SEC Comment Letter for Sunlands Technology Group (STG) — Jan 10, 2018
Sunlands Technology Group
Date: Jan. 10, 2018 · CIK: 0001723935 · Accession: 0000000000-18-001001
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January 10, 2018 Jianhong Yin Chairman Sunlands Online Education Group Building 4-6, Chaolai Science Park, No. 36 Chaoyang District, Beijing, 100012 Peoples Republic of China Re:Sunlands Online Education Group Draft Registration Statement on Form F-1 Submitted December 14, 2017 CIK No. 0001723935 Dear Mr. Yin: 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.
DRS Submitted December 14, 2017 Corporate History and Structure, page 4 1.Please revise the organizational chart on page 5 to reflect the post-offering ownership structure of the Company, including the percentage ownership of Messsr. Yin and Liu and public shareholders following completion of the offering. Risk Factors, page 14
FirstName LastNameJianhong Yin Comapany NameSunlands Online Education Group June 16, 2017 Page 2 FirstName LastNameJianhong Yin Sunlands Online Education Group January 10, 2018 Page 2 2.Please consider the addition of risk factor disclosure relating to the risk incumbent upon the potential misuse or misappropriation of controlling nontangible assets, including chops and seals. Our user metrics and other estimates are subject to inaccuracy..., page 27 3.Please revise to briefly explain the nature of the inherent challenges in measuring how your website and mobile applications are used across a large student base, such that your metrics may not be indicative of future operating performance. We have not determined a specific use for a portion of the net proceeds from this offering., page 4.Please revise to quantify that portion of the net proceeds for which you have not identified a specific use. We note that no such allocation is found at page 9 of your prospectus under "Use of Proceeds," where three specific uses of proceeds are identified. Use of Proceeds, page 54 5.Please revise to indicate that approximate dollar amount or percentage of your offering proceeds that will be available for the uses you enumerate in paragraph two, given the restrictions on loans and direct investment you have identified. Dilution , page 58 6.Please tell us the reason that you deduct mezzanine equity when calculating the net tangible book value. Material U.S. Federal Income Tax Considerations, page 177 7.We note the reference in paragraph one to a tax opinion of Davis Polk & Wardwell, however no such opinion is listed as an 8.1 exhibit to your filing. Please advise or revise. Notes to the Financial Statements Financial Statements for the Years Ended December 31, 2016 and 2015 23. Subsequent Events, page F-40 8.Please disclose the fair value of stock options granted in October 2017 and the total amount of compensation expense that will be recognized in subsequent periods. General 9.Please supplementally provide us with copies of all written communications, as defined in Rule 405 under the Securities Act, that you, or anyone authorized to do so on your
FirstName LastNameJianhong Yin Comapany NameSunlands Online Education Group June 16, 2017 Page 3 FirstName LastName Jianhong Yin Sunlands Online Education Group January 10, 2018 Page 3 behalf, present to potential investors in reliance on Section 5(d) of the Securities Act, whether or not they retain copies of the communication. 10.We note references to third-party market data throughout your prospectus, including references to reports prepared by iResearch. Please provide us with copies of any materials that support third-party statements, clearly cross-referencing a statement with the underlying factual support. We note also references to a study you commissioned with respect to student satisfaction rates, for example at page 2 of the registration statement. You may contact Christie Wong, Staff Accountant, at 202-551-3684 or Terry French, Accountant Branch Chief, at 202-551-3828 if you have questions regarding comments on the financial statements and related matters. Please contact Paul Fischer, Staff Attorney at 202-551- 3415, or Celeste M. Murphy, Legal Branch Chief, at 202-551-3257, with any other questions. Division of Corporation Finance Office of Telecommunications
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January 10, 2018
Jianhong Yin
Chairman
Sunlands Online Education Group
Building 4-6, Chaolai Science Park, No. 36
Chaoyang District, Beijing, 100012
Peoples Republic of China
Re:Sunlands Online Education Group
Draft Registration Statement on Form F-1
Submitted December 14, 2017
CIK No. 0001723935
Dear Mr. Yin:
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.
DRS Submitted December 14, 2017
Corporate History and Structure, page 4
1.Please revise the organizational chart on page 5 to reflect the post-offering ownership
structure of the Company, including the percentage ownership of Messsr. Yin and Liu
and public shareholders following completion of the offering.
Risk Factors, page 14
FirstName LastNameJianhong Yin
Comapany NameSunlands Online Education Group
June 16, 2017 Page 2
FirstName LastNameJianhong Yin
Sunlands Online Education Group
January 10, 2018
Page 2
2.Please consider the addition of risk factor disclosure relating to the risk incumbent upon
the potential misuse or misappropriation of controlling nontangible assets, including
chops and seals.
Our user metrics and other estimates are subject to inaccuracy..., page 27
3.Please revise to briefly explain the nature of the inherent challenges in measuring how
your website and mobile applications are used across a large student base, such that your
metrics may not be indicative of future operating performance.
We have not determined a specific use for a portion of the net proceeds from this offering., page
47
4.Please revise to quantify that portion of the net proceeds for which you have not
identified a specific use. We note that no such allocation is found at page 9 of your
prospectus under "Use of Proceeds," where three specific uses of proceeds are identified.
Use of Proceeds, page 54
5.Please revise to indicate that approximate dollar amount or percentage of your offering
proceeds that will be available for the uses you enumerate in paragraph two, given the
restrictions on loans and direct investment you have identified.
Dilution , page 58
6.Please tell us the reason that you deduct mezzanine equity when calculating the net
tangible book value.
Material U.S. Federal Income Tax Considerations, page 177
7.We note the reference in paragraph one to a tax opinion of Davis Polk & Wardwell,
however no such opinion is listed as an 8.1 exhibit to your filing. Please advise or revise.
Notes to the Financial Statements
Financial Statements for the Years Ended December 31, 2016 and 2015
23. Subsequent Events, page F-40
8.Please disclose the fair value of stock options granted in October 2017 and the total
amount of compensation expense that will be recognized in subsequent periods.
General
9.Please supplementally provide us with copies of all written communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized to do so on your
FirstName LastNameJianhong Yin
Comapany NameSunlands Online Education Group
June 16, 2017 Page 3
FirstName LastName
Jianhong Yin
Sunlands Online Education Group
January 10, 2018
Page 3
behalf, present to potential investors in reliance on Section 5(d) of the Securities Act,
whether or not they retain copies of the communication.
10.We note references to third-party market data throughout your prospectus, including
references to reports prepared by iResearch. Please provide us with copies of any
materials that support third-party statements, clearly cross-referencing a statement with
the underlying factual support. We note also references to a study you commissioned
with respect to student satisfaction rates, for example at page 2 of the registration
statement.
You may contact Christie Wong, Staff Accountant, at 202-551-3684 or Terry French,
Accountant Branch Chief, at 202-551-3828 if you have questions regarding comments on the
financial statements and related matters. Please contact Paul Fischer, Staff Attorney at 202-551-
3415, or Celeste M. Murphy, Legal Branch Chief, at 202-551-3257, with any other questions.
Division of Corporation Finance
Office of Telecommunications