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HANK GRACIN†† |
PARTNER
LESLIE MARLOW†
|
PARTNER
PATRICK EGAN†
|
PARTNER†
Admitted in New York only
†† Admitted in New York, Florida &
Colorado
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GRACIN &
MARLOW, LLP
COUNSELLORS AT LAW
THE CHRYSLER BUILDING
26th
FLOOR
405
LEXINGTON AVENUE
NEW
YORK, NEW YORK 10174
(212)
907-6457
FAX
(212) 208-4657
www.gracinmarlow.com
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IN
BOCA RATON
1825
NW CORPORATE BLVD.
SUITE
110
BOCA
RATON, FLORIDA 33431
(561)
237-0804
FAX
(561) 237-0803
WRITER E-MAIL:
lmarlow@gracinmarlow.com
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`
November 9,
2018
VIA EDGAR
Securities
and Exchange Commission
Division
of Corporation Finance
100 F
Street, NE
Washington,
D.C. 20549
Attention:
Jennifer Lopez
Staff
Attorney
Re:
Youngevity International, Inc.
Registration Statement on Form S-3
Filed October 17, 2018
File No.
333-227866
Dear
Ms. Lopez:
Thank
you for your November 5, 2018 letter regarding Youngevity
International, Inc. (“YGYI” or the
“Company”). In order to assist you in your review of
YGYI’s Registration Statement on Form S-3 (File No.
333-227866), on behalf of YGYI, we hereby submit a letter
responding to the comments and Amendment No. 1 to the Form S-3
marked to show changes. For your convenience, we have set forth
below the staff’s numbered comments in their entirety
followed by our responses thereto.
Form S-3 filed on October 17, 2018
General
1.
We
note that Exhibit 99.1 of your Current Report on Form 8-K filed
September 21, 2018 discloses that you have entered the cannabis
industry. Please revise your registration statement to clearly
describe your business in the cannabis industry and the risks to
the company from engaging in this business, including possible law
enforcement consequences under federal and state laws.
Response: We have added a description of our hemp-based products
and a risk factor regarding our hemp-based products, all which
contain less than .3% THC content. We believe these products are
currently legal under federal law and the laws of each state in
which we offer the products. Please note the Company has not
entered the cannabis industry as it relates to marijuana or
marijuana products, which continue to be illegal under federal
law.
2.
We
note that you are attempting to register the resale by the selling
stockholders of 1,394,726 shares of common stock issuable upon the
exercise of Series C Preferred Stock Warrants. Please be advised
that we believe it is premature to register for resale shares of
your common stock underlying Series C Preferred Stock Warrants that
are not yet outstanding. In this regard, we note that the Warrants
will be issued upon the exercise of the Series C Preferred Stock
that is voluntarily converted to shares of your Common Stock.
Accordingly, please amend your registration statement to remove
from registration the resale of any shares of common stock that are
issuable upon conversion of shares of your Series C Preferred Stock
Warrants that are not yet outstanding. Alternatively, please
provide us with your analysis as to why it is appropriate to
register the resale of common stock underlying the Warrants. Refer
generally, to Question 134.01 of our Securities Act Sections
Compliance and Disclosure Interpretations.
Response: We have amended the registration statement to remove the
shares of common stock underlying Series C Preferred Stock Warrants
that are not yet outstanding.
3.
We
note that you are registering for resale 367,805 True-up Shares of
common stock. We also note that you will issue “to the PIPE
Selling Stockholders additional shares of [y]our Common Stock (the
“True-up Shares”) within the expiration of the
Subscription Pricing Period” and that such issuance will
occur “in the event that the average of the 15 lowest closing
prices for [y]our Common Stock during the period beginning on date
of execution of such Purchase Agreement and ending on the date 90
days from the effective date of the registration statement...is
less than $4.75 per share.” In this regard, it appears that
some of the shares being registered for resale have not been issued
to the selling shareholder. Provide us with an analysis as to why
you believe that the selling shareholder is irrevocably bound to
purchase, and is at market risk for, the True-up shares being
registered for resale.
Please
note that if the selling shareholder was not irrevocably bound to
purchase the shares and at market risk with respect to those shares
at the time you register the resale, the private placement of those
shares has not been completed, and you will not be able to register
the resale with respect to those shares. In that event, you will
have to remove those shares from this registration statement and,
if desired, file a new registration statement to register those
shares no sooner than the date that the selling shareholder becomes
irrevocably bound to purchase and is at market risk with respect to
those shares. For guidance, refer to Question 139.11 of our
Compliance and Disclosure Interpretations relating to Securities
Act Sections.
Response: The Company believes
it is appropriate to register the 367,805 shares of Common Stock
for resale prior to their issuance because the contingent nature of
the shares is substantially the same as earnout shares, which the
Staff has confirmed are eligible for resale on Form S-3. In its
Compliance and Disclosure Interpretations (“C&DIs”)
for the Securities Act Forms, the Staff addressed whether shares
that are issuable in a merger transaction, but are not yet
outstanding, can be registered on Form S-3 pursuant to General
Instruction I.B.3. Specifically, Question 116.05
provides:
“Question: In reliance on Securities Act Section 4(2), a
merger transaction will not be registered. May resales of earnout
shares to be issued in connection with the merger be registered on
Form S-3 pursuant to General Instruction I.B.3 after the
consummation of the merger, even though the shares have not been
earned and are not outstanding at the time the registration
statement is filed?
Answer: Yes. [Feb. 27, 2009]”
The 367,805 shares of the Company’s Common Stock issuable
under the terms of its Securities Purchase Agreement with the PIPE
Selling Stockholders qualify as “earnout” shares in
accordance with C&DI Question 116.05 because the Company is
contractually obligated under the terms of its Securities Purchase
Agreement with the PIPE Selling Stockholders to issue the shares
upon the occurrence of future events (i.e., stock price). As a
result, the Company respectfully submits that the 367,805 shares of
Common Stock would be eligible for registration on a Form
S-3.
* *
*
YGYI
acknowledges that the adequacy and accuracy of the disclosure in
our filings is our responsibility. YGYI acknowledges that the staff
comments or changes to disclosure do not foreclose the Commission
from taking any action with respect to the filings. YGYI
acknowledges that the company may not assert staff comments as a
defense in any proceedings initiated by the Commission or any
person under the federal securities laws of the United
States.
If you
have any questions or need additional information, please contact
the undersigned at (516) 496-2223 or (212) 907-6457.
Sincerely,
/s/ Leslie Marlow
Leslie
Marlow
cc:
Stephan Wallach, Chief Executive Officer
Youngevity
International, Inc.
David
Briskie, Chief Financial Officer
Youngevity
International, Inc.