Correspondence 0001493152-24-028701 from Hapi Metaverse Inc. (CIK 0001600347)
Hapi Metaverse Inc. (CIK 0001600347)
Date: July 22, 2024 · CIK: 0001600347 · Accession: 0001493152-24-028701
AI Filing Summary & Sentiment
File numbers found in text: 333-194748
Letter
VIA EDGAR Division of Corporation Finance Office of Trade & Services Securities and Exchange Commission Washington, D.C. 20549 Re: Hapi Metaverse Inc. Form 10-K for Fiscal Year Ended December 31, 2023 Filed April 1, 2024 File No. 333-194748
Dear Mr. Watson and Mr. Phippen:
On behalf of Hapi Metaverse Inc. (the “Company,” “we,” “us,” or “our”), this letter responds to comments provided by the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) provided to the undersigned on July 3, 2024, regarding the Company’s Form 10-K filed April 1, 2024 (the “Annual Report”).
For your convenience, the Staff’s comments have been restated below and the Company’s responses are set forth immediately under the restated comments. Unless otherwise indicated, defined terms used herein have the meanings set forth in the Annual Report.
Form 10-K for Fiscal Year Ended December 31, 2023
Item 1. Business, page 4
1. In future filings, please disclose prominently that you are not a Chinese operating company but a Delaware holding company with operations conducted by your subsidiaries based in China and that this structure involves unique risks to investors. Your disclosure should acknowledge that Chinese regulatory authorities could disallow this structure, which would likely result in a material change in your operations and/or a material change in the value of your securities, including that it could cause the value of such securities to significantly decline or become worthless. Provide a cross-reference to your detailed discussion of risks facing the company as a result of this structure.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
2. In future filings, provide prominent disclosure about the legal and operational risks associated with being based in or having the majority of the company’s operations in China. Your disclosure should make clear whether these risks could result in a material change in your operations and/or the value of your securities or could significantly limit or completely hinder your ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. Your disclosure should address how recent statements and regulatory actions by China’s government, such as those related to the use of variable interest entities and data security or anti-monopoly concerns, have or may impact the company’s ability to conduct its business or accept foreign investments. Please disclose the location of your auditor’s headquarters and whether and how the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, and related regulations will affect your company. Provide cross-references to individual risk factors that discuss these topics.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
3. Clearly disclose in future filings how you will refer to the holding company and subsidiaries when providing the disclosure throughout the document so that it is clear to investors which entity the disclosure is referencing and which subsidiaries or entities are conducting the business operations. For example, we note that you have used “our PRC subsidiaries” in your proposed disclosure responsive to prior comment 1, but it is unclear which entities this includes. Additionally, disclose, if true, that your subsidiaries conduct operations in China and that the holding company does not conduct operations. State clearly the entity (including the domicile) in which investors hold an interest.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
4. Please provide a definition of “the PRC” that clarifies whether you include Hong Kong within such term. If you carve out Hong Kong from this definition, state that the legal and operational risks associated with operating in the PRC also apply to operations in Hong Kong.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
5. It appears that certain of your subsidiaries are organized under the laws of Hong Kong and have operations in Hong Kong. In future filings, include discussion of the applicable laws and regulations of Hong Kong, as well as the related risks and consequences, in your Item 1 disclosure. Examples of location-specific regulations that should be discussed include enforceability of civil liabilities in Hong Kong and how regulatory actions related to data security or anti-monopoly concerns in Hong Kong have or may impact the company’s ability to conduct its business and accept foreign investment. Include risk factor disclosure explaining whether there are laws or regulations in Hong Kong that result in oversight over data security, how this oversight impacts the company’s business, and to what extent the company believes that it is compliant with the regulations or policies that have been issued.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
6. Provide a more thorough description of how cash is transferred through your organization in future filings. In this regard, we note that your proposed disclosure in response to prior comment 1 only discusses the transfer of funds between the holding company and Hong Kong subsidiary HCHK, rather than the transfer of funds throughout your whole organization. Additionally, please provide a cross-reference to the discussion of limitations on your ability to transfer cash between you, your subsidiaries, or investors in your risk factors section.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
7. In future filings, please amend your disclosure in Item 1 and in the summary risk factors and risk factors sections to state that, to the extent cash in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of you or your subsidiaries by the PRC government to transfer cash. Provide a cross-reference to your summary risk factors and risk factors discussions.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
8. Please provide early in Item 1 of future filings a diagram of the company’s corporate structure, identifying the person or entity that owns the equity in each depicted entity. Identify clearly the entity in which investors hold their interest and the entities in which the company’s operations are conducted.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
9. Include a summary of risk factors in Item 1 of future filings, and disclose in such summary 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 annual report. 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 your securities. 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 continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
10. In future filings, revise to disclose each permission or approval that you or your subsidiaries are required to obtain from Chinese authorities to operate your business and to offer securities to investors. State whether you or your subsidiaries are covered by permissions requirements from the China Securities Regulatory Commission (CSRC), Cyberspace Administration of China (CAC), or any other governmental agency, and state affirmatively whether you have received all 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 or your subsidiaries: (i) do not receive or maintain such permissions and 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.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
11. We note that the CSRC recently published Trial Measures that impose certain filing requirements for direct and indirect overseas listings and offerings. Please disclose how, if at all, the Trial Measures apply to you and any offerings of your securities.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
Item 1A. Risk Factors
Risks Related to Doing Business in the People’s Republic of China (“PRC”), page 16
12. Given the Chinese government’s significant oversight and discretion over the conduct and operations of your business, please revise future filings to describe any material impact that intervention, influence, or control by the Chinese government has or may have on your business or on the value of your securities. 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 your securities. 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 continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. We remind you that, pursuant to federal securities rules, the term “control” (including the terms “controlling,” “controlled by,” and “under common control with”) means “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.”
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
13. In light of recent events indicating greater oversight by the Cyberspace Administration of China (CAC) over data security, please revise your disclosure to explain how this oversight impacts your business and to what extent you believe that you are compliant with the regulations or policies that have been issued by the CAC to date.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
General
14. We note your statement on page 21 of the Form 10-K for the year ended December 31, 2023 that members of your senior management team “have their primary residences and business offices in Asia.” If any of your directors, officers, or members of senior management are located in the PRC or Hong Kong, revise future filings to (i) state that that is the case and identify the relevant individuals, and (ii) include a separate “Enforceability” section with disclosure comparable to that required by Item 101(g) of Regulation S-K. Please also revise your risk factor regarding enforceability at page 21 to address more clearly challenges of bringing actions against such individuals.
Response: In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business operations.
We appreciate the opportunity to respond to your comments. If you have further comments or questions, we stand ready to respond as quickly as possible. If you wish to contact us directly you can reach me at 301-971-3955.
Sincerely,
Hapi
Metaverse Inc.
Show Raw Text
CORRESP
1
filename1.htm
Hapi
Metaverse Inc.
4800
Montgomery Lane, Suite 210
Bethesda,
MD 20814
July
22, 2024
VIA
EDGAR
Tony
Watson and Adam Phippen
Division
of Corporation Finance
Office
of Trade & Services
Securities
and Exchange Commission
100
F Street, NE
Washington,
D.C. 20549
Re:
Hapi Metaverse Inc.
Form
10-K for Fiscal Year Ended December 31, 2023 Filed April 1, 2024
File
No. 333-194748
Dear
Mr. Watson and Mr. Phippen:
On
behalf of Hapi Metaverse Inc. (the “Company,” “we,” “us,” or “our”), this letter responds
to comments provided by the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission
(the “Commission”) provided to the undersigned on July 3, 2024, regarding the Company’s Form 10-K filed April 1, 2024
(the “Annual Report”).
For
your convenience, the Staff’s comments have been restated below and the Company’s responses are set forth immediately under
the restated comments. Unless otherwise indicated, defined terms used herein have the meanings set forth in the Annual Report.
Form
10-K for Fiscal Year Ended December 31, 2023
Item
1. Business, page 4
1.
In future filings, please disclose prominently that you are not a Chinese operating company but a Delaware holding company with operations
conducted by your subsidiaries based in China and that this structure involves unique risks to investors. Your disclosure should acknowledge
that Chinese regulatory authorities could disallow this structure, which would likely result in a material change in your operations
and/or a material change in the value of your securities, including that it could cause the value of such securities to significantly
decline or become worthless. Provide a cross-reference to your detailed discussion of risks facing the company as a result of this structure.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
2.
In future filings, provide prominent disclosure about the legal and operational risks associated with being based in or having the majority
of the company’s operations in China. Your disclosure should make clear whether these risks could result in a material change in
your operations and/or the value of your securities or could significantly limit or completely hinder your ability to continue to offer
securities to investors and cause the value of such securities to significantly decline or be worthless. Your disclosure should address
how recent statements and regulatory actions by China’s government, such as those related to the use of variable interest entities
and data security or anti-monopoly concerns, have or may impact the company’s ability to conduct its business or accept foreign
investments. Please disclose the location of your auditor’s headquarters and whether and how the Holding Foreign Companies Accountable
Act, as amended by the Consolidated Appropriations Act, 2023, and related regulations will affect your company. Provide cross-references
to individual risk factors that discuss these topics.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
3.
Clearly disclose in future filings how you will refer to the holding company and subsidiaries when providing the disclosure throughout
the document so that it is clear to investors which entity the disclosure is referencing and which subsidiaries or entities are conducting
the business operations. For example, we note that you have used “our PRC subsidiaries” in your proposed disclosure responsive
to prior comment 1, but it is unclear which entities this includes. Additionally, disclose, if true, that your subsidiaries conduct operations
in China and that the holding company does not conduct operations. State clearly the entity (including the domicile) in which investors
hold an interest.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
4.
Please provide a definition of “the PRC” that clarifies whether you include Hong Kong within such term. If you carve out
Hong Kong from this definition, state that the legal and operational risks associated with operating in the PRC also apply to operations
in Hong Kong.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
5.
It appears that certain of your subsidiaries are organized under the laws of Hong Kong and have operations in Hong Kong. In future filings,
include discussion of the applicable laws and regulations of Hong Kong, as well as the related risks and consequences, in your Item 1
disclosure. Examples of location-specific regulations that should be discussed include enforceability of civil liabilities in Hong Kong
and how regulatory actions related to data security or anti-monopoly concerns in Hong Kong have or may impact the company’s ability
to conduct its business and accept foreign investment. Include risk factor disclosure explaining whether there are laws or regulations
in Hong Kong that result in oversight over data security, how this oversight impacts the company’s business, and to what extent
the company believes that it is compliant with the regulations or policies that have been issued.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
6.
Provide a more thorough description of how cash is transferred through your organization in future filings. In this regard, we note that
your proposed disclosure in response to prior comment 1 only discusses the transfer of funds between the holding company and Hong Kong
subsidiary HCHK, rather than the transfer of funds throughout your whole organization. Additionally, please provide a cross-reference
to the discussion of limitations on your ability to transfer cash between you, your subsidiaries, or investors in your risk factors section.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
7.
In future filings, please amend your disclosure in Item 1 and in the summary risk factors and risk factors sections to state that, to
the extent cash in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds may not be available to fund operations
or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of you or your subsidiaries by the PRC government to transfer cash. Provide a cross-reference to your summary risk factors and risk factors
discussions.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
8.
Please provide early in Item 1 of future filings a diagram of the company’s corporate structure, identifying the person or entity
that owns the equity in each depicted entity. Identify clearly the entity in which investors hold their interest and the entities in
which the company’s operations are conducted.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
9.
Include a summary of risk factors in Item 1 of future filings, and disclose in such summary 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 annual report.
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 your securities. 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 continue to offer securities
to investors and cause the value of such securities to significantly decline or be worthless.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
10.
In future filings, revise to disclose each permission or approval that you or your subsidiaries are required to obtain from Chinese authorities
to operate your business and to offer securities to investors. State whether you or your subsidiaries are covered by permissions requirements
from the China Securities Regulatory Commission (CSRC), Cyberspace Administration of China (CAC), or any other governmental agency, and
state affirmatively whether you have received all 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 or your subsidiaries: (i) do not receive or maintain such
permissions and 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.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
11.
We note that the CSRC recently published Trial Measures that impose certain filing requirements for direct and indirect overseas listings
and offerings. Please disclose how, if at all, the Trial Measures apply to you and any offerings of your securities.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
Item
1A. Risk Factors
Risks
Related to Doing Business in the People’s Republic of China (“PRC”), page 16
12.
Given the Chinese government’s significant oversight and discretion over the conduct and operations of your business, please revise
future filings to describe any material impact that intervention, influence, or control by the Chinese government has or may have on
your business or on the value of your securities. 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 your securities. 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 continue to offer securities to investors and cause the value of such securities to significantly decline or be
worthless. We remind you that, pursuant to federal securities rules, the term “control” (including the terms “controlling,”
“controlled by,” and “under common control with”) means “the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract,
or otherwise.”
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
13.
In light of recent events indicating greater oversight by the Cyberspace Administration of China (CAC) over data security, please revise
your disclosure to explain how this oversight impacts your business and to what extent you believe that you are compliant with the regulations
or policies that have been issued by the CAC to date.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
General
14.
We note your statement on page 21 of the Form 10-K for the year ended December 31, 2023 that members of your senior management team “have
their primary residences and business offices in Asia.” If any of your directors, officers, or members of senior management are
located in the PRC or Hong Kong, revise future filings to (i) state that that is the case and identify the relevant individuals, and
(ii) include a separate “Enforceability” section with disclosure comparable to that required by Item 101(g) of Regulation
S-K. Please also revise your risk factor regarding enforceability at page 21 to address more clearly challenges of bringing actions against
such individuals.
Response:
In response to this comment, the Company has provided the proposed revised disclosure appended hereto as Exhibit A. We undertake
to include this revised disclosure in future filings, subject to revisions in the event of changes to applicable law or our business
operations.
We
appreciate the opportunity to respond to your comments. If you have further comments or questions, we stand ready to respond as quickly
as possible. If you wish to contact us directly you can reach me at 301-971-3955.
Sincerely,
Hapi
Metaverse Inc.
By:
/s/
Lui Wai Leung, Alan
Chief
Financial Officer
Exhibit
A
Proposed
revised disclosure regarding Operations in China for Item 1 of Hapi Metaverse Annual Report:
We
are a Delaware holding company with operations conducted through our wholly owned subsidiaries based in Singapore, Hong Kong and the
People’s Republic of China (“PRC”).1 Our investors hold shares of common stock in Hapi Metaverse Inc., the
Delaware holdi