SEC Comment Letter for ONE STOP SYSTEMS, INC. (OSS) (CIK 0001394056) (OSS) — Jan 18, 2018
ONE STOP SYSTEMS, INC. (OSS) (CIK 0001394056)
Date: Jan. 18, 2018 · CIK: 0001394056 · Accession: 0000000000-18-001756
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-222121
Referenced dates: December 6, 2017
Letter
Mail Stop 4561 January 11, 2018 Steve Cooper Chief Executive Officer One Stop Systems, Inc. 2235 Enterprise Street #110 Escondido, CA 92029
Re: One Stop Systems, Inc. Registration Statement on Form S -1 Filed December 18, 2017 File No. 333-222121
Dear Mr. Cooper:
We have reviewed your amended 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. References to our prior comments refer to our letter dated December 6, 2017.
Please respond to this letter by amending your registration statement and providing the requested information. If you do not believe our com ments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your registration statement and the information you provide in response to these comments, w e may have additional comments.
General
1. We note your response to prior comment 2 regarding your reincorporation from a California corporation into a Delaware corporation. Please revise to briefly explain how you accomplished your reincorporation. Als o, we note that your registration statement still refers to a pending reincorporation on pages 6, 59, 101, and II -1, and that you still provide California corporation bylaws as your current bylaws as Exhibit 3.3. Revise accordingly .
Steve Cooper One Stop Systems, Inc. January 11, 2018 Page 2
Risk Factors
We rely on a limited number of parts suppliers to support our manufacturing…, page 15
2. We note your response to prior comment 4 related to your significant suppliers, Concisys, Inc. and Exact Computer. Please revise to describe the nature of your busin ess relationships with these suppliers, including a brief description of the materials or parts they provide you, whether you have any material purchase obligations or other commercial arrangements or understandings.
Management’s Discussion and Analysis o f Financial Condition and Results of Operations
Liquidity and Capital Resources, page 46
3. We note your revised disclosure in response to prior comment 10. For each of the four covenants for which you were not in compliance as of June 30, 2017 and December 31, 2016 and received waivers, please state in quantitative terms the extent to which you were not in compliance.
Business
Our Opportunity, page 63 4. In response to prior comment 11, you state that you generate “substantial revenue” from your Custom Built Servers business. Please disclose this in the prospectus and discuss the mat erial nature of this business to the company in both quantitative and qualitative terms.
Condensed Consolidated Financial Statements (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 2, Acquisition
Ion Software and Services, page F -46
5. We note your response to prior comment 23. Please explain further how you applied the guidance in ASC 805 -10-55-4 through 55 -9 in determining that the assets and activities acquired from Western Digital comprise a business. Also, tel l us how the technology agreement and services agreement factored into such determination.
Steve Cooper One Stop Systems, Inc. January 11, 2018 Page 3
6. Notwithstanding your response to the previous comment, please explain further your accounting for the bargain purchase option. In your response address how you determined the value of the equipment acquired and tell us the depreciation period for such ass et. Refer to ASC 805 -30-25-3 to 25 -4 and ASC 805 -30-30-4 through 30 -6.
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.
Refer to Rules 460 and 461 regarding requests for acceleration. Please allow adequate time for us to review any amendment prior to the requested effective date of the registration statement.
You may contact David Edgar, Staff A ccountant, at (202) 551 -3459 or Kathleen Collins, Accounting Branch Chief, at (202) 551 -3499 if you have questions regarding comments on the financial statements and related matters. Please contact Edwin Kim, Staff Attorney, at (202) 551-3297 or me at (20 2) 551 -3453 with any other questions.
Sincerely,
/s/ Jan Woo
Show Raw Text
Mail Stop 4561
January 11, 2018
Steve Cooper
Chief Executive Officer
One Stop Systems, Inc.
2235 Enterprise Street #110
Escondido, CA 92029
Re: One Stop Systems, Inc.
Registration Statement on Form S -1
Filed December 18, 2017
File No. 333-222121
Dear Mr. Cooper:
We have reviewed your amended 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. References to our prior comments refer to our letter
dated December 6, 2017.
Please respond to this letter by amending your registration statement and providing the
requested information. If you do not believe our com ments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
After reviewing any amendment to your registration statement and the information you
provide in response to these comments, w e may have additional comments.
General
1. We note your response to prior comment 2 regarding your reincorporation from a
California corporation into a Delaware corporation. Please revise to briefly explain how
you accomplished your reincorporation. Als o, we note that your registration statement
still refers to a pending reincorporation on pages 6, 59, 101, and II -1, and that you still
provide California corporation bylaws as your current bylaws as Exhibit 3.3. Revise
accordingly .
Steve Cooper
One Stop Systems, Inc.
January 11, 2018
Page 2
Risk Factors
We rely on a limited number of parts suppliers to support our manufacturing…, page 15
2. We note your response to prior comment 4 related to your significant suppliers, Concisys,
Inc. and Exact Computer. Please revise to describe the nature of your busin ess
relationships with these suppliers, including a brief description of the materials or parts
they provide you, whether you have any material purchase obligations or other
commercial arrangements or understandings.
Management’s Discussion and Analysis o f Financial Condition and Results of Operations
Liquidity and Capital Resources, page 46
3. We note your revised disclosure in response to prior comment 10. For each of the four
covenants for which you were not in compliance as of June 30, 2017 and December 31,
2016 and received waivers, please state in quantitative terms the extent to which you
were not in compliance.
Business
Our Opportunity, page 63
4. In response to prior comment 11, you state that you generate “substantial revenue” from
your Custom Built Servers business. Please disclose this in the prospectus and discuss
the mat erial nature of this business to the company in both quantitative and qualitative
terms.
Condensed Consolidated Financial Statements (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 2, Acquisition
Ion Software and Services, page F -46
5. We note your response to prior comment 23. Please explain further how you applied the
guidance in ASC 805 -10-55-4 through 55 -9 in determining that the assets and activities
acquired from Western Digital comprise a business. Also, tel l us how the technology
agreement and services agreement factored into such determination.
Steve Cooper
One Stop Systems, Inc.
January 11, 2018
Page 3
6. Notwithstanding your response to the previous comment, please explain further your
accounting for the bargain purchase option. In your response address how you
determined the value of the equipment acquired and tell us the depreciation period for
such ass et. Refer to ASC 805 -30-25-3 to 25 -4 and ASC 805 -30-30-4 through 30 -6.
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.
Refer to Rules 460 and 461 regarding requests for acceleration. Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.
You may contact David Edgar, Staff A ccountant, at (202) 551 -3459 or Kathleen Collins,
Accounting Branch Chief, at (202) 551 -3499 if you have questions regarding comments on the
financial statements and related matters. Please contact Edwin Kim, Staff Attorney, at (202)
551-3297 or me at (20 2) 551 -3453 with any other questions.
Sincerely,
/s/ Jan Woo
Jan Woo
Branch Chief - Legal
Office of Information
Technologies and Services
cc: Dennis J. Doucette, Esq.
Procopio, Cory, Hargreaves & Savitch LLP