Correspondence 0001929980-24-000028 from Helport AI Ltd (HPAI)
Helport AI Ltd
Date: Feb. 7, 2024 · CIK: 0002001699 · Accession: 0001929980-24-000028
AI Filing Summary & Sentiment
Reasoning
Letter
tris_corresp.htmHelport AI Limited
9 Temasek Boulevard #07-00, Suntec Tower Two
Singapore 038989
VIA EDGAR
February 7, 2024
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Technology
Washington, D.C. 20549
Attention:
Dave Edgar
Kathleen Collins
Austin Pattan
Jeff Kauten
Re:
Helport AI Limited
Draft Registration Statement on Form F-4
Submitted December 22, 2023
CIK No. 0002001699
Ladies and Gentleman:
Helport AI Limited (the “Company”, “Helport” or “we”) hereby transmits its response to the comment letter received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) on January 18, 2024 relating to the Draft Registration Statement on Form F-4, filed by the Company with the Commission on December 22, 2023.
For the Staff’s convenience, we have repeated below the Staff’s comment in bold and have followed each comment with the Company’s response. Disclosure changes made in response to the Staff’s comments have been made in the Registration Statement on Form F-4 (the “Registration Statement”) which is being filed to the Commission contemporaneously with the submission of this letter.
Draft Registration Statement on Form F-4
Defined Terms, page 11
1.
Please revise to define the terms of, and parties to, the Helport Reorganization as well as the Reorganization Documents, which you reference throughout the filing. Tell us what role, if any, Helport Limited has in the reorganization and why you provided financial statements for this entity and not the registrant, Helport AI Limited. In addition, clarify whether the Reorganization was completed by the December 31, 2023 deadline or revise to discuss any additional extensions.
Response: In response to the Staff’s comment, we revised the disclosures on pages 13, 15, 17, 18, and 105, to define the terms of, and parties to, the Helport Reorganization (the “Reorganization”) and the Reorganization Documents, including explaining the role of Helport Limited in the Reorganization. We have also revised the disclosures on these pages to clarify that the Reorganization was completed on December 22, 2023. Upon consummation of the Reorganization, Helport Limited, through Helport Group Limited, acquired 100% of the equity interest of Helport Pte. Ltd., and thus Helport Pte. Ltd. became a wholly owned subsidiary of Helport Limited. Immediately before and after the Reorganization, Helport Limited together with its subsidiaries were effectively under common control. As a result, we provided financial statements for Helport Limited, instead of for the registrant, Helport AI Limited, which is only a shell company and is not part of the Helport Group prior to the closing of the Business Combination.
Questions and Answers
What interests do Tristar's Sponsor, executive officers and directors have in the business combination, page 32
2.
Please highlight the risk that the sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders rather than liquidate. Include corresponding disclosure in your risk factors.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 32 and page 34 of the Registration Statement to include the requested information.
What vote is required to approve the proposals presented at the Meeting, page 34
3.
We note that the Initial Shareholders and Current Insiders have agreed to vote in favor of the business combination and related proposals. Please revise your discussion to highlight the vote of the unaffiliated shareholders needed to approve the business combination.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 34, page 49, page 61, page 98, page 140, page 142, page 143, page 145, page 148, page 149, page 150 and page 151 of the Registration Statement to include the requested information.
Summary of the Proxy Statement/Prospectus
Tristar Initial Shareholders and Current Insiders, page 47
4.
We note that the holders of the Founder Shares have waived their redemption rights. Please describe any consideration provided in exchange for this agreement.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 47 of the Registration Statement to include the requested information.
Risk Factors
Risks Related to the Business Combination of Tristar
Since the Sponsor and Tristar’s directors and officers..., page 61
5.
Please clarify how the board considered the conflicts described in this risk factor in negotiating and recommending the business combination.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 62 of the Registration Statement to include the requested information.
Tristar's shareholders will experience immediate dilution..., page 70
6.
We note that the future issuance of securities by the combined company may dilute the economic and voting rights and reduce the market price of Pubco ordinary shares. Please expand this risk factor to highlight the impact that additional redemptions may have on your ability to fund the surviving company, including the likelihood that you will be unable to raise additional capital on favorable terms, if at all. Discuss the downward pressure potential sales of securities following the business combination or any future capital raising transactions may have on the trading price of the combined entity.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 70 of the Registration Statement to include the requested information.
Risks Related to Our Securities Following the Business Combination and Helport Operating as a Public Company
If Helport or Pubco fails to implement and maintain an effective system of internal controls or remediate the material weaknesses..., page 91
7.
Please revise to disclose when you expect to fully remediate the material weaknesses in your internal controls over financial reporting and any material costs you expect to incur as part of your remediation plan.
Response: In response to the Staff’s comment, we have revised the disclosure on page 91 to disclose that we expect to fully remediate our material weaknesses in our internal controls over financial reporting before we cease to be an “emerging growth company”, and to describe the measures we intend to take to implement the remediation plan. However, at this stage, we are unable to quantify any particular material costs associated with implementing the remediation plan.
The Business Combination Proposal Earnout, page 104
8.
We note your disclosure regarding the terms of the earnout as set forth in the business combination agreement. Please revise to clarify that the earnout and related escrow were removed in connection with the First Amendment to the Business Combination Agreement consistent with your disclosure on page 108.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 104 of the Registration Statement to include the requested information.
Background of the Business Combination, page 110
9.
We note your statement that “On September 30, 2023, Tristar received the first version of ValueScope’s fairness opinion.” Please tell us whether the board considered multiple sets of projections, and if so, disclose how the projections referred to in the registration statement were selected. If the board considered a draft of the projections, disclose the material differences between the draft projections and final projections and why such changes were necessary.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 119 of the Registration Statement to include the requested information.
Recommendation of the Board and Reasons for the Business Combination, page 120
10.
We note your statement that the board's decision to recommend the transaction considered a number of factors “including, but not limited to, the following material factors.” Please revise to include, without qualification, the full list of material factors considered by the board when determining whether to recommend the business combination.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 121 of the Registration Statement to include the requested information.
Summary of Opinion of ValueScope, Inc. as Financial Advisor to Tristar, page 123
11.
Please tell us whether ValueScope relied upon any projections or forward-looking financial information when rendering its fairness opinion.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 123 of the Registration Statement to include the requested information.
Unaudited Pro Forma Condensed Combined Financial Statements Basis of Pro Forma Presentation, page 152
12.
You state that the historical financial statements have been adjusted to give pro forma effect to events that are directly attributable, factually supportable and expected to have a continuing impact on the result of the combined company. Please revise your disclosure to fully comply with the updated guidance in Article 11-02 of Regulation S-X and remove any references to the legacy pro forma guidance. In doing so, confirm that your pro forma financial statements include all necessary transaction accounting adjustments, including those that are not expected to have a continuing impact. Refer also to SEC Release No. 33-10786.
Response: In response to the Staff’s comment, we have revised the disclosures on page 152 to fully comply with the updated guidance in Article 11-02 of Regulation S-X, to ensure that our pro forma financial statements include all necessary transaction accounting adjustments, including those that are not expected to have a continuing impact.
Unaudited Pro Forma Combined Balance Sheet, page 154
13.
Please explain your basis for presenting Helport Pte. Ltd. and Helport Limited on a combined basis in your pro forma financial statements.
Response: We respectfully advise the Staff that, before December 22, 2023 (the date of the first filing of the DRS), because the Reorganization had not been completed by such date, there had been no basis to present Helport Limited and Helport Pte. Ltd. on a combined or consolidated basis. As a result, we issued respective Financial Statements of Helport Limited and Helport Pte. Ltd. as individual reporting entities, with two sets of audit opinion as well. Helport Limited and Helport Pte. Ltd. were presented on a combined basis in the pro forma financial statements, because the unaudited pro forma financial statements were prepared under the assumption that the Reorganization of Helport would be completed before the closing of the business combination between Helport Limited and Tristar Acquisition I Corporation.
On November 14, 2023, Helport Limited established Helport Group Limited in the British Virgin Islands, as its wholly owned subsidiary to be the intermediate holding company. On December 22, 2023, Helport Limited through Helport Group Limited acquired 100% of the equity interest of Helport Pte. Ltd., and thus Helport Pte. Ltd. became a wholly owned subsidiary of Helport Limited. We did not provide financial statements for Helport Group Limited and Helport AI Inc. because they had not been incorporated as of June 30, 2023.The main purpose of the Reorganization was to establish a BVI holding company for our existing business in Singapore, in preparation for a business combination. Immediately before and after the Reorganization, Helport Limited together with its subsidiaries were effectively under common control. Therefore, the Reorganization was accounted for as a recapitalization, and thus the current capital structure has been retroactively presented as if such structure had existed throughout the periods presented, and the entities under common control were presented on a combined and consolidated basis for all periods for which such entities were under common control. The consolidated presentation of the Company and its subsidiaries were accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying audited combined financial statements.
We have revised the financial statements section to present Helport Pte. Ltd. and Helport Limited on a combined basis in the combined financial statement of Helport Limited, since the Reorganization was completed on December 22, 2023. The revision from two sets of financial statements to a combined financial statement has no impact on the accounting treatments of unaudited pro forma financial statements.
14.
Please revise to explain what the capitalized transaction fees included in pro forma adjustment (2) represent. Specifically quantify each component included in this adjustment and to which entity the fee relates. Also, clarify when these fees were "capitalized" and how they are reflected in the historical financial statements, if at all. In addition, tell us how you determined that such costs should be recorded as a reduction of equity versus an expense in your pro forma statement of operations to the extent they are not already reflected in the historical financial statements. Refer to SAB Topic 5.A.
Response: In response to the SEC staff’s comment, we have made the following revisions on page 154 as stated in (1), and provided further clarification on when these fees were “capitalized” or “expensed”, and how such fees were reflected in the historical financial statements, either as a reduction of equity or as an expense in accumulated deficits / retained earnings.
(1)
We have revised to explain what the capitalized transaction fees included in pro forma “Adjustment (3)” represent, by specifically quantifying each component included in this adjustment and to which entity the fee relates. Only the transaction fees of Helport which qualified as deferred offering costs, would be charged as a reduction of the combined additional paid-in capital in “Adjustment (3)”. The details of capitalized transaction fees were as follows:
Transaction fees
Amount
Legal fees and other expenses
$ 776,000
Financial advisory fees
95,155
Industry consulting fees
20,686
Total capitalized transaction fees
$ 891,841
(2)
For Tristar, the transaction fees that directly relates to the Business Combination for professional services provided should be expensed in general and administrative expenses and carried forward in accumulated deficits in the historical financial statements. However, upon completion of Business Combination, Tristar’s accumulated deficits would be eliminated and reclassified into the combined additional paid-in capital to reflect the recapitalization of Helport through issuance of Tristar shares as adjusted in “Adjustment (6)”.
For Helport, the transaction fees for professional services provided before June 30, 2023 were expensed in general and administrative expenses in the historical financial statements, as such fees were not considered “directly attributable” to the Business Combination. The projected transaction fee
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tris_corresp.htmHelport AI Limited
9 Temasek Boulevard #07-00, Suntec Tower Two
Singapore 038989
VIA EDGAR
February 7, 2024
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Technology
Washington, D.C. 20549
Attention:
Dave Edgar
Kathleen Collins
Austin Pattan
Jeff Kauten
Re:
Helport AI Limited
Draft Registration Statement on Form F-4
Submitted December 22, 2023
CIK No. 0002001699
Ladies and Gentleman:
Helport AI Limited (the “Company”, “Helport” or “we”) hereby transmits its response to the comment letter received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) on January 18, 2024 relating to the Draft Registration Statement on Form F-4, filed by the Company with the Commission on December 22, 2023.
For the Staff’s convenience, we have repeated below the Staff’s comment in bold and have followed each comment with the Company’s response. Disclosure changes made in response to the Staff’s comments have been made in the Registration Statement on Form F-4 (the “Registration Statement”) which is being filed to the Commission contemporaneously with the submission of this letter.
Draft Registration Statement on Form F-4
Defined Terms, page 11
1.
Please revise to define the terms of, and parties to, the Helport Reorganization as well as the Reorganization Documents, which you reference throughout the filing. Tell us what role, if any, Helport Limited has in the reorganization and why you provided financial statements for this entity and not the registrant, Helport AI Limited. In addition, clarify whether the Reorganization was completed by the December 31, 2023 deadline or revise to discuss any additional extensions.
Response: In response to the Staff’s comment, we revised the disclosures on pages 13, 15, 17, 18, and 105, to define the terms of, and parties to, the Helport Reorganization (the “Reorganization”) and the Reorganization Documents, including explaining the role of Helport Limited in the Reorganization. We have also revised the disclosures on these pages to clarify that the Reorganization was completed on December 22, 2023. Upon consummation of the Reorganization, Helport Limited, through Helport Group Limited, acquired 100% of the equity interest of Helport Pte. Ltd., and thus Helport Pte. Ltd. became a wholly owned subsidiary of Helport Limited. Immediately before and after the Reorganization, Helport Limited together with its subsidiaries were effectively under common control. As a result, we provided financial statements for Helport Limited, instead of for the registrant, Helport AI Limited, which is only a shell company and is not part of the Helport Group prior to the closing of the Business Combination.
Questions and Answers
What interests do Tristar's Sponsor, executive officers and directors have in the business combination, page 32
2.
Please highlight the risk that the sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders rather than liquidate. Include corresponding disclosure in your risk factors.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 32 and page 34 of the Registration Statement to include the requested information.
What vote is required to approve the proposals presented at the Meeting, page 34
3.
We note that the Initial Shareholders and Current Insiders have agreed to vote in favor of the business combination and related proposals. Please revise your discussion to highlight the vote of the unaffiliated shareholders needed to approve the business combination.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 34, page 49, page 61, page 98, page 140, page 142, page 143, page 145, page 148, page 149, page 150 and page 151 of the Registration Statement to include the requested information.
Summary of the Proxy Statement/Prospectus
Tristar Initial Shareholders and Current Insiders, page 47
4.
We note that the holders of the Founder Shares have waived their redemption rights. Please describe any consideration provided in exchange for this agreement.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 47 of the Registration Statement to include the requested information.
2
Risk Factors
Risks Related to the Business Combination of Tristar
Since the Sponsor and Tristar’s directors and officers..., page 61
5.
Please clarify how the board considered the conflicts described in this risk factor in negotiating and recommending the business combination.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 62 of the Registration Statement to include the requested information.
Tristar's shareholders will experience immediate dilution..., page 70
6.
We note that the future issuance of securities by the combined company may dilute the economic and voting rights and reduce the market price of Pubco ordinary shares. Please expand this risk factor to highlight the impact that additional redemptions may have on your ability to fund the surviving company, including the likelihood that you will be unable to raise additional capital on favorable terms, if at all. Discuss the downward pressure potential sales of securities following the business combination or any future capital raising transactions may have on the trading price of the combined entity.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 70 of the Registration Statement to include the requested information.
Risks Related to Our Securities Following the Business Combination and Helport Operating as a Public Company
If Helport or Pubco fails to implement and maintain an effective system of internal controls or remediate the material weaknesses..., page 91
7.
Please revise to disclose when you expect to fully remediate the material weaknesses in your internal controls over financial reporting and any material costs you expect to incur as part of your remediation plan.
Response: In response to the Staff’s comment, we have revised the disclosure on page 91 to disclose that we expect to fully remediate our material weaknesses in our internal controls over financial reporting before we cease to be an “emerging growth company”, and to describe the measures we intend to take to implement the remediation plan. However, at this stage, we are unable to quantify any particular material costs associated with implementing the remediation plan.
3
The Business Combination Proposal Earnout, page 104
8.
We note your disclosure regarding the terms of the earnout as set forth in the business combination agreement. Please revise to clarify that the earnout and related escrow were removed in connection with the First Amendment to the Business Combination Agreement consistent with your disclosure on page 108.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 104 of the Registration Statement to include the requested information.
Background of the Business Combination, page 110
9.
We note your statement that “On September 30, 2023, Tristar received the first version of ValueScope’s fairness opinion.” Please tell us whether the board considered multiple sets of projections, and if so, disclose how the projections referred to in the registration statement were selected. If the board considered a draft of the projections, disclose the material differences between the draft projections and final projections and why such changes were necessary.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 119 of the Registration Statement to include the requested information.
Recommendation of the Board and Reasons for the Business Combination, page 120
10.
We note your statement that the board's decision to recommend the transaction considered a number of factors “including, but not limited to, the following material factors.” Please revise to include, without qualification, the full list of material factors considered by the board when determining whether to recommend the business combination.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 121 of the Registration Statement to include the requested information.
Summary of Opinion of ValueScope, Inc. as Financial Advisor to Tristar, page 123
11.
Please tell us whether ValueScope relied upon any projections or forward-looking financial information when rendering its fairness opinion.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that it has amended its disclosure on page 123 of the Registration Statement to include the requested information.
Unaudited Pro Forma Condensed Combined Financial Statements Basis of Pro Forma Presentation, page 152
12.
You state that the historical financial statements have been adjusted to give pro forma effect to events that are directly attributable, factually supportable and expected to have a continuing impact on the result of the combined company. Please revise your disclosure to fully comply with the updated guidance in Article 11-02 of Regulation S-X and remove any references to the legacy pro forma guidance. In doing so, confirm that your pro forma financial statements include all necessary transaction accounting adjustments, including those that are not expected to have a continuing impact. Refer also to SEC Release No. 33-10786.
Response: In response to the Staff’s comment, we have revised the disclosures on page 152 to fully comply with the updated guidance in Article 11-02 of Regulation S-X, to ensure that our pro forma financial statements include all necessary transaction accounting adjustments, including those that are not expected to have a continuing impact.
4
Unaudited Pro Forma Combined Balance Sheet, page 154
13.
Please explain your basis for presenting Helport Pte. Ltd. and Helport Limited on a combined basis in your pro forma financial statements.
Response: We respectfully advise the Staff that, before December 22, 2023 (the date of the first filing of the DRS), because the Reorganization had not been completed by such date, there had been no basis to present Helport Limited and Helport Pte. Ltd. on a combined or consolidated basis. As a result, we issued respective Financial Statements of Helport Limited and Helport Pte. Ltd. as individual reporting entities, with two sets of audit opinion as well. Helport Limited and Helport Pte. Ltd. were presented on a combined basis in the pro forma financial statements, because the unaudited pro forma financial statements were prepared under the assumption that the Reorganization of Helport would be completed before the closing of the business combination between Helport Limited and Tristar Acquisition I Corporation.
On November 14, 2023, Helport Limited established Helport Group Limited in the British Virgin Islands, as its wholly owned subsidiary to be the intermediate holding company. On December 22, 2023, Helport Limited through Helport Group Limited acquired 100% of the equity interest of Helport Pte. Ltd., and thus Helport Pte. Ltd. became a wholly owned subsidiary of Helport Limited. We did not provide financial statements for Helport Group Limited and Helport AI Inc. because they had not been incorporated as of June 30, 2023.The main purpose of the Reorganization was to establish a BVI holding company for our existing business in Singapore, in preparation for a business combination. Immediately before and after the Reorganization, Helport Limited together with its subsidiaries were effectively under common control. Therefore, the Reorganization was accounted for as a recapitalization, and thus the current capital structure has been retroactively presented as if such structure had existed throughout the periods presented, and the entities under common control were presented on a combined and consolidated basis for all periods for which such entities were under common control. The consolidated presentation of the Company and its subsidiaries were accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying audited combined financial statements.
We have revised the financial statements section to present Helport Pte. Ltd. and Helport Limited on a combined basis in the combined financial statement of Helport Limited, since the Reorganization was completed on December 22, 2023. The revision from two sets of financial statements to a combined financial statement has no impact on the accounting treatments of unaudited pro forma financial statements.
5
14.
Please revise to explain what the capitalized transaction fees included in pro forma adjustment (2) represent. Specifically quantify each component included in this adjustment and to which entity the fee relates. Also, clarify when these fees were "capitalized" and how they are reflected in the historical financial statements, if at all. In addition, tell us how you determined that such costs should be recorded as a reduction of equity versus an expense in your pro forma statement of operations to the extent they are not already reflected in the historical financial statements. Refer to SAB Topic 5.A.
Response: In response to the SEC staff’s comment, we have made the following revisions on page 154 as stated in (1), and provided further clarification on when these fees were “capitalized” or “expensed”, and how such fees were reflected in the historical financial statements, either as a reduction of equity or as an expense in accumulated deficits / retained earnings.
(1)
We have revised to explain what the capitalized transaction fees included in pro forma “Adjustment (3)” represent, by specifically quantifying each component included in this adjustment and to which entity the fee relates. Only the transaction fees of Helport which qualified as deferred offering costs, would be charged as a reduction of the combined additional paid-in capital in “Adjustment (3)”. The details of capitalized transaction fees were as follows:
Transaction fees
Amount
Legal fees and other expenses
$ 776,000
Financial advisory fees
95,155
Industry consulting fees
20,686
Total capitalized transaction fees
$ 891,841
(2)
For Tristar, the transaction fees that directly relates to the Business Combination for professional services provided should be expensed in general and administrative expenses and carried forward in accumulated deficits in the historical financial statements. However, upon completion of Business Combination, Tristar’s accumulated deficits would be eliminated and reclassified into the combined additional paid-in capital to reflect the recapitalization of Helport through issuance of Tristar shares as adjusted in “Adjustment (6)”.
For Helport, the transaction fees for professional services provided before June 30, 2023 were expensed in general and administrative expenses in the historical financial statements, as such fees were not considered “directly attributable” to the Business Combination. The projected transaction fee