SEC Comment Letter for TANTECH HOLDINGS LTD (TANH) (CIK 0001588084) (TANH) — Nov 17, 2014
TANTECH HOLDINGS LTD (TANH) (CIK 0001588084)
Date: Nov. 17, 2014 · CIK: 0001588084 · Accession: 0000000000-14-057702
AI Filing Summary & Sentiment
Reasoning
Referenced dates: October 25, 2013
Letter
November 17 , 2014 Via e -mail Ningfang Liang Chief Financial Officer Tantech Holdings Ltd. No. 10 Cen Shan Road, Shuige Industrial Zone Lishui City, Zhejiang Province People’s Republic of China
Re: Tantech Holdings Ltd. Amendment No. 2 to Registration Statement on Form F -1 Filed November 3, 2014 File No. 333 -198788
Dear Mr. Liang :
We have reviewed your registration statement and have the following comments .
General
1. We note your response to comment 104 of our letter dated October 25, 2013. It does not appear that you have revised your recent amendment to address this comment as your response indicates. Specifically, it does not appear that you revised your financial statements and disclosures throughout the filing to give retroactive effect to the expected stock split. Doing this in the next amendment will save us substantial review time in future amendments. If your auditors believe that only a “draft” report can be presented, due to a pending future event such as the stock split, they can include in the filing a signed and dated preface to their “draft” report stating the reason for the “draft” report and that they expect to be in a position to issue the report in the form presented prior to effectiveness. A signed, dated, and unr estricted auditor’s report must be included in the filing prior to effectiveness. See Rule 2 -02 of Regulation S -X.
Risk Factors, page 12
We have guaranteed the bank loan of a related party; if this related party fails to pay the … page
2. Please expand your discussion here to provide more detail regarding Forasen Groups’s ability to repay the loans that you have guaranteed. Please also clarify, here or elsewhere as appropriate, whether you intend to guarantee liabilities of related parti es in the future.
Ningfang Liang Tantech Holdings Ltd. November 17 , 2014 Page 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page
Investing Activities, page 55
3. You state here that you provided a loan of $2.6 million to a related party in the six months ended June 30, 20 14. As Note 12 to the unaudited financial statements makes apparent, this related party was Forasen Group. However, on page 110 you state both that Forasen Group did not owe you anything on December 31, 2013 and that the largest outstanding amount it owe d you during the six months to June 30, 2014 was $3.4 million. It appears that you loaned Forasen Group $3.4 million in this period, rather than $2.6 million. Please reconcile your disclosure here and in your discussion of related party transactions.
Recent Capital Expenditures and Divestitures, page 98
4. Refer to the table of expenditures through September 30, 2014. The amount spent on electronic equipment has dropped since your last filing. This table presents all expenditures on these categories since December 31, 2013, and thus it is unclear how the amount spent could have dropped. Please advise.
Alternate Page - Prospectus Cover Page
5. You have added text to the effect that Newbridge will be your placement agent in connection with this offering. The se alternate pages refer to the sale of securities by the selling shareholder rather than you. It is unclear why you are referring to Newbridge acting as a placement agent for you, rather than the selling shareholder, as well as why you are referring to p aying Newbridge 1.25% of the gross proceeds received by you from the sale of shares. Please revise.
Alternate Page - Selling Shareholders
6. Please include the percentage of shares owned by the selling shareholder after the offering including the shares bei ng sold in the primary firm commitment offering. We note the disclosure on page 8.
Alternate Page - Plan of Distribution
7. You refer here to securities to be offered and issued by you rather than sold the selling shareholder. Please revise to discuss the plan of distrib ution for shares sold by the selling shareholder . Please also clarify what is meant by the language “Newbridge Securities Corporation is not purchasing or selling any shares. Therefore, our selling securities holders will enter into a purc hase agreement directly with investors in connection with this offering.” This appears to conflict with your statement on the alternate cover page
Ningfang Liang Tantech Holdings Ltd. November 17 , 2014 Page 3
that the offering by your selling shareholders is firmly underwritten by Newbridge. Please revise.
You may contact Nudrat Salik at (202)551 -3692 or Melissa Rocha at (202)551 -3854 if you have questions regarding comments on the financial statements and related matters. Please contact Leland Benton at (202)551 -3791 or Craig Slivka at (202)551 -3729 with any other questions.
Sincerely,
/s/ Craig Slivka, for
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November 17 , 2014 Via e -mail Ningfang Liang Chief Financial Officer Tantech Holdings Ltd. No. 10 Cen Shan Road, Shuige Industrial Zone Lishui City, Zhejiang Province People’s Republic of China Re: Tantech Holdings Ltd. Amendment No. 2 to Registration Statement on Form F -1 Filed November 3, 2014 File No. 333 -198788 Dear Mr. Liang : We have reviewed your registration statement and have the following comments . General 1. We note your response to comment 104 of our letter dated October 25, 2013. It does not appear that you have revised your recent amendment to address this comment as your response indicates. Specifically, it does not appear that you revised your financial statements and disclosures throughout the filing to give retroactive effect to the expected stock split. Doing this in the next amendment will save us substantial review time in future amendments. If your auditors believe that only a “draft” report can be presented, due to a pending future event such as the stock split, they can include in the filing a signed and dated preface to their “draft” report stating the reason for the “draft” report and that they expect to be in a position to issue the report in the form presented prior to effectiveness. A signed, dated, and unr estricted auditor’s report must be included in the filing prior to effectiveness. See Rule 2 -02 of Regulation S -X. Risk Factors, page 12 We have guaranteed the bank loan of a related party; if this related party fails to pay the … page 26 2. Please expand your discussion here to provide more detail regarding Forasen Groups’s ability to repay the loans that you have guaranteed. Please also clarify, here or elsewhere as appropriate, whether you intend to guarantee liabilities of related parti es in the future. Ningfang Liang Tantech Holdings Ltd. November 17 , 2014 Page 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 38 Investing Activities, page 55 3. You state here that you provided a loan of $2.6 million to a related party in the six months ended June 30, 20 14. As Note 12 to the unaudited financial statements makes apparent, this related party was Forasen Group. However, on page 110 you state both that Forasen Group did not owe you anything on December 31, 2013 and that the largest outstanding amount it owe d you during the six months to June 30, 2014 was $3.4 million. It appears that you loaned Forasen Group $3.4 million in this period, rather than $2.6 million. Please reconcile your disclosure here and in your discussion of related party transactions. Recent Capital Expenditures and Divestitures, page 98 4. Refer to the table of expenditures through September 30, 2014. The amount spent on electronic equipment has dropped since your last filing. This table presents all expenditures on these categories since December 31, 2013, and thus it is unclear how the amount spent could have dropped. Please advise. Alternate Page - Prospectus Cover Page 5. You have added text to the effect that Newbridge will be your placement agent in connection with this offering. The se alternate pages refer to the sale of securities by the selling shareholder rather than you. It is unclear why you are referring to Newbridge acting as a placement agent for you, rather than the selling shareholder, as well as why you are referring to p aying Newbridge 1.25% of the gross proceeds received by you from the sale of shares. Please revise. Alternate Page - Selling Shareholders 6. Please include the percentage of shares owned by the selling shareholder after the offering including the shares bei ng sold in the primary firm commitment offering. We note the disclosure on page 8. Alternate Page - Plan of Distribution 7. You refer here to securities to be offered and issued by you rather than sold the selling shareholder. Please revise to discuss the plan of distrib ution for shares sold by the selling shareholder . Please also clarify what is meant by the language “Newbridge Securities Corporation is not purchasing or selling any shares. Therefore, our selling securities holders will enter into a purc hase agreement directly with investors in connection with this offering.” This appears to conflict with your statement on the alternate cover page Ningfang Liang Tantech Holdings Ltd. November 17 , 2014 Page 3 that the offering by your selling shareholders is firmly underwritten by Newbridge. Please revise. You may contact Nudrat Salik at (202)551 -3692 or Melissa Rocha at (202)551 -3854 if you have questions regarding comments on the financial statements and related matters. Please contact Leland Benton at (202)551 -3791 or Craig Slivka at (202)551 -3729 with any other questions. Sincerely, /s/ Craig Slivka, for Pamela Long Assistant Director CC: Anthony W. Basch, Esq. ( via e -mail) Kaufman & Canoles, P.C.