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United States securities and exchange commission logo
July 14, 2023
Stephen Herbert
Chief Executive Officer
Rezolve AI Limited
3rd Floor, 80 New Bond Street
London, W1S 1SB
United Kingdom
Re: Rezolve AI Limited
Registration
Statement on Form F-4
Filed June 16, 2023
File No. 333-272751
Dear Stephen Herbert:
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 filed on Form F-4
Cover Page
1. You disclose that
Daniel Wagner, your chief executive officer, beneficially owns 75% of
the voting power of
your outstanding capital stock. Please disclose on the cover page that
you are a "controlled
company" and the identity and beneficial ownership percentage of
your controlling
shareholder.
Summary of the Material Terms of the Business Combination, page 6
2. Please provide an
organizational chart outlining your pre- and post-business combination
corporate structure and
illustrating the relationships of the various entities discussed
throughout the
registration statement.
Stephen Herbert
FirstName
Rezolve AILastNameStephen Herbert
Limited
Comapany
July NameRezolve AI Limited
14, 2023
July 14,
Page 2 2023 Page 2
FirstName LastName
3. Please identify the certain other excluded assets to the
Pre-Closing Demerger.
Questions and Answers About the Proposals
Q: Do you have Redemption Rights?, page 25
4. Clarify whether redeeming shareholders will be able to retain their
warrants.
Summary of the Proxy Statement/Prospectus
Interests of Armada Directors and Officers in the Business Combination, page 36
5. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration provided in exchange for this agreement.
Unaudited Prof Forma Condensed Combined Financial Statements
Note 2 - Unaudited condensed combined balance sheet adjustments, page 104
6. On page 99 you state, "the number of Employee Share Ownerships Plans
and their
accounting impact are not considered for the purposes of these pro
forma condensed
combined financial statements." Please explain this statement and why
employee share
ownerships plans are not considered in the pro forma condensed
combined financial
statements. Refer to your basis in accounting literature and Article
11 of Regulation S-X.
7. With regards to adjustment (a) which relates to estimated transaction
costs, disclose why
you recorded $10,971,518 for a short-term loan. Also, please disclose
the terms of this
loan.
8. In footnote (b) you state, "There are insufficient funds in the Trust
Account at Closing to
satisfy the requirement for $5,000,001 of net tangible assets under
the Business
Combination Agreement "Net Tangible Assets Condition")." Please
clarify this
statement. If this statement is true please emphasize it throughout
the filing.
9. With a view towards clarify the disclosure in footnote (b), please
explain to us how
obtaining additional third-party financing would satisfy the Net
Tangible Assets
Condition.
10. For adjustment (f), disclose how you determined the amounts that will
be payable for the
acquisition of ANY. We note various scenarios regarding potential
payments for the
ANY acquisition disclosed on page F-30 of Rezolve's audited financial
statements.
11. Please explain why there is a debit to accumulated deficit for
$3,062,500 for adjustment
(j). If this is a typo and should be labeled adjustment (l), please
revise accordingly
12. With regards to adjustment (o) you state it "reflects the short-term
loan to fund transaction
costs in the maximum redemptions scenario." However, based on
adjustment (n), it
appears that the cash from this loan will be used to return Armada
redeemable stock.
Please explain the contradiction and revise accordingly.
Stephen Herbert
Rezolve AI Limited
July 14, 2023
Page 3
13. Disclose in footnote (o) the terms of the short-term loan.
14. Your adjustment (q) refers to "cash paid," but cash is not affected by
this adjustment.
Please clarify and if true, disclose that you intend to borrow funds
to pay the taxes.
15. Please clearly label earnings per share as pro forma earnings per
share when applicable.
The Business Combination Proposal
Background of the Business Combination, page 124
16. We note that Armada "renounced its interest in any corporate
opportunity offered to any
director or officer unless such opportunity is expressly offered to
such person solely in his
or her capacity as a director or officer of Armada and such
opportunity is one Armada is
legally and contractually permitted to undertake and would otherwise
be reasonable for
Armada to pursue." Please address this potential conflict of interest
and whether it
impacted your search for an acquisition target.
Rezolve Financial Projections, page 140
17. Given that you have not generated any revenue from your commerce
platform, please
explain why you believe there is a reasonable basis to present a
financial forecast beyond
one year. Your disclosures should provide information that
demonstrates that your
projections are reasonable. In this regard, the underlying assumptions
should be clearly
outlined supporting your revenue growth.
Business of Rezolve, page 206
18. We note that you currently only derive revenues via the sale of radio
advertisements and
transaction fees on ticket sales. In order to provide investors with a
better understanding of
your business, please balance your disclosure here and elsewhere as
appropriate with
equally prominent disclosure of your current operations. Additionally,
please disclose the
development stage of your mobile commerce and engagement platform and
when your
expect to commercialize such platform.
19. We note that following the completion of the Pre-Closing Demerger, you
will cease
FirstName LastNameStephen Herbert
operations in China. We also note that you are "considering re-engaging
with the Chinese
Comapany NameRezolve
market AI Please
in the future." Limited
expand your discussion to explain why you
are ceasing
July 14,operations
2023 Pagein3China when you are also considering re-engaging with the
Chinese market.
FirstName LastName
Stephen Herbert
FirstName
Rezolve AILastNameStephen Herbert
Limited
Comapany
July NameRezolve AI Limited
14, 2023
July 14,
Page 4 2023 Page 4
FirstName LastName
Rezolve's Management's Discussion and Analysis of Financial Conditions and
Results of
Operations, page 214
20. We note that over 98% of your revenue for the fiscal year ended
December 31, 2022,
appears to be from radio advertising as a result of your acquisition
of ANY. We also note
that ANY generates revenue due to a marketing agreement with Radio
Group.
Furthermore, on page 63 you state, "ANY was established to purchase
the rights to sell
services of the companies owned by Radio Group". Please explain your
relationship with
Radio Group and if Radio Group is a related party in accordance with
ASC 850.
21. We note that the majority of your revenues are generated by the sale
of radio
advertisements to a single customer, Radio Group GmbH, through a
single marketing
agreement. Please quantify the percentage of revenue attributable to
such customer and
describe the material terms of your agreement with Radio Group GmbH,
including the
term and any material termination provisions, and file this agreement
as an exhibit to your
registration statement. Additionally, please provide relevant risk
factor disclosure. Refer
to Item 601(b)(10) of Regulation S-K.
Key Business Metrics, page 218
22. Please address the following with respect to your key metrics:
Provide a clear definition of each metric and how it is
calculated;
Provide a statement indicating the reasons why the metric provides
useful
information to investors; and
Provide a statement indicating how management uses the metric in
managing or
monitoring the performance of your business.
Refer to SEC Release No. 33-10751.
Adjusted EBITDA, page 219
23. Disclose in detail what is included in business development expenses,
share based
compensation issued to related parties, and share based compensation
for consultancy
services and explain why you believe it is appropriation to exclude
theses costs from
Adjusted EBITDA. Your disclosure should explain each type of expense
and what
services were provided to you. Also, disclose how Adjusted EBITDA is
used by
management.
Certain Relationships and Related Party Transactions
Relationship with Daniel Wagner, page 246
24. We note that you have debt outstanding to DBLP Sea Cow Limited. Please
clarify the
terms and purpose of any loans from DBLP Sea Cow Limited.
Stephen Herbert
FirstName
Rezolve AILastNameStephen Herbert
Limited
Comapany
July NameRezolve AI Limited
14, 2023
July 14,
Page 5 2023 Page 5
FirstName LastName
Description of Rezolve Ordinary Shares, Articles of Association and Certain
Legal
Considerations, page 248
25. Please highlight the material risks to public warrant holders,
including those arising from
differences between private and public warrants. Clearly explain the
steps, if any, the
company will take to notify all shareholders, including beneficial
owners, regarding when
the warrants become eligible for redemption.
Resolve AI Limited and Subsidiaries
Carve-out Consolidated Balance Sheets, page F-4
26. In light of the incorporation of Rezolve AI Limited on January 5,
2023, explain to us why
you are reporting share information for 2022 and 2021.
Carve-out Consolidated Statement of Operations, page F-5
27. Reclassify employee costs, consulting expenses, business development
expenses to the
appropriate expense line-items, i.e. cost of revenues, sales and
marketing expenses, and
general and administrative expenses. We refer to guidance in Rule 5-03
of Regulation S-
X.
2. Basis of presentation and summary of significant accounting policies
2.1 Basis of presentation, page F-9
28. Please explain to us why you are providing carve-out financial
statements of Rezolve AI
Limited, rather than the historic financial statements of Rezolve
Limited. Also, to enable
us to understand the significance of the carved-out business, please
provide an analysis
comparing total assets, total liabilities, total shareholders'
equity/deficit, total revenues,
total operating expenses, operating loss, and net loss of Rezolve AI
Limited to Rezolve
Limited as of and for the years-ended December 31, 2022 and 2021.
29. Please fully disclose the details of your expense allocations in
accordance with SAB Topic
1:B, including the nature of the expenses allocated, an explanation of
the allocation
method used along with management s assertion that the method used
is reasonable.
Clarify that the Rezolve AI Limited income statements reflect all of
its costs of doing
business.
2.7 Revenue recognition, page F-12
30. You state that "Revenue is recognized in accordance with ASC 606
Revenue from
Contracts with Customers at the point in time when the promised
services are performed
for the customer and when ANY expects to be entitled to the
consideration." Please
expand your disclosure to state your specific performance
obligation(s) and when revenue
is recognized for each performance obligation(s).
Stephen Herbert
FirstName
Rezolve AILastNameStephen Herbert
Limited
Comapany
July NameRezolve AI Limited
14, 2023
July 14,
Page 6 2023 Page 6
FirstName LastName
31. Disclose how you considered the principal versus agent guidance in
ASC 606 when
recording advertising sales under your contract with Radio Group and
advise us.
2.17 Shareholders' deficit and reserves, page F-15
32. Please disclose the expense that you anticipate will be incurred when
the employee shares
achieve a grant date, upon the removal of the restrictions.
8. Debt and other liabilities, page F-22
33. We note a balance of $14,600,000 in consideration payable for the
acquisition of ANY at
December 31, 2021. Please explain why this payable is no longer
recorded at December
31, 2022. Refer to your basis in accounting literature.
14. Other Non-operating expense, net, page F-30
34. Please revise your income statement to report within Cost of revenues
the expenses
incurred from impairment of inventory. We refer you to the guidance in
ASC 420-10-
S99-3.
35. Please revise to report the charges incurred from the impairment of
accounts receivable
and the share-based payment cost within operating expenses or advise
us.
15. Business Combinations
Acquisition of Any Lifestyle Marketing GmbH ("ANY Acquisition"), page F-31
36. We note from your disclosure on page F-30 that you determined Rezolve
was the primary
beneficiary of ANY. Please provide us with your analysis under ASC 810
to support your
conclusion as of the date of consolidation. Such analysis should
include:
A description of the variable interests of ANY and the holders of
those variable
interests;
How ANY has the characteristics of a VIE;
A description of the activities that most significant affect the
economic performance
of ANY and how decisions over those activities are made; and
A description of the rights of ANY and your analysis as to whether
each of those
rights are protective or participating.
37. We note on page F-31 that on December 28, 2022, the legal ownership of
ANY reverted
back to the sellers of ANY. Notwithstanding the comment above, please
provide us your
analysis of ASC 810-10-40-4 as to whether you ceased to have a
controlling financial
interest in ANY after legal ownership reverted to its sellers.
38. Provide us your agreement(s) with ANY, and tell us why you do not
believe they are
required to be filed pursuant to Item 601(b)(10) of Regulation S-K.
Stephen Herbert
FirstName
Rezolve AILastNameStephen Herbert
Limited
Comapany
July NameRezolve AI Limited
14, 2023
July 14,
Page 7 2023 Page 7
FirstName LastName
General
39. 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.
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 Inessa Kessman, Senior Staff Accountant, at (202)
551-3371 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact Kyle
Wiley, Staff
Attorney, at (202) 344-5791 or Matthew Crispino, Staff Attorney, at (202)
551-3456 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Gerry Williams