United States securities and exchange commission logo
December 6, 2021
Chaitanya Kanojia
Chief Executive Officer
Starry Holdings, Inc.
38 Chauncy Street, Suite 200
Boston, MA 02111
Re: Starry Holdings,
Inc.
Registration
Statement on Form S-4
Filed November 5,
2021
File No. 333-260847
Dear Mr. Kanojia:
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 S-4
Do I have redemption rights?, page xviii
1. Please revise to show
the potential impact of redemptions on the per share value of the
shares owned by
non-redeeming shareholders by including a sensitivity analysis showing
a range of redemption
scenarios, including minimum, maximum and interim redemption
levels.
2. We note that certain
shareholders agreed to waive their redemption rights. Please describe
any consideration
provided in exchange for this agreement.
3. Please revise to
disclose all possible sources and extent of dilution that shareholders who
elect not to redeem
their shares may experience in connection with the business
combination. Provide
disclosure of the impact of each significant source of dilution,
Chaitanya Kanojia
Starry Holdings, Inc.
December 6, 2021
Page 2
including the amount of equity held by founders, convertible
securities, including warrants
retained by redeeming shareholders, at each of the redemption levels
detailed in your
sensitivity analysis, including any needed assumptions.
4. Quantify the value of warrants, based on recent trading prices, that
may be retained by
redeeming stockholders assuming maximum redemptions and identify any
material
resulting risks.
5. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise to disclose the effective underwriting fee on a
percentage basis for
shares at each redemption level presented in your sensitivity analysis
related to dilution.
How will the SPAC merger affect my public shares, public warrants and Units?,
page xxi
6. Please highlight the material risks to public warrant holders,
including those arising from
differences between private and public warrants. Clarify whether
recent common stock
trading prices exceed the threshold that would allow the company to
redeem public
warrants. Clearly explain the steps, if any, the company will take to
notify all
shareholders, including beneficial owners, regarding when the warrants
become eligible
for redemption.
What are the U.S. federal income tax consequences...., page xxii
7. You state that the SPAC merger will constitute a reorganization within
the meaning of
Section 368(a)(1)(F) of the Code. Please file an opinion of counsel
supporting such a
conclusion. Refer to Item 601(b)(8) of Regulation S-K. See also Staff
Legal Bulletin No.
19 for further guidance.
What vote is required to approve each proposal at the special meeting?, page
xxii
8. In light of your IPO Letter Agreement and Sponsor Support Agreement,
please clarify the
percentage of unaffiliated public SPAC stockholders that will be
necessary to approve of
the Business Combination.
Do any of Firstmark's Directors or Officers have interests in the business
combination that may
differ..., page xxiv
9. Please quantify the aggregate dollar amount and describe the nature of
what the sponsor
and its affiliates have at risk that depends on completion of a business
combination.
Include the current value of securities held, loans extended, fees due,
and out-of-pocket
FirstName LastNameChaitanya Kanojia
expenses for which the sponsor and its affiliates are awaiting
reimbursement. Provide
Comapany NameStarry
similar disclosureHoldings, Inc.
for the company s officers and directors, if
material.
December 6, 2021 Page 2
FirstName LastName
Chaitanya Kanojia
FirstName LastNameChaitanya Kanojia
Starry Holdings, Inc.
Comapany6,
December NameStarry
2021 Holdings, Inc.
December
Page 3 6, 2021 Page 3
FirstName LastName
10. Please highlight the risk that the sponsor will benefit from the
completion of a business
combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
11. Please clarify if the sponsor and its affiliates can earn a positive
rate of return on their
investment, even if other SPAC shareholders experience a negative rate
of return in the
post-business combination company.
The Convertible Note Investment, page 4
12. We note that you have arranged to sell additional securities to raise
funds to satisfy the
minimum cash required to complete the business combination transaction
after returning
funds to redeeming stockholders. Revise to discuss the key terms of
any convertible
securities and to disclose the potential impact of those securities on
non-redeeming
shareholders.
The PIPE Investment, page 4
13. Please highlight material differences in the terms and price of
securities issued at the time
of the IPO as compared to private placements contemplated at the time
of the business
combination. Disclose if the SPAC s sponsors, directors, officers or
their affiliates will
participate in the private placement.
Summary
FirstMark Board's Reason for Approval of the Business Combination, page 9
14. You state that for buildings in which Starry's network has been
deployed for at least one
year, the average penetration rate is approximately 24%. Please
balance this disclosure
with a discussion of Starry's actual penetration rates for each period
presented. In this
regard, it appears from your disclosures elsewhere that the estimated
penetration of
Homes Serviceable for fiscal 2021 is 1%.
Interests of FirstMark Directors and Officers in the Business Combination, page
20
15. Please expand your disclosure regarding the sponsor s ownership
interest in the target
company. Disclose the approximate dollar value of the interest based
on the transaction
value and recent trading prices as compared to the price paid.
Risk Factors, page 53
16. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
Chaitanya Kanojia
FirstName LastNameChaitanya Kanojia
Starry Holdings, Inc.
Comapany6,
December NameStarry
2021 Holdings, Inc.
December
Page 4 6, 2021 Page 4
FirstName LastName
Risks Related to Starry
We have identified material weaknesses in our internal control over financial
reporting and may
identify additional material weaknesses..., page 53
17. We note that Starry's management identified material weaknesses in
internal control over
financial reporting. Please revise to address specifically what
remediation efforts you
have taken so far and what remains to be completed in your remediation
plan. Also,
disclose how long you estimate it will take to complete your plan and
any associated
material costs that you have incurred or expect to incur.
Risks Related to the Business Combination and FirstMark
FirstMark identified a material weakness in its internal control over financial
reporting. This
material weakness could continue..., page 74
18. We note FirstMark's management identified a material weakness in
internal control over
financial reporting existed as of December 31, 2020 due to the
misclassification of
warrants issued during the IPO which resulted in a restatement. Please
revise to
specifically discuss any remediation efforts taken so far and what
remains to be completed
in your remediation plan. Also, disclose how long you estimate it will
take to complete
your plan and any associated material costs that you have incurred or
expect to incur.
Additionally, we note from Firstmark's September 30, 2021 Form 10-Q
that you also
identified a material weakness in internal control related to the
classification of Class A
common stock subject to possible redemption. Please also address your
remediation plan
related to this matter and revise your current representation of this
issue as a significant
deficiency rather than a material weakness.
Background of the Business Combination, page 99
19. We note that "in October 2020, Mr. Jani had a discussion with
Chaitanya ( Chet )
Kanojia, the Chief Executive Officer of Starry, on the emergence of
special purpose
acquisition companies and the process of undertaking an initial
business combination as a
possible avenue for taking Starry public". Please revise to specify
the date this discussion
took place.
20. Your charter waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
21. You state that you entered into non-disclosure agreements with 24
priority targets and
submitted non-binding indications of interest to five companies.
Please discuss the
outcome of the communications with these potential targets.
Chaitanya Kanojia
FirstName LastNameChaitanya Kanojia
Starry Holdings, Inc.
Comapany6,
December NameStarry
2021 Holdings, Inc.
December
Page 5 6, 2021 Page 5
FirstName LastName
Unaudited Pro Forma Condensed Combined Financial Information
Description of Minimum and Maximum Allowable Redemption Scenarios, page 182
22. Please tell us, and revise your disclosures to address what happens if
redemptions exceed
32,928,773 shares and the Closing Surviving Cash balance falls below
$300 million. In
your response, address whether there are options to obtain additional
funding and/or
whether this requirement can be waived such that the transaction can
still take place.
23. Please disclose here the various exchange and conversion ratios used
to determine the
shares outstanding after consummation of the Business Combination.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
Note 2. Adjustments to Unaudited Pro Forma Condensed Combined Financial
Information, page
189
24. We note that Starry's CEO will receive Class X common stock in the
merger, which
entitles the holder to 20 votes per share. As the Class X stock
appears to be linked to Mr.
Kanojia's employment, please tell us how you considered whether the
super-majority
voting rights constituted a modification to the founder's equity and
whether you intend to
record additional compensation expense as a result of such
modification. Refer to ASC
718-20-35-2A. If so, please revise to include the necessary pro forma
adjustment to
reflect such expense.
Information About Starry, page 202
25. You state that you primarily lease dark fiber from third parties.
Please disclose whether
the company utilizes any existing third-party networks to provide
services to end users.
Disclose whether the company utilizes any existing third-party
networks to provide
services to end-users. To the extent you do, please revise to include
a discussion of any
agreements with the third-party network providers.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Starry, page 230
26. We note that you have a gross loss for each period presented. Please
revise to disclose
whether there is a minimum amount of revenue that you must generate in
order to recover
your costs or achieve gross profit. Also, revise to distinguish
between those costs and
expenses that are fixed and variable in nature. This information will
allow investors to
better assess the potential profitability of your business.
27. You state on page 53 that management relies on projections and
estimates to calculate key
performance indicators (KPIs) and other business metrics. We also note
that FirstMark
reviewed certain metrics and performance indictors as part of the due
diligence procedures
related to this merger. Please revise here to include a quantified
discussion of the KPIs
and other metrics used in managing Starry's business for each period
presented, including
Chaitanya Kanojia
Starry Holdings, Inc.
December 6, 2021
Page 6
Addressable Households, Homes Serviceable, Total Subscribers and
Penetration of
Homes Serviceable. Also, ensure you clearly define how each metric is
calculated and
include a discussion of any trends, uncertainties and fluctuations in
such measures from
period to period. Refer to SEC Release No. 33-10751.
Key Non-GAAP Financial Measures, page 231
28. Please revise the table here to present the corresponding GAAP
measures of Net Loss,
Gross Profit and Operating Expenses with equal or greater prominence
than the related
non-GAAP measures. Refer to Question 102.10 of the Non-GAAP C&DIs and
Item
10(e)(1)(i)(A) of Regulation S-K.
29. Please revise to address in more detail why you believe disclosure of
Adjusted Gross
Profit and Adjusted Operating Expenses is useful to investors and how
management uses
these measures to evaluate operations. Specifically address why you
believe presenting a
non-GAAP gross loss measure that excludes depreciation expense related
to your
distribution systems, which are instrumental to providing your
broadband services and
generating revenue is useful to investors. Also, tell us how you
considered your
substantive non-cancelable commitments to expand and maintain your
distribution system
in the future in your consideration of this non-GAAP measure.
Liquidity and Capital Resources, page 238
30. Please revise to address the fact that you have determined there is
substantial doubt about
Starry's ability to continue as a going concern for the next 12-months
and disclose the
number of months you expect you can continue operations given your
current sources of
liquidity. Refer to Section III.C of SEC Release No. 33-6835.
Strategic Partnership Arrangement, page 239
31. Please revise to identify the third party with which you have entered
into a strategic
partnership and discuss the material terms of the agreement, including
but not limited to,
any termination provisions and revenue sharing arrangements
Beneficial Ownership of Securities, page 268
32. We note that you now have multiple classes of voting securities issued
and outstanding.
Please revise to provide beneficial ownership for each class of voting
securities before and
after the offering. Refer to Item 403 of Regulation S-K. In addition,
since the Class
FirstName LastNameChaitanya Kanojia
X common stock has 20 votes per share, add a column to the beneficial
ownership table
Comapany NameStarry
showing the totalHoldings,
percentageInc.
of voting power held by each person
listed in the table after
the offering.
December 6, 2021 Page 6
FirstName LastName
Chaitanya Kanojia
FirstName LastNameChaitanya Kanojia
Starry Holdings, Inc.
Comapany6,
December NameStarry
2021 Holdings, Inc.
December
Page 7 6, 2021 Page 7
FirstName LastName
Starry, Inc. Notes to Condensed Consolidated Financial Statements (unaudited)
Note 2. Summary of significant accounting policies
Revenues, page F-16
33. Please tell us what consideration you gave to disclosing revenue
disaggregated between,
for example, commercial customers and individual customers, Starry
Connect (i.e. low-
income customers) and other customers, and/or on some other basis of
disaggregation.
Refer to ASC 606-10-50-5.
34. Please revise here to address how you account for the Federal
subsidies awarded in 2020
and the monthly subscriber reimbursements that you receive under the
FCC's Emergency
Broadband Benefit program, if material, and include the specific
accounting guidance
applied. In your response, tell us the amount of subsidies received
for each period
presented.
35. Please revise to disclose how you account for the revenue earned under
your strategic
alliance agreements with AEPV and Quanta. Address whether you consider
yourself to be
the agent or principal for contracts related to these agreements, and
provide your
accounting analysis. Also address how Quanta is to be paid (e.g.,
based on revenue or a
straight fee) and how that impacts your revenue recognition, as
applicable. Refer to ASC
606-10-55-36 through 55-40. In your response, please tell us the
amount of revenue
earned from these arrangements for each period presented.
Note 5. Share-based compensation expense, page F-50
36. We note you issued restricted stock units in May 2021 that have a
service period and a
performance condition, which is linked to a liquidity event. Please
revise to define what
liquidity event(s) will satisfy the performance condition. To the
extent this merger
transaction will satisfy the performance condition, revise to include
a pro forma
adjustment for the additional compensation, if any, that will be
recorded upon
consummation of the transaction.
Chaitanya Kanojia
FirstName LastNameChaitanya Kanojia
Starry Holdings, Inc.
Comapany6,
December NameStarry
2021 Holdings, Inc.
December
Page 8 6, 2021 Page 8
FirstName LastName
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 Brittany Ebbertt, Senior Staff Accountant, at (202)
551-3572 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
Matthew Derby, Staff
Attorney, at (202) 551-3334 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Shagufa R. Hossain