Correspondence 0001903596-23-000334 from LUDWIG ENTERPRISES, INC. (LUDG)
LUDWIG ENTERPRISES, INC.
Date: April 26, 2023 · CIK: 0001960262 · Accession: 0001903596-23-000334
AI Filing Summary & Sentiment
Referenced dates: March 14, 2023
Letter
Office of Industrial Applications and Services Division of Corporation Finance Securities and Exchange Commission Re: Ludwig Enterprises, Inc. Draft Registration Statement on Form S-1 Filed February 15, 2023 CIK No. 0001960262
Dear Ms. Lochhead:
This is in response to the letter of comment of the Staff dated March 14, 2023, relating to the captioned Registration Statement on Form S-1 of Ludwig Enterprises, Inc. (the “Company”). The comments of the Staff is addressed below, seriatim:
Draft Registration Statement on Form S-1 Submitted February 15, 2023
Prospectus Summary
Our Company, page 3
1. Please expand your disclosure here to explain what “inflammatory genetic markers” are and how your products use them. Please also provide a brief description of your “mRNA genomic methodology.”
Revisions to the subject disclosure that provide more specificity have been made, in response to such comment.
2. Please revise your disclosure to provide a brief description of your two products, the My RNA for Life Home Test Kits and the My RNA for Life Genetic Centric Supplements.
Revisions to the subject disclosure that describe the Company’s products have been made, in response to such comment.
3. The disclosure in the summary should be a balanced presentation of your business. Please balance the description of the opportunity you see for your business and your planned product launches for 2023 with equally prominent disclosure of the challenges you face and the risks and limitations that could harm your business or inhibit your strategic plans. For example, but without limitation, revise your disclosure to also discuss your history of recurring net losses, limited experience commercializing products and the fact that you have not yet established sales, marketing, large scale manufacturing or distribution capabilities.
Revisions to the subject disclosure to balance the disclosure have been made, in response to such comment. In addition, revisions have been made to discuss the Company’s history of recurring net losses, its limited experience commercializing products and its lack of established sales, marketing and distribution capabilities.
Risk Factors
If we fail to effectively manage our growth, our business will be harmed, page 7
4. We note your disclosure that as you continue preparing for your service and product candidates to enter the market, you "will begin to and will continue to slow [y]our hiring in the near future." Given that you anticipate using part of the proceeds from this offering for expenditures senior staff and support team personnel, please clarify here your plans for adding personnel in the near future.
Revisions to the subject disclosure to clarify the Company’s plans have been made, in response to such comment.
We are an emerging growth Company and a smaller reporting Company and intend to take advantage of reduced disclosure requirements, page
5. We note your disclosure here and on your cover page that you are an emerging growth company and your election on the cover page that you will use the extended transition period for complying with any new or revised financial accounting standards. Please revise your prospectus to provide more detail regarding your emerging growth company status, including the following:
• Provide a brief description of the various exemptions that are available to you, such as exemptions from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Securities Exchange Act of 1934;
• Disclose your election under Section 107(b) of the Act to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2)(B) of the Act; and
• Describe the risks resulting from this election, including that your financial statements may not be comparable to companies that comply with public company effective dates.
Revisions to the subject disclosure have been made, in response to such comment.
Our limited operating history makes it difficult for us to estimate correctly our future operating expenses and anticipated revenue sources, page 11
6. We note your statement: "The amount and sources of these revenues will depend on the success of the league, its teams, our marketing efforts, our ability to secure new sponsorships, our perception by fans, the general public, and other factors that are difficult to forecast accurately." Please revise to clarify how these factors on which your anticipated revenues will depend are related to your business.
Revisions to the subject disclosure that properly address the Company’s situation have been made, in response to such comment.
Risks Relating to Our Organization and Structure
Our common stock is thinly traded and experiences wide share price fluctuations, low share prices and minimal liquidity, page 22
7. We note that this risk factor as well as the two following risk factors under the headings, "Because this offering does not have a minimum offering amount, we may not raise enough funds to continue operations" and "Because this offering is a self-underwritten “best effort” basis offering, we may not raise enough capital to fund our business goals and/or objective" appear to be repeated in this section. Please revise to remove the duplicative risk factor disclosure.
The duplicative risk factors have been removed, in response to such comment.
Use of Proceeds, page 23
8. Please revise your use of proceeds to briefly describe the principal purposes for which the net proceeds are intended to be used. For example, please briefly outline your program for the addition of equipment, your marketing plans, your addition of senior staff and support team members and the expenses related to accounting and regulatory compliance. Please also define "company awareness" and briefly explain your plans related to this purpose. Additionally, with respect to the funds you intend to put towards your research and clinical trials, please provide further details with respect to what aspects of your research and clinical development you intend to support with these funds, including reference to how far into the research and development processes the proceeds will enable you to reach. If the anticipated proceeds will not be sufficient to fund all the proposed purposes, please ensure that the order of priority of such purposes is given, as well as the amount and sources of other funds needed. Refer to Item 504 of Regulation S-K.
Revisions to the subject disclosure that provide a narrative of the Company’s intended use of offering proceeds, including its intentions with respect to “company awareness” expenditures, have been made, in response to such comment.
Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations, Nine Months Ending September 30, 2022, compared to the Nine Months Ended September 30, 2021, page 28
9. Revise to provide a more detailed discussion about the individual line items in your statement of operations. For example, disclose the nature of general and administrative and research and development expenses incurred during the period. You should also include a discussion of material financing expenses, such as the gain on debt extinguishment recognized during the nine months ended September 30, 2022. Refer to Item 303 of Regulation S-X.
The disclosure has been revised to present information for the years ended December 31, 2022 and 2021, and to include revisions that respond to such comment.
Convertible Promissory Notes, page 29
10. We note your disclosure of the various convertible notes you have entered into as well as terms related to those notes. Please revise your disclosure to include all material terms of the notes including, restrictive covenants on the conduct of your business (if any), the interest rate, and any termination provisions. We also note that you state on page 46 that the notes issued to Homeopathic Partners, Inc. on February 7, 2021 and November 4, 2021 are in default. Please revise your disclosure to discuss any material default provisions related to your notes and the risks to your business from these notes specifically being in default. Additionally, revise your risk factor disclosure on page 18 as necessary to reflect any risks specific to these notes being in default.
Revisions to the subject disclosure have been made, to reflect the accurate status of each convertible note and to state the material terms of such convertible notes. Please be advised neither of the two identified convertible notes issued to Homeopathic Partners, Inc. were, and are not now, in default. The prior disclosure that indicated otherwise was included due to scrivener’s error.
Critical Accounting Policies, page 31
11. You indicate that your significant accounting policies are fully described in your financial statements, beginning on page F-1. As required by Item 303(b)(3) of Regulation S-X, provide qualitative and quantitative information necessary to understand the estimation uncertainty and the impact your critical accounting estimates has had or is reasonably likely to have on financial condition or results of operations to the extent the information is material and reasonably available.
Revisions to the subject disclosure have been made, in response to such comment.
Business
Background, page 31
12. We note that you were incorporated in 1988, but that your two operating subsidiaries were acquired only within the past year. Please revise your disclosure in the business section to describe the material developments of your business prior to these acquisitions. Refer to Item 101(h) of Regulation S-K.
Revisions to the subject disclosure have been made, in response to such comment.
Current Research Study, page 32
13. We note that in December 2022 you received IRB approval for your study. Please revise your disclosure to discuss the anticipated timeline for carrying out this study, including any additional regulatory approvals you may need prior to commencement or throughout the course of the study. Please also revise your discussion of the planned study, and any other planned research study, to specify the following information, to the extent known at this time:
• the number of participants in the study;
• the primary and secondary endpoints; and
• any statistical analysis to be performed.
Revisions to the subject disclosure have been made, in response to such comment.
My RNA for Life Genetic Centric Supplements, page 32
14. We note that your supplements “are made with specific ingredients that have anti-inflammatory properties that may be able to modulate a person’s previously measured inflammatory index or even potentially control further inflammatory reactions and continued disease development.” Please disclose the key ingredients that are in your supplements and discuss how you selected these ingredients and the basis of your belief that they could potentially control inflammatory reactions and disease development.
Revisions to the subject disclosure have been made, in response to such comment.
My RNA for Life Home Test Kits, page 32
15. We note that as part of your My RNA For Life program you plan to use AI to provide patient specific information, including to predict, identify and help to prevent inflammation. You state that “the combination of mRNA genetic expression and AI could, [you] believe, with a certain degree of accuracy, identify individuals with the potential to develop chronic inflammatory diseases, such as cancer and heart disease.” We also note that you intend to combine mRNA genes with AI “to generate a statistical score.” Please expand here or elsewhere in the Business Section, as appropriate, to explain in greater detail the AI that you utilize including whether it is a technology that you have developed internally and the mechanics of how the AI is applied to generate statistical scores.
Revisions to the subject disclosure have been made, in response to such comment.
Products, page 32
16. We note a press release on your website dated December 6,
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CORRESP
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filename1.htm
NEWLAN
LAW FIRM, PLLC
2201
Long Prairie Road, Suite 107-762
Flower
Mound, Texas 75022
April 26, 2023
Kristin
Lochhead
Office
of Industrial Applications and Services
Division
of Corporation Finance
Securities
and Exchange Commission
100
F Street, N.E.
Washington,
D.C. 20549
Re: Ludwig
Enterprises, Inc.
Draft
Registration Statement on Form S-1
Filed
February 15, 2023
CIK
No. 0001960262
Dear
Ms. Lochhead:
This
is in response to the letter of comment of the Staff dated March 14, 2023, relating to the captioned Registration Statement on Form S-1
of Ludwig Enterprises, Inc. (the “Company”). The comments of the Staff is addressed below, seriatim:
Draft
Registration Statement on Form S-1 Submitted February 15, 2023
Prospectus
Summary
Our
Company, page 3
1. Please
expand your disclosure here to explain what “inflammatory genetic markers” are
and how your products use them. Please also provide a brief description of your “mRNA
genomic methodology.”
Revisions
to the subject disclosure that provide more specificity have been made, in response to such comment.
2. Please
revise your disclosure to provide a brief description of your two products, the My RNA for
Life Home Test Kits and the My RNA for Life Genetic Centric Supplements.
Revisions
to the subject disclosure that describe the Company’s products have been made, in response to such comment.
3. The
disclosure in the summary should be a balanced presentation of your business. Please balance
the description of the opportunity you see for your business and your planned product launches
for 2023 with equally prominent disclosure of the challenges you face and the risks and limitations
that could harm your business or inhibit your strategic plans. For example, but without limitation,
revise your disclosure to also discuss your history of recurring net losses, limited experience
commercializing products and the fact that you have not yet established sales, marketing,
large scale manufacturing or distribution capabilities.
Revisions
to the subject disclosure to balance the disclosure have been made, in response to such comment. In addition, revisions have been made
to discuss the Company’s history of recurring net losses, its limited experience commercializing products and its lack of established
sales, marketing and distribution capabilities.
Risk
Factors
If
we fail to effectively manage our growth, our business will be harmed, page 7
4. We
note your disclosure that as you continue preparing for your service and product candidates
to enter the market, you "will begin to and will continue to slow [y]our hiring in the
near future." Given that you anticipate using part of the proceeds from this offering
for expenditures senior staff and support team personnel, please clarify here your plans
for adding personnel in the near future.
Revisions
to the subject disclosure to clarify the Company’s plans have been made, in response to such comment.
We
are an emerging growth Company and a smaller reporting Company and intend to take advantage of reduced disclosure requirements, page
11
5. We
note your disclosure here and on your cover page that you are an emerging growth company
and your election on the cover page that you will use the extended transition period for
complying with any new or revised financial accounting standards. Please revise your prospectus
to provide more detail regarding your emerging growth company status, including the following:
• Provide
a brief description of the various exemptions that are available to you, such as exemptions from Section 404(b) of the Sarbanes-Oxley
Act of 2002 and Section 14A(a) and (b) of the Securities Exchange Act of 1934;
• Disclose
your election under Section 107(b) of the Act to use the extended transition period for complying with new or revised accounting standards
under Section 102(b)(2)(B) of the Act; and
• Describe
the risks resulting from this election, including that your financial statements may not be comparable to companies that comply with
public company effective dates.
Revisions
to the subject disclosure have been made, in response to such comment.
Our
limited operating history makes it difficult for us to estimate correctly our future operating expenses and anticipated revenue sources,
page 11
6. We
note your statement: "The amount and sources of these revenues will depend on the success
of the league, its teams, our marketing efforts, our ability to secure new sponsorships,
our perception by fans, the general public, and other factors that are difficult to forecast
accurately." Please revise to clarify how these factors on which your anticipated revenues
will depend are related to your business.
Revisions
to the subject disclosure that properly address the Company’s situation have been made, in response to such comment.
Risks
Relating to Our Organization and Structure
Our
common stock is thinly traded and experiences wide share price fluctuations, low share prices and minimal liquidity, page 22
7. We
note that this risk factor as well as the two following risk factors under the headings,
"Because this offering does not have a minimum offering amount, we may not raise enough
funds to continue operations" and "Because this offering is a self-underwritten
“best effort” basis offering, we may not raise enough capital to fund our business
goals and/or objective" appear to be repeated in this section. Please revise to remove
the duplicative risk factor disclosure.
The
duplicative risk factors have been removed, in response to such comment.
Use
of Proceeds, page 23
8. Please
revise your use of proceeds to briefly describe the principal purposes for which the net
proceeds are intended to be used. For example, please briefly outline your program for the
addition of equipment, your marketing plans, your addition of senior staff and support team
members and the expenses related to accounting and regulatory compliance. Please also define
"company awareness" and briefly explain your plans related to this purpose. Additionally,
with respect to the funds you intend to put towards your research and clinical trials, please
provide further details with respect to what aspects of your research and clinical development
you intend to support with these funds, including reference to how far into the research
and development processes the proceeds will enable you to reach. If the anticipated proceeds
will not be sufficient to fund all the proposed purposes, please ensure that the order of
priority of such purposes is given, as well as the amount and sources of other funds needed.
Refer to Item 504 of Regulation S-K.
Revisions
to the subject disclosure that provide a narrative of the Company’s intended use of offering proceeds, including its intentions
with respect to “company awareness” expenditures, have been made, in response to such comment.
Management's
Discussion and Analysis of Financial Condition and Results of Operations Results of Operations, Nine Months Ending September 30, 2022,
compared to the Nine Months Ended September 30, 2021, page 28
9. Revise
to provide a more detailed discussion about the individual line items in your statement of
operations. For example, disclose the nature of general and administrative and research and
development expenses incurred during the period. You should also include a discussion of
material financing expenses, such as the gain on debt extinguishment recognized during the
nine months ended September 30, 2022. Refer to Item 303 of Regulation S-X.
The
disclosure has been revised to present information for the years ended December 31, 2022 and 2021, and to include revisions that respond
to such comment.
Convertible
Promissory Notes, page 29
10. We
note your disclosure of the various convertible notes you have entered into as well as terms
related to those notes. Please revise your disclosure to include all material terms of the
notes including, restrictive covenants on the conduct of your business (if any), the interest
rate, and any termination provisions. We also note that you state on page 46 that the notes
issued to Homeopathic Partners, Inc. on February 7, 2021 and November 4, 2021 are in default.
Please revise your disclosure to discuss any material default provisions related to your
notes and the risks to your business from these notes specifically being in default. Additionally,
revise your risk factor disclosure on page 18 as necessary to reflect any risks specific
to these notes being in default.
Revisions
to the subject disclosure have been made, to reflect the accurate status of each convertible note and to state the material terms of
such convertible notes. Please be advised neither of the two identified convertible notes issued to Homeopathic Partners, Inc. were,
and are not now, in default. The prior disclosure that indicated otherwise was included due to scrivener’s error.
Critical
Accounting Policies, page 31
11. You
indicate that your significant accounting policies are fully described in your financial
statements, beginning on page F-1. As required by Item 303(b)(3) of Regulation S-X, provide
qualitative and quantitative information necessary to understand the estimation uncertainty
and the impact your critical accounting estimates has had or is reasonably likely to have
on financial condition or results of operations to the extent the information is material
and reasonably available.
Revisions
to the subject disclosure have been made, in response to such comment.
Business
Background,
page 31
12. We
note that you were incorporated in 1988, but that your two operating subsidiaries were acquired
only within the past year. Please revise your disclosure in the business section to describe
the material developments of your business prior to these acquisitions. Refer to Item 101(h)
of Regulation S-K.
Revisions
to the subject disclosure have been made, in response to such comment.
Current
Research Study, page 32
13. We
note that in December 2022 you received IRB approval for your study. Please revise your disclosure
to discuss the anticipated timeline for carrying out this study, including any additional
regulatory approvals you may need prior to commencement or throughout the course of the study.
Please also revise your discussion of the planned study, and any other planned research study,
to specify the following information, to the extent known at this time:
• the
number of participants in the study;
• the
primary and secondary endpoints; and
• any
statistical analysis to be performed.
Revisions
to the subject disclosure have been made, in response to such comment.
My
RNA for Life Genetic Centric Supplements, page 32
14. We
note that your supplements “are made with specific ingredients that have anti-inflammatory
properties that may be able to modulate a person’s previously measured inflammatory
index or even potentially control further inflammatory reactions and continued disease development.”
Please disclose the key ingredients that are in your supplements and discuss how you selected
these ingredients and the basis of your belief that they could potentially control inflammatory
reactions and disease development.
Revisions
to the subject disclosure have been made, in response to such comment.
My
RNA for Life Home Test Kits, page 32
15. We
note that as part of your My RNA For Life program you plan to use AI to provide patient specific
information, including to predict, identify and help to prevent inflammation. You state that
“the combination of mRNA genetic expression
and AI could, [you] believe, with a certain degree of accuracy, identify individuals with the potential to develop chronic inflammatory
diseases, such as cancer and heart disease.” We also note that you intend to combine mRNA genes with AI “to generate a statistical
score.” Please expand here or elsewhere in the Business Section, as appropriate, to explain in greater detail the AI that you utilize
including whether it is a technology that you have developed internally and the mechanics of how the AI is applied to generate statistical
scores.
Revisions
to the subject disclosure have been made, in response to such comment.
Products,
page 32
16. We
note a press release on your website dated December 6,