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United States securities and exchange commission logo
November 5, 2021
Yifan Li
Chief Executive Officer
Hesai Group
9th Floor, Building L2-B
1588 Zhuguang Road, Qingpu District
Shanghai 201702
People s Republic of China
Re: Hesai Group
Amendment No. 1 to
Draft Registration Statement on Form F-1
Submitted October
20, 2021
CIK No. 0001861737
Dear Dr. Li:
We have reviewed your amended 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. Unless otherwise noted, where prior comments are referred to
they refer to our letter
dated August 13, 2021.
Draft Registration Statement on Form F-1
Cover Page
1. We note your risk
factors on pages 49 and 57, which discuss your reliance on dividends
and other distributions
paid by your PRC subsidiaries, and that you intend to retain most,
if not all, of your
available funds and future earnings and do not expect to pay dividends
in the foreseeable
future after this offering. We also note your disclosure on page 69,
which states, We are
a holding company incorporated in the Cayman Islands. We may
rely on dividends from
our subsidiary in China for our cash requirements, including any
Yifan Li
FirstName LastNameYifan Li
Hesai Group
Comapany 5,
November NameHesai
2021 Group
November
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FirstName LastName
payment of dividends to our shareholders. PRC regulations may restrict
the ability of our
PRC subsidiary to pay dividends to us. Please expand your
disclosure on the prospectus
cover page to provide a description of how cash is transferred through
your organization
and state whether any transfers, dividends, or distributions have been
made to date.
Similarly, please expand your disclosure in the prospectus summary to
provide a clear
description of how cash is transferred through your organization.
Quantify any cash flows
and transfers of other assets by type that have occurred between you
and your subsidiaries,
and the direction of the transfer. Quantify any dividends or
distributions that a subsidiary
has made to you and which entity made such transfer, and their tax
consequences.
Similarly quantify dividends or distributions made to U.S. investors,
the source, and their
tax consequences. Your disclosure should make clear if no transfers,
dividends, or
distributions have been made to date. Describe any restrictions on
foreign exchange and
your ability to transfer cash between entities, across borders, and to
U.S. investors.
Describe any restrictions and limitations on your ability to
distribute earnings from your
businesses to the parent company and U.S. investors.
Prospectus Summary
Risks Related to Doing Business in China, page 9
2. We note your response to prior comment 6. Please clarify that the
Chinese
government may intervene or influence your operations at any time and
that actions by the
Chinese government to exert control over offerings that are conducted
overseas could
cause the value of such securities to significantly decline or be
worthless.
Summary Combined and Consolidated Financial Data, page 18
3. We note your response to prior comment 7 and have the following
comments;
Revise to only present the pro forma EPS for the most recent
fiscal year and interim
period pursuant to Article 1-02(c)(2) of Regulation S-X.
Revise to include the expense for all equity awards that will vest
at the effective date
of your IPO, or the most recent practicable date prior to the
effectiveness of this
offering, including those that will vest subsequent to June 30,
2021 and disclose the
date used to determine these amounts.
Ensure that the adjustment to the numerator assumes such
adjustment was made as of
the beginning of the fiscal year presented. Refer to Article
11-02(a)(6)(i)(B) of
Regulation S-X.
Revise your Capitalization Table on page 70 to reflect the pro
forma expense as
calculated in the bullet above by recording an adjustment to the
Additional Paid-In
Capital and Accumulated Deficit for the pro forma column.
Risk Factors
Our auditor is currently not subject to inspections by the PCAOB..., page 28
4. Please expand your risk factor disclosure to discuss that the United
States Senate passed
the Accelerating Holding Foreign Companies Accountable Act, which, if
enacted, would
Yifan Li
FirstName LastNameYifan Li
Hesai Group
Comapany 5,
November NameHesai
2021 Group
November
Page 3 5, 2021 Page 3
FirstName LastName
decrease the number of non-inspection years from three years to two,
thus reducing the
time period before your securities may be prohibited from trading or
delisted.
We generate a substantial portion of our revenue..., page 38
5. We note your response to prior comment 8. Please clarify the specific
percentages of
revenue that each of your largest customers represented for the
periods presented.
The PRC government has significant oversight..., page 45
6. We note your response to prior comment 9. Please clarify that the
Chinese
government may intervene or influence your operations at any time.
Combined and Consolidated Financial Statements for the Years Ended December
31,2019 and
2020
Combined and Consolidated Statements of Operations and Comprehensive Loss for
the Years
Ended December 31, 2019 and 2020, page F-4
7. Please revise to separately present the litigation settlement from the
Other operating
expenses (income), net since the settlement represents substantially
all of that expense line
item. In addition, the settlement represents a material charge to your
total operating
expenses and should be clearly labeled as a litigation settlement.
Notes to Consolidated Financial Statements
1. Organization and Nature of Operations
2021 Reorganization, page F-7
8. We note your disclosure that upon completion of the 2021
Reorganization, per share
information of the Company has been retrospectively presented from the
earliest period in
the combined and consolidated financial statements presented. Please
clarify how you
also considered retrospectively presenting your statement of financial
position as of the
earliest period presented, including outstanding shares, and the share
information
disclosed in Notes 15 and Note 17. Refer to ASC 805-50-45-4 and 5.
Unaudited Consolidated Financial Statements for the Six Months Ended June 30,
2020 and 2021
Unaudited Consolidated Statements of Operations and Comprehensive Loss for the
Six Months
Ended June 30, 2020 and 2021, page F-40
9. Your disclosure on page 86 indicates that general and administrative
expenses includes
RMB105.9 million related to certain shareholders discounted capital
injection in the
2021 Reorganization and recognition of a derivative liability to
shareholders of RMB72.1
million. Please ensure that your disclosure clearly states the line
items that these expense
items have been classified to on your Consolidated Statements of
Operations and
Comprehensive Loss for the Six Months Ended June 30, 2020 and 2021.
Revise
accordingly.
Yifan Li
FirstName LastNameYifan Li
Hesai Group
Comapany 5,
November NameHesai
2021 Group
November
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FirstName LastName
10. Please clarify your disclosures to explain the transactions that
resulted in the shareholders
discounted capital injection expense, how you are accounting for these
transactions, and
the authoritative accounting literature upon which you are relying. In
your response, also
clarify why there is a difference between the cash distributions
received from shareholders
and the cash distributions paid to shareholders, as reflected on page
F-42, and how you are
accounting for this difference. Please also explain how the
subscription receivable of
RMB 339 million, described on page F-56, was determined, whether there
are any
uncertainties with obtaining the necessary approvals for payment, and
the resulting
accounting impacts if payment is not received.
Notes to Unaudited Financial Statements
2. Summary of Significant Accounting Polices
Revenue recognition, page F-45
11. Clarify if you consider your LiDAR products sold together with
engineering design and
development and validation service projects to be one distinct
performance obligation and
the factors you considered in making this determination. Please also
clarify the factors
you considered in determining to recognize revenue for certain of
these arrangements over
time and for certain of these arrangements at a point in time. Revise
your disclosures
accordingly.
12. For arrangements recognized over time, clarify how you have an
enforceable right to
payment and how you considered all of the factors in ASC 606-10-55-11
through 15. In
this regard, we note your disclosure on page 38 that if your purchase
orders are terminated
by customers, you will be paid an amount based on (i) the price for
all goods and services
that have been completed in accordance with the purchase agreement and
not previously
paid for; and (ii) the actual costs of work-in-process and raw
materials incurred in
furnishing the goods or services under the purchase agreement. With
respect to the work
in process, clarify how you are compensated for costs incurred to date
plus a reasonable
profit margin and how the criteria in ASC 606-10-55-11 are met. Revise
your disclosures
accordingly.
13. Tell us how you considered separately disclosing revenue recognized
over time and
revenue recognized at a point in time related to your LiDAR products
sold with
engineering services. Please also tell us how you considered
separately disclosing
revenue related to your warranty service arrangements.
Derivative Liability, page F-48
14. We note that you "signed agreements with certain shareholders holding
50,187,879
Class B ordinary shares, whereby the Group has agreed to provide an
option for these
shareholders to convert their ordinary shares to redeemable preferred
shares". Please tell
us what consideration you gave to disclosing the actual redemption
value as of June 30,
Yifan Li
Hesai Group
November 5, 2021
Page 5
2021.
You may contact Laura Veator, Senior Staff Accountant, at (202) 551-3716
or Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Matthew Derby, Staff
Attorney, at (202) 551-3334 or Jeff Kauten, Staff Attorney, at (202) 551-3447
with any other
questions.
Sincerely,
FirstName LastNameYifan Li
Division of
Corporation Finance
Comapany NameHesai Group
Office of Technology
November 5, 2021 Page 5
cc: Z. Julie Gao, Esq.
FirstName LastName