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United States securities and exchange commission logo
December 21, 2020
Chenlong Tan
Chief Executive Officer
iPower Inc.
2399 Bateman Avenue
Duarte, CA 91010
Re: iPower Inc.
Draft Registration
Statement on Form S-1
Submitted November
27, 2020
CIK No. 0001830072
Dear Mr. Tan:
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 S-1 Submitted November 27, 2020
Prospectus Summary
Implications of Being an Emerging Growth Company and Smaller Reporting
Company, page 7
1. You indicate on the
cover page that you have elected not to use the extended transition
period for complying
with any new or revised financial accounting standards provided
pursuant to Section
7(a)(2)(B) of the Securities Act. Please revise your disclosures here
and elsewhere
throughout the filing to clarify that you have elected to opt out of the
extended transition
period for complying with new or revised accounting standards under
Section 107(b) of the
JOBS Act and state that the election is irrevocable. Also, revise
your disclosures on
page 38 to discuss the impact of adopting ASU 2018-13 and ASU
2016-13, since they
appear to be effective for you.
Chenlong Tan
FirstName
iPower Inc.LastNameChenlong Tan
Comapany21,
December NameiPower
2020 Inc.
December
Page 2 21, 2020 Page 2
FirstName LastName
The Offering, page 9
2. We note your disclosure that your Class B common stock will have ten
votes per share.
We also note your disclosure on page 25 that your founders, officers
and directors will
control the company for the foreseeable future. Please disclose this
in your prospectus
summary and include the percent of the voting power such individuals
will control after
the offering.
3. We note your indication that there is no guarantee or assurance that
your Class A common
stock will be approved for listing on Nasdaq. Revise to clarify
whether or not your
offering is contingent upon listing and, if not, enhance your risk
factors to explain the
limited liquidity that will be available to purchasers of your Class A
common stock.
4. Revise your table on page 5 to quantify the levels in the columns and
provide the unit of
measurement.
Risks Related to Our Common Stock, page 25
5. Please organize your risk factors so that the generic risk factors you
have included, such
as "There are risks, including stock market volatility, inherent in
owning our common
stock," "We are an emerging growth company..." and the risks described
under the
heading "Risks Related to This Offering," are presented at the end of
the Risk Factors
section under the heading "General Risk Factors" or tell us why you do
not believe this is
necessary. Refer to Item 105(a) of Regulation S-K.
Cautionary Note Regarding Forward-Looking Statements, page 28
6. The disclosure that appears here seems to be largely duplicative of
the disclosure that
appears on page iv. Please revise to consolidate and remove redundant
disclosure.
Dilution, page 32
7. Please include disclosure comparing the public contribution under the
proposed public
offering and the effective cash contribution of your existing
stockholders in transactions
during the past five years. Refer to Item 506 of Regulation S-K.
Regulatory Environment, page 34
8. We note your disclosure that demand for hydroponic gardening products
depends on the
uncertain growth of the cannabis industry. Please disclose here and in
your prospectus
summary whether, if known, a material amount of your revenues are
derived from sales to
end users that are in the business of growing cannabis and related
products.
Liquidity and Capital Resources, page 35
9. Please disclose the material terms of your Loan and Security
Agreement, Receivables
Purchase Agreement, PPP loan and SBA Loan that you have filed as
exhibits to your
Chenlong Tan
iPower Inc.
December 21, 2020
Page 3
registration statement, including, but not limited to, the amount
outstanding under each
obligation, the term and maturity dates of each agreement, fees and
interest payable
thereunder, and any affirmative and negative covenants or refer
readers to the disclosure
that appears at Note 8 for some of this disclosure. In addition, we
note your disclosure that
up to $3,000,000 is available under your credit facility; however, the
Loan and Security
Agreement filed as exhibit 10.4 to the registration statement provides
that the Revolving
Loan Limit is $2,000,000. Please reconcile this disclosure.
Government Regulation, page 44
10. Please revise this disclosure for consistency with your prospectus
summary. In addition,
we note your disclosure that the Farm Bill explicitly allows the
transfer of hemp-derived
products across state lines for commercial or other purposes. It also
puts no restrictions on
the sale, transport, or possession of hemp-derived products, so long
as those items are
produced in a manner consistent with the law. Please also include
disclosure that the
Farm Bill did not change the FDA s authority, and that cannabis and
cannabis derived
products are subject to the same authorities and requirements as
FDA-regulated products
containing any other substance, regardless of whether the products
fall within the
definition of hemp under the Farm Bill.
Summary Compensation Table, page 48
11. Please ensure you have included all compensation, including
perquisites, earned by the
Named Executive Officers during the fiscal years covered. In this
regard, we note that Mr.
Tan s employment agreement provides that the company will lease a
motor vehicle for
Mr. Tan s daily use. Lastly, please include the appropriate
narrative disclosure to the
Summary Compensation Table, as applicable. Refer to Items 402(m)-(o)
of Regulation S-
K.
Principal Stockholders, page 49
12. Please revise your tabular disclosure to segregate the percent of
shares beneficially owned
by class of common stock. Please also include a separate column for
each class reflecting
the as adjusted percentage of shares beneficially owned after the
proposed offering and
include proper footnote disclosure required under Item 403 of
Regulation S-K, as
applicable. Lastly, please include the holders of 5% or more of the
company s common
stock, who are currently listed in footnote 3, in the table itself. In
this regard, we note that
shares of the company s Series A preferred stock should be reflected
in the table as Class
A common stock in accordance with Rule 13d-3(d)(1) under the Exchange
Act.
Certain Relationships
FirstName and Related
LastNameChenlong TanParty Transactions, page 50
Comapany
13. NameiPower
Please disclose theInc.
amounts paid under the agreements with E Marketing
Solution Inc.
December 21, 2020 Page 3 Marking Inc. to date.
and Global Product
FirstName LastName
Chenlong Tan
FirstName
iPower Inc.LastNameChenlong Tan
Comapany21,
December NameiPower
2020 Inc.
December
Page 4 21, 2020 Page 4
FirstName LastName
Note 4 Variable interest entity, page F-14
14. Please disclose on the face of the balance sheets the assets that can
be used only to settle
obligations of the consolidated VIE and the liabilities for which
creditors do not have
recourse to the general credit of the company. Refer to ASC
810-10-45-25.
15. Please expand your disclosures to include the following:
a description of the significant terms to your contract (e.g.,
length of term/remaining
term, renewal provisions, penalties, etc.);
describe how contract terms grant you the power to direct
significant activities and
right to economic returns;
your methodology for determining that you are the primary
beneficiary, including
significant judgments and assumptions made;
qualitative and quantitative information about your involvement
with the VIE,
including the nature, purpose, size and activities of VIE,
including how the VIE is
financed;
whether you have provided financial or other support to the VIE
for the periods
presented that you were not previously contractually required to
provide; and
a qualitative discussion of any restrictions on the VIE's
assets.
Refer to paragraphs 50-2AA and 50-5A of ASC Section 810-10-50. Make
conforming
disclosures for Global Products Marketing Inc. on page 50 and in your
interim financial
statements, when provided.
Indemnification of Directors and Officers, page II-1
16. You disclose that you have entered into indemnification agreements
with each of your
officers and directors and that you maintain a general liability
insurance policy that covers
certain liabilities of directors and officers arising out of claims
based on acts or omissions
in their capacities as directors or officers; however, on page 47, you
state that you have
not entered into indemnification agreements with your directors and
officers and that you
do not have stand-alone director and officer liability insurance to
cover liabilities our
directors and officers may incur in connection with their services.
Please reconcile this
disclosure. If you have entered into such agreements, please file them
as exhibits to the
registration statement.
Recent Sales of Unregistered Securities, page II-2
17. Please disclose, with respect to each issuance, the exemption from
registration on which
you relied and whether an underwriter was involved in placing such
securities, as for
example, with respect to your Series A preferred stock. In addition,
please disclose all
warrants the company has issued, including the warrants issued in
connection with the
November 2020 offering.
Chenlong Tan
FirstName
iPower Inc.LastNameChenlong Tan
Comapany21,
December NameiPower
2020 Inc.
December
Page 5 21, 2020 Page 5
FirstName LastName
Exhibits
18. Please confirm you intend to file a specimen stock certificate for
your Class A common
stock and the form of warrant to be registered in this offering.
Selling Stockholders, page Resale-3
19. Please disclose the position, office or material relationship each
selling stockholder had
with the company in the past three years, such as the affiliation with
Shanshan Huang.
Please also provide the required footnote disclosure, as applicable.
Refer to Item 507 of
Regulation S-K.
20. Tell us whether the private placement in which the warrants were
issued has closed and, if
not, tell us why it is appropriate to register the resale of the
shares underlying the warrants
at this time.
General
21. Please include the dealer prospectus delivery obligation legend on the
outside back cover
of your primary offering prospectus. Refer to Item 502(b) of
Regulation S-K.
22. 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. Please contact the staff
member associated
with the review of this filing to discuss how to submit the materials,
if any, to us for our
review.
23. In your resale prospectus, please include a description of the
warrants pursuant to which
the common stock registered in this offering will be issued. Please
also include
appropriate tax disclosure relating to the warrants, and a brief
description of the warrants
in your prospectus summary.
24. In your resale prospectus, revise to disclose the price at which such
shares will be offered
if there is no market for your securities. Refer to Item 501(b)(3) of
Regulation S-K.
You may contact Patrick Kuhn at 202-551-3308 or Rufus Decker at
202-551-3769 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Taylor Beech at 202-551-4515 or Mara Ransom at 202-551-3264 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Trade & Services