United States securities and exchange commission logo
April 18, 2022
Huisen Wang
Chief Executive Officer
Huadi International Group Co., Ltd.
No. 1688 Tianzhong Street
Longwan District
Wenzhou, Zhejiang Province
People's Republic of China 325025
Re: Huadi International
Group Co., Ltd.
Form 20-F for the
Fiscal Year Ended September 30, 2021
Filed February 2,
2022
File No. 001-39904
Dear Mr. Wang:
We have limited our review of your filing to the financial
statements and related
disclosures 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 these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended September 30, 2021
Part 1
Item 3. Key Information
Overview, page 1
1. In an overview under
Item 3, please disclose prominently that you are not a Chinese
operating company but a
Cayman Islands holding company with operations conducted by
your subsidiaries based
in China and that this structure involves unique risks to investors.
Please also provide a
cross-reference to your detailed discussion of risks facing the
company as a result of
your structure.
2. In an overview under
Item 3, please provide prominent disclosure about the legal and
operational risks
associated with being based in and having the majority of the company s
Huisen Wang
FirstName LastNameHuisen Wang
Huadi International Group Co., Ltd.
Comapany
April NameHuadi International Group Co., Ltd.
18, 2022
April 218, 2022 Page 2
Page
FirstName LastName
operations in China. Your disclosure should make clear whether these
risks could result in
a material change in your operations and/or the value of your ordinary
shares or could
significantly limit or completely hinder your ability to offer or
continue to offer securities
to investors and cause the value of such securities to significantly
decline or be worthless.
Your disclosure should address how recent statements and regulatory
actions by China s
government, such as those related to data security or anti-monopoly
concerns, have or
may impact the company s ability to conduct its business, accept
foreign investments, or
list on an U.S. or other foreign exchange. Please also disclose
whether your auditor is
subject to the determinations announced by the PCAOB on December 16,
2021 and
whether and how the Holding Foreign Companies Accountable Act (HFCAA)
and related
regulations will affect your company.
3. We note your disclosures on page ii; however, when you provide
disclosures throughout
the filing please make it clear to investors which entity the
disclosure is referencing and
which subsidiaries or entities are conducting the business operations.
Please refrain from
using terms such as we or our when describing activities
or functions of a subsidiary
or other entity. For example, disclose, if true, that your
subsidiaries conduct operations in
China and that the holding company does not conduct operations.
Disclose clearly the
entity (including the domicile) in which investors own an interest.
4. In an overview under Item 3, please provide a clear description of how
cash is transferred
through your organization. Disclose your intentions to distribute
earnings or settle
amounts owed under your operating structure. Quantify any cash flows
and transfers of
other assets by type that have occurred between the holding company
and its subsidiaries,
and direction of transfer. Quantify any dividends or distributions
that a subsidiary has
made to the holding company and which entity made such transfer, and
their tax
consequences. Similarly quantify dividends or distributions made to
U.S. investors,
their source, and their tax consequences. Your disclosures should make
it clear if no
transfers, dividends, or distributions have been made to date by
stating that fact. Also,
describe any restrictions on foreign exchange and your ability to
transfer cash between
entities, across borders, and to U.S. investors. Describe any
restrictions and limitations on
your ability to distribute earnings from the company, including your
subsidiaries, to the
parent company and U.S. investors.
5. In an overview under Item 3, please disclose the risks that your
corporate structure and
being based in or having the majority of operations in China poses to
investors. In
particular, describe the significant regulatory, liquidity, and
enforcement risks with cross-
references to the more detailed discussion of these risks. For
example, specifically discuss
risks arising from the legal system in China, including risks and
uncertainties regarding
the enforcement of laws and that rules and regulations in China can
change quickly with
little advance notice; and the risk that the Chinese government may
intervene or influence
your operations at any time, or may exert more control over offerings
conducted overseas
and/or foreign investment in China-based issuers, which could result
in a material change
in your operations and/or the value of your securities. Acknowledge
any risks that any
Huisen Wang
Huadi International Group Co., Ltd.
April 18, 2022
Page 3
actions by the Chinese government to exert more oversight and control
over offerings that
are conducted overseas and/or foreign investment in China-based
issuers could
significantly limit or completely hinder your ability to offer or
continue to offer securities
to investors and cause the value of such securities to significantly
decline or be worthless.
6. In an overview under Item 3, please disclose each permission or
approval that you or your
subsidiaries are required to obtain from Chinese authorities to
operate your business and
to offer securities to foreign investors. State whether you or your
subsidiaries are covered
by permissions requirements from the China Securities Regulatory
Commission (CSRC),
Cyberspace Administration of China (CAC) or any other governmental
agency that is
required to approve your or your subsidiaries operations, and state
affirmatively whether
you have received all requisite permissions or approvals and whether
any permissions or
approvals have been denied. Please also describe the consequences to
you and your
investors if you or your subsidiaries: (i) do not receive or maintain
such permissions or
approvals, (ii) inadvertently conclude that such permissions or
approvals are not required,
or (iii) applicable laws, regulations, or interpretations change and
you are required to
obtain such permissions or approvals in the future. Please also
provide a cross-reference to
your related risk factor.
7. In an overview under Item 3, please disclose that trading in your
securities may be
prohibited under the HFCAA if the PCAOB determines that it cannot
inspect or
investigate completely your auditor, and that as a result an exchange
may determine to
delist your securities. Disclose whether your auditor is subject to
the determinations
announced by the PCAOB on December 16, 2021.
Risk Factors, page 2
8. In light of recent events indicating greater oversight by the CAC over
data security,
particularly for companies seeking to list on a foreign exchange,
please revise your
disclosure to explain how this oversight impacts your business and to
what extent you
believe that you are compliant with the regulations or policies that
have been issued by the
CAC to date.
Item 10. Additional Information
Exchange Controls, page 84
9. We note disclosures in the second paragraph on page 86 regarding your
VIE in the PRC;
however, we note no disclosures throughout your filing that indicate you
operate through
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a VIE structure. Please explain to us and revise your disclosures to
address this apparent
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revise Ltd.filing to affirmatively
state on page 1 that
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Huisen Wang
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Huadi International Group Co., Ltd.
Comapany
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18, 2022
April 418, 2022 Page 4
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In closing, 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.
You may contact SiSi Cheng at 202-551-5004 or Anne Mcconnell at
202-551-3709 with
any questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing