United States securities and exchange commission logo
December 10, 2021
Behrooz Abdi
Chief Executive Officer
ACE Convergence Acquisition Corp.
1013 Centre Road, Suite 403S
Wilmington, DE 19805
Re: ACE Convergence
Acquisition Corp.
Form S-4
Filed November 12,
2021
File No. 333-261055
Dear Mr. Abdi:
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.
Form S-4 Filed November 12, 2021
Questions and Answers for Shareholders of ACE, page 11
1. In this section, please
quantify the aggregate dollar amount and describe the nature of
what the sponsor and
its affiliates have at risk that depends on the completion of a
business combination.
Include the current value of the securities held, loans extended,
fees due, and
out-of-pocket expenses for which the sponsor and its affiliates are awaiting
reimbursement. Provide
similar disclosure for the company's officers and directors, if
material.
2. Please also 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.
Behrooz Abdi
FirstName LastNameBehrooz
ACE Convergence AcquisitionAbdi
Corp.
Comapany10,
December NameACE
2021 Convergence Acquisition Corp.
December
Page 2 10, 2021 Page 2
FirstName LastName
3. We note the statement that The PIPE Investors have agreed to
purchase either (i)
8,200,000 shares of New Tempo common stock or (ii) $25.0 million of
ACE s 12.0%
convertible senior notes due 2025, for an aggregate of $107,000,000 of
gross proceeds, in
the PIPE Investment. Please reconcile with the definition on page 6
that PIPE
Investment is (a) the purchase of up to 8,200,000 shares of New
Tempo common stock
pursuant to the PIPE Common Stock Subscription Agreements and (b) the
Convertible
Note Investment. (Emphases added.) If the PIPE Investors purchase
either $82.0 million
in common stock or $25 million in notes, please explain how this would
lead to aggregate
gross proceeds of $107 million.
4. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration provided in exchange for this agreement.
Summary of the Proxy Statement/Prospectus, page 29
5. We note your use of industry and market data throughout the prospectus
derived from
studies or reports from third parties, including IPC International.
Please revise to include
the names and dates of those studies, and to the extent you
commissioned any of the third
party data you cited, provide the consent of the third party in
accordance with Rule 436.
Interests of Directors and Executive Officers in the Business Combination, page
43
6. 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.
7. You note that the Proposed Certificate of Incorporation is silent as
to the issue of the
application of the doctrine of corporate opportunity. Please address
this potential conflict
of interest and whether it impacted your search for an acquisition
target.
Comparative Per Share Information, page 52
8. It is not clear to us why the pro forma basic and diluted net loss per
share amounts
presented on page 53 do not agree to the amounts presented on pages
193-194. Please
clarify or revise.
9. It is not clear why ACE s historical weighted average shares
outstanding and net loss per
share as of and for the year ended December 31, 2020 do not agree to
the amounts
presented in ACE s annual financial statements. Please clarify or
revise.
10. It appears that underwriting fees remain constant and are not adjusted
based on
redemption. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at minimum, maximum, and interim
redemption levels.
Risk Factors, page 55
11. Please tell us whether the sponsor will receive additional securities
pursuant to an anti-
Behrooz Abdi
FirstName LastNameBehrooz
ACE Convergence AcquisitionAbdi
Corp.
Comapany10,
December NameACE
2021 Convergence Acquisition Corp.
December
Page 3 10, 2021 Page 3
FirstName LastName
dilution adjustment based on the company's additional financing
activities. To the extent
they will, quantify the number and value of securities the sponsor
will receive. In
addition, disclose the ownership percentages in the company before and
after the
additional financing to highlight the dilution risk to public
stockholders.
12. 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.
13. Please revise the conflicts of interest discussion so that it
highlights all material interests
in the transaction held by the sponsor and the company's officers and
directors. This
could include fiduciary or contractual obligations to other entities
as well as any interest
in, or affiliation with, the target company. In addition, please
clarify how the board
considered those conflicts in negotiating and recommending the
business combination.
14. Please clarify in the risk factor on page 57 whether Tempo has been
materially impacted
by recent supply chain issues, such as those affecting the
semiconductor industry. If so,
please provide relevant detail including any material risks or impact
to your results of
operations or management s ability to forecast. In this regard, we
note your disclosure on
page 61 that due to the COVID-19 pandemic, Tempo has experienced some
supply
constraints, including with respect to semiconductor components.
Business Combination Proposal
Registration Rights Agreement, page 120
15. We note that the merger agreement contemplates the entrance into an
amended and
restated registration rights agreement pursuant to which New Tempo
will agree to register
for resale certain shares of New Tempo common stock and other equity
securities of New
Tempo that are held by the parties thereto from time to time. Please
disclose whether
there are, or whether you expect, any maximum cash penalties under the
registration rights
agreement(s), if applicable. Please also disclose any additional
penalties resulting from
delays in registering your common stock. Refer to ASC 825-20-50-1.
Projected Financial Information, page 138
16. Please expand to fully describe the material assumptions underlying
the projections
contained in the first and second bullet points on page 140. Provide
further explanation to
support a revenue compound annual growth rate of 23% between 2021 and
2025.
Unaudited Pro Forma Condensed Combined Financial Information, page 187
17. When you update your pro forma financial statements, please ensure the
historical
amounts presented here agree to the historical amounts presented on
the face of the
financial statements. For example, we note that you present on page
192 Tempo s total
stockholders equity of $68,840; based on page F-68, Tempo actually
had total
Behrooz Abdi
FirstName LastNameBehrooz
ACE Convergence AcquisitionAbdi
Corp.
Comapany10,
December NameACE
2021 Convergence Acquisition Corp.
December
Page 4 10, 2021 Page 4
FirstName LastName
stockholders deficit of $(68,840).
ACE's Management's Discussion and Analysis of Financial Condition and Results
of Operations
Quantitative and Qualitative Disclosures About Market Risk, page 218
18. It is not clear why you have provided disclosure about market risk as
of September 30,
2020. Please update your disclosure in accordance with Item 305 of
Regulation S-K.
Critical Accounting Policies and Estimates
Stock-Based Compensation, page 232
19. Please disclose and discuss changes in the estimated fair value of
your common stock
during the periods presented. Please address material differences
between the valuations
used to determine the fair value of your common stock relative to the
fair value implied by
the current merger transaction.
Tempo Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 232
20. You disclose on page 236 that sales and marketing expenses decreased
for the year ended
December 31, 2020 compared to the year ended December 31, 2019
partially due to an
average reduction of 22% in headcount as a result of the global
pandemic; however, you
disclose that general and administrative expenses increased partially
due to an average
growth of 33% in headcount beginning end of fiscal year 2019 through
fiscal year 2020.
Please revise your disclosure to clarify how you experienced both an
increase and a
decrease in headcount in 2020 as compared to 2019.
Index to Financial Statements, page F-1
21. Please note the updating requirements of Rule 8-08 of Regulation S-X.
Please similarly
update your financial information throughout the filing.
Financial Statements of ACE Convergence Acquisition Corp.
Note 10 - Fair Value Measurements, page F-19
22. You disclose on pages F-20 and F-39 that each Unit sold in the initial
public offering
consisted of one Class A ordinary share and one-fourth of one Public
Warrant; however,
you disclose on pages F-15 and F-33 that each Unit consisted of one
Class A ordinary
share and one-half of one Public Warrant. Please revise your
disclosure to address this
apparent discrepancy.
Note 5 - Related Party Transactions, page F-34
23. You disclose on page F-34 that you had $90,000 in borrowings under the
working capital
facility as of June 30, 2021 and December 31, 2020. As noted on pages
F-4, F-17 and F-
23, it appears that you actually had no outstanding borrowings under
the working capital
Behrooz Abdi
ACE Convergence Acquisition Corp.
December 10, 2021
Page 5
facility as of December 31, 2020. In addition, you also disclose on
pages 92 and 216 that
you had no outstanding borrowings under the working capital facility
as of June 30, 2021.
Please revise your disclosure to address these apparent discrepancies
and to provide
disclosure that agrees to the amounts presented on the face of your
financial statements.
Financial Statements of Tempo Automation, Inc.
Report of Independent Registered Public Accounting Firm, page F-40
24. We note that BDO USA has served as Tempo Automation s auditor since
2020. Please
tell us what consideration you gave to providing the disclosures
required by Item 304 of
Regulation S-K, including a letter from the former auditor filed as an
exhibit to the
registration statement agreeing or disagreeing with those disclosures.
Although we note
Tempo Automation is the company being acquired, we also note the
merger will be
accounted for as a reverse recapitalization and that Tempo Automation
is the accounting
acquirer and predecessor.
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 Jeff Gordon at 202-551-3866 or John Cash at 202-551-3768
if you have
questions regarding comments on the financial statements and related matters.
Please contact
Erin Donahue at 202-551-6001 or Anne Parker at 202-551-3611 with any other
questions.
FirstName LastNameBehrooz Abdi Sincerely,
Comapany NameACE Convergence Acquisition Corp.
Division of
Corporation Finance
December 10, 2021 Page 5 Office of
Manufacturing
FirstName LastName