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United States securities and exchange commission logo
July 8, 2021
Alex K. Grab
General Counsel
Brilliant Earth Group, Inc.
26 O Farrell Street, 10th Floor
San Francisco, CA 94108
Re: Brilliant Earth
Group, Inc.
Confidential Draft
Registration Statement on Form S-1
Submitted June 11,
2021
CIK 0001866757
Dear Mr. Grab:
We have reviewed your 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.
Confidential Draft Registration Statement on Form S-1 submitted June 11,
2021
General
1. Please disclose the
total economic value of the payments under the Tax Receivable
Agreement. Because it
appears that you use Adjusted EBITDA as a significant metric for
measuring your
financial performance and because this measure does not account for a
reduction in a deferred
tax asset, please describe the impact the arrangement has on the
business s total
enterprise value and, consequently, the price of the securities you will be
offering in the IPO.
The discussion of the Tax Receivable Agreement and the redirection
of cash flows to the
pre-IPO owners should be given more prominence in your prospectus
than is currently
present. While the disclosure on pages 61-64 is descriptive, the TRA is a
key financial
arrangement that will materially impact your liquidity and should be
Alex K. Grab
FirstName LastNameAlex
Brilliant Earth Group, Inc. K. Grab
Comapany
July 8, 2021NameBrilliant Earth Group, Inc.
July 8,2 2021 Page 2
Page
FirstName LastName
featured as a principal topic in the prospectus. Because the
arrangement could be
considered a windfall for the pre-IPO owners, your disclosure should
adequately and
prominently address the fact that the agreement confers significant
economic benefits to
the TRA Participants and redirects cash flows to them at the expense
of public
shareholders.
Dilution, page 87
2. Please disclose how the numbers and percentages in the table on page
88 would change
assuming the exercise of all outstanding options and warrants.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 106
3. We note your disclosures regarding the factors to which you attribute
the fluctuations in
income statement line items. In addition to discussing the reasons for
the change, as
appropriate please revise your disclosures to also quantify the change
resulting from each
of the factors noted.
4. We note your discussion of gross profit on page 109 and your reference
to improvements
in that measure being offset by higher cost of sales in the reported
periods. To the extent
possible, please revise the discussion to quantify the impact of the
factors that impacted
your gross profit both positively and negatively during the reported
periods, including the
components of cost of sales you currently reference. Separately
quantify and discuss each
material factor, rather than netting them. Refer to FR-72.
Sourcing and Supply Chain, page 130
5. Please clarify the nature of your arrangements with your suppliers and
manufacturing
partners, including how pricing is determined, given that your
disclosure indicates you
typically do not enter into long-term contracts.
Brilliant Earth Group, Inc
Report of Independent Registered Public Accounting Firm, page F-2
6. Please have your registered public accounting firm revise its report
to indicate that the
firm conducted its audits in accordance with the "standards of the
Public Company
Accounting Oversight Board (United States)." The reference in the
report to the
"auditing" standards of the Public Company Accounting Oversight Board
is not consistent
with the requirements of PCAOB AS3101.
Brilliant Earth, LLC
Report of Independent Registered Public Accounting Firm, page F-5
7. Please have your registered public accounting firm revise its report
to indicate that the
firm conducted its audits in accordance with the "standards of the
Public Company
Alex K. Grab
Brilliant Earth Group, Inc.
July 8, 2021
Page 3
Accounting Oversight Board (United States)." The reference in the
report to the
"auditing" standards of the Public Company Accounting Oversight Board
is not consistent
with the requirements of PCAOB AS3101.
Exhibits
8. Please file as exhibits the executive compensation arrangements
mentioned on page 145.
You may contact Effie Simpson at 202-551-3346 or Martin James at
202-551-3671 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Geoff Kruczek at 202-551-3641 or Jay Ingram at 202-551-3397 with any
other questions.
FirstName LastNameAlex K. Grab Sincerely,
Comapany NameBrilliant Earth Group, Inc.
Division of
Corporation Finance
July 8, 2021 Page 3 Office of
Manufacturing
FirstName LastName