy is largely dependent
upon increasing the
number of customers that use your technology. Please disclose the
number of customers
for each period presented in your financial statements.
6. You also state that customer success and retention are also a part of
your growth strategy
and that it is important that existing customers renew their
subscriptions when existing
contracts expire. Please disclose how you measure customer retention
and whether
management uses specific metrics to measure retention.
7. Please enhance the overview of your management s discussion and
analysis to discuss the
likely impact of known trends, demands, commitments, events or
uncertainties that are
reasonably likely to have material effects on your financial condition
or results of
operations. For example, discuss each of the three operating segments,
the percentage of
revenue you generate from each segment, and the emerging trends within
those segments.
We note that revenue from the Direct segment has significantly
increased from 2020 to
2021 while revenues from the Publishing segment has significantly
decreased over the
same time period.
Results of Operation, page 34
8. In your discussion of revenues you cite the "particular significance"
of an ongoing change
in the mix of underlying revenue from a declining print business to
growth largely derived
from recurring subscription-based revenue; however you provide no
quantification of the
contribution of each factor to the material changes in the various
line items discussed.
Similarly on page 35, without quantification you attribute changes in
your advertising
expense to declining resale of third party online adverting and to
discontinuance of your
print directory line of business. Please see the guidance provided by
Section III.D of
Release 33-6835 and, as applicable, revise throughout to quantify the
impact of each
Gavin Burnett
FirstName
Locafy LtdLastNameGavin Burnett
Comapany
October 25,NameLocafy
2021 Ltd
October
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material factor discussed when your results are impacted by two or
more factors. In this
regard, clarify and quantify the impact of such changes on your
reporting segment results
of operations.
Business
Intellectual Property, page 49
9. Please revise to disclose the expected expiration date for your U.S.
patent relating to your
underlying technology.
Property and Facilities, page 49
10. Please file your lease as an exhibit to your registration statement.
Please refer to Item
601(b)(10)(ii)(D) of Regulation S-K.
Financial Statements
3.2. Basis of preparation, page F-9
11. We note monetary amounts are expressed in Australian dollars. We also
note
in the penultimate paragraph on page ii that you refer to U.S. dollars
as $ and US$ ,
and Australian dollars as A$ ; a convention which does not appear
to be applied
consistently in the financial statements and accompanying footnotes.
Please clarify and
revise as appropriate.
3.5 Revenue
Publishing, page F-11
12. We note that you publish advertising through your proprietary
directories and you also
earn additional advertising revenues from Google Ad. We also note that
your Publishing
segment incurs advertising costs. Tell us and disclose what portions
of your advertising
revenues are recognized on gross or net basis and why.
13. We note the your Publishing segment recognizes non-advertising
revenues over time and
that some of such revenues are earned from the creative production of
custom Proximity
Pages, Proximity Networks or Locators to the replacement of an entire
online directories.
Tell us whether such creative production revenues are material to your
operating results
and if so, tell us how you determined that control of such creative
product is transferred to
your customers over time.
3.9 Share-based payments arrangements, page F-12
14. In accordance with paragraphs 47 through 49 of IFRS 2, disclose as
applicable how fair
value is determined in transactions where equity instruments are
granted as
compensation for goods and services.
Gavin Burnett
FirstName
Locafy LtdLastNameGavin Burnett
Comapany
October 25,NameLocafy
2021 Ltd
October
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3.13 Impairment of tangible and intangible assets other than goodwill, page
F-14
15. Further, we note that 87.5% of your segment assets are allocated to
your Publishing
reporting segment. A substantial portion of these Publishing segment
assets appear to be
the carrying cost of databases. In light of the material decline in
Publishing segment
revenues and current reported segment operating loss, tell us your
consideration of
impairment of publishing segment assets.
7. Segment Reporting, page F-21
16. We note from the top of page 48 that you support your channel
resellers through your
"customer success team." In this regard, please tell us why no
technology expenses and
no employee benefit expenses were allocated Channel segment operations
during your
fiscal year ending June 30, 2020.
17. Please disaggregate by nature the "Other expenses not allocated"
line-item, in the first
table on page F-22.
29. Share-based payments, page F-35
18. In light of the November 16, 2020 modification of expiration dates of
your Performance
Rights, please expand your disclosures as required by paragraphs
47(c)(ii) and (iii) of
IFRS 2.
Movements in Performance Rights during the year, page F-35
19. It appears as though the numbers of Performance Rights reported in the
tables on page F-
35 have not been retroactively adjusted for the 1 for 20 reverse split
of August 20, 2021.
Please either revise or advise.
32. Post-reporting date events, page F-36
20. Tell us and disclose how you plan to account for the non-interest
bearing convertible notes
issued after June 30, 2021. Disclose the terms of these notes and tell
us how you plan to
account for the current elective and the post-IPO mandatory conversion
features.
General
21. Please file the articles of incorporation of the company. Please refer
to Item 601(b)(3)(i)
of Regulation S-K.
22. 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.
You may contact Joseph Kempf, Senior Staff Accountant, at (202)
551-3352 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
Gavin Burnett
Locafy Ltd
October 25, 2021
Page 5
comments on the financial statements and related matters. Please contact
Priscilla Dao, Staff
Attorney, at (202) 551-5997 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
FirstName LastNameGavin Burnett
Division of
Corporation Finance
Comapany NameLocafy Ltd
Office of Technology
October 25, 2021 Page 5
cc: Rick Werner
FirstName LastName