United States securities and exchange commission logo
February 23, 2022
Shaosen Cheng
Chief Executive Officer
Golden Path Acquisition Corp
100 Park Avenue
New York, NY 10017
Re: Golden Path
Acquisition Corp.
Amendment No. 2 to
Registration Statement on Form S-4
Filed February 4,
2022
File No. 333-259896
Dear Mr. Cheng:
We have reviewed your amended 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.
Unless we note
otherwise, our references to prior comments are to comments in our
January 24, 2022 letter.
Amendment No. 2 to Registration Statement on Form S-4 filed February 4,
2022
Cover Page
1. We note your response
to prior comment 1 regarding the potential currency controls
between MC Hologram s
PRC-based operating subsidiaries and your parent company
after your merger. You
reference on page 15 that cash raised from overseas financing
activities, such as
SPAC trust funds and other investment funds, may be transferred to
your PRC-based
operating subsidiaries through capital contributions or shareholder loans.
However, shareholder
loans from foreign lenders are subject to statutory limits, and
shareholder loans and
capital contributions must be registered with PRC authorities.
Please describe these
statutory limitations and registration requirements in more detail and
their impact on your
ability to fund your China-based operations. In addition, please
Shaosen Cheng
FirstName
Golden PathLastNameShaosen
Acquisition CorpCheng
Comapany23,
February NameGolden
2022 Path Acquisition Corp
February
Page 2 23, 2022 Page 2
FirstName LastName
revise your prospectus cover page to discuss the limitations of
sending cash or dividends
from your PRC-based operating subsidiaries to your parent company. We
note that PRC
regulations permit PRC-based operating subsidiaries to pay dividends
to foreign entities,
including parent companies, only out of their accumulated profits, if
any, determined in
accordance with PRC accounting standards and regulation.
2. We note your response to prior comment 3 regarding the availability of
the PCAOB to
inspect the workpapers of your U.S.-based auditors for PRC-based
subsidiaries of MC
Hologram. Please provide similar disclosure in your cover page that
clarifies that while
your auditor is based in the U.S. and registered with PCAOB and
subject to PCAOB
inspection, in the event it is later determined that the PCAOB is
unable to inspect or
investigate completely your auditors workpapers because of a position
taken by an
authority in a foreign jurisdiction, then such lack of inspection
could cause trading in the
your securities to be prohibited under the Holding Foreign Companies
Accountable
Act, and ultimately result in a determination by a securities exchange
to delist the
your securities.
Summary of the Proxy Statement/Prospectus, page 10
3. Please address the following as it relates to your revised disclosures
in response to prior
comment 4:
Disclose when MC, Mengyun HK and Beijing Xihuiyun Technology were
established and the reason for the reorganization.
Identify the shareholders and their percentage ownership in each
of the above entities
prior to the reorganization and to the extent they differ from the
holders in Shanghai
Mengyun Holographic before the reorganization, explain further
your assertion that
this was a reorganization of entities under common control.
Revise the post-organization chart to disclose the shareholders
and their percentage
ownership in MC Hologram.
Your disclosures state that after the reorganization, MC owns 100%
equity interests
of Mengyun HK and Beijing Xihuiyun. However, the post-organization
chart
indicates that MC owns 100% of Mengyun HK and Mengyun HK owns 100%
of
Beijing Xihuiyun. Please explain this apparent inconsistency or
revise as necessary.
Risk Factors, page 21
4. Please revise here to include a discussion of the numerous material
weaknesses in internal
control over financial reporting identified by MC and its independent
registered public
accounting firm.
Risk Factors
If MC's direct equity ownership is challenged by the PRC authorities, it may
have a significant
adverse impact on MC's operating results..., page 43
5. We note your response to prior comment 2 regarding your assessment
that a VIE structure
Shaosen Cheng
FirstName
Golden PathLastNameShaosen
Acquisition CorpCheng
Comapany23,
February NameGolden
2022 Path Acquisition Corp
February
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is unnecessary to control your PRC-based operating subsidiaries under
PRC-law. Please
disclose your basis for why direct foreign ownership is permissible
under current PRC
law, and clarify whether there is uncertainty as to your conclusion.
Disclose that
if foreign ownership is disallowed by the PRC government in the
future, your ownership
of your PRC-based subsidiaries may be rescinded, and your ordinary
shares may end up
worthless in value. Please provide similar disclosure on your
prospectus cover page and
summary.
Non-Competition and Non-Solicitation Agreements, page 78
6. Your response to prior comment 7 indicates that your Non-Competition
and Non-
Solicitations Agreements only apply to Best Road Holdings Limited, not
its sole
member, Ms. Wei Peng, or her affiliates. However, your revised
disclosure and Exhibit
2.2 indicates its restrictions would apply to affiliates of Best Road
Holdings Limited.
Please reconcile. Further, Exhibit 2.2 is filed in draft form without
identifying Best Road
Holdings Limited or Ms. Wei Peng. Please clarify whether this form
agreement was used
for other investors or entities affiliated with management. If not,
please file this
agreement in executed form.
Business of MC
MC's Services, page 115
7. We note your revisions in response to prior comment 20. Please further
revise to include a
discussion of the vendor arrangements related to the resale of
hardware, as previously
requested. Tell us whether you rely on a few specific vendors for a
significant portion of
your holographic hardware and if so, revise to include a discussion of
such relationships.
Also, you state that you have a competitive advantage by having
"bargaining power"
against your vendors. Please explain how your bargaining power
supports the increase in
the unit cost of chip prices as discussed on page 135 and revise your
disclosure as
necessary.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of MC
Specific Factors Affecting MC's Results of Operations
MC's ability to retain and attract customers, page 132
8. We note your revised disclosures in response to prior comment 8.
Please revise further to
address the following:
You state that customer count includes all customers that you
generated revenue from
during the measurement period. Provide us with your customer count
for each
category of customer disclosed at the measurement date.
You state your performance metrics exclude web content customer
information.
Explain further which revenue stream web content relates to and
why it is excluded
from your metrics. Also, disclose the percentage of revenue
generated from web
content customers for each period presented.
Revise to clarify whether the customers acquired from Shenzhen
Bowei and
Shaosen Cheng
FirstName
Golden PathLastNameShaosen
Acquisition CorpCheng
Comapany23,
February NameGolden
2022 Path Acquisition Corp
February
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Shenzhen Tianyuemeng are included in your new customer count.
Also, explain
further how these acquisitions impacted your customer count in
each period. In this
regard, clarify what impact these acquisitions had on the
significant increase in your
customer count from September 30, 2020 to December 31, 2020.
Revise to disclose the retention rate for your top 10 customers
and top 20 customers
for all periods presented. Also, disclose the percentage of
revenue generated from
your top 20 customers for each period to add context to the
relevance of this measure.
Revise to disclose the percentage of total revenue attributed
to your high paying
customers.
Further explain the increase in your total customer retention
rate for the year ended
December 31, 2020 to the nine months ended September 30, 2021. In
this regard
clarify how sales through your own channel resulted in more
favorable renewal rates
than sales through third party channels.
You state that retention rate is calculated using the number of
existing customers at
the beginning of the period and the number of customers who are
still active at the
end of the following period. Explain further what is meant by end
of the "following"
period and clarify whether your customer count for purposes of
this calculation is
based on the customers at period end or those that were customers
at any point during
the period.
Consider providing your key performance metrics in a tabular
presentation to provide
more understandable disclosures. Refer to Section III.A of SEC
Release No. 33-8350.
Covid-19 Pandemic, page 134
9. We note your revised disclosures in response to prior comment 9.
Please confirm for us
that the sales volume for your one chip product increased 21.4%
despite the 21.74%
increase in the sales price for such product or revise your
disclosures as necessary. Also,
you refer to the change in price and volume for your top 3 chip
products. Revise to clarify
whether these changes relate to fiscal 2020 or the nine-months ended
September 30, 2021
and provide similar disclosures for the period not currently provided.
Results of Operations
Nine Months Ended September 30, 2020, Compared to the Nine Months Ended
September 30,
2021, page 136
10. Please revise to include a breakdown of your revenue by product line
for all periods
presented, similar to your segment footnote disclosures, to add
further context to your
results of operations discussion.
11. We note from your revised disclosures in response to prior comment 10
that Horgos
Bowei and Horgos Tianyuemeng were geographic extensions of Shenzhen
Bowei and
Shenzhen Tianyuemeng, respectively. Please explain further to us, and
revise to clarify,
how these incorporations contributed so significantly to revenue
growth. In this regard,
explain whether revenue from these entities is attributable to the
product and service lines
Shaosen Cheng
FirstName
Golden PathLastNameShaosen
Acquisition CorpCheng
Comapany23,
February NameGolden
2022 Path Acquisition Corp
February
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of the acquired businesses and if so why a separate discussion of the
incorporated entities
is relevant. Also, clarify whether the tax incentives and local
government subsidies are
incentives for you or your customers and explain further how such
incentives impacted
your revenue growth. Tell us whether similar incentives were
previously available to
customers of Shenzhen Bowei and Shenzhen Tianyuemeng. Lastly, revise
your Business
section to include a discussion of the impact of such incentives on
your business.
12. We note your revised disclosures in response to prior comment 11 where
you refer to "the
commerce of operation of Mcloudvr HK in October 2020, which starts
chip business...."
Please revise to clarify, if true, that Mcloudvr HK "commenced" their
operations and
began selling holographic hardware in October 2020. Also, revise your
Business Section
to include a discussion of the Mcloudvr HK acquisition and its impact
on your business.
In this regard, your disclosures on page F-43 indicate that this
entity had no operations
when you acquired them on October 5, 2020.
13. In an effort to add further context to the significant decrease in the
Holographic Solutions
gross margins, please revise to disclose the gross margins for your
holographic hardware
sales for each period presented similar to your discussion of LiDAR
product margins.
Year Ended December 31, 2019 compared to the Year Ended December 31, 2020, page
139
14. We note your revised disclosures in response to prior comment 12 where
you refer to
several factors that contributed to the increase in holographic
solutions revenue for fiscal
2020 compared to fiscal 2019. Please revise to also discuss any
factors that offset such
amounts. For example, include a quantified discussion of the decrease
in holographic
technology licensing and content product revenue and the reasons for
such decline.
Liquidity and Capital Resources, page 142
15. We note your revised disclosures on page 15 in response to prior
comment 13 regarding
the holding company's ability to transfer any funds received from the
merger into the
PRC. Please make similar revisions in this section of the filing.
Unaudited Pro Forma Combined Financial Information, page 171
16. We note your revisions in response to prior comment 15 to reflect the
acquisitions of
Shenzhen Bowei and Shenzhen Tianyuemeng in the pro forma financial
statements.
Please revise to address the following:
Include a discussion in the introductory paragraph of each
transaction for which you
are giving pro forma effect and ensure you address each of the
requirements in
Article 11-02(a)(2) of Regulation S-X.
Revise to include a pro forma adjustment column for these
acquisitions separate from
the pro forma adjustment columns for the Golden Path merger. In
this regard, include
a column for MC, Shenzhen Bowei, Shenzhen Tianyuemeng, pro forma
adjustments
related to these mergers and then a subtotal for MC combined. Then
show the pro
forma adjustments related to the merger under min/max scenarios.
Refer to Article
Shaosen Cheng
Golden Path Acquisition Corp
February 23, 2022
Page 6
11-02(a)(4).
Pro forma adjustment (12) reflects amortization of intangibles
acquired from
Shenzhen Bowei and Shenzhen Tianyuemeng of $1,149,351. Your pro
forma
disclosures on page F-94 show a similar amount related to
Shenzhen Bowei only and
such amount is in RMB. Please explain this apparent inconsistency
or revise. Also,
revise footnote (12) to include a discussion of the intangible
assets acquired and the
useful lives of such assets for each entity to support this
adjustment. Refer to Article
11-02(a)(8) of Regulation S-X.
17. We note your revisions in response to prior comment 16. In footnote 3
on page 176 you
indicate that there will be approximately $3.6 million of transaction
costs incurred by
Golden Path and MC at the close of the business combination. Tell us
what amounts, if
any, are already reflected in the historical financial statements. Any
amounts not reflected
in the historical financial statements should be recorded in the pro
forma income statement
for fiscal 2020 and the footnote disclosures should clearly indicate
that such costs are non-
recurring. No adjustments related to unrecorded transaction costs
should be reflected in
the September 30, 2021 pro forma financial statements. Please revise
or explain further
how your current disclosures comply with Article 11-02(b)(6)(B) of
Regulation S-X.
Note 2. Summary of Significant Accounting Policies
Revenue Recognition, page F-87
18. We note your response to prior comments 21 and 22. Please revise here
to more clearly
describe how you determined that you have the ability to direct the
use of, and obtain
substantially all of the benefits from your hardware sales, similar to
the information
provided in your response.
Shenzhen Tianyuemeng Technology Co., Ltd.
Notes to Financial Statements, page F-116
19. We note your revisions in response to prior comment 24. Please revise to
label the notes
to the interim financial statements of Shenzhen Tianyuemeng Technology
Co. and
FirstName LastNameShaosen Cheng
Shenzhen Bowei Vision Technology Co., Ltd. as "unaudited." Also, explain
why the
Comapany NameGolden
merger Path Acquisition
dates, as disclosed Corp
in the subsequent events notes for each of
these entities,
differ
February 23, from
2022 the
Pagedates
6 disclosed in MC Hologram s consolidated
financial statements.
FirstName LastName
Shaosen Cheng
FirstName
Golden PathLastNameShaosen
Acquisition CorpCheng
Comapany23,
February NameGolden
2022 Path Acquisition Corp
February
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FirstName LastName
You may contact Dave Edgar, Senior Staff Accountant, at (202) 551-3459
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 Edwin, Kim,
Staff Attorney, at
(202) 551-3297 or Larry Spirgel, Office Chief at (202) 551-3815 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Bill Huo, Esq.