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July 25, 2019
Jihong Liang
Chief Financial Officer
36Kr Holdings Inc.
5-6/F, Tower A1, Junhao Central Park Plaza
No. 10 South Chaoyang Park Avenue
Chaoyang District, Beijing, People's Republic of China, 100026
Re: 36Kr Holdings Inc.
Draft Registration Statement on Form F-1
Submitted June 28, 2019
CIK No. 0001779476
Dear Ms. Liang:
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.
Draft Registration Statement on Form F-1 Submitted June 28, 2019
Our Business, page 1
1. You state that as of December 31, 2018, you provided business services
to 23 of the
Global Fortune 100 companies and 59 of the Top 100 New Economy companies
in
China. To provide context for these claims, please disclose the
percentages of your 2018
revenue that you derived from these customer bases.
Our Challenges, page 3
2. Please revise to note that you do not possess certain operating licenses
required by the
PRC government and that this may expose you to administrative sanctions.
Jihong Liang
36Kr Holdings Inc.
July 25, 2019
Page 2
Our History and Corporate Structure, page 4
3. You state in this section that you expect existing shareholders of
Beijing Duoke to become
the shareholders of 36Kr Holdings Inc. under a shareholding structure
that substantially
mirrors Beijing Duoke's current shareholding structure. Please
disclose the percentage of
36Kr's ordinary shares that you expect will be held by existing
shareholders of Beijing
Duoke and the percentage to be held by new investors following the
offering.
Conventions Which Apply to this Prospectus, page 7
4. Your statements that third party data has not been independently
verified and that it may
not be consistent with other information compiled in or outside China
may imply an
inappropriate disclaimer of responsibility with respect to the third
party information.
Please revise.
Use of Proceeds, page 60
5. After you have determined the approximate net proceeds you anticipate
receiving in this
offering, please revise this section to state the approximate
percentages you intend
to use for each purpose listed. Refer to Items 4.a. of Form F-1 and
3.C.1 of Form 20-F.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Operating Data, page 76
6. You disclose that you generate your online advertising service revenue
through the Cost
Per Day and cost-per-advertisement models. Please tell us how your
average monthly
page views correlates to and provides an understanding of these two
types of advertising
revenues. Please also tell us how the page views are tabulated between
your self-operated
platforms and third party platforms.
Our ability to further diversify our monetization channels and enhance our
monetization
capabilities, page 77
7. You indicate that your financial condition and results of operations
depend, in part, on
FirstName LastNameJihong Liangusers to subscribers. Please tell us what
consideration you
your ability to convert your
Comapany Name36Kr Holdingsyour number of users and the percentage of users that
are
have given to disclosing Inc.
July 25, 2019 Pagefor each period presented.
subscribers 2
FirstName LastName
Jihong Liang
FirstName LastNameJihong Liang
36Kr Holdings Inc.
Comapany Name36Kr Holdings Inc.
July 25, 2019
July 25, 2019 Page 3
Page 3
FirstName LastName
Liquidity and Capital Resources, page 90
8. You disclose that as of December 31, 2018, you had RMB49.0 million
(US$7.1 million)
in cash and cash equivalents and a significant portion of your cash
and cash equivalents is
held by your VIE and its subsidiaries. Please disclose the material
amounts of cash and
short-term investments disaggregated by currency denomination as of
the most recent
balance sheet date in each jurisdiction in which your affiliated
entities are domiciled. For
entities within China, disclose material amounts of cash held by VIEs
separately from the
amount of cash held by other entities.
Business, page 100
9. You indicate in Note 4 to your Consolidated Financial Statements that
one customer
accounted for 19% of your revenue in 2018. Please identify this
customer and disclose
the material terms of your agreements with it. Refer to Item 4.a of
Form F-1 and Items
4.B.6 and 10.C of Form 20-F. Also, tell us what consideration you have
given to filing
your agreements with this customer.
Distribution Channels, page 108
10. Please disclose the material terms of your agreements with the third
party platforms that
distribute your content Refer to Items 4.a of Form F-1 and 10.C of
Form 20-F.
Management
Compensation of Directors and Executive Officers, page 137
11. Please clarify, if true, that 2018 compensation was paid to the
executive officers of Bejing
Duoke, not those of 36Kr Holdings Inc.
Index to the Consolidated Financial Statements
Consolidated Statements of Cash Flows, page F-6
12. You present a line item in the Statements of Cash Flows that refers to
Funding from
Shareholders. Please describe to us and disclose the terms and
provisions of such funding
agreements. Revise your discussion of Liquidity and Capital Resources
to address
disclosure requirements under Item 5.B.1 and 2 of Form 20-F related to
this funding
source. In addition, tell us how your financial statement disclosures
regarding these
funding arrangements comply with the accounting and disclosures under
ASC 470.
Notes to Consolidated Financial Statements
1. Nature of Operations and Reorganization, page F-7
13. In your table of ownership structure, the column heading labeled
Percentage of Direct or
Indirect Economic Ownership suggests you have equity interest in
Beijing Duoke, your
VIE. However, Beijing Dake, your wholly owned subsidiary in China,
will enter into a
Jihong Liang
FirstName LastNameJihong Liang
36Kr Holdings Inc.
Comapany Name36Kr Holdings Inc.
July 25, 2019
July 25, 2019 Page 4
Page 4
FirstName LastName
series of contractual arrangements with your VIE and its shareholders
to convey
economics and power to you. Please remove the references to "Direct or
Indirect" to
clarify the contractual nature of your arrangements as opposed to
ownership
arrangements.
14. Please include a description of the recognized and unrecognized
revenue-producing assets
that are held by the VIE. These assets may include licenses,
trademarks, other intellectual
property, facilities or assembled workforce. We refer you to ASC
810-10-50-5A.d.
2. Significant Accounting Policies
(h) Short-term investments, page F-17
15. You disclose a significant amount of Short-term Investments that
include investments in
Wealth Management Products issued by China Merchants Bank, which are
redeemable by
the Company at a periodic term or any working day. Please include the
information
required by ASC 320-10-50-1A through 3 by major security type. Revise
your discussion
of liquidity and capital resources on page 90 to expand and clarify
the disclosure of these
products comprising your short-term investments.
(n) Revenue recognition, page F-19
16. You disclose that you display advertisements such as full screen
display, banners, and
pop-ups provided by or produced for customers on the 36Kr Platforms
over a particular
period of time. You also disclose that under the
cost-per-advertisement model, you
recognize revenue at a point in time when you posts the advertisements
initially as all the
economic benefit enjoyed by the customer can be substantially realized
at the time the
advertisements are initially posted. Please tell us the period of time
you typically display
these advertisements and how you determined that point in time revenue
recognition is
appropriate. We refer you to FASB ASC 606-10-25-23 through 25-30.
17. You disclose that in certain circumstances, you subcontract some of
your services to other
third parties. Please tell us in further detail, how you: control and
take responsibilities for
such services before the services are transferred to the customer;
have the right to direct
the subcontractors to perform the service and control the goods or
assets transferred to its
customers; and combine and integrate the separate services provided by
subcontractors
into the specified marketing or business consulting solutions to its
customers. Please also
tell us who has control over discretion in establishing prices. We
refer you to ASC 606-
10-55-39.
18. You offer institutional investor subscription services, a service
package to institutional
investors, which consists of creating the investor yellow page on 36Kr
Platform,
publishing articles about the investors and their investees on the
36Kr Platform and
priority access to 36Kr's offline activities, etc. Please disclose how
such revenue is
recognized. We refer you to ASC 606-10-25-23 and 25-27.
Jihong Liang
36Kr Holdings Inc.
July 25, 2019
Page 5
19. You disclose that you distribute content through established overseas
and local media
companies in setting up overseas and local stations including a
variety of major third-party
platforms. You also disclose on page 16 that third-party professional
content constitutes a
meaningful part of your content offerings. Tell us how your channel,
third-party platform
and third-party content terms and arrangements impact your revenue
recognition and are
accordingly reflected in your revenue recognition disclosures. In
addition, please tell us
how you assessed whether you were the principal or agent in your
arrangements using
third-parties and disclose whether you reported the related revenue on
a gross or net
basis. We refer you to ASC 606-10-55-36 through 55-40 and 50-12(c).
20. In addition, tell us how you account for development and acquisition
of your content and
reference the authoritative GAAP you rely upon for the related
accounting and disclosure.
General
21. Please provide us with a copy of the CIC report for our review.
Clearly mark the specific
language in the report that supports the statements in your
prospectus.
22. 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.
23. Please supplementally provide us with copies of any graphical
materials or artwork you
intend to use in your prospectus. Upon review of such materials, we
may have further
comments. For guidance, refer to Question 101.02 of our Securities Act
Forms
Compliance and Disclosure Interpretations.
You may contact Amanda Kim, Staff Accountant, at (202) 551-3241 or
Craig Wilson,
Senior Assistant Chief Accountant, at (202) 551-3226 if you have questions
regarding comments
on the financial statements and related matters. Please contact Matthew
Crispino, Staff Attorney,
at (202) 551-3456 or Barbara C. Jacobs, Assistant Director, at (202) 551-3735
with any other
questions.
Sincerely,
FirstName LastNameJihong Liang
Division of
Corporation Finance
Comapany Name36Kr Holdings Inc.
Office of
Information Technologies
July 25, 2019 Page 5 and Services
FirstName LastName