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United States securities and exchange commission logo
June 3, 2022
Arshia Sarkhani
Chief Executive Officer
Asset Entities Inc.
100 Crescent Ct, 7th Floor
Dallas, TX 75201
Re: Asset Entities Inc.
Draft Registration
Statement on Form S-1
Submitted May 2,
2022
CIK No. 0001920406
Dear Mr. Sarkhani:
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 submitted May 2, 2022
Cover Page
1. You disclose that you
"may be considered a "controlled company" . . . after consummation
of this offering."
Please revise your cover page and your risk factor disclosure on page 23
to clarify that you
will be a "controlled company." Additionally, please revise the cover
page to identify your
controlling shareholder and to disclose the percentage of your total
voting power this
shareholder will control following the completion of this offering.
Industry and Market Data, page i
2. You state that you have
not independently verified third-party information, nor have you
ascertained the
underlying economic assumptions relied upon in those sources. Please
Arshia Sarkhani
FirstName LastNameArshia Sarkhani
Asset Entities Inc.
Comapany
June 3, 2022NameAsset Entities Inc.
June 3,
Page 2 2022 Page 2
FirstName LastName
note that you are responsible for the entire contents of the offering
statement. As this
statement may imply an inappropriate disclaimer of responsibility with
respect to the
third-party information, please either delete this statement or
specifically state that you are
liable for such information.
Prospectus Summary, page 1
3. Please revise the prospectus summary to describe your dual class
structure.
Risk Factors, page 9
4. Please revise to disclose any material risks resulting from your
business operations related
to the blockchain, crypto, and NFT industries. For example, if the
volatility of these
industries may have material impacts on your business, please discuss
this.
5. Please add a risk factor discussing any risks related to your dual
class capital structure,
such as the risks that your dual class structure may render your
shares ineligible
for inclusion in certain stock market indices, and thus adversely
affect share price and
liquidity.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
28
6. We note that your revenue depends on your number of subscribers.
Please revise to
include your number of active subscribers as of the end of each period
presented in your
financial statements.
Corporate History and Structure, page 34
7. Please revise to include a diagram depicting your organizational
structure following the
completion of this offering. Include on this diagram both your
controlling
shareholder and, as a group, the public shareholders that will receive
shares in this
offering. Ensure the diagram depicts the Class A and Class B holdings
of these
shareholders.
Business
Our Current Business, page 35
8. We note your discussion of your Social Influencer Network, your team
of social
influencer independent contractors. Please tell us whether any
individual influencer
accounted for a material portion of your expenses.
Certain Relationships and Related Party Transactions, page 57
9. On page F-11, you disclose that the Company paid management fees to
its controlling
members totaling $535,127 during the fiscal year ended December 31,
2021. Please
revise your related party section to describe these transactions or
advise. Consider Item
Arshia Sarkhani
FirstName LastNameArshia Sarkhani
Asset Entities Inc.
Comapany
June 3, 2022NameAsset Entities Inc.
June 3,
Page 3 2022 Page 3
FirstName LastName
404 of Regulation S-K.
Principal Shareholders, page 58
10. Please revise this section to also disclose the voting rights of both
your Class A and Class
B common stock. Additionally, revise the principal shareholder table
to
include columns that reflect the percentage of pre- and post-
offering total voting power held by each person or entity by combining
the number of
votes they are entitled to from their holdings of all classes of
voting stock.
Exhibits
11. Please file any material lease under which a part of the property
described in the
registration statement is held by the registrant. See Item 601(b)(10)
of Regulation S-K.
General
12. Please supplementally provide your detailed legal analysis supporting
your conclusion
that you are not an investment adviser as defined under the
Investment Advisers Act of
1940 (the Advisers Act ). In your response, please address each
of the three prongs of
the investment adviser definition in Section 202(a)(11) of the
Advisers Act and identify
the factual and legal basis for your position on each of these three
prongs, including
citations to any applicable law, regulation or other precedent. When
addressing the
compensation prong of the investment adviser definition,
please also provide
additional information about how exactly the Company intends to be
compensated for its
education and entertainment services. If you believe that you
qualify for any exclusions
or exemptions from investment adviser status, please identify
those exclusions or
exemptions and provide detailed support for your position.
13. Please describe whether your team of social influencer independent
contractors will be
permitted to provide investment advice or commentary as part of the
services they provide
to the Company or through their use of the Company s various servers
and platforms. If
so, please also provide detailed analysis of whether your team of
social influencer
independent contractors may be considered to be investment
advisers under the
Advisers Act or applicable state law. If you believe these social
influencer independent
contractors may potentially be investment advisers under such
laws, please discuss
whether you believe that you would have any potential liability under
Section 203(e)(6) of
the Advisers Act (and parallel provisions of applicable state law) for
the failure of any
such social influencer independent contractors to register as
investment advisers.
14. Please describe the nature of interactions between, on the one hand,
your personnel and
your social influencer independent contractors and, on the
other, the public users of the
company s Discord servers or other social media platforms. In your
response, please
describe whether communications made by your personnel and your
social influencer
independent contractors are tailored, individualized, or otherwise
attuned to any public
user s particular needs or investment goals.
Arshia Sarkhani
Asset Entities Inc.
June 3, 2022
Page 4
15. Describe the content of the commentary on securities trading or
any investment
guidance provided by the company, its personnel and the social
influencer independent
contractors. In your response, please address the inclusion on
social media of any
analyses of specific securities. We note, in this regard, the apparent
inclusion on
YouTube, and potentially other platforms, of the company s analysis
of, for example,
specific growth stocks. Please reconcile with the company s
assertion on page 17 that
the company does not advise as to the value of any specific
securities or categories of
securities or market trends; issue analyses or reports concerning
specific securities or
categories of securities; advise on the advantages of investing in
securities instead of other
types of investments; or issue lists of securities from which users or
others can choose.
16. Please provide us with supplemental 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, have presented or expect to present to potential investors in
reliance on Section
5(d) of the Securities Act, whether or not you retained, or intend to
retain, copies of those
communications.
You may contact Morgan Youngwood, Senior Staff Accountant, at (202)
551-3479 or
Stephen Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have
questions regarding
comments on the financial statements and related matters. Please contact Olivia
Bobes, Law
Clerk, at (202) 551-7361 or Mitchell Austin, Staff Attorney, at (202) 551-3574
with any other
questions.
FirstName LastNameArshia Sarkhani Sincerely,
Comapany NameAsset Entities Inc.
Division of
Corporation Finance
June 3, 2022 Page 4 Office of
Technology
FirstName LastName