United States securities and exchange commission logo
August 26, 2022
Rich Wheeless
Chief Executive Officer
ParcelPal Logistics Inc.
1111 Melville Street, Suite 620
Vancouver, BC V6A 2S5 Canada
Re: ParcelPal Logistics
Inc.
Form 20-F for the
Fiscal Year ended December 31, 2021
Filed May 4, 2022
File No. 000-56191
Dear Mr. Wheeless:
We have reviewed your filing 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 these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year ended December 31, 2021
Operating and Financial Review and Prospects
Operating Results, page 23
1. We note that in
discussing your cost of revenue for year 2021 compared to year 2020 on
page 24, and for year
2020 compared to year 2019 on page 25, you attribute an increase in
cost of revenue
partially to higher vehicle fuel costs, though two lines later you indicate
that vehicle fuel costs
decreased during the period.
You also have
disclosure on page 7 indicating that fuel and energy costs have increased in
part due to the recent
invasion of Ukraine by Russia, and on page 8 you describe various
supply chain and
workforce shortages arising from the Covid-19 pandemic, and you state
that such shortages
"have adversely affected" your operating results.
Please expand your
disclosures under this heading to address the apparently conflicting
disclosures about
vehicle fuel costs (e.g. indicate the extent to which the change in total
Rich Wheeless
FirstName LastNameRich
ParcelPal Logistics Inc. Wheeless
Comapany
August 26, NameParcelPal
2022 Logistics Inc.
August
Page 2 26, 2022 Page 2
FirstName LastName
vehicle fuels costs is attributable to changes in prices and changes
in volumes), and
provide details including quantification of the adverse effects of the
supply chain and
workforce shortages to comply with Item 5.A and D of Form 20-F.
2. We note that you mention several events elsewhere in the filing that
may have material
effects on your results of operations, including disclosures of the
acquisition of Web to
Door Trucking Corp. in September 2021 on page F-17, and of new
business agreements
on pages 18 and 19, including a November 2021 agreement with UpMeals,
and August
2021 agreements with WeDoLaundry and Farmer s Meal.
Please expand your disclosures to clarify the extent to which your
2021 revenues and
operating results were materially impacted by these developments.
Also disclose the status of the October 2021 letter of intent
mentioned on page 19,
concerning your plans to acquire a delivery service company, provide a
description of the
business to be acquired, indicate the amount and form of purchase
consideration, and
identify any uncertainties or steps to be completed and the timeframe.
Liquidity and Capital Resources, page 27
3. We note that your convertible promissory notes include near term
maturity dates and
provisions for variable conversion terms, incremental balance
penalties and higher interest
rates in the event of default; as well as provisions that would
disallow repayment of the
obligations without the consent of Tangiers Global LLC after the
maturity dates.
Given the implications of these various provisions we believe that
additional disclosures
would be required to comply with Item 5.B and D of Form 20-F.
Please provide prominent disclosure under this heading of the total
balance owed to this
counterparty as of the end of the period covered by your report, a
discussion of the
maturity dates applicable to such balance, stratified as appropriate,
and any intentions that
you have for repayment and expectations for conversion by the
counterparty.
It should be clear whether you are relying on the counterparty to
elect conversion, or have
the ability to repay the balances prior to the maturity dates, in
which case also discuss the
sources of any funds that would be used for this purpose.
If there is uncertainty of your ability to repay the balances prior to
the maturity dates and
you are unable to compel conversion, discuss the implications if the
counterparty does not
opt for conversion prior to the maturity dates, and explain whether
there would be any
limitation on the period over which default conditions could persist.
Also explain how the balances owed could change as a result of the
interest rate and
"Mandatory Default Amount" provisions, and how the variable conversion
rate could
change and effect the number of shares that would be issuable.
Rich Wheeless
FirstName LastNameRich
ParcelPal Logistics Inc. Wheeless
Comapany
August 26, NameParcelPal
2022 Logistics Inc.
August
Page 3 26, 2022 Page 3
FirstName LastName
Please disclose a range for the number of shares that you may need to
issue to settle the
outstanding balances if the counterparty opts for conversion, under
both the fixed and
variable provisions based on the market price of your stock at the
time of filing your
report, and clarify whether there would be any limit on the number of
shares that could be
required to settle the obligations if the market price of your shares
declines.
Major Shareholders and Related Party Transactions, page 38
4. We note your disclosure explaining that there are no shareholders
owning 5% or more of
your common shares except for the CEO. However, we understand from
your disclosures
in Note 12 to your financial statements that you have issued shares to
a single
counterparty to settle convertible loans that collectively would
exceed this threshold.
Tell us how you have considered these common shares, the convertible
note agreements,
the investment agreement listed at Exhibit 4.5, and your relationship
generally with
Tangiers Global LLC and its owners, in determining that no further
disclosure is required
to comply with Item 7.A and B of Form 20-F, if this is your view.
Alternatively, if you find that your disclosures under this heading
are not fully current in
reflecting the various aspects and substance of this relationship,
please submit the
revisions that you propose to comply with the aforementioned guidance.
Financial Statements
Note 12 - Convertible Promissory Note, page F-28
5. Please modify your disclosures under this heading to provide sectional
differentiation for
convertible promissory notes that have been fully settled as of the
end of the period and
those with remaining balances owed, and expand your disclosures to
include the following
additional information pertaining to your convertible promissory note
agreements.
Identify the counterparty in each agreement.
Provide a summary of the variable conversion price provisions
associated with any
convertible promissory notes having outstanding balances, and
explain whether the
fixed or variable conversion provisions would apply, based on
circumstances as of
the end of the period covered by your report.
Provide the interest rate and balance adjustment (including
quantification based on
the Mandatory Default Amount provision) that would apply to each
instrument
having a balance as of the end of the period in the event of
default.
Quantify the number of shares that would be issuable as of the
end of the period
covered by your report, based on circumstances at that point in
time, to settle the total
outstanding balances of your convertible promissory notes,
including the related
derivative liability, in the event of an election to convert by
the counterparty.
Rich Wheeless
ParcelPal Logistics Inc.
August 26, 2022
Page 4
If the number of shares that you calculate for disclosure to
address the preceding
point are based on the fixed price conversion terms then also
quantify the number of
shares that would be issuable to settle the notes using the
variable price conversion
terms to provide a range for the reasonably possible settlement
scenarios.
Describe any instances in which variable conversion prices were
relied upon in
settling a prior conversion notice, including the circumstances
and effects.
Indicate whether you have any expectation of the counterparty
requiring repayment
rather than electing to convert the remaining convertible
promissory notes
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.
You may contact Lily Dang at (202) 551-3867 if you have questions
regarding comments
on the financial statements and related matters. Please contact Karl Hiller,
Branch Chief, at
(202) 551-3686 with any other questions.
FirstName LastNameRich Wheeless Sincerely,
Comapany NameParcelPal Logistics Inc.
Division of
Corporation Finance
August 26, 2022 Page 4 Office of Energy
& Transportation
FirstName LastName