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United States securities and exchange commission logo
May 27, 2020
In Keuk Kim
Chief Executive Officer
DoubleDown Interactive Co., Ltd.
13F, Gangnam Finance Center
152, Teheran-ro Gangnam-gu
Seoul 06236, Republic of Korea
Re: DoubleDown
Interactive Co., Ltd.
Amendment No. 2 to
Draft Registration Statement on Form F-1
Submitted May 18,
2020
CIK No. 0001799567
Dear Mr. Kim:
We have reviewed your amended draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments. Unless otherwise noted, where prior comments are referred to
they refer to our letter
dated March 27, 2020.
Amendment No. 2 to Draft Registration Statement on Form F-1
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Our Marketing Efficiency, page 51
1. We note your response
to prior comment three. Please clarify what you mean by
acquisition of players
through paid channels. Paid channel fees to your marketing
partners would appear
to be fees paid to those partners to acquire players and therefore it
is not clear why an
efficiency measure on the payback of those fees would
include revenues from
your organically acquired player revenues.
In Keuk Kim
DoubleDown Interactive Co., Ltd.
May 27, 2020
Page 2
Certain relationships and related party transactions, page 103
2. Please add disclosure related to the acquisition of Double8 Games Co.,
Ltd. from
DoubleU Games. Refer to Item 7.B of Form 20-F.
Note 2. Significant accounting policies
Basis of preparation and consolidation, page F-7
3. Please disclose the cause, nature and amounts of the line item
adjustments to
the Consolidated Financial Statements for the periods presented on
page F-3. Tell us your
consideration of these adjustments as error corrections and the need
for expanded
disclosures. In this regard, we note that net income for 2019 declined
by $3.5 million
(approximately 10%) compared to the amount as reported in the previous
amendment.
Refer to ASC 250-10-50-7.
Revenue recognition, page F-10
4. We note per your response to prior comment seven that the deferred
revenue balance was
$1.8 million at December 31, 2019. Based on the actual amount of
virtual currency
outstanding, which includes fungible purchased and free virtual
currency, please make
clear how you calculated deferred revenue and how you considered free
virtual
currency in determining the average price of all virtual currency
outstanding in the paying
players' accounts at the end of the reporting period.
Please provide an example computation or additional analysis that
demonstrates how
combining the purchase time metric with other metric analysis such as,
average chip
balance, daily average game play and daily average wagers reasonably
supports your
assumptions that the currency is consumed as game play between one
purchase and the
next, or five days.
Contract assets, contract liabilities and other disclosures, page F-11
5. We note your response to prior comment eight. We refer to the benefits
of your loyalty
program ("Diamond Club") as described
on https://doubledowncasino1.zendesk.com/hc/en-us/articles/204901214. It
appears that
loyalty points earned for chip purchases provide a material right as
loyalty members are
entitled to incremental benefits that do not reflect their stand-alone
selling price.
Additionally, such benefits (i.e., higher payout levels on the Daily
Wheel, gifting options
greater than the standard 3-gift limit, and VIP vouchers that enable
benefits of a chip sale)
are only available to certain loyalty members based on their Club tier
status attained
FirstName LastNameIn Keuk Kim
through their cumulative purchases and are not otherwise available as a
marketing offer or
Comapany NameDoubleDown Interactive Co., Ltd. us how your accounting for
loyalty points is
options for entry-level loyalty members. Tell
May 27, 2020 Page 2 the guidance in ASC 606-10-55-41 and 42. Please advise or
revise.
consistent with
FirstName LastName
In Keuk Kim
FirstName LastNameIn Keuk Kim
DoubleDown Interactive Co., Ltd.
Comapany NameDoubleDown Interactive Co., Ltd.
May 27, 2020
Page 3
May 27, 2020 Page 3
FirstName LastName
Subsequent events, page F-13
6. As disclosed, on May 15, 2020, DoubleU Games ("DUG") exercised the
call option to
purchase the 2.5% Non-convertible Bonds with warrants issued to STIC
and exercised the
warrants by surrendering the 2.5% Non-convertible Bonds into 306,539
common shares at
the exercise price of KRW 293,600 (US$240.03 at May 1, 2020 with
initial conversion
price of $254,00). Concurrently, STIC agreed to convert the 2.5%
7-year convertible
bonds into 715,258 newly-issued common shares at the conversion price
of KRW 293,00
(US$240.03 at May 1, 2020) no later than June 5, 2020. Please disclose
the financial
impact of these transactions and clarify whether the down-round and
contingent beneficial
conversion provisions have been triggered. We note the change in the
conversion price.
See ASC 855-10-50-2.
You may contact Kathryn Jacobson, Senior Staff Accountant, at (202)
551-3365 or Craig
Wilson, Senior Advisor, at (202) 551-3226 if you have questions regarding
comments on the
financial statements and related matters. Please contact Jeff Kauten, Staff
Attorney, at (202) 551-
3447 or Kathleen Krebs, Special Counsel, at (202) 551-3350 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Barbara A. Jones, Esq.