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United States securities and exchange commission logo
March 3, 2022
Ioannis Pipilis
Chief Executive Officer
SVF Investment Corp. 3
1 Circle Star Way
San Carlos CA, 94070
Re: SVF Investment
Corp. 3
Registration
Statement on Form S-4
Filed February 4,
2022
File No. 333-262529
Dear Mr. Pipilis:
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 S-4
Cover Page
1. Please revise to
highlight that the combined company will be a controlled company,
identify the
controlling shareholders and the shareholders' total voting power.
2. We note that you have
multiple classes of securities, including Class V-3 common stock
which has disparate
voting rights from the Class A common stock. Please revise to
disclose the
post-business combination voting structure and quantify the voting power that
the Class V-3 common
stock holders will have after the business combination.
Additionally, revise
your risk factor disclosure to addresses the risk that your capital
structure may render
your shares ineligible for inclusion in certain stock market indices,
which could adversely
affect share price and liquidity.
Ioannis Pipilis
SVF Investment Corp. 3
March 3, 2022
Page 2
What is an UP-C structure?, page xvii
3. In order to provide investors with a better understanding of the
proposed corporate
structure following the business combination, explain the strategic
rationale for
implementing the up-C structure, including all material ways in which
the structure
benefits the company, certain groups of stockholders, and/or related
parties. Disclose how
the transaction structure achieves the intended benefits, including
the tax and liquidity
benefits. Additionally, highlight the resulting conflicts of interest
related to such benefits
here and in the Risk Factors section.
Do I Have Redemption Rights?, page xviii
4. Revise your disclosure to show the potential impact of redemptions on
the per share value
of shares owned by non-redeeming shareholders by including a
sensitivity analysis
showing a range of interim redemption scenarios.
5. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Please revise to disclose the effective underwriting fee
on a percentage basis
for shares at each redemption level presented in your sensitivity
analysis related to
dilution.
What are the U.S. Federal Income Tax Consequences of the Domestication?, page
xxv
6. We note it is intended that the Domestication qualify as an F
Reorganization for U.S.
federal income tax purposes. Please include a tax opinion from counsel
for this and the
other material federal tax consequences. Given your representation
that there is
an absence of direct guidance on the application of Section
368(a)(1)(F) of the Code to a
statutory conversion of a corporation holding only investment-type
assets such as SVF
3, the tax opinion should address the degree of uncertainty, state the
key factors used in
the analysis, and discuss the risks to investors of the uncertain tax
treatment.
Do any of SVF 3's directors or officers have interests in the business
combination that may differ
from..., page xxvii
7. Provide a summary here of the material interests that SVF 3 s
directors and officers have
that are different from those of the public shareholders.
Summary, page 1
FirstName LastNameIoannis Pipilis
8. With a view toward facilitating investor understanding of your complex
corporate
Comapany NameSVF
structure, pleaseInvestment Corp.
include here 3
the post-combination diagram of your
corporate structure
March provided on page
3, 2022 Page 2 207-208. Additionally, revise the diagram so that the
text is legible.
FirstName LastName
Ioannis Pipilis
FirstName LastNameIoannis Pipilis
SVF Investment Corp. 3
Comapany
March NameSVF Investment Corp. 3
3, 2022
March3 3, 2022 Page 3
Page
FirstName LastName
Merger Consideration, page 2
9. We note that The Symbotic Founder, certain family members of the
Symbotic Founder
and certain affiliated entities and trusts of the Symbotic Founder and
his family members
will receive a number of shares of the Post-Combination Company s
Class V-3 common
stock in exchange for payment by such holder to the Post-Combination
Company of
adequate consideration. We note a similar arrangement for the other
holders of Interim
Symbotic Common Units. Explain in plain English the rationale for and
effect of these
arrangements.
10. We note that the Post-Combination Company s Class V-3 common stock
will convert to
Class V-1 common stock upon the occurrence of certain sunset events,
including an
automatic conversion. Revise to specify each sunset event that would
trigger conversion.
SVF 3's Directors and Executive Officers Have Financial Interests in the
Business Combination,
page 6
11. Please 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.
Include the current value of securities held, loans extended, fees
due, and out-of-pocket
expenses for which the sponsor and its affiliates are awaiting
reimbursement. Provide
similar disclosure for the company s officers and directors, if
material.
12. Please 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.
13. Your bylaws waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
Summary, page 7
14. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration provided in exchange for this agreement.
15. Please revise to disclose all possible sources and extent of dilution
that shareholders who
elect not to redeem their shares may experience in connection with the
business
combination. Provide disclosure of the impact of each significant
source of dilution,
including the amount of equity held by founders, convertible
securities, including warrants
retained by redeeming shareholders, at each of the redemption levels
detailed in your
sensitivity analysis, including any needed assumptions.
Ioannis Pipilis
FirstName LastNameIoannis Pipilis
SVF Investment Corp. 3
Comapany
March NameSVF Investment Corp. 3
3, 2022
March4 3, 2022 Page 4
Page
FirstName LastName
Forward Purchase Agreement, page 15
16. We note that you entered into a Forward Purchase Agreement in
connection with your
initial public offering and are conducting a concurrent PIPE financing
with the business
combination. Please highlight any material differences in the terms
and price of securities
issued at the time of the IPO as compared to private placements
contemplated at the time
of the business combination.
We depend heavily on principal customers..., page 27
17. Given Symbotic's dependence on Walmart as a customer and the nature of
Walmart's
investment in Symbotic, file the amended Master Automation Agreement
with Walmart as
an exhibit to the registration statement.
The Sponsor and SVF 3's directors, officers and their affiliates may elect to
purchase Public
Shares, which may influence a vote..., page 43
18. We note your disclosure that the Sponsor and SVF 3 s directors,
officers or their affiliates
may purchase additional Public Shares in privately negotiated
transactions or in the open
market prior to the completion of the Business Combination. Please
tell us how such
purchases are consistent with the requirements of Rule 14e-5 under the
Exchange Act.
Unaudited Pro Forma Condensed Combined Financial Information
Description of the Business Combination, page 78
19. Please revise to include a prominent statement that the accounting for
the transaction is
not complete. Discuss the uncertainties affecting the pro forma
financial information, the
possible consequences of their resolution, and any other available
information that will
enable a reader to understand the magnitude of any potential
adjustments to the
measurements depicted. Refer to Article 11-02(11)(ii)(B) of Regulation
S-X.
20. You disclose that the unit Repurchase Amount may range between $120
million and $300
million but you currently expect it to be approximately $300 million.
Please revise to
explain your basis for the assumption of the repurchase amount. If
different results could
occur, revise to provide additional pro forma presentations which give
effect to the range
of possible results. Refer to Item 11-02(a)(10) of Regulation S-X.
21. We note that you have not included any pro forma adjustments related
to
the Tax Receivable Agreement. Please include a quantified discussion,
either in the
introductory paragraphs or in the in the pro forma footnotes, of the
potential payments due
under the Tax Receivable Agreement assuming the exchange of all Units.
Also, disclose
the factors that may impact such amounts, such as the market price of
your stock at the
time of exchange, the prevailing federal tax rate and whether the
company has generated
taxable income to realize the benefits from this Agreement.
Ioannis Pipilis
FirstName LastNameIoannis Pipilis
SVF Investment Corp. 3
Comapany
March NameSVF Investment Corp. 3
3, 2022
March5 3, 2022 Page 5
Page
FirstName LastName
Basis of Pro Forma Presentation, page 80
22. Your maximum redemption scenario is based on the maximum number of
redemptions
that may occur; however, the amount of cash under that scenario will
not meet the
Minimum Cash Condition. You disclose elsewhere that neither you nor
Warehouse has
waived this condition and unless Warehouse and Symbotic Holdings elect
to waive
such condition, the Maximum Redemptions scenario cannot occur. Please
revise to
disclose whether you or Warehouse intend to waive this condition and
if not, disclose
whether the business combination would be consummated. Describe any
additional
conditions or actions you would have to take for the business
combination to be
consummated under the maximum redemption scenario. Lastly, revise the
notes to the pro
forma financials to show the impact on the pro forma financial
statements under the
various options available. If neither party intends to waive this
condition, please tell us
why you are presenting the maximum redemption scenario assuming all
shares have been
redeemed. Refer to Article 11-02(a)(10) of Regulation S-X.
Notes to Unaudited Pro Forma Condensed Combined Financial Information, page 86
23. We note from your disclosures on page 2 that the New Symbotic Holdings
Common Units
may be redeemed for shares of Class A common stock or an equivalent
amount of cash.
Please tell us how you considered the guidance in ASC 480-10-S99 to
determine that your
contingently redeemable non-controlling interest should be classified
as permanent equity
on your pro forma balance sheet. Specifically address how you
determined that
redemption of these units for cash is solely within the company's
control.
24. We note your pro forma balance sheet assumes that investors in the
Forward Purchase
Agreement have elected to purchase an additional 5.0 million shares
for $50.0 million.
Please revise to clarify whether investors have committed to the
additional purchase and if
not, revise the pro forma notes to explain the impact on the pro forma
financial statements,
should the additional shares not be issued.
Purchases of SVF 3 Shares, page 100
25. We note your disclosure that SVF 3 or its affiliates may offer
incentives to investors who
indicate they intend to vote against the business combination
proposal. Please revise to
more prominently discuss the ability of SVF 3 or its affiliates to
ensure the business
combination is approved and the impact it could have on investors.
Additionally, in your
response letter, please tell us how you intend to disclose any such
arrangements
in advance of the special meeting.
Ioannis Pipilis
FirstName LastNameIoannis Pipilis
SVF Investment Corp. 3
Comapany
March NameSVF Investment Corp. 3
3, 2022
March6 3, 2022 Page 6
Page
FirstName LastName
Symbotic Platform Overview
Remaining Performance Obligations ("Backlog"), page 168
26. To provide context for the disclosure of your backlog, identify the
customers that
constitute these remaining performance obligations and disclose the
terms of the related
material contracts with these customers. In this regard, we note that
for the year
ended September 25, 2021, 95% of your revenue was derived from only
two customers.
Given Symbotic's substantial dependence on these customers, please
file the material
contracts with these two customers as exhibits to the registration
statement pursuant to
Item 601(b)(10) of Regulation S-K.
Liquidity and Capital Resources, page 187
27. We note material increases in certain of your assets and liabilities
during the year ended
September 25, 2021, such as your accounts receivable and deferred
revenue. In light of
these changes, please revise to include a more robust discussion of
the underlying reasons
for changes in working capital items that affect operating cash flows.
Refer to Section
IV.B.1 of SEC Release No. 33-8350.
28. Please disclose the minimum funding required to remain in business for
at least the next
12 months, as well as the minimum number of months that you will be
able to conduct
your planned operations using currently available capital resources.
Refer to Item
303(a)(1) and (2) of Regulation S-K.
Unaudited Prospective Financial Information of Symbotic, page 215
29. Please revise to disclose each material assumption on which Symbotic
s management
based the forecasts, including but not limited to current customer
expansion, new sales
opportunities, manufacturing and installation costs, and operating
expenses. Additionally,
specify the guaranteed minimums used for gross profits and disclose
the basis for
assuming that key variable cost items would be absorbed by the
customer.
Certain Relationships and Related Person Transactions-Symbotic
C&S Wholesale Grocers, page 280
30. Provide all disclosure required by Item 404 of Regulation S-K.
Disclose each transaction
among the related parties and quantify the dollar value for each such
transaction.
Audited Consolidated Financial Statements of Warehouse Technologies LLC and
Subsidiaries
Consolidated Statements of Operations , page F-36
31. We note you present a measure of gross profit on the face of your
Consolidated
Statements of Operations. We further note that it appears all your
amortization and
depreciation expense is currently classified within general and
administrative expense.
Please tell us how your presentation complies with the guidance in SAB
Topic 11.B. In
this regard, if you do not allocate any depreciation and amortization
to cost of revenue,
Ioannis Pipilis
SVF Investment Corp. 3
March 3, 2022
Page 7
you should remove the gross profit subtotal from your statements of
operations and relabel
the cost of revenue line item to indicate that it excludes
depreciation and amortization.
Consolidated Statement of Cash Flows, page F-39
32. Please tell us why certain amounts in your statement of cash flows
reflecting changes in
assets and liabilities do not agree to the changes in such assets and
liabilities in your
balance sheet. For example, explain why the change in accounts
receivable and both
current and long term deferred revenue in your statement of cash flows
is different than
the changes reflected in your balance sheet.
Note 2. Summary of Significant Accounting Policies
Concentrations of Credit Risk and Significant Customers, page F-42
33. You disclose that two customers represented 95%, 87% and 80% of the
company's total
revenue for the years ended September 25, 2021, September 26, 2020,
and September 28,
2019, respectively. Further, four customers accounted for 100% of your
accounts
receivable balance at each balance sheet date. Please revise to
provide discussion of
concentration of credit risk separately for each of these customers
pursuant to ASC 275-
10-50-18(a). Also, separately disclose the total revenue from each
customer that provided
more than 10% of your revenue for each period presented. Refer to ASC
280-10-50-42.
Lastly, in your response, please provide the identity of the customers
comprising these
concentrations.
Revenue Recognition, page F-43
34. We note that your systems include both hardware and software that are
treated as a single
performance obligation. Further, disclosure on page 170 indicates that
you charge an
annual software and support fee that is required to use the Symbotic
system. Please tell us
how you considered whether the option to renew the term license
represents a material
right considering the significant upfront payment required for the
system. Refer to ASC
606-10-25-18(j).
35. Please provide us with a breakdown of your systems sales that include
perpetual licenses
versus those that include term licenses for each period presented.
Provide a similar
breakdown for any system sales included in your remaining performance
obligation.
FirstName LastNameIoannis Pipilis
Also, please clarify how the annual software and support fees apply for
customers with
Comapany NameSVF
perpetual Investment
licenses Corp.
and describe 3
further to us the updates and upgrades
included in such
services.
March 3, 2022 Page 7
FirstName LastName
Ioannis Pipilis
FirstName LastNameIoannis Pipilis
SVF Investment Corp. 3
Comapany
March NameSVF Investment Corp. 3
3, 2022
March8 3, 2022 Page 8
Page
FirstName LastName
Note 3. Revenue
Remaining Performance Obligations, page F-48
36. We note that you expect to recognize approximately 8% of your
remaining performance
obligations over the next 12 months and the balance thereafter. Please
tell us in what
periods you expect to recognize the amounts included in "thereafter"
and how your current
disclosures reflect the appropriate time bands for your arrangements.
Refer to ASC 606-
10-50-13(b). Also, please clarify for us the nature of these
performance obligations, the
terms of such arrangements, why the balance is substantially larger
than your current year
revenue and whether there are any customer concentrations present that
should be
disclosed pursuant to ASC 275-10-50-18.
Note 15. Unit-based Compensation, page F-56
37. Your disclosure indicates that both your Class C Units and the Class A
Warrant Units
issued to Walmart base the expected term on estimated liquidity event
timing. Please
revise to specifically describe what the liquidity event is that would
impact the term of
these awards. Also, your disclosure indicates that the Warrant Units
may vest in
connection with conditions defined by the terms of the Warrant, which
appear to be in
addition to additional expenditures made by Walmart. Revise your
disclosure to more
specifically describe these vesting terms. Refer to ASC
718-10-50-2(a)(1).
38. Please revise to disclose the fair value of the underlying common
stock (or a range of
values) for each period presented as this appears to be a significant
assumption used in
determining the grant date fair value of your Class C and Class A
Warrant units. Refer to
ASC 718-10-50-2(f)(2). Also, in your response, provide us with the
individual common
share values used throughout fiscal 2021 and to date in fiscal 2022
and to the extent there
were any significant fluctuations from period to period, please
describe the factors that
contributed to such fluctuations, including any intervening events
within the company or
changes in the valuations assumptions or methodologies used to
determine the fair value
of your common stock.
General
39. Please revise the forepart of your document to quantify the actual
Exchange Ratio of New
Symbiotic Holdings Common Units as of the most recent date
practicable. Also, define
the Exchange Ratio in the Glossary.
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.
Ioannis Pipilis
SVF Investment Corp. 3
March 3, 2022
Page 9
You may contact Rebekah Lindsey, Senior Staff Accountant, at (202)
551-3303 or
Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 if you have
questions regarding
comments on the financial statements and related matters. Please contact
Matthew Derby, Staff
Attorney, at (202) 551-3334 or Joshua Shainess, Legal Branch Chief, at (202)
551-7951 with any
other questions.
FirstName LastNameIoannis Pipilis Sincerely,
Comapany NameSVF Investment Corp. 3
Division of
Corporation Finance
March 3, 2022 Page 9 Office of Technology
FirstName LastName