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United States securities and exchange commission logo
September 23, 2021
Theodore L. Koenig
Chairman and Chief Executive Officer
MCAP Acquisition Corporation
311 South Wacker Drive, Suite 6400
Chicago, Illinois 60606
Re: MCAP Acquisition
Corporation
Registration
Statement on Form S-4
Filed August 24,
2021
File No. 333-259027
Dear Mr. Koenig:
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.
Form S-4 filed August 24, 2021
Cover Page
1. You indicate in the
forepart of the proxy statement/prospectus that the business
combination transaction
will consist of four different mergers. Rather than focus on the
mechanics of the
business combination transaction, please explain its purpose and effect.
Similarly, please
explain in plain English the type, amount and value of the transaction
consideration and the
reasons for the adjustments to the cash consideration.
Summary of the Proxy Statement/Prospectus
Proposal No. 1: The Business Combination Proposal, page 5
2. In light of the number
of mergers and parties to the business combination agreement,
please provide diagrams
depicting the organizational structure of MCAP and
Theodore L. Koenig
MCAP Acquisition Corporation
September 23, 2021
Page 2
AdTheorent before and after the business combination. Include in the
post-combination
organization diagram of MCAP the percentage ownership of each material
group of
shareholders assuming both no redemptions and maximum redemptions.
3. Please summarize the Member Support Agreement and the Sponsor Support
Agreement.
4. Please discuss the conditions to the business combination that there
be Aggregate Cash
Consideration of at least $140 million and Available Cash of $258.125.
Consider
providing a table showing the sources and uses of funding for the
business
combination assuming no redemptions and maximum redemptions.
5. Disclose if MCAP's Sponsor, directors, officers or their affiliates
will participate in the
PIPE investment.
Questions and Answers About the Business Combination
What vote is required to approve the Stockholder Proposals?, page 13
6. In light of the vote requirement for approval of the proposals, please
discuss how the
voting requirement and the various agreements for the Sponsor,
executive officers and
directors of MCAP, as well as certain investors who purchased 4.1
million MCAP units in
the MCAP IPO, to vote in favor of the business combination make it
more likely that the
business combination will be approved. For example, disclose the
amount and percentage
of shares not subject to these voting agreements that would be
required to approve the
business combination proposal if all MCAP shares are present or only a
quorum of
MCAP shares are present.
What equity stake will current MCAP stockholders and AdTheorent Stockholders
have in the
Post-Combination Company after the Closing?, page 14
7. 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 and convertible
securities, such as
warrants retained by redeeming shareholders, at each of the redemption
levels detailed in
your sensitivity analysis, including any needed assumptions. If you
present a maximum
redemption scenario here based on the maximum number of redemptions that
may occur
without a shortfall of cash while still satisfying the conditions to the
Business
Combination, please explain why this is appropriate when there are no
limitations on the
maximum
FirstName number of redemptions.
LastNameTheodore L. Koenig Explain whether the conditions that
define the
maximum
Comapany redemption
NameMCAP level can
Acquisition be waived or satisfied in another
manner.
Corporation
8. Please
September 23,separately
2021 Pagedisclose
2 the equity ownership to be held by H.I.G.
FirstName LastName
Theodore L. Koenig
FirstName LastNameTheodore
MCAP Acquisition CorporationL. Koenig
Comapany 23,
September NameMCAP
2021 Acquisition Corporation
September
Page 3 23, 2021 Page 3
FirstName LastName
Summary Historical Consolidated Financial Information of AdTheorent
Other Key Operating and Financial Performance Metrics, page 26
9. Your presentation of Revenue less Traffic Acquisition Costs (TAC)
excludes certain costs
incurred to execute customer campaigns. This measure appears to
substitute individually
tailored revenue recognition methods for those of GAAP and does not
comply with
Question 100.04 of the Non-GAAP C&DIs and Rule 100(b) of Regulation G.
Please
revise. To the extent you choose to provide a non-GAAP contribution
margin measure
instead, ensure that you reconcile such measure to GAAP gross profit
and do not refer to it
as a "revenue" non-GAAP measure. Also, ensure that you present the
comparable GAAP
measure with equal or greater prominence wherever you present such
measure. Similar
revisions should be made to your Revenue less TAC as a percentage of
revenue measure.
Risks Related to AdTheorent's Business
AdTheorent may have long sales cycles..., page 41
10. Please disclose the average length of AdTheorent s sales cycle.
Our Proposed Certificate of Incorporation will provide..., page 73
11. Please reconcile your exclusive forum provision disclosures on pages
57 and 73.
Specifically, please clarify which provision will be included in the
Post-Combination
Company's certificate of incorporation.
MCAP may face litigation and other risks as a result of the material weakness
in its internal
control over financial reporting..., page 74
12. You refer here to MCAP's material weakness in internal control over
financial reporting.
Further, we note from MCAP's March 31, 2021 Form 10-Q that management
identified a
material weakness in internal controls over financial reporting
related to the accounting
for warrants issued in connection with the company's initial public
offering, which also
resulted in ineffective disclosure controls and procedures as of the
same date. Please
include a separate risk factor addressing MCAP's identified material
weakness and discuss
any remediation efforts taken so far including what remains to be
completed in your
remediation plan. Also, disclose how long you estimate it will take to
complete your plan
and any associated material costs that you have incurred or expect to
incur. To the extent
such weakness has not yet been remediated, please explain how MCAP
concluded that
their disclosure controls and procedures were effective as of June 30,
2021.
Unaudited Pro Forma Condensed Combined Financial Information, page 77
13. We note your discussion here of the no redemption and maximum
redemption scenarios.
Please explain further your statement that the actual results will be
within the parameters
described in the two scenarios, or revise as necessary. In this
regard, the maximum
scenario assumes only 13,742,000 shares of Class A ordinary shares are
redeemed when,
Theodore L. Koenig
FirstName LastNameTheodore
MCAP Acquisition CorporationL. Koenig
Comapany 23,
September NameMCAP
2021 Acquisition Corporation
September
Page 4 23, 2021 Page 4
FirstName LastName
in fact, up to 28,208,093 shares are subject to redemption.
Note 2. Basis of Pro Forma Presentation, page 88
14. We note that your maximum redemption scenario is based on the maximum
number of
redemptions that may occur without a shortfall of cash while still
satisfying the conditions
to the Business Combination. We further note that MCAP has several
alternatives to
settle the cash shortfall should more than 13,742,000 public shares be
redeemed. Please
revise the notes to the pro forma financials to show the impact on the
financial
statements under the various options available to cover the cash
shortfall should more than
13,742,000 shares be redeemed. Refer to Article 11-02(a)(10) of
Regulation S-X.
Note 3. Adjustments to Unaudited Pro Forma Condensed Combined Financial
Information
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet, page 90
15. Based on the description of pro forma balance sheet adjustments (h)
and (i), it appears that
the adjustments on the face of your pro forma balance sheet might be
mislabeled. Please
revise or advise.
16. Please revise to provide the amounts used to calculate the cash
consideration and excess
cash paid to existing AdTheorent Members reflected in adjustments (m)
and (n). Also,
revise Note 1 to provide a quantified breakdown of the aggregate
transaction
consideration in total and separately for cash and stock
consideration.
Note 5. Earn-out, page 93
17. We note that the estimated fair values of the earn-out for AdTheorent
equity
holders, MCAP shares held in escrow, and amounts issuable to holders
of unvested
employee stock options and units were determined using a Monte Carlo
simulation
model. Further, you state that such values are subject to change as
additional information
becomes available and additional analysis are performed. Considering
the amount
recognized for pro forma purposes is considerably less than the
potential $95.0 million
earn-out consideration, please revise to include a sensitivity
analysis to show how your
pro forma financials might be impacted under various simulation and
valuation scenarios.
Refer to Article 11-02(a)(10) of Regulation S-X.
Proposal No. 1 - the Business Combination Proposal
The Background of the Business Combination, page 98
18. You provide disclosure about the other potential acquisition targets
considered by MCAP
and Monroe Capital. Please disclose when you ceased discussions with
the other
potential targets to focus solely on AdTheorent.
19. Please expand your disclosure of the parties negotiations of the
business combination and
related agreements to discuss the terms and conditions of the final
merger agreement,
including the Aggregate Cash Consideration and Available Cash
conditions, the
Theodore L. Koenig
MCAP Acquisition Corporation
September 23, 2021
Page 5
determination of the final structure of the proposed transaction and
the ultimate amount
and form of consideration. As part of this discussion, disclose which
party proposed a
$950 million enterprise value of AdTheorent and why MCAP proposed
reducing that
value to $775 million.
Certain Historical and Prospective Financial Information Provided to the MCAP
Board, page
105
20. Please revise to disclose the material assumptions and estimates
underlying the projected
financial information and the limitations of the projections.
Interests of MCAP's Directors and Officers in the Business Combination, page
108
21. Please expand the conflicts of interest discussion so that it
highlights and quantifies all
material interests in the transaction held by the Sponsor and MCAP s
officers and
directors and their affiliates. This could include fiduciary or
contractual obligations to
other entities as well as any interest in, or affiliation with, the
target company. In addition,
please clarify how the board considered those conflicts in negotiating
and recommending
the business combination.
Material U.S. Federal Tax Considerations of the Redemption Rights and the
Business
Combination, page 124
22. You indicate that named counsel is providing an opinion on the legal
conclusions set forth
in this section. However, it does not appear that counsel has opined
on the material tax
consequences for holders who exchange their AdTheorent Capital Stock
for MCAP
Common Stock and Post-Combination Company Warrants in the Business
Combination.
In this regard, it appears there is uncertainty as to the material tax
consequences and that
counsel is assuming the material tax consequence at issue -- that the
Business
Combination will be treated as a "reorganization" within the meaning
of 368(a) of the
Internal Revenue Code. If there is significant doubt about the tax
consequences of the
transaction, 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 that event,
the company should
provide summary and risk factor disclosure setting forth the risks of
uncertain tax
treatment to investors. For guidance, refer to Sections III.C.3 and
III.C.4 of CF Staff
Legal Bulleting No. 19.
Information About AdTheorent, page 154
23. We note you present Adjusted EBITDA on page 155 and EBITDA on page 160
without
presenting the related GAAP measure of net income with equal or greater
prominence.
FirstName LastNameTheodore L. Koenig
Further, you discuss the percentage increase in adjusted EBITDA without
providing
Comapany NameMCAP
similar disclosuresAcquisition Corporation
for the comparable GAAP measure. Please revise.
Refer to Question
102.10 of the Non-GAAP
September 23, 2021 Page 5 C&DIs and Item 10(e)(1)(i)(A) of Regulation
S-K.
FirstName LastName
Theodore L. Koenig
FirstName LastNameTheodore
MCAP Acquisition CorporationL. Koenig
Comapany 23,
September NameMCAP
2021 Acquisition Corporation
September
Page 6 23, 2021 Page 6
FirstName LastName
AdTheorent Management's Discussion and Analysis of Financial Condition and
Results of
Operations, page 169
24. You state that you rely on both attracting new customers and expanding
current
customers' usage of your platform to sustain and grow your business.
Please tell us what
measures you use to monitor your ability to retain and grow the usage
of your existing
customers and to obtain new customers. In this regard, we note you
disclose active
customers and high-spend clients throughout the filing. You also
disclose that 69% of
fiscal year 2020 revenue is generated from customers who have been
with you since 2017
or earlier. If management uses these measures to evaluate your
business and operations,
please revise to include a quantified discussion of such metrics in
M&DA for each period
presented. Also, ensure you define how the metric is calculated, how
management uses it,
and include a discussion of any trends or fluctuations from period to
period, including
how such metrics impacted your revenue growth for each period
presented. Refer to SEC
Release No. 33-10751.
25. We note your discussion of digital advertising impressions, including
that you had over 20
billion impressions in fiscal year 2020 and that your platform
assigned predictive scores to
approximately 1 million digital ad impressions per second or 87
billion per day. Please
revise to address how you track these digital advertising impressions
in order to support
the figures disclosed. To the extent you rely on this information as a
key performance
measure to evaluate your business or operations, please also revise to
include appropriate
disclosures to this effect.
Results of Operations, page 175
26. While revenue increased only 0.5% between December 31, 2019 and 2020,
we note that
revenue from COVID-resistant industries increased 30% during this
period. Additionally,
we note revenue increased 57.8% for the six months ended June 30, 2020
compared to the
same period in fiscal 2021. In an effort to balance your discussion
regarding fluctuations
in revenue and to provide more insight into any effect the pandemic
had on revenue,
please revise to quantify the negative impact that the COVID-19
pandemic had on revenue
for each period presented. Additionally, clarify whether the
significant increase in
revenue for the periods ended June 30 was impacted by the pandemic
(e.g., were 2020
quarterly revenues lower than usual due to COVID) or whether this was
purely organic
growth. Lastly, please provide quantification of all factors impacting
revenue, both
positively and negatively, for each period.
Selected Quarterly Results of Operations, page 178
27. Please revise to explain why you are presenting quarterly data for
only the first two
quarters of fiscal 2020 and 2021. Alternatively, consider revising to
present quarterly data
for all periods presented.
Theodore L. Koenig
FirstName LastNameTheodore
MCAP Acquisition CorporationL. Koenig
Comapany 23,
September NameMCAP
2021 Acquisition Corporation
September
Page 7 23, 2021 Page 7
FirstName LastName
Liquidity and Capital Resources
Cash Flow Summary, page 184
28. You state that AdTheorent's accounts payable are often due on shorter
cycles than its
accounts receivable, requiring it to remit payments from its own funds
and accept the risk
of bad debt. Please disclose the typical payment terms of your
customer sales. Also, tell
us your days sales outstanding and days payable outstanding for each
period presented,
and consider disclosing such information along with a discussion of
the underlying
reasons for any significant changes in each measure and the impact on
your liquidity.
Refer to Item 303(a)(1) of Regulation S-K.
AdTheorent Holding Company, LLC and Subsidiaries Notes to Consolidated
Financial
Statements
3. Revenue Recognition, page F-47
29. While we note direct access revenue is a new offering and that revenue
is not yet material
to your financial statements, please tell us how much revenue you
recorded related to this
revenue stream in each period presented. Further, consider revising to
address whether
you expect to grow this revenue stream in the future.
General
30. Please revise to disclose the deadline for submitting shareholder
proposals for inclusion in
the registrant s proxy statement and form of proxy for the
registrant s next annual
meeting, calculated in the manner provided in Rule 14a-8(e). Please
also revise to disclose
the date after which notice of a shareholder proposal submitted
outside the processes of
Rule 14a-8 is considered untimely. Refer to Rules 14a- 5(e)(1) and
(2).
Theodore L. Koenig
FirstName LastNameTheodore
MCAP Acquisition CorporationL. Koenig
Comapany 23,
September NameMCAP
2021 Acquisition Corporation
September
Page 8 23, 2021 Page 8
FirstName LastName
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 Brittany Ebbertt, Senior Staff Accountant, at
202-551-3572 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 Alexandra
Barone, Staff Attorney,
at 202-551-8816 or Kathleen Krebs, Special Counsel, at 202-551-3350 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Jonathan Talcott