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United States securities and exchange commission logo
August 31, 2022
Bill Chen
Chief Executive Officer
LAAA Merger Corp.
667 Madison Avenue
New York, NY 10065
Re: LAAA Merger Corp.
Amendment No. 1 to
Registration Statement on Form S-4
Filed August 12,
2022
File No. 333-265885
Dear Mr. Chen:
We have reviewed your amended 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.
Unless we note
otherwise, our references to prior comments are to comments in our
August 2, 2022 letter.
Amendment No. 1 to Registration Statement on Form S-4
Questions and Answers About The Business Combination and the
Extraordinary General
Meeting
Will I experience dilution as a result of the Business Combination?,
page 10
1. We note your response
to prior comment 6 and re-issue in part. Please revise to explain
the potential dilution
in the event the Senior and Junior debt conversion rates reset to the
$5.50 and $4.50 per
share floors, respectively.
Proposal No. 2 The Charter Proposals, page 81
2. We note your revisions
in response to prior comment 19. Please amend the cover page to
identify Proposals
2B-2I and file the form of proxy card.
Bill Chen
FirstName LastNameBill Chen
LAAA Merger Corp.
Comapany
August 31, NameLAAA
2022 Merger Corp.
August
Page 2 31, 2022 Page 2
FirstName LastName
Other Agreements Relating to the Business Combination
Lock-up Agreement, page 93
3. We note your revised disclosure on page 24 in response to prior
comment 9. Please
reconcile your disclosures on pages 24 and 93 so that it clear whether
some or all of
the ProSomnus stockholders are subject to the lock-up.
Proposal No. 3 The Acquisition Merger Proposal
Background of the Business Combination, page 98
4. We note your response to comment 23 and re-issue in part. Please
explain briefly the
nature of the three Medical Device Reports ("MDRs") and how Lakeshore
considered
these reports, including any conclusions reached concerning them.
Lakeshore's Board of Director's Reasons for Approving the Business Combination,
page 100
5. We note your response to comment 26 and reissue in part. Please
disclose the ProSomnus
2024 and 2025 projections that were presented to Lakeshore. In this
regard, we note that
ProSomnus is a revenue-stage company and the 2024 and 2025 projections
cover near-
term periods. Also explain why Lakeshore's board chose not to consider
these projections
when determining ProSomnus valuation. Also, tell us whether 2024
and 2025 projections
were presented to Lakeshore in August 2021 and April 2022.
Summary of ProSomnus Financial Analysis, page 104
6. We acknowledge the expanded information provided in response to
comment 28 but
continue to have difficulty in understanding the basis for the
increase in
revenues projected for 2022 and 2023 and your expectations for
continued revenue growth
in subsequent years. Please provide the following information and
revise your
presentation accordingly.
Separately quantify total sales volumes and average per unit sales
price for legacy
products and next generation products for each year presented.
Explain the differences between gross and net revenues of $3.2
million in 2021, $4.1
million in 2022 and $7.1 million in 2023 as implied by the
endmost table on page
107.
Expand your description of the selling process on page 177 to
explain in greater
detail how your sales representatives are expected to generate
device sales to sleep
dentists, sleep physicians and other providers based on their
attendance at AASM,
AADSM and other sleep medicine events.
Quantify expected productivity of your sales representatives and
sensitivity of
your revenue projections to reasonably likely variations in their
productivity in 2022
and 2023.
Quantify the degree to which your revenue projections for 2022 and
2023
assume repeat sales from sleep dentists, sleep physicians and
other providers.
Describe the nature of business activities and operational scale
for the typical
Bill Chen
FirstName LastNameBill Chen
LAAA Merger Corp.
Comapany
August 31, NameLAAA
2022 Merger Corp.
August
Page 3 31, 2022 Page 3
FirstName LastName
customer that are expected to qualify for list price discounts in
2022 and 2023.
Quantify list price discounts reflected in your revenue
projections for 2022 and 2023.
Quantify the degree of customer concentration and associated
list price discounts for
2022 and 2023 and expected in subsequent years.
Describe and quantify the number of intraoral devices that are
not expected
to properly fit or fail to adequately address the patient's sleep
apnea condition as
reflected in your projections for 2022 and 2023 and expected in
subsequent years.
Quantify your provision for warranty exposure reflected in your
projections for 2022
and 2023 and expected in subsequent years.
As originally requested, separately quantify to the extent
possible the impact of each
factor listed on page 107 on your projected gross margin for 2022
and 2023.
As originally requested, provide information that will
facilitate an understanding
of reasonably likely changes beyond 2023 in your sale of next
generation devices that
would materially impact your revenue CAGR, gross margins and
other key financial
metrics.
U.S. Federal Income Tax Consequences of the Reincorporation Merger to U.S.
Holders of
Lakeshore Securities, page 125
7. We refer to your revised disclosures in response to prior comment 31
and reissue the
comment. We note that Loeb & Loeb's opinion, as presented on pages 125
through the
middle of page 127, is rendered without regard to PFIC status. We
further note that the
disclosure at the bottom of page 127 states Lakeshore's belief that
Lakeshore likely was
and will be a PFIC, but the disclosure does not specify whether Loeb &
Loeb agrees or
disagrees with this position. To the extent that counsel shares the
view concerning PFIC
likely status, then Loeb & Loeb should revise and reorder its opinion
of the tax
consequences to reflect this status and to highlight the tax
consequences presented at the
bottom of page 127 and top of page 128. In light of the disclosure at
the bottom of page
133 and top of page 134, please similarly revise the disclosure in the
"Certain U.S.
Federal Income Tax Consequences to U.S. Holders of Exercising
Redemption Rights"
section.
8. Please revise the first paragraph under the heading and the short-form
opinion (Exhibit
8.1) to clarify, as applicable, that counsel's opinion covers the
disclosures contained in the
following two sections: "Passive Foreign Investment Company Status"
(pages 127-130)
and "Certain U.S. Federal Income Tax Consequences to U.S. Holders of
Exercising
Redemption Rights" (pages 132-134).
Business of ProSomnus
Clinical Results and Studies, page 147
9. We note your response to comment 32 and re-issue in part. Ensure that
you provide
information about each of the studies mentioned on pages 138 and 139,
including the
number of patients they have enrolled and their findings. For
reference, these studies
include:
Bill Chen
LAAA Merger Corp.
August 31, 2022
Page 4
A Multi-Center Preference Study of a Novel Oral Appliance
Design and Material
published in Sleep;
Efficacy and Effectiveness of the ProSomnus [IA] Sleep
Device for the Treatment
of Obstructive Sleep Apnea: EFFECTS Study published in Cureus;
Evaluation of a new oral appliance with objective compliance
recording capability: a
feasibility study published in Journal of Dental Sleep Medicine;
Assessment of potential tooth movement and bite changes with a
hardacrylic sleep
appliance: A 2-year clinical study published in Journal of Dental
Sleep Medicine;
Comparative assessment of changes in pharyngeal airway space in
cases of
obstructive sleep apnoea with a customized mandibular repositioning
appliance a
clinical study published in Sleep Science.
10. We note your response to comment 33 and re-issue. The clinical trials
listed in this
section do not appear to total 654 total patients. Please disclose all
clinical trials and their
results or explain why you do not believe this information is material.
Going Concern and Management's Plans, page 172
11. We note your revised disclosures in response to prior comment 36. Please
tell us why
your disclosure is limited to $7.2 million in proceeds. In this regard,
we note your
disclosures concerning the $40 million Minimum Cash Condition and the
prospective
Senior and Junior Debt investments discussed on page 94. As applicable,
revise to show
the use of proceeds assuming various net cash assumptions.
You may contact Franklin Wyman at 202-551-3660 or Kevin Kuhar at
202-551-3662 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Dillon Hagius at 202-551-7967 or Joe McCann at 202-551-6262 with any
other
questions.
Sincerely,
FirstName LastNameBill Chen
Division of
Corporation Finance
Comapany NameLAAA Merger Corp.
Office of Life
Sciences
August 31, 2022 Page 4
cc: Giovanni Caruso
FirstName LastName