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United States securities and exchange commission logo
April 12, 2023
Mario Yau Kwan Ho
Co-Chief Executive Officer
NIP Group Inc.
Rosenlundsgatan 31
11 863 Stockholm, Sweden
Re: NIP Group Inc.
Amendment No. 1 to
Draft Registration Statement on Form F-1
Submitted March 17,
2023
CIK No. 0001966233
Dear Mario Yau Kwan Ho:
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.
Amendment No. 1 to Draft Registration Statement on Form F-1 filed March
17, 2023
Prospectus Cover Page, page i
1. Please disclose the
name of your auditor and the location of its headquarters. Also disclose
how the Holding Foreign
Companies Accountable Act, as amended by the Consolidated
Appropriations Act,
2023, and related regulations will affect your company.
2. Please augment your
description of how cash is transferred through your organization to
include
cross-references to the condensed consolidating schedule and consolidated
financial statements,
as well as to the comparable discussions in the Prospectus Summary,
the Summary of Risk
Factors, and specifically identified risk factors.
Mario Yau Kwan Ho
FirstName
NIP Group LastNameMario Yau Kwan Ho
Inc.
Comapany
April NameNIP Group Inc.
12, 2023
April 212, 2023 Page 2
Page
FirstName LastName
3. We note your disclosure that you "face risks associated with
regulatory approvals on
offerings conducted overseas by and foreign investment in China-based
issuers, anti-
monopoly regulatory actions, oversight on cybersecurity, data privacy
and personal
information." Please revise to provide more detail as to how recent
statements and
regulatory actions by China s government related to the use of
variable interest
entities, data security and anti-monopoly concerns have or may impact
the company s
ability to conduct its business, accept foreign investments, or list
on a U.S. or other
foreign exchange, or supplementally confirm that they have and will
not have any such
impact.
Prospectus Summary, page 1
4. We note your statement on pages 1, 104 and 118 that you "are actively
exploring
opportunities in areas such as esports education and training, fan
universe (B2C
monetization and metaverse), NFTs, esports real estate and IP
licensing." If true, please
revise to clarify that you do not currently have plans or agreements
in place regarding
such possible opportunities, and that you do not know if or when you
might ever have
plans or agreements in place regarding such opportunities.
5. We note your statements throughout the prospectus that you have the
"most
expansive global footprint in the world." Please revise to provide the
basis for such
statement, or characterize it as management's belief and the basis for
such belief.
6. Please revise the diagram on page 8 or the footnotes thereto to
identify the entities and
natural persons who own Seventh Hokage, xiaOt Sun Holdings, Diglife,
Tolsona, Nyx
Ventures, and Shanghai Yuyun Management Partnership; the minority
interests in the four
identified subsidiaries of the VIE; and the approximat number and
general nature of the
"Other Existing Shareholders" of the holding company.
7. We note your disclosure on pages 8 and 9 regarding permissions and
approvals required
by the CAC and the CSRC. Please revise to disclose each other
permission or approval
that you, your subsidiaries, or the VIEs are required to obtain from
Chinese authorities to
operate your business and to offer the securities being registered to
foreign
investors. State affirmatively whether you have received all such
requisite permissions or
approvals and whether any permissions or approvals have been denied.
Please also
describe the consequences to you and your investors if you, your
subsidiaries, or the VIEs:
(i) do not receive or maintain such permissions or approvals, (ii)
inadvertently conclude
that such permissions or approvals are not required, or (iii)
applicable laws, regulations, or
interpretations change and you are required to obtain such permissions
or approvals in the
future. It appears that you did not rely on an opinion of counsel with
respect to your
conclusions regarding whether you need permissions and approvals to
operate your
business and to offer securities to investors; if true, state as much
and explain why such an
opinion was not obtained. With respect to your disclosure about the
Trial Measures,
Mario Yau Kwan Ho
FirstName
NIP Group LastNameMario Yau Kwan Ho
Inc.
Comapany
April NameNIP Group Inc.
12, 2023
April 312, 2023 Page 3
Page
FirstName LastName
please affirmatively state that you are subject to the Trial Measures,
further describe the
filing requirements and any timing considerations, and update to
explain where you are in
the CSRC review process.
Summary of Risk Factors, page 2
8. In your summary of risk factors, disclose the risks that your
corporate structure and being
based in or having the majority of the company s operations in China
poses to investors.
In particular, describe the significant regulatory, liquidity, and
enforcement risks with
cross-references to the more detailed discussion of these risks in the
prospectus. For
example, specifically discuss risks arising from the legal system in
China, including risks
and uncertainties regarding the enforcement of laws and that rules and
regulations in
China can change quickly with little advance notice; and the risk that
the Chinese
government may intervene or influence your operations at any time, or
may exert more
control over offerings conducted overseas and/or foreign investment in
China-based
issuers, which could result in a material change in your operations
and/or the value of the
securities you are registering for sale. Acknowledge any risks that
any actions by the
Chinese government to exert more oversight and control over offerings
that are conducted
overseas and/or foreign investment in China-based issuers could
significantly limit or
completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
If the PRC government deems that our contractual arrangements with the VIE do
not comply
with PRC regulatory restrictions ..., page 40
9. Revise this risk factor to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of the VIE structure do not
comply with PRC
regulations, or if these regulations change or are interpreted
differently in the future, the
securities you are registering may decline in value or become
worthless if the
determinations, changes, or interpretations result in your inability
to assert contractual
control over the assets of your PRC subsidiaries or the VIEs that
conduct all or
substantially all of your operations.
Risk Factors
Risks Related to Doing Business in China, page 44
10. Given the Chinese government s significant oversight and discretion
over the conduct of
your business, please revise to highlight separately the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of the securities you are
registering. Also,
given recent statements by the Chinese government indicating an intent
to exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers, acknowledge the risk that any such action
could significantly limit
or completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
Mario Yau Kwan Ho
FirstName
NIP Group LastNameMario Yau Kwan Ho
Inc.
Comapany
April NameNIP Group Inc.
12, 2023
April 412, 2023 Page 4
Page
FirstName LastName
Unaudited Pro Forma Condensed Combined Statement of Comprehensive Profit or
Loss, page
81
11. We note your presentation of pro forma information to give effect to
the acquisition of
Ninjas in Pyjamas that occurred on January 10, 2023. Please tell us
how your presentation
complies with Rule 11-02 of Regulation S-X.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
83
12. We note your disclosure, "[w]e experienced robust growth in our net
revenues, which
increased from US$5.7 million in 2020 to US$31.8 million in 2021. We
recorded gross
profit of US$0.9 million in 2020 and gross loss of US$0.6 million in
2021, representing
gross profit margin of 16.6% and gross loss margin of 1.9%,
respectively." Please revise
this section to elaborate upon and explain the downward trend in your
gross profit from
fiscal year ended 2020 to 2021. Discuss any known trends that may be
impacting this
measure with a view to understanding how and whether such trend may
impact your
ability to be profitable in the future.
13. We note that your disclosure does not discuss the impact of Covid-19
on your
business. To the extent applicable, please amend your disclosure to
provide a more
detailed discussion and quantification of the effects of COVID-19 on
your business.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Components of Results of Operations, page 84
14. We note your tabular presentation here presents the results of
operations for NIP Group
for fiscal 2020 and 2021, and a column for the pro forma results of
operation reflecting the
combined results of NIP Group and Ninjas in Pyjamas. Please revise
your tabular
presentation here and throughout MD&A to also include a column that
presents the results
of Ninjas in Pyjamas. Additionally, please note that the pro forma
information presented
should be consistent with Article 11 of Regulation S-X.
Results of Operations, page 87
15. Please provide a reconciliation of the revenue and cost of revenue
amounts discussed in
your results of operations to the net revenue from third parties and
related parties line
items and cost of revenue provided by third parties and related
parties line items presented
on the Consolidated Statement of Operations and Comprehensive Loss.
Additionally,
please discuss the gross profit generated by third parties and the
gross loss generated from
related parties.
Management
Compensation of Directors and Executive Officers, page 145
16. Please update this information for the most recently completed fiscal
year.
Mario Yau Kwan Ho
NIP Group Inc.
April 12, 2023
Page 5
Financial Statements of NIP Group Inc. (formerly known as ESVF Esports Group
Inc.) as of and
for the Year Ended December 31, 2021
Organization and Principal Activities
History of the Group and Basis of Presentation for the Reorganization
Reverse Acquisition, Reorganization, page F-9
17. We note your disclosures under the headers "Reverse Acquisition" and
"Reorganization"
within this note that, on March 18, 2021, Wuhan ESVF and Shenzhen VF
completed a
Reverse Acquisition, with Shenzhen VF as the accounting acquirer, and
Shenzhen VF
deemed to be the predecessor for accounting purposes, and that the
historical financial
statements of Shenzhen VF became the Group s historical financial
statements for periods
prior to the consummation of the Reverse Acquisition. We also note
your disclosure
within this note that the transaction of the reorganization was
determined to be a
recapitalization with lack of economic substance, and therefore was
accounted for in a
manner similar to a common control transaction with the financial
information of the
Group presented on a carryover basis for all periods presented.
Finally, we also note the
disclosure in Note 3 on page F-28 that this same transaction is being
treated as a business
combination for accounting purposes and is accounted for using the
acquisition method
under ASC 805, with Shenzhen VF deemed to be the accounting acquirer
and its assets
and liabilities, equity and historical operating results being
included at their historical
carrying values, and the assets and liabilities of Wuhan ESVF were
recorded at fair value
as of the date of the transaction. Please reconcile this apparent
disparity in accounting
treatment.
Note 2 - Summary of Significant Accounting Policies
(m) Revenue Recognition
Talent Management Service
Provided by third-party online entertainers, page F-22
18. Please provide your analysis that determines revenue earned for talent
provided by third
party online entertainers should be recognized on a gross basis. Refer
to ASC 606-10-55-
36 through 40. Include in your response the specific services the
third parties provide, and
how you are involved in stipulating how these services are provided.
General
19. Please provide us with supplemental 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, have presented or expect to present to potential investors in
reliance on Section
FirstName LastNameMario Yau Kwan Ho
5(d) of the Securities Act, whether or not you retained, or intend to
retain, copies of
Comapany
thoseNameNIP Group Inc.
communications. Please contact the staff member associated with
the review of this
filing
April 12, to Page
2023 discuss
5 how to submit the materials, if any, to us for our
review.
FirstName LastName
Mario Yau Kwan Ho
FirstName
NIP Group LastNameMario Yau Kwan Ho
Inc.
Comapany
April NameNIP Group Inc.
12, 2023
April 612, 2023 Page 6
Page
FirstName LastName
You may contact Amy Geddes at 202-551-3304 or Theresa Brillant at
202-551-3307 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Scott Anderegg at 202-551-3342 or Lilyanna Peyser at 202-551-3222 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services