SecProbe.io

United States securities and exchange commission logo
March 20, 2023
Qun Lu
Chief Executive Officer
CH AUTO Inc.
6F, Building C
Shunke Building
Shunyi District, Beijing 101200, China
Re:CH AUTO Inc.
Registration Statement on Form F-4
Filed March 3, 2023
File No. 333-270267
Dear Qun Lu:
            We have reviewed your 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 amending your registration statement and providing the
requested information.  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 any amendment to your registration statement and the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-4
Summary of the Proxy Statement/Prospectus, page 18
1.Please revise this section to prominently disclose that shares of common stock held by
certain stockholders are currently under equity pledge or judicial freezing and, if such
equity pledges are exercised or if the shares subject to judicial freezing are auctioned off,
the Holding Company may only control approximately 46% of the voting rights of the
company. Clearly disclose the reduction in interest could occur before or after the closing
of the business combination. Please also disclose the equity and economic interest that
will be held by the Holding Company if the equity pledges are exercised or auctioned off.
2.Please clearly disclose the number of shares in PubCo that will be issued if the equity

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pledges are exercised or auctioned off prior to the closing of the business combination.
3.We note your disclosure that you have 32,000 pre-sales order for K20 vehicles and you
expect to fulfill the non-binding orders in 16 months after receiving estimated proceeds of
$55 million to $155 million. Please clarify the number of pre-orders you expect to fulfill if
you raise the low end of your projected financing.
Going Concern, page 22
4.We note your revised disclosure that you expect to receive up to $33 million from the trust
account and also intend to raise between $55 million and $155 million post-business
combination. We also note your disclosure on page 118 that "[o]ver the forecast period
from 2023 to 2025, the Company estimates that it will require a total of US150 million in
capital expenditures to execute its growth strategy." It appears that multiple funding
scenarios generate insufficient funds to execute your business plan. Please revise to
discuss this potential shortfall and the company's plan if it is unable to raise an aggregate
of $150 million to execute its growth strategy.
Interest of Financial Advisors and Due Diligence Consultant in the Business Combination, page
36
5.We note your disclosures appear to indicate that convertible debts for which the Company
received total proceeds of $8.9 million can be converted into 23.8 million shares of stock.
Please more fully explain the conversion terms based on the implied fair value of the
related shares.  Please also explain how the convertible debts will be accounted for and
tell us your consideration for reflecting them in the pro forma financial statements.
Summary of the Proxy Statement/Prospectus
IPO Underwriting Agreement, page 36
6.Based on the numbers of shares assumed to be redeemed under the Interim and Maximum
Redemption scenarios, it is not clear how you determined the amount of IPO proceeds
remaining in the Trust Account under each scenario or how these amounts reconcile to the
Trust Account balances, after the assumed redemptions, reflected in the pro forma
financial statements.  Please revise the amounts and related effective underwriting fee
percentages presented in the table or disclose how you determined the amounts currently
presented and explain you believe they are appropriate.
Background of the Business Combination, page 112
7.Please update your disclosure to discuss (i) the outcome of the
reorganization negotiations with the company's existing shareholders, (ii) material PIPE
financing developments and (iii) the NextG Tech convertible debt. Additionally, please
file the convertible loan agreement as an exhibit or tell us why you are not required to do
so.

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Proposal Four: The NTA Requirement Amendment Proposal, page 132
8.We note that you are now asking MCAF stockholders to adopt amendments to the existing
charter that would allow MCAF to consummate the business combination even if MCAF
has less than $5,000,001 in net tangible assets. Explain why you are asking stockholders
to vote on this proposal now, as opposed to at an earlier time. Additionally, provide a
discussion of the related risks for investors and the post-business combination company
here and in the risk factors section. Please also include a Q&A on the NTA Requirement
Amendment Proposal.
Management's Discussion and Analysis of Financial Condition and Results of Operations of the
Company
Liquidity and Capital Resources, page 181
9.Refer to the second full paragraph on page 183, specifically the last sentence that begins
"Our third-party independent auditor also issued auditor opinion as to...prepared assuming
that we would continue as a going concern".  We note your revisions in response to prior
comment 4; however, we note no revisions to this sentence which appears to contradict
the first sentence of the paragraph that states your auditors' included an explanatory
paragraph expressing substantial doubt about your ability to continue as a going concern
in their report.

Management's Discussion and Analysis of Financial Condition and Results of Operations of
MCAF, page 190
10.We have reviewed your response to prior comment 7.  Please revise MD&A to provide
the previously requested disclosure to quantify the cash redemptions of $24.5 million that
occurred on December 21, 2022.  Please also revise the disclosures on pages F-84 and F-
103 to quantify the cash redemptions.

Unaudited Pro Forma Condensed Combined Financial Statements, page 195
11.We have reviewed your response to prior comment 11 and the revisions to the filing,
including the disclosures on page 196 that upon the Reorganization Closing, the Holding
Company will (1) have the ability to direct, directly or indirectly, at least 71.2184% of the
voting rights of all outstanding equity securities of the Company entitled to vote, (2) own,
directly or indirectly, at least 71.2184% of the economic rights of all the outstanding
equity securities in the Company, and (3) own, directly or indirectly at least 37.8426% of
the then-issued and outstanding equity interests in the Company.  Please more fully
address the following:
•Since the Reorganization has not yet been completed, explain the full range of
possible results, including how you determined the pro forma financial statements
appropriately reflect the range of possible results as required by Rule 11-02(a)(10) of

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Regulation S-X.
•Explain the reason for the difference between the percentages related to the voting
rights and economic rights relative to the percentage related to the outstanding equity
interests.
•Explain whether the remaining 28.7816% equity interest that will continued to be
held by existing shareholders who chose not to participate in the Reorganization
could change.  If the percentage interest could change, explain how you determined
potential changes in the non-controlling interest are not required to be presented and
disclosed and discussed in the pro forma financial statements.
•Clarify the reasons for and the impact of the agreement with the DSO Stockholders,
including who they will transfer up to 25% of the stock of the Company held by
them.
•Explain the disclosure on page 89 regarding your ability to consolidate the Company,
including how you determined the pro forma financial statements appropriately
reflect the range of possible results as required by Rule 11-02(a)(10) of Regulation S-
X.
•In regard to the 1,250,000 advisor shares to be issued to BHTIC for services provided
to MCAF, it remains unclear where or how the fair value of the shares ($10 per share)
is recorded in the pro forma financial statements as such amount appears to represent
a transaction fee that may be required to be expensed.
•In regard to the 2,500,000 advisor shares to be issued to CBC and Revere for services
provided to the Company, due to the fact that the shares are required to be issued if
the Business Combination is successfully and do not appear to be conditioned on
additional financing being obtained and the fact that the fair value of the shares ($10
per share) to be issued appears to exceed the amount of cash proceeds that would be
obtained under the 50% and Maximum Redemption scenarios, it is not clear where or
how the excess fair value of the shares is recorded in the pro forma financial
statements as such amount appears to represent transaction fees that may be required
to be expensed.
12.Refer to page 197.  Please more fully explain how you determined the maximum number
of shares that can be redeemed under the Maximum Redemption scenario, including any
related assumptions.  If accurate, please disclose if actual redemptions exceed the
maximum amount presented the business combination will not occur.  If that is not
accurate, please more fully explain how you determined the Maximum Redemption
scenario presented is appropriate and the pro forma financial statements appropriately
reflect the range of possible results as required by Rule 11-02(a)(10) of Regulation S-X.
In this regard, we also note the filing now also includes a proposal to amend the tangible
net asset requirement; however, it is not clear what would or could occur if the proposal is
not approved or how the approval or lack of approval of the proposal is appropriately
reflected in the range of possible results required to be presented in the pro forma financial
statements.  For example, if the proposal to amend the tangible net asset requirement is
not approved and actual redemptions result in MCAF not meeting the tangible net asset

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requirement, it is not clear what would or could occur in regard to the business
combination.  Please more fully explain to us how you determined the pro forma financial
statements comply with Rule 11-02(a)(10) of Regulation S-X.
Notes to Unaudited Pro Forma Combined Financial Statements
Note 3. Transaction Accounting Adjustments to the Unaudited Pro Forma Combined Balance
Sheet as of June 30, 2022, page 204
13.Refer to adjustment (5) on page 205.  In the second paragraph, please identify or clarify if
the current reference to CN AUTO should be CH AUTO.  Please also revise the last
sentence of the note to clarify that MCAF’s estimated transaction costs are actually
included in the unaudited pro forma condensed combined statement of operations for the
year ended December 31, 2021.

Note 4. Transaction Accounting Adjustments to the Unaudited Pro Forma Combined Statements
of Operations, page 206
14.Refer to adjustment (12).  Please expand to disclose how amounts are calculated and
explain that they represent the 28.7816% non-controlling interest referred to in adjustment
(8).  Also, please revise pages 201 and 202 to correct the reference for the respective non-
controlling interest net loss amounts to adjustment (12), rather than adjustment (11), as
currently shown.

Exhibits
15.Refer to Part II and the Exhibit listings 23.1 and 23.2 related to the consents of Marcum
Asia CPAs LLP for CH-AUTO Technology Corporation Ltd. and CH AUTO Inc. We
note a dual consent for both companies is included in Exhibit 23.1.  Please address the
following:
•Revise the first paragraph of Exhibit 23.1 to clarify the auditor consents to the
inclusion in this Registration Statement of CH AUTO INC. on Form F-4 of its report
dated August 12, 2022, except for the consolidated statements of operations and
comprehensive loss, and Notes 5 and 12, as to which the date is December 30, 2022,
with respect to their audits of the consolidated financial statements of CH-AUTO
Technology Corporation Ltd. as of December 31, 2021 and 2020, the related
consolidated statements of operations and comprehensive loss, changes in
shareholders’ equity and cash flows for the years ended December 31, 2021 and
2020, which report appears in the Prospectus, which is part of this Registration
Statement.
•Revise the second paragraph of Exhibit 23.1 to clarify the reference to the audit
report dated August 12, 2022, is with respect to the audits of the consolidated
financial statements of CH AUTO Inc., as of April 30, 2022, the related consolidated
statements of operations and comprehensive loss, changes in deficit and cash flows

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for the period from January 25, 2022 through April 30, 2022, which report appears in
the Prospectus, which is part of this Registration Statement.

16.We note that assumption 5 of Exhibit 5.1 assumes that no steps to wind-up the company
have occurred. It is inappropriate for counsel to include in its opinion assumptions that are
overly broad, that assume away the relevant issue or that assume any of the material facts
underlying the opinion or any readily ascertainable facts, including that the company is
not in bankruptcy. Please ask counsel to support this assumption. Refer to Section II.B.3.a
of Staff Legal Bulletin No. 19.
17.Please file the Voting Rights Proxy Agreement and Economic Rights Transfer Agreement
as exhibit to your registration statement.  Please revise your disclosure to address any risks
related to these agreements.
General
18.We note your disclosure that upon the Reorganization closing the Holding Company will
(1) have the ability to direct, directly or indirectly, at least 71.2184% of the voting rights
of all outstanding equity securities of the Company entitled to vote, (2) own at least
71.2184% of the economic rights of all the outstanding equity securities in the Company
and (3) own, directly or indirectly own at least 37.8426% of the then-issued and
outstanding equity interests in the Company. We also note your disclosure that if the
equity pledges are exercised or if the shares subject to judicial freezing are later auctioned
off prior to the closing of the Business Combination, the Holding Company may only
have ability to direct, directly or indirectly, as little as 46.2701% of the voting rights of all
outstanding equity securities of the Company entitled to vote.  Please also disclose the
percentage of the economic interest and equity interest that the Holding Company will
own.  Please include more prominent disclosure that the Holding Company may receive a
reduced interest if the pledge shares are exercised or subject to judicial freezing.
19.Please disclose whether the board believes the determination that the fair market value of
target continues to remain above 80% of the assets held in the trust account in light of
your disclosure that the Holding Company may only have ability to direct, directly or
indirectly, as little as 46.27% of the voting rights of all outstanding equity securities of the
Company entitled to vote.
20.We note your disclosure on page