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United States securities and exchange commission logo
January 25, 2021
Abner Kurtin
Chair of the Board and Chief Executive Officer
Ascend Wellness Holdings, LLC
1411 Broadway
16th Floor
New York, NY 10018
Re: Ascend Wellness
Holdings, LLC
Draft Registration
Statement on Form S-1
Submitted December
28, 2020
CIK No. 0001756390
Dear Mr. Kurtin:
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 S-1
Cover Page
1. We note your disclosure
here that you intend to list your Class A common stock on the
Canadian Securities
Exchange. We also note your disclosure on page 14 that you
anticipate having your
shares of Class A common stock trade on the OTC Markets in the
U.S and your disclosure
on page 20 that you anticipate trading on over-the-counter
markets in the United
States following the completion of this offering. If you intend to
have your shares of
Class A common stock quoted on the OTC Markets, please revise the
cover page to state
that and to specify on which OTC Market.
Abner Kurtin
FirstName LastNameAbner
Ascend Wellness Holdings, Kurtin
LLC
Comapany
January 25,NameAscend
2021 Wellness Holdings, LLC
January
Page 2 25, 2021 Page 2
FirstName LastName
About This Prospectus, page 2
2. We note your disclosure that certain of the industry data presented in
the S-1 was derived
from reports commissioned and paid for by the underwriters and
prepared by Arcview
Market Research. We also note that it appears that you have attributed
certain statements
in the Business section to Arcview Market Research. Please revise your
filing to file a
consent from Arcview Market Research or advise. Please see Securities
Act Rule 436 and
Question 233.02 of the Securities Act Rules Compliance and Disclosure
Interpretations.
Implications of Being an Emerging Growth Company, page 3
3. 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.
Our voting control will be concentrated, page 11
4. Please disclose the percentage of outstanding shares that Class B
shareholders must
maintain to continue to control the outcome of matters submitted to
shareholders for
approval.
Risk Factors, page 11
5. Please revise to comply with Regulation S-K Item 105 by relocating
risks that could
generically apply to any registrant or offering to the end of the
section under the caption
General Risk Factors.
Our certificate of incorporation and bylaws will provide that the Court of
Chancery of the State
of Delaware will be the sole and exclusive , page 16
6. Please revise this risk factor to disclose that your exclusive forum
provision will not apply
to actions arising under the Securities Act or the Exchange Act as
discussed on page 128.
Please also ensure that the exclusive forum provision in your bylaws
states this clearly, or
tell us how you will inform investors in future filings that the
provision does not apply to
any actions arising under the Securities Act or Exchange Act. Please
also revise this risk
factor to disclose that your exclusive forum provision could result in
increased costs for
shareholders to bring a claim.
Use of Proceeds, page 48
7. Please disclose whether you expect to use any proceeds to pay the $2
million MSA
termination fee to the CEO's company as referenced on page F-29.
8. We note that you intend to use proceeds for the expansion of your
cultivation and
processing facilities, future acquisitions, working capital and
general corporate purposes.
Please revise to disclose the approximate amount to be used for each
such purpose. Refer
Abner Kurtin
FirstName LastNameAbner
Ascend Wellness Holdings, Kurtin
LLC
Comapany
January 25,NameAscend
2021 Wellness Holdings, LLC
January
Page 3 25, 2021 Page 3
FirstName LastName
to Item 504 of Regulation S-K.
Compensation Expense, page 59
9. Please expand your disclosures to quantify the amounts of compensation
expense you
classify as cost of goods sold (page F-9) and as G&A so that readers
can fully understand
the magnitude of your total compensation expense. Also, please explain
how you
distinguish this "compensation expense" line item from the G&A line
item. If the
compensation expense line item solely relates to the unallocated
portions of your senior
management compensation then that fact should be disclosed.
Business
Established Ascend Brand with Focus on Flagship Retail, page 72
10. Please substantiate your statement that the Ascend retail brand in
Illinois is one of the
most recognized brands in the market, serving an average of 2,628
customers on a daily
basis while achieving productivity of approximately $5,496 per square
foot, rivaling the
sale productivity of luxury retailers like Apple, Tiffany and
Lululemon.
History
Illinois, page 74
11. Please briefly explain what a BLS Region is.
Security Ownership of Certain Beneficial Owners and Management, page 119
12. Please revise your disclosure to identify the natural person or
persons who have voting
and investment control of the shares held by One Tower Spire, LLC.
Description of Capital Stock, page 125
13. We note that you refer shareholders to, in part, the applicable
provisions of the Delaware
law. It is not appropriate to qualify your disclosure by reference to
information that is not
included in the filing or filed as an exhibit. Please revise
accordingly.
Note 6 Notes Receivable, page F-17
14. Please expand your disclosures to clearly indicate whether these
receivables all relate to
deposits you paid in connection with agreements to acquire specific
businesses. If so,
please identify the business to which each receivable relates and
disclose whether there
are any conditions that would impair your ability to collect the full
amounts outstanding if
the corresponding acquisition is not consummated. Further, please
clearly correlate each
receivable with any corresponding acquisition transactions reported in
Note 18. Also,
please reconcile the existance of your purchase agreements with the
disclosure in the Use
of Proceeds section on page 48 that "we do not have agreements or
commitments for any
material acquisitions or investments as of the date of this
prospectus".
Abner Kurtin
Ascend Wellness Holdings, LLC
January 25, 2021
Page 4
Note 8 Variable Interest Entities, page F-18
15. Please clarify why the VIE summarized financial information is
characterized as
unaudited given the disclosure requirements of ASC 810-10-50-3. Also,
please provide
the disclosures required by ASC 810-50-3.c-d. and ASC 810-50-2AA.
Note 10 Leases, page F-20
16. Please provide us with a comprehensive analysis that supports your
determination to use
the 9% weighted average discount rate to measure your lease
liabilities. Clearly
demonstrate how your assumptions comply with the corresponding
accounting guidance.
In this regard, we note the 14%-20% borrowing rates referenced in Note
11.
Note 11 Debt, page F-23
17. For each convertible instrument, including the real estate preferred
units, please clearly
disclose the specific conversion terms pursuant to the original
agreements and explain the
accounting impact of any subsequent changes in said terms.
Note 12 Members Equity, page F-24
18. Please disclose in MD&A whether any beneficial conversion feature,
including that which
is attached to your real estate preferred units, can reasonably be
expected to precipitate a
charge that will adversely impact your operating results upon the
conversion referenced
on page 5. Similarly, please address whether a material charge to
stock compensation
expense will be recognized upon consummation of the IPO due to
accelerated vesting
provisions or other conditions.
Note 13 Equity-Based Compensation Expense, page F-25
19. Please clearly disclose whether each equity incentive unit is
convertible into one common
unit. Also, please expand your disclosure in MD&A to clearly explain
how you
determined the compensation expense that will be recognized relating
to the 19.9
million restricted common units issued in November 2020 (page F-32).
Note 18 Subsequent Events, page F-30
20. For each 2020 and 2021 completed and probable acquisition, please give
us your
significance calculations as outlined in Article 3-05 of Regulation
S-X.
21. We understand that in December 2020, the member of Ascend Michigan
assigned its
interests to Ascend Wellness Holdings, LLC for no consideration. Please
disclose in
FirstName LastNameAbner Kurtin
MD&A the circumstances of this transaction and whether this is an
indication that the
Comapany NameAscend
Ascend Wellness
Michigan assets Holdings,
reflected LLCF-18 may be impaired. In this
regard, we also
on page
Januarynote
25, the
2021Michigan
Page 4 breach of contract loss contingency disclosed on page
F-32.
FirstName LastName
Abner Kurtin
FirstName LastNameAbner
Ascend Wellness Holdings, Kurtin
LLC
Comapany
January 25,NameAscend
2021 Wellness Holdings, LLC
January
Page 5 25, 2021 Page 5
FirstName LastName
You may contact David Burton at 202-551-3626 or Al Pavot at 202-551-3738
if you have
questions regarding comments on the financial statements and related matters.
Please contact
Ada D. Sarmento at 202-551-3798 or Mary Beth Breslin at 202-551-3625 with any
other
questions.
Sincerely,
Division of Corporation
Finance
Office of Life Sciences
cc: James B. Guttman, Esq.