SEC Company Response from Abits Group (ABTS) — May 30, 2025
Abits Group Inc
Date: May 30, 2025 · CIK: 0001864055 · Accession: 0001641172-25-013028
AI Filing Summary & Sentiment
File numbers found in text: 333-284387
Referenced dates: February 7, 2025
Letter
Office of Crypto Assets Division of Corporation Finance Attention: Messrs. David Lin and David Gessert Re: Abits Group Inc Registration Statement on Form F-3 Filed January 21, 2025 File No. 333-284387
Dear Mr. Lin and Mr. Gessert:
In response to the comments set forth in the letter dated February 7, 2025 (the “Comment Letter”) of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), I am writing to supply additional information requested from Abits Group Inc (the “Company,” “we” or “our”). For ease of reference, we have recited the Staff’s comments in this response and numbered them accordingly. Amendment No. 1 to the Registration Statement on Form F-3 (the “Form F-3/A”) is being filed to accompany this letter. Capitalized terms used herein shall have the meanings ascribed to them in the Common Letter unless otherwise defined herein.
Registration Statement on Form F-3
General
1. Please confirm that you will include in future Exchange Act filings all applicable disclosures you include, or will include, in this registration statement in response to our comments.
Response: We hereby confirm that we will include in future Exchange Act filings all applicable disclosures that have been included, or will be included, in this registration statement in response to the Staff’s comments.
Cover Page
2. Please disclose prominently on the prospectus cover page that you are not a Chinese operating company but a British Virgin Islands holding company with part of your operations conducted by your subsidiaries based in China and that this structure involves unique risks to investors. Disclose that investors may never hold equity interests in the Chinese operating companies. 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 the securities you are registering for sale, 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 and the offering as a result of this structure, including within any disclosure you incorporate by reference, as applicable.
Response: The Company respectively acknowledges the Staff’s comments. In response, we have revised the disclosures on the prospectus cover page to address the Staff’s above comments to the extent that they apply. However, we have also included additional factual details in the disclosures in the Form F-3/A to clarify that most of the disclosure requirements listed in the Commission’s Sample Letter to China-Based Companies should not apply to the Company and its subsidiaries. Specially, the Company is not a China-based company nor does it have the majority of its operations in China. The disclosures in the Form F-3/A have stated the fact that the Company is based in the United States and has all of its bitcoin mining operations conducted in the U.S. The Company’s mainland China subsidiary does not conduct any of the Company’s revenue generating activity and its sole function is to provide administrative support to the Company and its two U.S. subsidiaries, which are the only entities within our organization conducting revenue generating operations. The Company’s Hong Kong subsidiary is a holding company and does not conduct substantial business operations. While we have provided relevant risk factor discussions on the cover page and in the Prospectus Summary and Risk Factors sections as requested, we do not believe any regulatory actions the Chinese governmental authorities may take would likely result in a material change in our operations that are based in the U.S. or a material change in the value of the securities we are registering for sale, nor could any such regulatory action cause the value of our securities to significantly decline or become worthless.
3. Provide prominent disclosure about the legal and operational risks associated with being based in or having some portion 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 the securities you are registering for sale or could significantly limit or completely hinder your ability to offer or 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 data security or antimonopoly concerns, have or may impact the company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other foreign exchange. 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. Your prospectus summary should address, but not necessarily be limited to, the risks highlighted on the prospectus cover page.
Response: We have revised the disclosures on the prospectus cover page of the Form F-3/A in response to the Staff’s comments.
4. Provide a description of how cash is transferred through your organization and disclose your intentions to distribute earnings or settle amounts owed under any applicable agreements. State whether any transfers, dividends, or distributions have been made to date among the holding company and its subsidiaries, or to investors, and quantify the amounts where applicable. Provide cross-references to the consolidated financial statements.
Response: We have revised the disclosures on the prospectus cover page of the Form F-3/A in response to the Staff’s above comments.
About This Prospectus, page 1
5. Please revise your definitions of “China” and “PRC” to include Hong Kong and Macau and to clarify that the legal and operational risks associated with operating in China also apply to your operations in Hong Kong. The definitions may clarify that the only time that “China” and the “PRC” do not include Hong Kong or Macau are when you are referencing specific laws and regulations adopted by the PRC. If they do, please revise your disclosure to discuss any commensurate laws or regulations in Hong Kong, if applicable, and any risks and consequences to the company associated with those laws and regulations. As one example, your enforceability of civil liabilities discussion should discuss the enforceability of civil liabilities in Hong Kong.
Response: We have revised the definitions on page 1 of the Form F-3/A in response to the Staff’s comments. We have revised the disclosures with respect to enforceability of civil liabilities beginning on page 41 of the Form F-3/A.
Prospectus Summary, page 3
6. In your summary of risk factors, disclose the risks that your corporate structure and being based in or having some portion 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 prospectus. 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 the securities you are registering for sale. 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 offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Response: We have revised the summary of risk factors and included new risk factors beginning on page 8 of the Form F-3/A in response to the Staff’s comments.
7. Disclose each permission or approval that you or your subsidiaries are required to obtain from Chinese authorities to operate your business and to offer the securities being registered to foreign 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 that is required to approve your or your subsidiaries’ operations, 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 or 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. In this regard, we note your disclosure on page 6 relating to the CSRC “Trial Measures.” Further, with respect to the above, please disclose how you reached your conclusions, including whether you are relying on the opinion of counsel. If you relied on advice of counsel, you should identify counsel and file the consent of counsel as an exhibit to the registration statement. If you did not consult counsel, you should explain why.
Response: We have revised disclosures on page 8 of the Form F-3/A in response to the Staff’s comments and have also filed the consent of counsel as an exhibit to the Form F-3/A.
8. Provide a clear description of how cash is transferred through your organization. Disclose your intentions to distribute earnings or settle amounts owed under applicable agreements. Quantify any cash flows and transfers of other assets by type that have occurred among the holding company and its subsidiaries, and direction of transfer. Quantify any dividends or distributions that a subsidiary has made to the holding company or another subsidiary 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 the company, including your subsidiaries, to the parent company and U.S. investors as well as the ability to settle amounts owed under applicable agreements.
Response: We have included disclosures regarding how cash is transferred through our organization on page 10 of the Form F-3/A in response to the Staff’s comments.
9. We note your disclosure incorporated by reference from the section entitled “The Holding Foreign Companies Accountable Act” on page 2 of your December 31, 2023 Form 20-F. Please enhance your disclosure to disclose that trading in your securities may be prohibited under the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, and related regulations if the PCAOB determines that it cannot inspect or investigate completely your auditor for a period of two consecutive years, and that as a result an
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CORRESP
1
filename1.htm
Level
24, Lee Garden One, 33 Hysan Avenue
Causeway
Bay, Hong Kong SAR
May
30, 2025
Office
of Crypto Assets
Division
of Corporation Finance
U.S.
Securities and Exchange Commission
100
F Street, N.E.
Washington,
D.C. 20549
Attention:
Messrs. David Lin and David Gessert
Re:
Abits
Group Inc
Registration
Statement on Form F-3
Filed
January 21, 2025
File
No. 333-284387
Dear
Mr. Lin and Mr. Gessert:
In
response to the comments set forth in the letter dated February 7, 2025 (the “Comment Letter”) of the staff (the “Staff”)
of the Securities and Exchange Commission (the “Commission”), I am writing to supply additional information requested from
Abits Group Inc (the “Company,” “we” or “our”). For ease of reference, we have recited the Staff’s
comments in this response and numbered them accordingly. Amendment No. 1 to the Registration Statement on Form F-3 (the “Form
F-3/A”) is being filed to accompany this letter. Capitalized terms used herein shall have the meanings ascribed to them in the
Common Letter unless otherwise defined herein.
Registration
Statement on Form F-3
General
1. Please
confirm that you will include in future Exchange Act filings all applicable disclosures you
include, or will include, in this registration statement in response to our comments.
Response:
We hereby confirm that we will include in future Exchange Act filings all applicable disclosures that have been included, or will be
included, in this registration statement in response to the Staff’s comments.
Cover
Page
2. Please
disclose prominently on the prospectus cover page that you are not a Chinese operating company
but a British Virgin Islands holding company with part of your operations conducted by your
subsidiaries based in China and that this structure involves unique risks to investors. Disclose
that investors may never hold equity interests in the Chinese operating companies. 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 the securities you are registering for sale, 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 and the offering as a result of this
structure, including within any disclosure you incorporate by reference, as applicable.
Response:
The Company respectively acknowledges the Staff’s comments. In response, we have revised the disclosures on the prospectus
cover page to address the Staff’s above comments to the extent that they apply. However, we have
also included additional factual details in the disclosures in the Form F-3/A to clarify that most of the disclosure requirements
listed in the Commission’s Sample Letter to China-Based Companies should not apply to the Company and its subsidiaries. Specially,
the Company is not a China-based company nor does it have the majority of its operations in China. The disclosures in the Form
F-3/A have stated the fact that the Company is based in the United States and has all of its bitcoin mining operations conducted in the
U.S. The Company’s mainland China subsidiary does not conduct any of the Company’s revenue generating activity and its sole
function is to provide administrative support to the Company and its two U.S. subsidiaries, which are the only entities within our organization
conducting revenue generating operations. The Company’s Hong Kong subsidiary is a holding company and does not conduct substantial
business operations. While we have provided relevant risk factor discussions on the cover page and in the Prospectus Summary and Risk
Factors sections as requested, we do not believe any regulatory actions the Chinese governmental authorities may take would likely result
in a material change in our operations that are based in the U.S. or a material change in the value of the securities we are registering
for sale, nor could any such regulatory action cause the value of our securities to significantly decline or become worthless.
3. Provide
prominent disclosure about the legal and operational risks associated with being based in
or having some portion 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 the securities you are registering for sale or could significantly limit or
completely hinder your ability to offer or 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 data security or antimonopoly concerns, have or may impact the company’s
ability to conduct its business, accept foreign investments, or list on a U.S. or other foreign
exchange. 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. Your prospectus summary should
address, but not necessarily be limited to, the risks highlighted on the prospectus cover
page.
Response:
We have revised the disclosures on the prospectus cover page of the Form F-3/A in response to the Staff’s comments.
4. Provide
a description of how cash is transferred through your organization and disclose your intentions
to distribute earnings or settle amounts owed under any applicable agreements. State whether
any transfers, dividends, or distributions have been made to date among the holding company
and its subsidiaries, or to investors, and quantify the amounts where applicable. Provide
cross-references to the consolidated financial statements.
Response:
We have revised the disclosures on the prospectus cover page of the Form F-3/A in response to the Staff’s above comments.
About
This Prospectus, page 1
5. Please
revise your definitions of “China” and “PRC” to include Hong Kong
and Macau and to clarify that the legal and operational risks associated with operating in
China also apply to your operations in Hong Kong. The definitions may clarify that the only
time that “China” and the “PRC” do not include Hong Kong or Macau
are when you are referencing specific laws and regulations adopted by the PRC. If they do,
please revise your disclosure to discuss any commensurate laws or regulations in Hong Kong,
if applicable, and any risks and consequences to the company associated with those laws and
regulations. As one example, your enforceability of civil liabilities discussion should discuss
the enforceability of civil liabilities in Hong Kong.
Response:
We have revised the definitions on page 1 of the Form F-3/A in response to the Staff’s comments. We have revised the disclosures
with respect to enforceability of civil liabilities beginning on page 41 of the Form F-3/A.
Prospectus
Summary, page 3
6. In
your summary of risk factors, disclose the risks that your corporate structure and being
based in or having some portion 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 prospectus. 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 the securities you are registering for sale. 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 offer or continue to offer
securities to investors and cause the value of such securities to significantly decline or
be worthless.
Response:
We have revised the summary of risk factors and included new risk factors beginning on page 8 of the Form F-3/A in response to
the Staff’s comments.
7. Disclose
each permission or approval that you or your subsidiaries are required to obtain from Chinese
authorities to operate your business and to offer the securities being registered to foreign
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 that is required to approve your or your subsidiaries’
operations, 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 or 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. In this
regard, we note your disclosure on page 6 relating to the CSRC “Trial Measures.”
Further, with respect to the above, please disclose how you reached your conclusions, including
whether you are relying on the opinion of counsel. If you relied on advice of counsel, you
should identify counsel and file the consent of counsel as an exhibit to the registration
statement. If you did not consult counsel, you should explain why.
Response:
We have revised disclosures on page 8 of the Form F-3/A in response to the Staff’s comments and have also filed the consent
of counsel as an exhibit to the Form F-3/A.
8. Provide
a clear description of how cash is transferred through your organization. Disclose your intentions
to distribute earnings or settle amounts owed under applicable agreements. Quantify any cash
flows and transfers of other assets by type that have occurred among the holding company
and its subsidiaries, and direction of transfer. Quantify any dividends or distributions
that a subsidiary has made to the holding company or another subsidiary 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 the company, including your subsidiaries, to the parent company and U.S. investors
as well as the ability to settle amounts owed under applicable agreements.
Response:
We have included disclosures regarding how cash is transferred through our organization on page 10 of the Form F-3/A in response
to the Staff’s comments.
9. We
note your disclosure incorporated by reference from the section entitled “The Holding
Foreign Companies Accountable Act” on page 2 of your December 31, 2023 Form 20-F. Please
enhance your disclosure to disclose that trading in your securities may be prohibited under
the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations
Act, 2023, and related regulations if the PCAOB determines that it cannot inspect or investigate
completely your auditor for a period of two consecutive years, and that as a result an