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July 3, 2019
Ryan Rhodes
President and Chief Executive Officer
Restoration Robotics, Inc.
128 Baytech Drive
San Jose, CA 95134
Re: Restoration Robotics, Inc.
Registration Statement on Form S-4
Filed June 7, 2019
File No. 333-232000
Dear Mr. Rhodes:
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 on Form S-4 filed June 7, 2019
Cover Page
1. Please limit your prospectus cover page to one page. See Item 501(b) of
Regulation S-K.
2. Please disclose on the cover that there is no adjustment to the number
of shares of
Restoration common stock to be issued in the merger and the market value
of the shares of
Restoration common stock could vary significantly from the market value
as of the date of
the proxy statement/prospectus.
Voting Agreements, page 12
3. We note your reference to the agreements to vote. We also note the
irrevocable proxy like
in section 1.4 of exhibit 10.34. Given those agreements, please provide
us your analysis
Ryan Rhodes
Restoration Robotics, Inc.
July 3, 2019
Page 2
supporting your conclusions regarding whether offers and sales of the
securities registered
for sale have already been made and completed. For guidance, see the
Division of
Corporation Finance's Securities Act Sections Compliance and
Disclosure Interpretation
239.13 available on the Commission's website.
4. Please identify or tell us the nature of the holdings of the parties
who have entered into the
Restoration Voting and Lock-Up agreements.
Material U.S. Federal Income Tax Consequences, page 15
5. Here and throughout your document, as appropriate, please provide
unequivocal
disclosure regarding the material tax consequences rather than what
the tax consequences
may be and include an appropriate opinion of counsel opining on the
material tax
consequences. If counsel is unable to provide a firm opinion, counsel
may issue a
"should" or "more likely than not" opinion to make clear that the
opinion is subject to a
degree of uncertainty. In this case, the disclosure should describe
the degree of uncertainty
and include risk factor disclosure setting forth the risks to
investors due to the uncertainty.
Refer to Staff Legal Bulletin No. 19 (October 2011).
If the merger is not completed, page 30
6. Please include a separate risk factor to highlight the risk mentioned
in the second
paragraph of this section.
The certificate of incorporation of the combined company, page 38
7. We note that your forum selection provision identifies the Court of
Chancery of the State
of Delaware as the exclusive forum for certain litigation, including
any "derivative
action." Please disclose whether this provision applies to actions
arising under the
Securities Act or Exchange Act. In that regard, we note that Section 27
of the Exchange
Act creates exclusive federal jurisdiction over all suits brought to
enforce any duty or
liability created by the Exchange Act or the rules and regulations
thereunder, and Section
22 of the Securities Act creates concurrent jurisdiction for federal
and state courts over all
suits brought to enforce any duty or liability created by the
Securities Act or the rules and
regulations thereunder. If the provision applies to Securities Act
claims, please also revise
your prospectus to state that there is uncertainty as to whether a
court would enforce such
provision and that investors cannot waive compliance with the federal
securities laws and
the rules and regulations thereunder. If this provision does not apply
to actions arising
under the Securities Act or Exchange Act, please also ensure that the
exclusive forum
FirstName LastNameRyan Rhodes
provision in the governing documents states this clearly, or tell us
how you will ensure
Comapany investors will be informed in future filings that the provision does
not apply to any
that NameRestoration Robotics, Inc.
July 3, actions arising under the Securities Act or Exchange Act.
2019 Page 2
FirstName LastName
Ryan Rhodes
FirstName LastNameRyan Rhodes
Restoration Robotics, Inc.
Comapany NameRestoration Robotics, Inc.
July 3, 2019
Page 3
July 3, 2019 Page 3
FirstName LastName
Venus Concept's subscription-based model exposes Venus Concept to the credit
risk, page 42
8. Please include a separate risk factor to highlight the risk mentioned
in the second
paragraph of this section and provide more specificity regarding the
allegations against
you.
A subsidiary of Venus Concept has received a letter of inquiry, page 51
9. Please disclose, if material, the percentage of your revenue from the
product mentioned in
the first sentence of this section.
Venus Concept's products and services and any future products or services, page
71
10. Please disclose, if material, the percentage of your revenue from the
patents mentioned in
the second paragraph of this section.
Background of the Merger, page 82
11. Please revise the disclosure on page 86 to indicate the basis for the
percentage ownership
of the combined company that was proposed on January 21, 2019.
12. Please revise to disclose in greater detail the negotiations regarding
the material terms,
such as the amount of financing, the termination fee, the number of
representatives from
Venus Concepts and Restoration to be on the board of directors of the
combined company,
the exchange ratio and the percentage ownership of current Venus
Concepts and
Restoration shareholders in the combined company. For example, did the
amount of
financing that would occur immediately following the transaction
materially differ from
the amounts mentioned in Proposal 2 and did Restoration propose a
counter
offer between January 21, 2019 and February 16, 2019.
Restoration Robotics Reasons for the Merger, page 89
13. Please quantify, if practicable, the disclosure in this section and on
pages 94-96 the
reasons for the merger, such as the amount of the liquidation value
and the transaction
costs mentioned on pages 91 and 93, respectively.
14. Please revise this section and the disclosure on pages 94-96 to
discuss in more detail the
synergies mentioned in the first bullet point on page 35 or advise.
Ryan Rhodes
FirstName LastNameRyan Rhodes
Restoration Robotics, Inc.
Comapany NameRestoration Robotics, Inc.
July 3, 2019
July 3, 2019 Page 4
Page 4
FirstName LastName
Opinion of Restoration Robotics Financial Advisor, page 96
15. Please supplementally provide us with all materials, including board
books, provided by
the financial advisor to either the Restoration or Venus Concepts
boards.
16. Please disclose the management projections use by the financial
advisor to perform the
analysis disclosed in this section or advise us why you do not believe
they are material to
the understanding of your fairness opinion disclosures.
Material U.S. Federal Income Tax Consequences of the Merger, page 117
17. Please revise the disclosure in the second paragraph of this section
to clarify why the
discussion does not address Medicare contribution tax on net
investment income.
The Merger Agreement, page 122
18. We note your disclosure in the first paragraph of this section that
the merger agreement is
not intended to provide any other factual information. Please revise
to remove any
potential implication that the referenced merger agreement does not
constitute public
disclosure under the federal securities laws.
Market Overview, page 191
19. Please tell us whether you commissioned any of the third-party data
presented in your
filing.
Clinical Developments, page 208
20. Please tell us whether the clinical studies have revealed any material
disadvantages.
Liquidity and Capital Resources, page 238
21. Please disclose the revenue and liquidity covenants mentioned in the
sixth paragraph of
this section.
Venus Concept Consolidated Financial Statements
Consolidated Statements of Cash Flows, page F-9
22. Please revise the statement to remove the sub-total you present before
showing changes in
operating assets and liabilities, as this sub-total is not
contemplated in ASC 230-10-45-
31. Further, the amounts appear to be non-GAAP financial measures,
which Item
10(e)(1)(ii)(C) of Regulation S-K prohibits you from presenting on the
face of your
financial statements or in the accompanying notes.
Ryan Rhodes
FirstName LastNameRyan Rhodes
Restoration Robotics, Inc.
Comapany NameRestoration Robotics, Inc.
July 3, 2019
July 3, 2019 Page 5
Page 5
FirstName LastName
Note 2 - Significant Accounting Policies
(i) Inventories, page F-14
23. We note that your demonstration units are classified as inventory on
your balance sheet.
Please tell us your accounting policy for demonstration units,
including the useful life of
the units and if amortization expense related to your demonstration
units is recorded in
your statement of operations. Also tell us if you loan demonstration
units to customers
and, if so, how you account for those transactions.
(p) Stock- based compensation, page F-16
24. Please revise to disclose how management determines the fair value of
common shares
underlying your stock-option grants.
(q) Revenue Recognition
(i) Leases, page F-17
25. We note from your disclosures on page 194 that customers in good
standing have the
option of upgrading to the newest available or alternative technology
throughout the
subscription period. Please describe to us in greater detail the
material terms of your lease
agreements which allow for the upgrade. Explain how you account for
both the right to
upgrade and the actual exchange of equipment citing the authoritative
accounting
literature upon which you are relying. Revise the filing to also
provide enhanced
disclosure of the related accounting policy.
Unaudited Pro Forma Combined Financial Statements
Unaudited Pro Forma Condensed Combined Balance Sheet March 31, 2019, page F-68
26. We note that in your pro forma balance sheet the long term deferred
tax assets of Venus
Concept have been reclassified to long term deferred tax liabilities.
Please tell us the
purpose of this reclassification and explain how you considered ASC
740-10-45-6 in your
presentation.
Note 4 - Accounting for the Merger, page F-72
27. We note that intellectual property has been assigned a fair value of
approximately $12.3
million and an economic life of 8 years. Please revise your filing to
disclose how you
determined the fair value and useful lives assigned to intellectual
property, including any
significant uncertainties associated with valuations and useful lives.
Note 6 - Pro Forma Adjustments, page F-75
28. We note that adjustment C. reflects the application of purchase
accounting and eliminates
the historical stockholders' equity balances of Restoration Robotics.
Please revise to
disclose the gross impact of these adjustments.
Ryan Rhodes
Restoration Robotics, Inc.
July 3, 2019
Page 6
Exhibits
29. Please file as exhibits the amendments to the debt facility mentioned at
the top of page 83
and in the fifth paragraph on page 87.
30. Please revise your exhibit index to mark which exhibits pertain to the
second footnote on
page II-8.
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 Eric Atallah at 202-551-3663 or Kevin Kuhar, Accounting
Branch
Chief, at 202-551-3662 if you have questions regarding comments on the
financial statements
and related matters. Please contact Thomas Jones at 202-551-3602 or Heather
Percival, Senior
Attorney, at 202-551-3498 with any other questions.
Sincerely,
FirstName LastNameRyan Rhodes
Division of
Corporation Finance
Comapany NameRestoration Robotics, Inc.
Office of
Electronics and Machinery
July 3, 2019 Page 6
cc: Brian J. Cuneo
FirstName LastName