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United States securities and exchange commission logo
September 8, 2020
Charlotte MacVane
General Counsel
ATI Intermediate Holdings, LLC
3901 Midway Place NE
Albuquerque, New Mexico 87109
Re: ATI Intermediate
Holdings, LLC
Draft Registration
Statement on Form S-1
Submitted August
12, 2020
CIK 0001820721
Dear Ms. MacVane:
We have reviewed your draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Confidential Draft Registration Statement on Form S-1
General
1. Please supplementally
provide us with copies of all written communications, as defined in
Rule 405 under the
Securities Act, that you, or anyone authorized to do so on your behalf,
present to potential
investors in reliance on Section 5(d) of the Securities Act, whether or
not they retain copies
of the communications. Please contact the staff member associated
with the review of this
filing to discuss how to submit the materials, if any, to us for our
review.
Charlotte MacVane
FirstName LastNameCharlotte MacVane
ATI Intermediate Holdings, LLC
Comapany 8,
September NameATI
2020 Intermediate Holdings, LLC
September
Page 2 8, 2020 Page 2
FirstName LastName
Summary Consolidated Financial and Other Data, page 12
2. We note the table captions relating to pro forma earnings (loss)
attributable to common
stockholders, pro forma weighted average shares and basic and diluted
earnings net
income per share data. Please revise the table to include footnotes
explaining your
reasons for presenting the information, and to describe the
adjustments you have made in
calculating the pro forma amounts. Separately address the impact on
your income tax
position of converting from an limited liability corporation to a
Delaware 'C' corporation.
This comment also applies to the Selected Consolidated Financial and
Other Data
disclosures on page 47.
Risk Factors
If we fail to, or incur significant costs in order to, obtain, maintain,
protect, defend or enforce,
our intellectual property..., page 16
3. We note that you have brought an action against a competitor in
connection with
misappropriation of trade secrets that remains pending. We note also
that this action is
not disclosed in Legal Proceedings on page 74. Please advise.
Our planned expansion into new markets could subject us to additional
business..., page 30
4. You state that your strategy is to grow your revenues outside of the
U.S. by developing
region-specific products. Please revise to clarify which regions you
are targeting for
expansion and how the products you intend to market differ from your
current products
and the stage of their development.
Following the offering, we will be classified as a "controlled company", page
34
5. We note that you refer to the combined ownership of Oaktree and Ron
Corio in
determining that you will be a controlled company. Please revise to
clarify the nature of
the relationship between Oaktree and Mr. Corio, including any
agreements relating to the
ownership and voting of the securities they hold.
Internal control deficiencies have historically been identified that
constituted material
weaknesses...may adversely affect our business., page 38
6. Please revise to briefly describe the material weaknesses management
identified in your
internal controls over financial reporting in each of your (i)
financial statement close
process, (ii) deferred unbilled revenue reconciliation process and
(iii) inventory cut-off
and pricing. For example, explain the reasons for, or the
circumstances that resulted in,
the weakness in internal controls in these areas, and address whether
there was
any impact to your financial statements for the years ended December
31, 2018 and 2019.
Charlotte MacVane
FirstName LastNameCharlotte MacVane
ATI Intermediate Holdings, LLC
Comapany 8,
September NameATI
2020 Intermediate Holdings, LLC
September
Page 3 8, 2020 Page 3
FirstName LastName
Capitalization, page 45
7. Please revise the introductory paragraph to clarify whether the
reverse stock split occurs
as part of or subsequent to the Corporate Conversion transactions
described on page 43.
In addition, include a footnote to the table to briefly explain how
the $305,151 of actual
member's equity has been re-allocated in the Corporate Conversion and
reverse stock
split to the various "as adjusted" stockholders' equity accounts.
8. We note the disclosures relating to the $25.0 million maximum earn-out
payments in Note
12 on page F-23. Please clarify to us whether this offering of
securities by the Selling
Stockholder triggers the earn-out payment provision and would result
in a significant
liability being recorded. Tell us your consideration of giving pro
forma effect to that event
in your capitalization table.
Dilution, page 46
9. Please revise to add a table summarizing the average price per share
paid by existing
stockholders and new investors.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 52
10. Revise the introductory paragraph to the table on page 52 to clarify
that you are presenting
your consolidated statements of operations as well as other financial
data management
considers, and revise the table to separately present and label
Adjusted EBITDA as other
financial data.
Comparison of 2019 and 2018
Revenue, page 54
11. We note from pages 49 and 50 that the primary operating metric you use
to evaluate your
sales performance and to track market acceptance of your products from
year to year is
MW shipped and that your revenues are also affected by changes in the
volume and
average selling prices, or ASP, of your solar tracking systems. Please
revise to disclose the
number of MW shipped in 2019 as compared to 2018. In addition,
quantify and explain
how changes in these metrics contributed to the significant increase
in your revenues
during 2019.
12. We note from Note 17 to the financial statements the significant
increase in United States
revenues in 2019. Please revise to discuss the reasons for your
revenue growth in the
United States in 2019, including for example, additional customers,
substantial larger
customer contracts, etc.
Charlotte MacVane
FirstName LastNameCharlotte MacVane
ATI Intermediate Holdings, LLC
Comapany 8,
September NameATI
2020 Intermediate Holdings, LLC
September
Page 4 8, 2020 Page 4
FirstName LastName
13. As a related matter, please expand the discussion of cost of revenue
to disclose how
changes in cost per watt, or CPW, impacted on your cost of goods sold.
We note from
page 50 that you use the metrics MW shipped, ASP and CPW to evaluate
trends in
pricing, manufacturing and customer profitability.
Income Tax Expense, page 54
14. We note from Notes 6 and 12 to the financial statements the
disclosures relating to the re-
measurement of the Tax Receivable Agreement as part of an IRS
settlement in 2019.
Please revise this section to discuss the impact of that
re-measurement and settlement on
your income tax provision in 2019, including impact of the $2.7
million gain that
resulted from the reduction in the fair value of the Tax Receivable
Agreement.
Operating Activities, page 55
15. Please revise to discuss the reasons underlying the changes in
accounts payable.
Business
Overview, page 66
16. We note various references to transactions, agreements and
acquisitions. Please revise to
provide a general discussion of the development of your business that
clarifies the
involvement of Oaktree and Ron Corio. Include in your discussion a
description of the
transactions that resulted in the obligations mentioned in your
disclosures on pages 23 and
84-85. Also clarify your reference to an acquisition of "Patent LLC"
and what Patent
LLC held at the time of its acquisition.
Our Products and Services
Our Tracker System, page 69
17. We note your disclosure that you believe that your products are the
only trackers that
automatically move into a stow position when wind forces reach a
threshold level without
requiring sensors, motors or electrical power, which you refer to as
"passive stow". Please
revise to explain how passive stow works.
18. We note your disclosure that you believe that your tracker system is
inherently more
secure than some of your competitors products because you "do not
use controllers and
other key components from manufacturers in countries that may be
deemed to be threats
to U.S. national security or rely on open, wireless communication
protocols that can be
easily hacked." Please revise to clarify which countries you are
referring to, and disclose
the countries from which you source your controllers and key
components. Also, if you
elect to compare the security of your product, please revise to
disclose the names of your
competitors and from where they source their products.
Charlotte MacVane
FirstName LastNameCharlotte MacVane
ATI Intermediate Holdings, LLC
Comapany 8,
September NameATI
2020 Intermediate Holdings, LLC
September
Page 5 8, 2020 Page 5
FirstName LastName
Consolidated Statements of Operations, page F-4
19. In light of the material changes to your capital structure that will
occur as a result of the
Corporate Conversion and the reverse stock split, tell us your
consideration of providing
pro forma earnings per share data on the face of your statements of
operations giving
effect to those events. Refer to SAB Topics 1.B.2 and Article 11 of
Regulation S-X.
Exhibits
20. We note that you intend to file the tax receivable agreement. Please
also file the
agreement related to the earn out discussed in you disclosure.
You may contact Beverly Singleton at 202-551-3328 or Martin James at
202-551-3671 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Erin Purnell at 202-551-3454 or Geoffrey Kruczek at 202-551-3641 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing
cc: Michael Kim