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United States securities and exchange commission logo
February 16, 2021
Gregory M. Gentile
Chief Financial Officer
Silver Spike Acquisition Corp.
660 Madison Ave., Suite 1600
New York, New York 10065
Re: Silver Spike
Acquisition Corp.
Registration
Statement on Form S-4
Filed January 19,
2021
File No. 333-252186
Dear Mr. Gentile:
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.
Form S-4 filed January 19, 2021
Cover Page
1. Please revise your
cover page to discuss the practical effects and implications of the Up-C
structure. For example,
disclose your voting and economic ownership interests in WMH,
describe your role as
managing member of WMH and note that this will give you control
over the affairs and
decision-making of WMH. Finally, explain that you will consolidate
the financial results
of WMH.
2. Please revise the cover
page to disclose the dual class structure that will exist following
the completion of the
business combination. Ensure you include a discussion of the
economic and voting
rights of both your Class A and Class V common stock.
Gregory M. Gentile
FirstName
Silver SpikeLastNameGregory
Acquisition Corp.M. Gentile
Comapany16,
February NameSilver
2021 Spike Acquisition Corp.
February
Page 2 16, 2021 Page 2
FirstName LastName
Summary Term Sheet, page 7
3. Here and elsewhere you state that WMH operates "the leading listings
marketplace and
most comprehensive SaaS subscription offering sold to retailers and
brands in the U.S.
state-legal and Canadian cannabis markets." Please revise to provide
support for your
statements that WMH operates "the leading listings marketplace" and
offers the "the most
comprehensive SaaS subscription offering."
4. Disclosure on page 9 of the "ownership of Silver Spike" appears to
include a number of
assumptions, including that WMH equity holders will exchange their
units for shares of
the registrant's Class A common stock. In order to simplify this
disclosure, please revise
this presentation to disclose the percentage of the registrant's total
voting power that these
categories of persons will have after the business combination.
Additionally, disclose the
economic interests of each of these categories of persons following
the business
combination.
Questions and Answers about the Transaction Proposals...
What vote is required to approve the Transaction Proposals... ?, page 20
5. In light of the vote requirement, please revise here or elsewhere to
discuss how the voting
requirement and the voting and support agreements make it more likely
the business
combination will be approved. For example, discuss the percentage of
shares not subject
to the voting and support agreement that would be required to approve
the business
combination proposal if only a quorum of Silver Spike shareholders are
present.
Amended Operating Agreement
Rights of the Units, page 35
6. You disclose that after the business combination WMH will have
post-merger Class A
units, Class P Units and LTIP Units. Please provide an explanation of
the rights of these
different types of WMH units and discuss which WMH equity holders will
hold Class A
units and which will hold Class P units.
After completion of the business combination, the post-merger WMH equity
holders..., page 83
7. Please revise this risk factor to highlight the fact that your two
founders will control
between approximately 44% and 53% of your voting power following the
completion of
the business combination. Please also revise your summary to disclose
this.
Risk Factors
New WMH's proposed organizational documents will designate the Court of
Chancery..., page
98
8. This risk factor appears to indicate that the provision designating
the Delaware Chancery
Court as the exclusive forum for certain claims will apply to
Securities Act claims.
Section 12.3 of the Form of Certificate of Incorporation of New WMH,
included as Annex
Gregory M. Gentile
Silver Spike Acquisition Corp.
February 16, 2021
Page 3
B, appears to designate the federal district courts of the United
States as the exclusive
forum for Securities Act claims. Please revise to reconcile this
apparent discrepancy or
advise.
Certain Projected Financial Information, page 130
9. You disclose WMH's projected revenue, gross margin and adjusted
EBITDA, and note
that these projections are based on a variety of regulatory and
operational assumptions.
Tell us whether any other information was provided to Silver Spike to
support the
projections. If so, disclose the material estimates and hypothetical
assumptions upon
which they are based.
U.S. Federal Income Tax Considerations, page 142
10. You disclose that this section provides the opinion of Davis Polk &
Wardwell LLP of the
material U.S. federal income tax consequences. Please file the tax
opinion as an exhibit.
Unaudited Pro Forma Condensed Combined Financial Information, page 180
11. Please tell us whether you will be subject to U.S. federal income tax
subsequent to the
domestication. If so, please revise your pro forma information to
reflect the change in tax
status. Refer to SAB Topic 1B2.
Business of WMH, page 197
12. You disclose that you neither sell nor fulfill purchases of cannabis
products and do not
process payments for cannabis transactions. We also note that it
appears that your
platform allows consumers to reserve products for pick-up or order
delivery of products
from your clients. Please revise to clarify the role of your platform
when consumers
reserve products and order delivery of products from your clients. For
example, clarify
whether a consumer purchases your clients' products through your
platform and, if so,
who processes the payments. Additionally, further clarify whether your
revenue depends
on the number of reservations or deliveries facilitated by your
platform. Finally, to the
extent that the company processes any payments for transactions,
including transaction
fees, explain why the collection of such fees would be permissible
under U.S. federal
regulations which do not permit the processing of payments for
federally prohibited
activities.
Our Competitive Strengths, page 203
13. We note the disclosure of EBITDA on page 204 without disclosure of GAAP
net income
FirstName LastNameGregory M. Gentile
with greater prominence. Please revise accordingly. Refer to Item
10(e)(1)(i)(A) of
Comapany NameSilver
Regulation Spike
S-K and Acquisition
Question 102.10Corp.
of the Non-GAAP Compliance and
Disclosure
Interpretations.
February 16, 2021 Page 3
FirstName LastName
Gregory M. Gentile
FirstName
Silver SpikeLastNameGregory
Acquisition Corp.M. Gentile
Comapany16,
February NameSilver
2021 Spike Acquisition Corp.
February
Page 4 16, 2021 Page 4
FirstName LastName
Management s Discussion and Analysis of Financial Condition and Results of
Operations of
WMH
Key Operating and Financial Metrics, page 217
14. Please tell us what information you are intending to convey when
disclosing "monthly
revenue per paying client" where the revenue used to calculate the
metric is not
representative of GAAP revenue. In this regard, the calculation of
this measure includes
non-GAAP revenue that is determined based on a tailored accounting
principle. We refer
you to Question 100.04 of the Non-GAAP Compliance and Disclosure
Interpretations.
Please advise.
15. It appears that the "total revenue" used to calculate "monthly revenue
per paying client"
may include revenue from customers that are no longer paying clients
at period end and
are, therefore, not included in the "paying clients" number used in
the denominator.
Please tell us how this metric is representative of revenue per paying
customer if "total
revenue" includes amounts earned by customers that have cancelled
service as of period
end.
16. We note your monthly average users (MAUs) increased significantly
between 2018, 2019
and third-quarter 2020. Please revise to include a discussion of the
fluctuations in this
metric from period to period. In this regard, we note you disclose on
page 67 that,
beginning in 2020, you experienced an increase in MAUs due to the
impact from the
pandemic.
17. We note you disclose average net dollar retention on page 219. To the
extent material to
an understanding of any trends, please disclose the monthly net dollar
retention rate for
each period presented. Also, tell us what consideration was given to
including net dollar
retention in the metrics section on page 217.
Results of Operations
Comparison of Nine Months Ended September 30, 2019 and 2020, page 222
18. We note your disclosure on page 67 that you experienced a significant
increase in demand
in 2020 from both retailers and consumers as a result of the pandemic,
which resulted in
an increase in revenue. Please revise here to include a discussion,
including quantification
if possible, of the impact the pandemic had on your revenue from
period to period.
Contractual Obligations, page 230
19. Please revise to disclose that the payments you would be required to
make under the Tax
Receivable Agreement may be significant, and are not reflected in the
table.
Beneficial Ownership of Securities, page 243
20. Please revise your disclosure to further clarify that identified
beneficial owners of post-
merger WMH Class A units will also own an equal number of shares of
your Class V
Gregory M. Gentile
Silver Spike Acquisition Corp.
February 16, 2021
Page 5
common stock following the business combination. Additionally, we note
that you
disclose the total voting power of the beneficial owners identified on
the table. Please
revise to separately disclose the percentage of each class of voting
securities that each
beneficially owns.
Notes to Consolidated Financial Statements of WM Holding Company, LLC and
Subsidiaries
Note 2. Summary of significant accounting policies
Revenue Recognition, page FS-9
21. Please revise to include all the information required by ASC 606-10-50
within your
footnotes. In particular, ensure you identify the performance
obligations within each
contract, how the transaction price is determined including any
consideration of sales
incentives or discounts, and how the transaction price is allocated to
each performance
obligation, including how the stand-alone selling price is determined.
Ensure your
disclosures address your significant revenue streams including your
accounting for
featured listings.
22. Revise to separately disclose the revenues from customers attributed
to the U.S. and
attributed to all foreign countries in total from which you derive
revenues. If revenues
from customers attributed to Canada are material, those revenues shall
be disclosed
separately. Refer to ASC 280-10-50-41.
23. Tell us what consideration was given to providing a breakdown of
revenue from
subscriptions versus featured listings or other revenue sources. Refer
to ASC 606-10-50-
5.
Income Taxes, page FS-9
24. Revise to disclose the components of income before provision for
income taxes as either
domestic or foreign. In this regard, we note that you recorded a
significant income tax
provision related to taxable income from operations in Canada. Refer
to Rule 4-08(h) of
Regulation S-X.
Note 8. Members equity, page FS-14
25. We note your Class A-3 and Class B Unit profits interests have
performance conditions
that were not probable of being satisfied as of period end. Please
revise to disclose how
the completion of this merger transaction may affect the vesting of
these awards and the
recognition of the related stock-based compensation. In this regard, we
note pro forma
FirstName LastNameGregory M. Gentile
adjustment (dd) on page 190 to record $11.0 million of unrecognized
compensation upon
Comapany NameSilver
closing Spike Acquisition
of the business combinationCorp.
is the same amount as the
unrecognized compensation
expense
February disclosed
16, 2021 Page 5on page FS-24.
FirstName LastName
Gregory M. Gentile
FirstName
Silver SpikeLastNameGregory
Acquisition Corp.M. Gentile
Comapany16,
February NameSilver
2021 Spike Acquisition Corp.
February
Page 6 16, 2021 Page 6
FirstName LastName
Note 10. Subsequent events, page FS-16
26. Revise to disclose the date through which subsequent events have been
evaluated. Refer to
ASC 855-10-50-1. Similar concerns apply to your disclosure on page
FS-26
General
27. Please revise to add diagrams depicting the pre-combination
organizational structure of
both Silver Spike and WMH and the post-combination organizational
structure of the
combined company. Ensure that these diagrams clearly identify the
economic and voting
power percentages of the different security holder groups, such as the
Sponsor, the WMH
equity holders and the Silver Spike public stockholders.
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 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
Mitchell Austin, Staff
Attorney, at (202) 551-3574 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Derek J. Dostal, Esq.