Correspondence 0001213900-23-075503 from Mega Matrix Inc (MPU)
Mega Matrix Inc
Date: Sept. 8, 2023 · CIK: 0001953021 · Accession: 0001213900-23-075503
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-271349
Referenced dates: May 24, 2023
Letter
Via EDGAR Division of Corporation Finance Office of Crypto Assets Re: MarsProtocol Inc. Registration Statement on Form F-4 Filed April 20, 2023 File No. 333-271349
Dear Sir/Madam:
On behalf of MarsProtocol Inc. (the “Company”), we are responding to the Staff’s comment letter dated May 24, 2023, related to the above referenced Registration Statement on Form F-4.
For ease of reference, we have copied the Staff’s comments in italics as indicated below with the Company’s responses.
Registration Statement on Form F-4 filed April 20, 2023
General
1. We note you checked the box that you qualify as an “emerging growth company” (EGC) under the JOBS Act. Please revise your next amendment to disclose the following under Section 107(b) of the JOBS Act:
● How and when you may lose EGC status;
● The exemptions that are available to EGCs, including those related to auditor attestation on the effectiveness of Internal Controls over Financial Reporting (ICFR) under Section 404(b) of Regulation S-K;
● If you have elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b), include a statement that the election is irrevocable; or
● If you have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1), provide a risk factor explaining that this election allows you to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. Please state in your risk factor that, as a result of this election, your financial statements may not be comparable to companies that comply with public company effective dates. Include a similar statement in your critical accounting policy disclosures.
ARIZONA ● CALIFORNIA ● COLORADO ● CONNECTICUT ● DELAWARE ● FLORIDA ● GEORGIA ● ILLINOIS ● INDIANA ● KANSAS
● KENTUCKY ● LOUISIANA MARYLAND ● MASSACHUSETTS ● MINNESOTA ● MISSISSIPPI ● MISSOURI ● NEVADA ● NEW JERSEY
● NEW MEXICO ● NEW YORK ● NORTH CAROLINA OHIO ● OREGON ● PENNSYLVANIA ● RHODE ISLAND ● TENNESSEE ● TEXAS
● UTAH ● VIRGINIA ● WASHINGTON ● WASHINGTON D.C. ● WEST VIRGINIA
September 8, 2023
Page 2
RESPONSE: In response to the Staff’s comments, we have updated the disclosures on the cover and pages vii, viii, and 11 to disclose the following under Section 107(b) of the JOBS Act:
● How and when you may lose EGC status;
● The exemptions that are available to EGCs, including those related to auditor attestation on the effectiveness of Internal Controls over Financial Reporting (ICFR) under Section 404(b) of Regulation S-K;
● If you have elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b), include a statement that the election is irrevocable; or
● If you have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1), provide a risk factor explaining that this election allows you to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. Please state in your risk factor that, as a result of this election, your financial statements may not be comparable to companies that comply with public company effective dates. Include a similar statement in your critical accounting policy disclosures.
2. Based on disclosures throughout the document, it appears you sold all aircraft associated with the leasing business and no longer operate a leasing business subsequent to your emergence from bankruptcy. However, based on disclosures in your financial statements and the related footnotes, it appears you still operate a leasing business that generated $120,000 in operating lease revenue and $1,478,800 in other income in 2022 and had assets of $1,431,700 at December 31, 2022. Please tell us, and revise your next amendment as appropriate, to discuss your ongoing leasing business, including your future plans for this business and any other pertinent information for potential investors. To the extent that you no longer pursue individual aspects of your aircraft leasing business, revise your disclosure throughout your filing to the past tense. As a single example, as you no longer appear to hold aircraft on your balance sheet, revise your aircraft capitalization and depreciation policy disclosure on page F-13 to indicate that aircraft and aircraft engines were recorded at cost.
RESPONSE: In response to the Staff’s comment, we clarified that after emergence from bankruptcy, we still maintained an interest in the aircraft leasing business, and the underlying aircrafts were leased from third parties. However, on August 25, 2023, per the recommendation of JetFleet’s board of directors, the Company, as a holder of a majority of the voting stock of JetFleet, elected to approve the winding up and dissolution of JetFleet. As part of the winding up process, JetFleet will cease providing aircraft advisory and management services. See pages 1 and 2.
The other income of $1.5 million resulted from waive of other current liabilities which became non-payable as of December 31, 2022. The assets of $1.4 million were primarily comprised of cash of $0.3 million and tax receivable of $1.1 million, which was subsequently collected from tax authorities in the three months ended March 31, 2023.
LEWIS BRISBOIS BISGAARD & SMITH LLP
www.lewisbrisbois.com
September 8, 2023
Page 3
3. Provide disclosure of any significant crypto asset market developments material to understanding or assessing your business, financial condition and results of operations, or share price, including any material impact from the price volatility of crypto assets.
RESPONSE: In response to the Staff’s comment, we included a heading called “Our Market and Industry.” Please note that the Company has ceased providing non-custodial staking tools to third parties and is only conducting solo-staking. See pages 1, 2, 28, and 42.
4. We note your disclosure that you accept crypto assets as a form of payment, as well as your disclosure that you hold crypto assets. Please revise to specifically identify the crypto assets that you hold and accept as payment, as well as those for which you have plans to hold and accept as payment. In addition, please identify any and all crypto asset services that you offer and intend to offer for each crypto asset. Consider using a table or chart to list these various crypto assets and corresponding services, as applicable.
RESPONSE: We respectfully advise that the Company does not have any customers as it is currently focusing on its solo-staking operations. As such the Company no longer accept accepts Bitcoin, ETH, USDT, or USDC from its customers, if any, or as a form of payment for its airline leasing business or any other services. See page 19.
5. We note your disclosure that, “the stable coins of $3.1 million and crypto assets of $0.4 million” that you held at December 31, 2022 were “highly liquid.” Please explain what you mean by this or remove this term.
RESPONSE: We respectfully advise that the term “highly liquid” indicates that the Company has the ability to convert stablecoins and certain crypto assets, including ETH, into fiat currency promptly through its cooperated custodian, Matrix Trust Company Limited (“Matrixport”) at any time. We have deleted the term “highly liquid”. See page 26.
6. Please describe the terms and provisions of your insurance policies, including insurance policies covering the crypto assets that you hold, and also including, the amount of coverage, term, termination provisions, renewal options and limitations on coverage. To the extent there are none, please revise your disclosure to so clarify and expand your risk factor disclosure as appropriate.
RESPONSE: We respectfully advise that the Company does not carry any insurance policies covering its holding of crypto assets. We have updated the risk factor on page 19 to clarify that we do not carry any insurance..
7. Under an appropriately captioned heading, please revise your disclosure to include details regarding your custodial practices for crypto assets, including the items below:
● briefly discuss what portion of the crypto assets are held in hot wallets and cold wallets;
LEWIS BRISBOIS BISGAARD & SMITH LLP
www.lewisbrisbois.com
September 8, 2023
Page 4
● disclose the geographic location where the crypto assets are held in cold wallets and how the private keys are located;
● identify any custodians you use and discuss the material terms of any agreements you have with them;
● identify the person(s) that have access to the crypto assets and whether any persons (e.g., auditors, etc.) are responsible for verifying the existence thereof;
● describe the terms and provisions of your insurance policies, if any, covering your crypto assets and clarify whether any insurance providers have inspection rights. To the extent there are no such policies, please revise your disclosure to so clarify and expand your risk factor disclosure as appropriate; and
● identify the person(s) that have the authority to release the crypto assets from your wallets.
RESPONSE: In response to the Staff’s comment, we included a heading called “Custodial Practices” disclosing the Company’s custodial practices for crypto assets. See page 42.
Cover Page
8. Please revise your cover page to indicate where your common stock is listed, its trading symbol, and its trading price as of the most recent practicable date.
RESPONSE: We respectfully advise the Staff that MPU Cayman’s common stock is currently not traded and we have updated the disclosure on the cover page to clarify that it will apply for listing on the NYSE American under the symbol “MPU.”
Questions and Answers, page iii
9. Please include in this section a Question and Answer that includes a discussion of the percentage of outstanding voting control that related parties hold. Also include a discussion of any agreements to vote shares to approve and adopt the Merger Agreement. If there are no such agreements, please so state.
RESPONSE: We respectfully advise Staff that we have updated Question and Answer, page v, to include a discussion of the percentage of outstanding voting control that related parties hold and if there are any voting agreements in place.
Summary, page 1
10. Please include in this section an organizational chart that identifies all of the entities in your business both before and after the Redomicile Merger. The chart(s) should indicate the percentage of economic interests and voting interests relevant parties have in each entit
Show Raw Text
CORRESP
1
filename1.htm
John
P. Yung
2020
West El Camino Avenue, Suite 700
Sacramento,
California 95833
John.Yung@lewisbrisbois.com
Direct:
916.646.8288
September
8, 2023
Via
EDGAR
U.S. Securities
and Exchange Commission
Division of
Corporation Finance
Office of Crypto
Assets
100 F Street
NE
Washington,
DC 20549
Re: MarsProtocol
Inc.
Registration
Statement on Form F-4
Filed
April 20, 2023
File
No. 333-271349
Dear
Sir/Madam:
On
behalf of MarsProtocol Inc. (the “Company”), we are responding to the Staff’s comment letter dated May 24, 2023, related
to the above referenced Registration Statement on Form F-4.
For
ease of reference, we have copied the Staff’s comments in italics as indicated below with the Company’s responses.
Registration
Statement on Form F-4 filed April 20, 2023
General
1. We
note you checked the box that you qualify as an “emerging growth company” (EGC)
under the JOBS Act. Please revise your next amendment to disclose the following under Section
107(b) of the JOBS Act:
● How
and when you may lose EGC status;
● The
exemptions that are available to EGCs, including those related to auditor attestation on
the effectiveness of Internal Controls over Financial Reporting (ICFR) under Section 404(b)
of Regulation S-K;
● If
you have elected to opt out of the extended transition period for complying with new
or revised accounting standards pursuant to Section 107(b), include a statement that
the election is irrevocable; or
● If
you have elected to use the extended transition period for complying with new or revised
accounting standards under Section 102(b)(1), provide a risk factor explaining that this
election allows you to delay the adoption of new or revised accounting standards that have
different effective dates for public and private companies until those standards apply to
private companies. Please state in your risk factor that, as a result of this election, your
financial statements may not be comparable to companies that comply with public company effective
dates. Include a similar statement in your critical accounting policy disclosures.
ARIZONA ● CALIFORNIA ● COLORADO ● CONNECTICUT ● DELAWARE ● FLORIDA ● GEORGIA ● ILLINOIS ● INDIANA ● KANSAS
● KENTUCKY ● LOUISIANA MARYLAND ● MASSACHUSETTS ● MINNESOTA ● MISSISSIPPI ● MISSOURI ● NEVADA ● NEW JERSEY
● NEW MEXICO ● NEW YORK ● NORTH CAROLINA OHIO ● OREGON ● PENNSYLVANIA ● RHODE ISLAND ● TENNESSEE ● TEXAS
● UTAH ● VIRGINIA ● WASHINGTON ● WASHINGTON
D.C. ● WEST VIRGINIA
September 8, 2023
Page 2
RESPONSE: In
response to the Staff’s comments, we have updated the disclosures on the cover and
pages vii, viii, and 11 to disclose the following under Section 107(b) of the JOBS Act:
● How
and when you may lose EGC status;
● The
exemptions that are available to EGCs, including those related to auditor attestation on
the effectiveness of Internal Controls over Financial Reporting (ICFR) under Section 404(b)
of Regulation S-K;
● If
you have elected to opt out of the extended transition period for complying with new or revised
accounting standards pursuant to Section 107(b), include a statement that the election is
irrevocable; or
● If
you have elected to use the extended transition period for complying with new or revised
accounting standards under Section 102(b)(1), provide a risk factor explaining that this
election allows you to delay the adoption of new or revised accounting standards that have
different effective dates for public and private companies until those standards apply to
private companies. Please state in your risk factor that, as a result of this election, your
financial statements may not be comparable to companies that comply with public company effective
dates. Include a similar statement in your critical accounting policy disclosures.
2. Based
on disclosures throughout the document, it appears you sold all aircraft associated with
the leasing business and no longer operate a leasing business subsequent to your emergence
from bankruptcy. However, based on disclosures in your financial statements and the related
footnotes, it appears you still operate a leasing business that generated $120,000 in operating
lease revenue and $1,478,800 in other income in 2022 and had assets of $1,431,700 at December
31, 2022. Please tell us, and revise your next amendment as appropriate, to discuss your
ongoing leasing business, including your future plans for this business and any other pertinent
information for potential investors. To the extent that you no longer pursue individual aspects
of your aircraft leasing business, revise your disclosure throughout your filing to the past
tense. As a single example, as you no longer appear to hold aircraft on your balance sheet,
revise your aircraft capitalization and depreciation policy disclosure on page F-13 to indicate
that aircraft and aircraft engines were recorded at cost.
RESPONSE: In
response to the Staff’s comment, we clarified that after emergence from bankruptcy,
we still maintained an interest in the aircraft leasing business, and the underlying aircrafts
were leased from third parties. However, on August 25, 2023, per the recommendation of JetFleet’s
board of directors, the Company, as a holder of a majority of the voting stock of JetFleet,
elected to approve the winding up and dissolution of JetFleet. As part of the winding up
process, JetFleet will cease providing aircraft advisory and management services. See
pages 1 and 2.
The other income of
$1.5 million resulted from waive of other current liabilities which became non-payable as of December 31, 2022. The assets of $1.4 million
were primarily comprised of cash of $0.3 million and tax receivable of $1.1 million, which was subsequently collected from tax authorities
in the three months ended March 31, 2023.
LEWIS BRISBOIS BISGAARD & SMITH LLP
www.lewisbrisbois.com
September 8, 2023
Page 3
3. Provide
disclosure of any significant crypto asset market developments material to understanding
or assessing your business, financial condition and results of operations, or share price,
including any material impact from the price volatility of crypto assets.
RESPONSE: In
response to the Staff’s comment, we included a heading called “Our Market and
Industry.” Please note that the Company has ceased providing non-custodial staking
tools to third parties and is only conducting solo-staking. See pages 1, 2, 28, and 42.
4. We
note your disclosure that you accept crypto assets as a form of payment, as well as your
disclosure that you hold crypto assets. Please revise to specifically identify the crypto
assets that you hold and accept as payment, as well as those for which you have plans to
hold and accept as payment. In addition, please identify any and all crypto asset services
that you offer and intend to offer for each crypto asset. Consider using a table or chart
to list these various crypto assets and corresponding services, as applicable.
RESPONSE:
We respectfully advise that the Company does not have any customers as it is currently focusing on its solo-staking operations. As such the Company no longer accept accepts Bitcoin, ETH, USDT, or USDC from its customers, if any, or as a form of payment for its airline leasing business or any other services. See page 19.
5. We
note your disclosure that, “the stable coins of $3.1 million and crypto assets of $0.4
million” that you held at December 31, 2022 were “highly liquid.” Please
explain what you mean by this or remove this term.
RESPONSE:
We respectfully advise that the term “highly liquid” indicates that the Company has the ability to convert stablecoins and certain crypto assets, including ETH, into fiat currency promptly through its cooperated custodian, Matrix Trust Company Limited (“Matrixport”) at any time. We have deleted the term “highly liquid”. See page 26.
6. Please
describe the terms and provisions of your insurance policies, including insurance policies
covering the crypto assets that you hold, and also including, the amount of coverage, term,
termination provisions, renewal options and limitations on coverage. To the extent there
are none, please revise your disclosure to so clarify and expand your risk factor disclosure
as appropriate.
RESPONSE: We
respectfully advise that the Company does not carry any insurance policies covering its holding
of crypto assets. We have updated the risk factor on page 19 to clarify that we do not carry
any insurance..
7. Under
an appropriately captioned heading, please revise your disclosure to include details regarding
your custodial practices for crypto assets, including the items below:
● briefly
discuss what portion of the crypto assets are held in hot wallets and cold wallets;
LEWIS BRISBOIS BISGAARD & SMITH LLP
www.lewisbrisbois.com
September 8, 2023
Page 4
● disclose
the geographic location where the crypto assets are held in cold wallets and how the private
keys are located;
● identify
any custodians you use and discuss the material terms of any agreements you have with them;
● identify
the person(s) that have access to the crypto assets and whether any persons (e.g., auditors,
etc.) are responsible for verifying the existence thereof;
● describe
the terms and provisions of your insurance policies, if any, covering your crypto assets
and clarify whether any insurance providers have inspection rights. To the extent there are
no such policies, please revise your disclosure to so clarify and expand your risk factor
disclosure as appropriate; and
● identify
the person(s) that have the authority to release the crypto assets from your wallets.
RESPONSE:
In
response to the Staff’s comment, we included a heading called “Custodial Practices” disclosing the Company’s
custodial practices for crypto assets. See page 42.
Cover
Page
8. Please
revise your cover page to indicate where your common stock is listed, its trading symbol,
and its trading price as of the most recent practicable date.
RESPONSE: We
respectfully advise the Staff that MPU Cayman’s common stock is currently not traded
and we have updated the disclosure on the cover page to clarify that it will apply for listing
on the NYSE American under the symbol “MPU.”
Questions
and Answers, page iii
9. Please
include in this section a Question and Answer that includes a discussion of the percentage
of outstanding voting control that related parties hold. Also include a discussion of any
agreements to vote shares to approve and adopt the Merger Agreement. If there are no such
agreements, please so state.
RESPONSE: We
respectfully advise Staff that we have updated Question and Answer, page v, to include a discussion
of the percentage of outstanding voting control that related parties hold and if there are
any voting agreements in place.
Summary,
page 1
10. Please
include in this section an organizational chart that identifies all of the entities in your
business both before and after the Redomicile Merger. The chart(s) should indicate the percentage
of economic interests and voting interests relevant parties have in each entit