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United States securities and exchange commission logo
October 12, 2022
Pun Leung Liu
Chief Financial Officer
YXT.COM Group Holding Limited
Floor 20, Building 2, No. 209, Zhuyuan Road
High-tech District, Suzhou,
Jiangsu, 215011, People s Republic of China
Re: YXT.COM Group
Holding Limited
Amendment No. 3 to
Draft Registration Statement on Form F-1
Submitted September
15, 2022
CIK No. 0001872090
Dear Pun Leung Liu:
We have reviewed your amended 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.
Unless we note
otherwise, our references to prior comments are to comments in our
November 3, 2021 letter.
Amendment No. 3 to Draft Registration Statement on Form F-1
Cover Page
1. Please revise the cover
page to clarify that all of the legal and operational risks associated
with being based in
China could result in a material change in your operations and/or the
value of the securities
you are registering for sale or could significantly limit or
completely hinder your
ability to offer or continue to offer securities to investors and
cause the value of such
securities to significantly decline or be worthless. Also disclose on
the cover page whether
and how the Holding Foreign Companies Accountable Act
(including the
Accelerating Holding Foreign Companies Accountable Act) and related
regulations will affect
your company.
Pun Leung Liu
YXT.COM Group Holding Limited
October 12, 2022
Page 2
2. We note your disclosure on page 10; however, please expand your
disclose on the cover
page related to the transfer of cash through your organization to
disclose here whether the
company has written cash management policies and procedures that
dictate how funds are
transferred and, if so, describe these policies and procedures.
Provide cross-references to
the condensed consolidating schedule and the consolidated financial
statements.
Prospectus Summary, page 6
3. We note your disclosure that you have obtained all approvals required
for your operations
in China. Please expand your disclosure to discuss whether you have
obtained all
permissions or approvals to offer the securities being registered to
foreign investors. Also,
if you determine no permissions are required, provide an explanation
as to whether you
consulted counsel and, if not, why you did not consult counsel and why
you believe you
do not need any permissions or approvals.
Summary of Risk Factors, page 12
4. For each risk factor related to doing business in China in your
summary of risk factors,
provide a specific cross-reference to the more detailed risk factor.
Implication of the Holding Foreign Companies Accountable Act, page 14
5. Expand your disclosure here to expressly disclose that an exchange may
determine to
delist your securities if the PCAOB determines that it cannot inspect
or investigate
completely your auditor.
Conventions which Apply to This Prospectus, page 15
6. Please revise the definition of China and PRC to include
Taiwan, Hong Kong and
Macau and clarify that the only time China and PRC does
not include Taiwan, Hong
Kong or Macau is when you reference specific laws and regulations
adopted by the PRC.
Our Summary Consolidated Financial Data and Operating Data, page 19
7. We note your presentation of pro forma net loss per share for the six
months ended June
30, 2022. Please revise to also present pro forma net loss per share
for the year ended
December 31, 2021.
VIE Consolidating Schedule (Unaudited), page 23
FirstName LastNamePun Leung Liu
8. Please revise to provide disclosure clarifying which entities are
included in the column
Comapany NameYXT.COM
"primary beneficiaries Group Holding
of the VIEs" Limited
and confirm whether this column
represents the
OctoberWFOEs.
12, 2022 Page 2
FirstName LastName
Pun Leung Liu
FirstName
YXT.COMLastNamePun Leung Liu
Group Holding Limited
Comapany
October 12,NameYXT.COM
2022 Group Holding Limited
October
Page 3 12, 2022 Page 3
FirstName LastName
Consolidated Financial Statements
1. Principal Activities and Organization
(b) History of the Group and Basis of Presentation for the Reorganization, page
F-14
9. Considering the nature of the relationships with the VIEs, please
revise the headers on
page F-15 to remove the references to "direct or indirect ownership."
20. Commitments and Contingencies, page F-67
10. We note your disclosure here that the Winding-up Proceedings have been
stayed pending
determination of the HKIAC Arbitration. In order to provide more
clarity, please revise to
disclose information about the HKIAC Arbitration here.
General
11. Please update your analysis supporting your contention that the
Company may properly
rely on Rule 3a-8 under the Investment Company Act of 1940 (the
1940 Act ) by
providing recent numbers and percentages relevant to the requirements
of Rule 3a-8(a)(1),
(2), (3), and (4). To the extent that your response relies on imputing
the income, assets,
etc., of the VIEs to the Company and/or its subsidiaries, please
provide a legal analysis
under Rule 3a-8 supporting such imputation.
12. The Commission has described bona fide research and development (
R&D ) companies
as companies that . . . raise large amounts of capital, invest the
proceeds and use the
principal and return on these investments to fund their operations
during their lengthy
product development phase. An R&D company may also purchase a
non-controlling
equity stake in another company as part of a strategic alliance with
the other company to
conduct research and develop products jointly. Refer to Certain
Research and
Development Companies, Investment Company Act Rel. No. 26077 (June 16,
2003)
("Adopting Release"). Please expand on your analysis of the
applicability of Rule 3a-8 to
the Company by providing support for your contention that the Company
is currently
engaged in a product development phase of the kind described by the
Commission in the
Adopting Release. Your response should, among other things, identify
the product(s)
currently under development, disclose the number of personnel
dedicated to R&D
activities that are employed by each subsidiary, and describe the
facilities and other
infrastructure of each subsidiary dedicated to R&D. To the extent that
your response relies
on imputing the personnel, assets, etc., of the VIEs to the Company
and/or its subsidiaries,
please provide a legal analysis supporting such imputation as a means
of adherence to
Rule 3a-8. For avoidance of doubt, this analysis should address
whether an issuer may
rely on Rule 3a-8 on the basis of assets, income, and activities of
entities (such as the
VIEs) in which the Company does not have a direct equity stake, citing
any supporting
Commission statements or staff guidance.
13. On page 5 of the prospectus, the Company states that the VIEs hold
our key operating
licenses, provide services to our customers, enter into contracts with
our suppliers, and
Pun Leung Liu
YXT.COM Group Holding Limited
October 12, 2022
Page 4
employ our workforce. Please specify the percentage of the Company s
workforce
currently employed by each VIE and the percentage of the Company s
customers serviced
by each VIE. Also, provide in your response a list and description of the
licenses held by
each VIE.
14. In your response to prior comment 3 and in the related disclosure, you
indicate that if the
Company is unable to rely on Rule 3a-8 under the 1940 Act, the Company
would liquidate
certain assets and rely on the exemption provided by Rule 3a-1 under the
1940 Act. You
further indicate that if the Company s ability to rely on Rule 3a-8
were called into
question as a result of the loss of primary control by the WFOEs over the
VIEs, the
Company could rely on the exemption provided by Rule 3a-2 under the 1940
Act. We
note that the Commission has stated that an intent to ultimately rely on
Rule 3a-1 may not
constitute a bona fide intent to be engaged primarily in a noninvestment
business for
purposes of Rule 3a-2. See Transient Investment Companies, Investment
Company Act
Rel. No. 11552 (Jan. 14, 1981). Please clarify whether there are any
circumstances in
which the Company may seek to rely on Rule 3a-2 before transitioning to
reliance on Rule
3a-1. If any such circumstances exist, please provide a legal analysis
supporting such an
approach.
You may contact Brittany Ebbertt, Senior Staff Accountant, at (202)
551-3572
or Christine Dietz, Senior Staff Accountant, at (202) 551-3408 if you have
questions
regarding comments on the financial statements and related matters. Please
contact Alexandra
Barone, Staff Attorney, at (202) 551-8816 or Jan Woo, Legal Branch Chief, at
(202) 551-3453
with any other questions.
Sincerely,
FirstName LastNamePun Leung Liu
Division of
Corporation Finance
Comapany NameYXT.COM Group Holding Limited
Office of Technology
October 12, 2022 Page 4
cc: Li He
FirstName LastName