United States securities and exchange commission logo
April 28, 2022
Aneil Manhas
Chief Executive Officer
Bruush Oral Care Inc.
30 Wellington Street West, 5th Floor
Toronto, ON M5L 1E2
Canada
Re: Bruush Oral Care
Inc.
Draft Registration
Statement on Form F-1
Submitted April 1,
2022
CIK No. 0001913210
Dear Mr. Manhas:
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 on Form F-1
About this Prospectus, page 1
1. We note your cautionary
statements concerning the representations, warranties and
covenants made in
agreements filed as exhibits to the registration statement. Disclosure
regarding an
agreement's representations, warranties and covenants in a registration
statement (whether
through incorporation by reference or direct inclusion) constitutes a
disclosure to
investors, and you are required to consider whether additional disclosure is
necessary in order to
put the information contained in, or otherwise incorporated into that
publication, into
context so that such information is not misleading. Please refer to Report
of Investigation
Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and
Aneil Manhas
FirstName
Bruush OralLastNameAneil Manhas
Care Inc.
Comapany
April NameBruush Oral Care Inc.
28, 2022
April 228, 2022 Page 2
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Commission Statement on potential Exchange Act Section 10(b) and
Section 14(a)
liability, Exchange Act Release No. 51283 (Mar. 1, 2005). If you
continue to use these
cautionary statements in your registration statement, please revise
them to remove any
implication that the agreements do not constitute disclosure under the
federal securities
laws and to clarify that you will provide additional disclosure to the
extent that you are or
become aware of the existence of any material facts that are required
to be disclosed under
the federal securities laws and that might otherwise contradict the
representations,
warranties and covenants contained in the agreements and will update
such disclosure as
required by federal securities laws.
Prospectus Summary, page 3
2. The disclosure in the summary should be a balanced presentation of
your business. Please
balance the description of the opportunity you see in your market,
your value proposition
and your growth strategy with equally prominent disclosure of the
challenges you face and
the risks and limitations that could harm your business or inhibit
your strategic plans. For
example, but without limitation, revise your disclosure to also
discuss your history of
recurring net losses, risks related to your current branding strategy,
and any risks your
business may face as a result of the COVID-19 pandemic.
3. We note your intention to launch several new products in 2022. Please
discuss the
development efforts needed to commercially launch these products,
where your
development efforts currently stand with respect to each of these
products and the
regulatory approvals necessary in order commence selling these
products to the public.
4. We note your disclosure on page 24 that you "accepted a lower selling
price per Br ush
Kit to increase market penetration and increase brand awareness, as
well as increase
[y]our active subscriber base to generate more future recurring
revenue from [y]our
Br ush Refill subscription program" as well as on page 26 that you
"accepted a higher
operating loss to increase brand awareness and continue to build
[y]our active subscriber
base to generate more future recurring revenue through our Br ush
Refill subscription
program." Please revise your disclosure in the Prospectus Summary as
well as the
Business Section to discuss this branding strategy. Furthermore,
please revise your Risk
Factors to address any risks associated with this strategy that lowers
selling price to
increase market penetration and brand awareness and which has resulted
in a history of
net losses for your business.
The Opportunity, page 3
5. We note your statement that "[o]ral care professionals agree that
brushing with an electric
toothbrush is one of the most crucial steps to improving oral health."
Please revise your
disclosure to provide your basis for this statement.
6. Please identify the studies referred to in this section that were
reviewed by the Company.
Please also tell us whether you commissioned the report by Mintel,
and, if so, analyze
whether you are required to file a consent pursuant to Rule 436 of the
Securities Act.
Aneil Manhas
FirstName
Bruush OralLastNameAneil Manhas
Care Inc.
Comapany
April NameBruush Oral Care Inc.
28, 2022
April 328, 2022 Page 3
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Our Value Proposition, page 3
7. We note your statements discussing your leadership in the electric
toothbrush market and
your position relative to your competition here and throughout the
registration statement.
For example, you state here that you offer consumers a
"top-of-the-line" or "high-quality
electric toothbrush" at "a more affordable price than a comparable
electric toothbrush
from the competition" and that your toothbrush is equipped with
"industry-leading
technology." We also note that on page 4 you state that your "the Br
ush Toothbrush is
one of the sleekest looking brushes on the market." Please revise your
disclosure here and
throughout the registration statement, including in the Competition
subsection on page 36,
to provide the basis for any statements regarding your competitive
position and
comparisons between your products and those of your competitors. Refer
to Item 4.B.7. of
Form 20-F.
8. We note your discussion of your subscription program and in
particular, your statement
that "almost 80% of [y]our customers purchased a Br ush Kit with a
Subscription," which
you state "evidences the fact that this aspect of [y]our value
proposition is very appealing
to the consumers." We also note, however, your statement on page 24
that "[you] accepted
a lower selling price per Br ush Kit to [...] increase [y]our active
subscriber base to
generate more future recurring revenue from [y]our Br ush Refill
subscription program."
In light of this statement, please revise your discussion here to
provide greater context on
your strategy for your subscription program including how you are
appealing to customers
through your current subscription offering.
Growth Strategy, page 4
9. We note your statement here and throughout the registration statement
that you have "over
27,000 active subscriptions" or "active subscribers." Please revise
your disclosure to
define an "active subscription."
Introduce new products, page 4
10. We note that you plan to launch a suite of new oral care products in
2022 that are
"[r]ooted in innovative, effective ingredients and elegant
formulations." Please expand
your disclosure to discuss how these new products are innovative and
to provide the basis
upon which you have determined that they are effective. To the extent
that any of these
products would need regulatory approvals prior to commercialization,
please discuss those
approvals and whether you have obtained them. For products requiring
approval by, for
example, the FDA or a foreign government equivalent, conclusions
regarding efficacy and
safety are determinations that only the FDA or a foreign government
equivalent has the
authority to make. In the case that your products will need such
approvals, but they have
not yet been obtained, please revise your disclosure throughout your
document, including
but not limited to the statement noted here, to eliminate the
implication that your product
candidates have been or will ultimately be determined safe and/or
effective or have
demonstrated safety and/or efficacy for purposes of approval by the
FDA or comparable
Aneil Manhas
FirstName
Bruush OralLastNameAneil Manhas
Care Inc.
Comapany
April NameBruush Oral Care Inc.
28, 2022
April 428, 2022 Page 4
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agency.
The Offering
Use of Proceeds, page 5
11. Please revise your disclosure here regarding the expected uses of your
net proceeds to
align with the specific purposes that you describe in the Use of
Proceeds section on page
21.
Risk Factors, page 8
12. Please expand your risk factor disclosure to include a risk factor
discussing any material
cybersecurity risks and developments you face, in particular as an
e-commerce company.
To the extent you have been materially impacted by a cybersecurity
breach, please include
a description of the incident, costs, and other consequences. For
additional guidance,
please refer to CF Disclosure Guidance Topic No. 2 on Cybersecurity.
Capitalization, page 19
13. Please revise your presentation to present cash rather than total
current assets and to
include total debt. Revise your calculation of total capitalization to
only include total debt
and total stockholders deficiency.
Use of Proceeds, page 21
14. Please revise this section to provide more specific detail regarding
the use of the funds to
be allocated to your working capital needs, growth strategies and
sales and marketing
activities. For each category, please discuss what aspects of the
purpose will be covered
by the funds and how far into your plans for each purpose the funding
will enable you to
reach. For example, we note that you plan to launch several new oral
care products in
2022, including toothpaste, mouthwash, dental floss, a whitening pen
and an electric
toothbrush designed for kids. To the extent that some of these
proceeds will go towards
commercialization of these products, please discuss how far into the
commercialization of
each product you anticipate the funding will enable you to reach. If
the anticipated
proceeds will not be sufficient to fund all the proposed purposes,
please ensure that the
order of priority of such purposes is given, as well as the amount and
sources of other
funds needed. Refer to Item 3.C. of Form 20-F.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 24
15. Please expand your discussion and analysis of revenues to quantify the
extent to which
changes in volume, pricing and mix of products (i.e., kits versus
refills) sold had on
revenues for each period presented. Refer to Item 303(b)(2)(iii) of
Regulation S-K and
Sections 501.04 and 501.12 of the Financial Reporting Codification.
Aneil Manhas
FirstName
Bruush OralLastNameAneil Manhas
Care Inc.
Comapany
April NameBruush Oral Care Inc.
28, 2022
April 528, 2022 Page 5
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16. Please quantify the amount of discounts recognized as an offset to
revenues for each
period presented given the material impact to gross profit. Refer to
Item 303(b)(2) of
Regulation S-K and Section 501.12 of the Financial Reporting
Codification.
17. Please expand your disclosure for the fair market value of warrants to
describe the factors
contributing to the significant increase in fair value of the warrants
from the issuance of
the July/August 2020 warrants to the issuance of the August/September
2020 warrants.
Liquidity and Capital Resources, page 27
18. We note that inventory is a significant component of total current
assets as of the two
most recent balance sheet dates. As such, please include the inventory
turnover ratio or
other measure used by management to monitor inventory for each period
presented along
with an analysis of the ratio trends. Refer to Item 303(b)(1) of
Regulation S-K and
Section 501.13.b. of the Financial Reporting Codification for
guidance.
Financial Instruments and Risk Management, page 32
19. Please expand your disclosures for foreign exchange risk to disclose
the amount of
financial assets held in Canadian dollars by type of financial asset.
Business, page 34
20. We note your disclosure on page 35 that you currently sell products in
the United States
and Canada. Please revise your Business section to provide a breakdown
of total revenues
by geographic market for the last three financial years. Refer to Item
4.B.2. of Form 20-F.
Facilities, Production and Distribution, page 35
21. We note your disclosure that you develop and manufacture products with
third-party
manufacturing partners located in Canada and China. Given the ongoing
impact from the
outbreak of COVID-19, in particular in China, please revise your
disclosure to address
whether you or your third-party manufacturing partner in China have
experienced any
availability problems or supply shortages related to raw materials,
interruptions or delays
related to the manufacture of your products in China or any
interruptions or delays with
respect to moving your product from your manufacturers in Canada and
China to your
distributor in Utah. To the extent that there is a material risk to
the manufacturing and/or
distribution of your products due to the ongoing COVID-19 pandemic,
please also revise
your Risk Factors to specifically address this risk.
Sales Channels, page 35
22. We note that you have partnered with third-party retailers including
Indigo, Harry Rosen,
Macy's and Urban Outfitters who sell your products on their websites.
Please clarify
whether you have commercial arrangements in place with these
retailers. Furthermore, to
the extent you are dependent upon any contract you have in place with
your partners,
please disclose the material terms of any such contract and file it as
an exhibit to the
Aneil Manhas
FirstName
Bruush OralLastNameAneil Manhas
Care Inc.
Comapany
April NameBruush Oral Care Inc.
28, 2022
April 628, 2022 Page 6
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registration statement. Alternatively, advise us why such agreement is
not material and
required to be described and filed. Refer to Item 4.B.6, Item 10.C.
and Section 4.(a) to the
Instructions as to Exhibits of Form 20-F.
23. We note the estimated market size included in this section is for the
oral care market.
Please provide the market size for electronic toothbrushes and the
your current share of
that market.
Brand Strategy, page 36
24. Please revise your disclosure here to further explain your unique
brand strategy. Please
explain what your "organic seeding programs" are and how you generate
omni-channel
content through these programs. We also note that you "received over
200 brand-elevating
press placements" with various press outlets. Please explain how you
generate these press
placements and whether you pay for these placements. Finally, we note
that you have
collaborated "with over 200 on-brand influencers." Please explain how
you generate these
collaborations and whether you have any commercial arrangements in
place with these
influencers. To the extent that you depend on any such arrangement
with an influencer,
please disclose the material terms of the arrangement and file it as
an exhibit to the
registration statement. Refer to Items 4.B.5. and 4.B.6. as well as
Section 4.(a) to the
Instructions as to Exhibits of Form 20-F.
Partnership with Kevin Hart, page 36
25. Please expand your discussion here of your Endorsement Agreement with
K. Hart
Enterprises, Inc., to disclose all material terms of the agreement
including each parties'
rights and obligations as well as a more detailed explanation of the
various compensation
terms.
Regulatory Environment, page 37
26. Please expand your discussion of the regulatory environment in which
your business
operates to include a discussion of any material effects of Canadian
government
regulations on your business. Furthermore, we note that you intend to
commercialize
various new oral care products in 2022 such as toothpaste, mouthwash,
dental floss and
whitening. To the extent that the commercialization of any of these
new products would
be subject to government regulations such as FDA approval, please
revise your discussion
here to describe the material effects of such government regulations.
Intellectual Property, page 38
27. Please revise your disclosure here to specify the product(s) to which
these patents relate as
well as the expiration dates of these patents. Furthermore, to the
extent that you have any
pending or planned patent applications related to the products you
intend to launch in
2022, please provide for each pending on planned patent application
the following
information:
Aneil Manhas
FirstName
Bruush OralLastNameAneil Manhas
Care Inc.
Comapany
April NameBruush Oral Care Inc.
28, 2022
April 728, 2022 Page 7
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FirstName LastName
the specific product to which the patent relates;
whether the patent is owned or licensed;
the type of patent protection (for example, composition of
matter, use, or process);
the patent expiration dates; and
the applicable jurisdictions.
Management
Executive Officers, page 39
28. Please include the age for each of your officers and directors and
provide clear disclosure
regarding their business experience during the last five years,
including the companies at
which they worked and the dates of employment at each company.
Equity Compensation Plan, page 43
29. Please revise your disclosure to describe the material terms of the
existing Stock Option
Plan. Refer to Item 6.E.2. of Form 20-F.
Executive and Director Compensation
Employment, Consulting and Management Agreements, page 44
30. Please revise your disclosure to include a summary of the material
terms of the
employment agreement between the company and Matthew Kavanagh.
Summary Compensation Table, page 44
31. Please tell us why the amount of stock-based compensation is not
included in the
summary compensation table.
Principal Shareholders, page 45
32. To the extent known, please disclose any significant change in the
percentage ownership
held by any major shareholders during the past three years. Refer to
Item 7.A.1.(b) of
Form 20-F.
33. Please include the share ownership information for each officer and
director of the
company. Please also revise your disclosure to identify the natural
person or persons who
have voting and/or investment control of the shares held by Yaletown
Bros Ventures Ltd.
Experts, page 61
34. Please include the identification of your independent registered
public accounting firm
and specific reference to their reports on your consolidated financial
statements as experts
in auditing and accounting. Refer to Item 4 of Form F-1 and Item 10.G.
of Form 20-F for
guidance.
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Bruush OralLastNameAneil Manhas
Care Inc.
Comapany
April NameBruush Oral Care Inc.
28, 2022
April 828, 2022 Page 8
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Notes to the Financial Statements
3. Summary of Significant Accounting Policies and Use of Estimates and
Judgments, page F-9
35. Please include your accounting policy for the identification of
operating and reportable
segments. To the extent that you have more than one reportable
segment, please provide
the disclosures required by IFRS 8.20 through .30. Finally, provide
the entity-wide
disclosures required by IFRS 8.31 through .34 regardless of the number
of reportable
segments identified.
Revenue recognition, page F-9
36. Please revise to more clearly describe the arrangements underlying
your deferred revenue
liability account and provide the disclosures required by IFRS
15.116-118.
37. We note from page 3 that you distribute a starter kit, which includes
a toothbrush, brush
heads, a charger and travel case and separately a refill kit that only
includes brush heads.
We also note within MD&A that you attribute changes in sales and gross
margins to the
differences between the two products. Accordingly, please revise to
provide the
disaggregation of revenue disclosures required by IFRS 15.114-115 for
your starter kits
and refill kits.
Research and development costs, page F-11
38. Please expand your disclosure to state the amount of research and
development costs
expensed for each period presented.
Share capital, page F-13
39. We note your accounting policy is to assign warrants issued as part of
a unit a residual
value only to the extent that the price of the unit exceeds the market
price of the
underlying share at issuance otherwise it is assigned no value. Please
expand your
accounting policy to clarify that this assumes the warrant is equity
classified and to also
provide your accounting policy for warrants issued as part of a unit
that does not qualify
for equity classification. Refer to IAS 32.
Critical accounting estimates and significant management judgments, page F-14
40. Please include a discussion of the estimates and judgments management
made to estimate
the fair value of the Class B common shares that are underlying and
drive the fair value of
warrants and stock-based compensation. In this regard, we did not note
any cash
transactions during the nine-months ended October 31, 2021.
12. Share Capital
(a) Options, page F-19
41. Please revise your disclosure for the 309,498 options granted during
fiscal year 2021 to
disclose the total fair value of these options with compensation
expense of $145,933
Aneil Manhas
Bruush Oral Care Inc.
April 28, 2022
Page 9
recognized during fiscal year 2021 and $92,276 recognized during the
9-months ended
October 31, 2021. In this regard, it is unclear how $145,933 is the total
fair value of the
grant as currently disclosed.
13. Derivative Warrant Liability, page F-19
42. Please revise your disclosures for the assumptions used in the
Black-Scholes Option
Pricing Model to include the fair value of the Class B Common Shares, as
this is a
material input into estimating fair value of the warrants. Please also
address this comment
for your presentation in MD&A on page 26.
43. For the warrants issued in connection with a private placement of units
in August and
September 2020, please address the inconsistent disclosure regarding the
fair value of the
warrants upon issuance of $821,346 in Note 12 on page F-18 versus
$774,895 on page F-
20.
44. We note that you issued 236,073 broker warrants with the same terms as
the unit warrants
for the August and September 2020 private placement units with an
issuance fair value of
$123,981. Please tell us why these warrants have not been included in the
disclosure of
the derivative warrant liability and marked to fair value for each period
presented.
General
45. 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 Tracey Houser at 202-551-3736 or Kevin Kuhar at
202-551-3662 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jessica Ansart at 202-551-4511 or Christopher Edwards at 202-551-6761
with any other
questions.
Sincerely,
FirstName LastNameAneil Manhas
Division of
Corporation Finance
Comapany NameBruush Oral Care Inc.
Office of Life
Sciences
April 28, 2022 Page 9
cc: Lahdan S. Rahmati
FirstName LastName