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United States securities and exchange commission logo
April 7, 2022
Jonah Raskas
Co-Chief Executive Officer and Director
CHW Acquisition Corp
2 Manhattanville Road, Suite 403
Purchase, NY 10577
Re: CHW Acquisition
Corp
Registration
Statement on Form S-4
Filed March 10,
2022
File No. 333-263418
Dear Mr. Raskas:
We have reviewed your 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.
Registration Statement on Form S-4 Filed March 10, 2022
Cover Page
1. Please disclose the
transaction enterprise value, the Exchange Ratio, the PIPE and
Backstop Investment,
and the Debt Financing on your prospectus cover. Please also
disclose that upon the
Closing, New Wag! s executive officers, directors, and their
affiliates will
beneficially own approximately 52.3% of New Wag! s common stock
outstanding, assuming
maximum redemptions, and that the Sponsor will have the right to
designate a director to
the New Wag! Board following the Closing.
Jonah Raskas
FirstName LastNameJonah Raskas
CHW Acquisition Corp
Comapany
April NameCHW Acquisition Corp
7, 2022
April 27, 2022 Page 2
Page
FirstName LastName
Q: WHAT EQUITY STAKE WILL CHW CURRENT SHAREHOLDERS, THE SPONSOR,
THE PIPE AND BACKSTOP INVESTOR AND CONTINUING WAG! STOCKHOLDERS
HOLD..., page 10
2. Here and on pages 17, 99, 116, and 282, please revise your disclosure
regarding the
ownership of the post-combination company to:
offer at least one additional interim redemption scenario
between those you currently
present;
consistently disclose the Sponsor's and its affiliates' total
potential ownership interest
assuming exercise and conversion of all convertible securities at
each redemption
scenario;
make consistent assumptions regarding open market purchases and
whether the
Sponsor forfeits any founder shares pursuant to the CHW Founders
Stock Letter;
present the Wag! stockholders and Series P Investors
separately; and
include Blue Torch Capital LP and the Lender Warrants.
Q: WHAT HAPPENS IF A SUBSTANTIAL NUMBER OF PUBLIC SHAREHOLDERS
VOTE IN FAVOR OF THE BUSINESS COMBINATION..., page 16
3. Please revise to show the potential impact of redemptions on the per
share value of the
shares owned by non-redeeming shareholders at each redemption level,
taking into
account not only the money in the trust account, but the
post-transaction equity value of
the combined company. Your disclosure should show the impact of
certain equity
issuances on the per share value of the shares, including the
exercises of public and
private warrants, the issuance of earnout shares, the issuance of the
Series P Investment,
and exercise of the Lender Warrants under each redemption scenario.
4. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis.
Q: WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL
MEETING?, page 18
5. Given that the Sponsor and CHW's directors and officers own
approximately 15% of the
aggregate voting power of the CHW ordinary shares, please disclose the
number of votes
aside from those held by the Sponsor and CHW's directors and officers
that will be
required to approve each propose proposal, assuming only a valid
quorum is established.
Summary of the Proxy Statement/Prospectus
Wag Labs, Inc. (Wag!), page 24
6. Please disclose on what basis Wag! is a "leading" provider of access
to pet care services,
e.g. by revenue, bookings, etc.
Jonah Raskas
FirstName LastNameJonah Raskas
CHW Acquisition Corp
Comapany
April NameCHW Acquisition Corp
7, 2022
April 37, 2022 Page 3
Page
FirstName LastName
Ownership of Wag!, page 25
7. Please consider also disclosing in the first paragraph hereunder the
number of Wag! stock
options and restricted shares outstanding at the date of the proxy.
Quorum and Vote of CHW Shareholders, page 36
8. Please include the disclosure required by Item 3(h) of Form S-4.
Risk Factors
CHW's Sponsor, directors, officers, advisors or their affiliates may enter into
certain
transactions..., page 91
9. We note your disclosure that CHW s Sponsor, directors, officers,
advisors or their
affiliates may purchase public shares or public warrants or a
combination thereof in
privately negotiated transactions or in the open market either prior
to or following the
Closing. Please disclose the purpose of such purchases, confirm
that CHW s Sponsor,
directors, officers, advisors or their affiliates will purchase these
securities at a price no
higher than the redemption price, disclose that shares purchased by
CHW s Sponsor,
directors, officers, advisors or their affiliates would not be voted
in favor of approving the
business combination, confirm that CHW s Sponsor, directors,
officers, advisors or their
affiliates will waive any redemption rights, and confirm that CHW will
file a Form 8-K
prior to the special meeting providing the information described in
Tender Offers and
Schedules C&DI Question 166.01.
Background of the Business Combination, page 116
10. Please substantially revise the disclosure in this section to include
a description of the
negotiations relating to the valuation of Wag!. For example, it is not
clear who proposed
an initial valuation and what the initial proposal was, if and how the
amount evolved
throughout the negotiations and how it was negotiated, what the final
agreed upon
valuation was, and when agreement on the final valuation and type of
consideration was
reached. In addition, please address how the Series P Investment
impacted the valuation
negotiations.
11. Please provide a detailed description of the negotiations regarding
the term sheet that was
executed on October 19, 2021 by CHW and Wag!, including the terms of
the initial draft,
the terms included in the final executed version, and how the terms
evolved over the
course of the negotiation. Please also specify what revisions were
made to the executed
term sheet on December 27, 2021.
12. Please provide a detailed description of how the terms of the Business
Combination
Agreement evolved throughout the exchange of drafts from the initial
draft of the
Business Combination Agreement on November 16, 2021 until it was
executed on
February 2, 2022, and if applicable, describe how the terms differed
from the term sheet.
Jonah Raskas
FirstName LastNameJonah Raskas
CHW Acquisition Corp
Comapany
April NameCHW Acquisition Corp
7, 2022
April 47, 2022 Page 4
Page
FirstName LastName
13. Please substantially revise your disclosure in this section to include
a chronological
description of the negotiations relating to material terms of the
transaction and ancillary
agreements, including, but not limited to, the Domestication, the type
of consideration to
be paid to Wag! stockholders, the earnout shares and trigger events
and allocation
between Wag! stockholders and management, the financial projections
and any
discussions relating to the assumptions underlying such projections,
the control of the
post-combination company, director designation rights and
organizational documents, the
CHW founders stock letter, and the lock up agreements. In your revised
disclosure, please
explain the issues and terms discussed at the meetings, each party's
position on such
issues, and how you reached agreement on the final terms.
14. Please revise your disclosure to list each person present at each
meeting, including, but
not limited to, the members of Wag! management that were present at
the October 1, 2021
meeting and the CHW board members that attended the February 1, 2022
meeting to
approve the business combination for which there was only a quorum.
15. Please revise your disclosure in this section to include a description
of the negotiations
relating to the PIPE and Backstop Investment, the Series P Investment,
and the Credit
Facility, including how the amounts of the PIPE and Backstop
Investment, the Series P
Investment, and the Credit Facility were determined, how potential
investors and the
lender were selected, and what relationship these parties have with
CHW, the Sponsor,
Wag!, and the placement agent. In addition, clarify why CHW ultimately
determined the
PIPE offers in November and December 2021 were not in the best
interest of CHW s
investors and the best long-term interests of CHW and why CHW
determined the debt
offers in January 2022 were more favorable than the term sheets that
were extended to
Wag! and CHW at the end of 2021.
16. We note your reference to CHW's financial advisor on page 118. Please
identify this
advisor and clarify the role of this advisor throughout the
negotiations, and clarify the role
that Chardan played in these negotiations. In addition, please
quantify any fees payable to
these advisors and to Oppenheimer for their services, including fees
payable upon
consummation of the Business Combination and the value of the
Representative Shares
issued to Chardan in connection with CHW's IPO.
17. We note your reference to a report delivered to CHW by Ernst and Young
on page 119
and the study delivered to CHW by its "financial analyst" referenced
on page 118.
Please include the information required by Item 1015(b) of Regulation
M-A, or tell us
why you are not required to do so.
18. We note that CHW engaged in a period of due diligence from September
24, 2021 to
January 22, 22. Please disclose if and how that due diligence effort
impacted the terms of
the transaction.
19. We note that CHW's Existing Organizational Documents waived the
corporate
opportunities doctrine. Please address this potential conflict of
interest and whether it
impacted your search for an acquisition target.
Jonah Raskas
FirstName LastNameJonah Raskas
CHW Acquisition Corp
Comapany
April NameCHW Acquisition Corp
7, 2022
April 57, 2022 Page 5
Page
FirstName LastName
Comparable Company Analysis, page 125
20. We note the Investor Presentation, which was filed by CHW on February
3, 2022 as an
exhibit to a Form 8-K, includes a similar presentation of the
comparable company
analysis discussed on page 126, but also includes figures for
enterprise value as a multiple
of estimated revenue for calendar year 2022 and does not include
figures for enterprise
value as a multiple of estimated gross profit for calendar year 2023,
which you include in
the filing. Please tell us whether the analysis contained in the
investor presentation is
different from the analysis included in your filing. If so, please
include such analysis in
your filing, explain the material differences, and clarify whether the
Board considered the
additional analysis in recommending that the CHW shareholders approve
the transaction.
Financial Statements, page 125
21. We note your disclosure on page 118 that "during the week of September
26, 2021, CHW
had its financial analyst conduct a study of the comparable companies
in Wag! s market
and alternative ways to look at valuation," your disclosure on page
125 that CHW utilized
the financial statements to perform a series of financial diagnostics,
including
benchmarking costs to similar consumer marketplace businesses,
analyses of revenue
composition and growth, and analyses of historical take rate trends,
and your disclosure on
pages 125 and 126 that the comparable company analysis and the
projections included in
the filing were each prepared by Wag!'s management team. Please
clarify whether CHW's
financial advisor or CHW's team prepared separate analyses other than
the analyses
prepared by Wag! management included in the filing on page 126, and if
so, include such
analysis in your filing and explain the material differences.
Certain Projected Financial Information, page 126
22. We note your disclosure that the projections assume monthly services
completed on the
Wag! platform will return to pre-pandemic levels in Q4 2022.
Disclose whether the
projections for 2023 are in line with historic operating trends. If
not, address why the
change in trends is appropriate or the assumptions are reasonable. In
addition, please tell
us whether the format of the projections originally included net
income (loss) and revise
the presentation accordingly. Please refer to Item 10(b)(2) of
Regulation S-K.
Proxy Solicitation Costs, page 157
23. Please disclose the anticipated fees CHW will pay to its proxy
solicitor. Please refer to
Item 18(a)(4) of Form S-4 and Item 4(a)(3) of Schedule 14A.
Interests of CHW Directors and Officers in the Business Combination, page 163
24. Please revise this disclosure to:
quantify the aggregate dollar amount and describe the nature of
what the sponsor and
its affiliates have at risk that depends on completion of a
business combination;
Jonah Raskas
CHW Acquisition Corp
April 7, 2022
Page 6
expand your disclosure regarding the indirect ownership
interest in the target
company held by your executives and directors to disclose the
approximate dollar
value of the interest based on the transaction value and recent
trading prices as
compared to the price paid;
quantify loans extended, fees due, and out-of-pocket expenses
for which the sponsor,
its affiliates, and your executives and directors are awaiting
reimbursement;
disclose the length of time following that business combination
that you will continue
to indemnify your directors and officers and maintain a
directors' and officers'
liability insurance policy; and
clarify if the sponsor and its affiliates can earn a positive
rate of return on their
investment, even if other SPAC shareholders experience a negative
rate of return in
the post-business combination company.
Please make conforming edits throughout your filing.
Material U.S. Federal Income Tax Considerations, page 186
25. We note that Section 7.14(a) of the Business Combination Agreement
provides that,
Each of SPAC, the Domesticated SPAC, Merger Sub, the Company and
the Company
Subsidiaries shall use its respective reasonable best efforts to
cause the Acquisition
Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code."
Please provide disclosure as to the tax consequences of the
Acquisition Merger in this
section and file an opinion, as necessary. In this regard, we note
that if the tax
consequences are material to the transaction as a whole, which we
believe to be the case
with respect to the Acquisition Merger, then disclosure and
appropriate tax opinions are
required with respect to the transaction as a whole. Please refer to
Item 4(a)(6) of Form S-
4. Further, as counsel is issuing at least one "should" opinion,
please include risk factor
disclosure regarding the uncertainty of this opinion(s).
Notes to Unaudited Pro Forma Condensed Combined Financial Information
1. Description of the Business Combination, page 205
26. Please disclose the number of stock options of Wag! common stock
associated with
the $73.6 million noted in footnote (1) and how the dollar amount was
determined. Also,
explain to us and disclose as appropriate how you are accounting for
this share
consideration.
2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet, page 208
FirstName LastNameJonah Raskas
27. Please provide a note that explains the $930 adjustment in the
"Transaction Pro Forma
Comapany NameCHW
Adjustments" Acquisition
column Corp
assuming no redemption on the "Deferred
offering costs" line and
April 7,the corresponding
2022 Page 6 line adjusted.
FirstName LastName
Jonah Raskas
FirstName LastNameJonah Raskas
CHW Acquisition Corp
Comapany
April NameCHW Acquisition Corp
7, 2022
April 77, 2022 Page 7
Page
FirstName LastName
28. The items within adjustment (A) sum to $151,192 as noted. However, the
amount of the
adjustment to the "Cash and cash equivalents line" in the "Transaction
Pro Forma
Adjustments" column assuming no redemption is $152,122. Please
reconcile and revise
as appropriate.
29. We note your disclosure in note A(iii) that transactions costs of CHW
Acquisition
Corporation are reflected as a reduction of cash, with a corresponding
increase in
accumulated deficit, as these costs are expensed as incurred. However,
based on notes H
and I, it appears the transaction costs incurred by CHW are reflected
as a reduction of
APIC. Please revise as appropriate.
30. In note (G) you attribute $12.5 ($12,500) to the par value of
12,500,000 CHW Acquisition
Corporation redeemable shares. From disclosures in the filing it
appears the par value per
share of these shares is $0.0001, amounting to $1.25 ($1,250). Please
clarify and revise as
appropriate.
31. The line items "Reclassification of CHW Acquisition Corporation s
Redeemable
Common Stock" and "Recapitalization of Wag! Preferred and Common Stock
to New
Wag! Common Stock" within note H refer to note G, but it appears the
references should
be to note E. Please revise as appropriate.
32. Please tell us and disclose how you concluded that the earnout shares
potentially issuable
to Eligible Company Equityholders should be recorded as share-based
compensation and
equity as opposed to contingent consideration and a liability. Address
any differences
between the Earnout Shares, Management Earnout shares and earnout
shares allocable to
the unvested options and restricted shares of Wag! that were
considered in determining
your accounting and classification. Disclose how the $32.4 million for
the stock based
compensation charges related to the earnouts was computed and
attributed to the Earnout
Shares and/or Management Earnout shares.
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations,
page 211
33. Please disclose how the $3.6 million interest expense related to the
amortization of the
debt discount including cash interest expense related to interest
payable of $3.0 million on
the Credit Facility in note (AB) is computed.
Information About Wag!
Our Business, page 226
34. We note your disclosure that you have experienced "strong growth."
Please specify on
what basis you have experienced growth and add quantitative
disclosure.
35. We note your disclosure that "based on an internal survey conducted in
2018-2019, 90%
of [y]our new Pet Parents reported that they never used a dog walker
before joining the
Wag! platform; after joining, [y]our Pet Parents used Wag! services
four to five times
per month on average." Please clarify whether Pet Parents are using
dog walking services
Jonah Raskas
FirstName LastNameJonah Raskas
CHW Acquisition Corp
Comapany
April NameCHW Acquisition Corp
7, 2022
April 87, 2022 Page 8
Page
FirstName LastName
four to five times per month on average.
Our Market Opportunity, page 227
36. We note your disclosure that the total U.S. market for pet spending
was $103.6 billion in
2020, including pet food and treats, veterinary care and product
sales, pet supplies, and
other non-medical services. Please tell us why it is appropriate to
reference this market
when your service offerings do not include pet food and treats,
veterinary care and product
sales, or pet supplies. In addition, please clarify whether your
graphic on page 228 is
intended to show the expansion of Wag!'s offerings in the future.
Competitive Strengths, page 230
37. We note your disclosure that "according to recent industry surveys,
Wag! was the number
one online Pets and Animals destination worldwide in the fourth
quarter of 2021 with
more than 4,200,000 monthly visitors." Please identify the parties who
conducted the
industry surveys.
Wag!'s Management's Discussion and Analysis of Financial Condition and Results
of Operations
Effects of the COVID-19 Pandemic, page 246
38. We note your disclosure here and in your risk factors that the
COVID-19
pandemic resulted in a "reduction" in the number of overnight bookings
and "significantly
impacted" your results in 2020. Please quantify the impact of the
pandemic on your
business.
Overview
Restructuring and Preferred Share Repurchase, page 247
39. We did not identify any discussion herein regarding a preferred share
repurchase. Please
revise as appropriate.
Key Performance Indicators ("KPIs") and Non-GAAP Measures, page 249
40. We note your disclosure on page 84 that "Wag! tracks certain
operational metrics,
including its key business metrics such as Pet Parent Monthly
Frequency, Service Fill
Rate, Wag! Premium Attach Rate, as well as Pet Parent cohort
behavior," and we also
note your reference to these metrics throughout your filing. Please
explain such metrics in
this section, including how they are calculated and why management
finds them useful.
In addition, please tell us what consideration you gave to including
in this discussion the
net revenue by cohort, take rate, and LTV graphics that appear in the
Investor
Presentation, which was filed by CHW on February 3, 2022 as an exhibit
to a Form 8-K.
Comparison of the Years Ended December 31, 2021 and 2020, page 251
41. We note that revenues increased by 68% in 2021, whereas cost of
revenue, excluding
depreciation and amortization, increased only 1%. Please revise your
disclosure to
Jonah Raskas
CHW Acquisition Corp
April 7, 2022
Page 9
discuss the relationship between revenues and cost of revenues and
whether this type of
relationship is indicative of future results and why or why not.
Management of New Wag! Following the Business Combination, page 267
42. In an appropriate place in this section, please disclose the Sponsor's
right to designate a
director to the board of New Wag! and clarify how long the Sponsor
will have this right.
Description of New Wag! Securities
Anti-Takeover Provisions of Delaware Law, page 283
43. Please add a discussion of the provision in the Proposed Charter that
would limit the
ability of stockholders to act by written consent.
Wag Labs, Inc. Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Revenue Recognition, page F-31
44. Please tell us your consideration of the disclosure requirement in ASC
606-10-50-5 in
terms of disclosing disaggregated revenues by category, such as pet
wellness services,
Wag! Premium subscription fees, service fees charged to PCGs for use
of the platform and
fees paid by PCGs to join the platform.
45. With respect to Wag! Wellness revenues, please tell us in detail the
basis for gross
revenue reporting as a principal in these transactions.
46. Also with respect to Wag! Wellness revenues, we note your disclosure
that in certain
arrangements, the transaction price is considered variable and an
estimate of the
transaction price is recorded when the action occurs. Please disclose
the methods, inputs
and assumptions used for determining the transaction price including
any judgments and
changes in the judgments used in determining the transaction price.
Please refer to ASC
606-10-50-17 and 20.
Cost of Revenues (exclusive of depreciation and amortization), page F-32
47. Please revise your disclosure to clarify how you distinguish between
which platform costs
are considered cost of revenues versus platform operations and
support.
Note 3. Business
FirstName Combinations,
LastNameJonah page F-34
Raskas
Comapany
48. NameCHW
Please Acquisition
provide support Corp
for your disclosure that pro forma disclosures
for the CPI
April 7,acquisition
2022 Pagepursuant
9 to ASC 805-10-50-2.h are not required due to
immateriality.
FirstName LastName
Jonah Raskas
FirstName LastNameJonah Raskas
CHW Acquisition Corp
Comapany
April NameCHW Acquisition Corp
7, 2022
April 10
Page 7, 2022 Page 10
FirstName LastName
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Robyn Manuel at 202-551-3823 or Doug Jones at
202-551-3309 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Taylor Beech at 202-551-4515 or Dietrich King at 202-551-8071 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Ari Edelman, Esq.