Q&K International Group Limited

Suite 1607, Building A

No.596 Middle Longhua Road

Xuhui District, Shanghai, 200032

People’s Republic of China

May 23, 2022

VIA EDGAR

Jeffrey Lewis

Shannon Menjivar

Division of Corporation Finance

Office of Real Estate & Construction

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

 

Re:	Q&K INTERNATIONAL GROUP Ltd (the “Company”)

Form 20-F for the fiscal year ended September 30, 2021

Filed February 15, 2022

File No. 001-39111

Dear Mr. Lewis and Ms. Menjivar:

In response to the comments of the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”), dated May 10, 2022 (the “Comment Letter”) on the Company Form 20-F for the fiscal year ended September 30, 202 filed on February 15, 2022, the Company submits this letter containing its responses to the Comment Letter via EDGAR to the Commission.

For your convenience, the Staff’s comments from the Comment Letter are repeated below in bold, followed by the Company’s responses.

Form 20-F filed February 15, 2022

Item 3. Key Information, page 9

 

1.

We note your response to comment 6. Please identify the entities that comprise the column, “Consolidate[d] Subsidiaries.” The WFOE that is the primary beneficiary to the VIE should be presented in a separate column, so an investor may gain an understanding of how the WFOE transacts with the VIE and with its parent. Please tell us how this agreement and other pertinent agreements are reflected in the condensed consolidating schedule.

---

Securities and Exchange Commission

Page 2 of 6

 

In response to the Staff’s comment, the Company plans to revise the condensed consolidating schedules to present the WFOE in a separate column in future filings. The condensed consolidating schedules include the financial information of the Company, the WOFE, the Consolidated VIE and its subsidiaries, and the Other Consolidated Subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation:

 

		As of September 30, 2019																								As of September 30, 2020																								As of September 30, 2021
		The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated				The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated				The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated
		RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB
		(thousands)
Cash and cash equivalents			101,157				477				55,926				2,239				—				159,799				6,015				372				15,227				1,265				—				22,879				1,355				7				10,982				3,973				—				16,317
Restricted cash			—				—				91,015				—				—				91,015				—				—				8,887				—				—				8,887				—				—				2,893				42				—				2,935
Accounts receivable			—				—				1,306				—				—				1,306				—				—				1,943				—				—				1,943				—				—				370				—				—				370
Amounts due from related parties			—				—				5,587				—				—				5,587				—				—				168				—				—				168				—				—				—				201				—				201
Prepaid rent and deposit			—				1,117				127,096				—				—				128,213				—				—				51,281				—				—				51,281				—				—				571				—				—				571
Advances to suppliers			—				—				64,028				—				—				64,028				—				—				16,043				—								16,043				—				—				5,323				7,610								12,933
Other current assets			1				242				146,316				—				—				146,559				—				—				44,400				57,403								101,803				—								97,978				45,365								143,343
Property and equipment, net			—				12,439				1,170,446				2,426				—				1,185,311				—				—				358,022				—				—				358,022				—								38,940				—				—				38,940
Intangible assets, net			—				8				1,240				—				—				1,248				—				—				222,123				—				—				222,123				—				—				539				151,925				—				152,464
Land use rights			—				—				10,734				—				—				10,734				—				—				10,448				—				—				10,448				—				—				—				—				—				—
Other assets			—				5,946				—				—				—				5,946				—				109				57,024				—				—				57,133				—				—				108				9,448				—				9,556
Intercompany receivables			522,124				—				—				192,177				(714,301	)			—				1,385,814				—				—				—				(1,385,814	)			—				1,465,312				—												(1,465,312	)			—
Total assets			623,282				20,229				1,673,694				196,842				(714,301	)			1,799,746				1,391,829				481				785,566				58,668				(1,385,814	)			850,730				1,466,667				7				157,704				218,564				(1,465,312	)			377,630
Accounts payable			—				—				277,103				—				—				277,103				—				—				294,469				—				—				294,469				—				—				281,458				38,811				—				320,269
Amounts due to related parties			—				—				3,121				—				—				3,121				—				—				6,594				—				—				6,594				—				—				—				—				—				—
Deferred revenue			—				—				78,540				—				—				78,540				—				—				152,619				—				—				152,619				—				—				1,125				194,511				—				195,636

---

Securities and Exchange Commission

Page 3 of 6

 

		As of September 30, 2019																								As of September 30, 2020																								As of September 30, 2021
		The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated				The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated				The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated
		RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB
		(thousands)
Short-term debt			—				—				319,103				—				—				319,103				221,328				—				540,808				—				—				762,136				210,776				—				256,773				91,156				—				558,705
Rental installment loans			—				—				756,749				—				—				756,749				—				—				54,505				—				—				54,505				—				—				33				18,061				—				18,094
Deposits from tenants			—				—				163,203				—				—				163,203				—				—				82,191				—				—				82,191				—				—				1,422				64,363				—				65,785
Payable for asset acquisition			—				—				—				—				—				—				—				—				—				165,808				—				165,808				—				—				—				—				—				—
Accrued expenses and other current liabilities			—				2,205				93,908				3,179				—				99,292				12,911				2,160				427,109				1,238								443,418				—				1,653				875,572				147,657				—				1,024,882
Long-term debt			—				—				428,345				—				—				428,345				—				—				464,920				—				—				464,920				—				—				201,041				—				—				201,041
Convertible note, net			—				—								—				—				—				206,466				—				—				—				—				206,466				313,870				—				—				—				—				313,870
Long-term deferred rent			—				—				387,739				—				—				387,739				—				—				212,054				—				—				212,054				—				—				—				—				—				—
Contingent earn-out liabilities			97,417				—				—				—				—				97,417								—				—				—				—				—				164,254				—				—				—				—				164,254
Intercompany payables			—				573,439				140,862				—				(714,301	)			—				2,955,202				536,546				549,666				299,602				(4,341,016	)			—				3,272,273				473,655				642,146				349,511				(4,737,585	)			—
Deficit of investments in subsidiaries and consolidated VIE and VIE’s subsidiaries			1,346,408				—				—				—				(1,346,408	)			—				—				—				—				—				—				—				—				—				—				—				—				—
Total liabilities			1,443,825				575,644				2,648,673				3,179				(2,060,709	)			2,610,612				3,395,907				538,706				2,784,935				466,648				(4,341,016	)			2,845,180				3,961,173				475,308				2,259,570				904,070				(4,737,585	)			2,862,536
Total ,mezzanine equity			1,425,485				—				—				—				—				1,425,485				—				—				—				—				—				—				—				—				—				—				—				—
Total shareholders’ deficit			(2,246,028	)			(555,415	)			(974,979	)			193,663				1,346,408				(2,236,351	)			(2,004,078	)			(538,225	)			(1,999,369	)			(407,980	)			2,955,202				(1,994,450	)			(2,494,506	)			(475,301	)			(2,101,866	)			(685,506	)			3,272,273				(2,484,906	)

---

Securities and Exchange Commission

Page 4 of 6

 

		For the year ended September 30, 2019																								For the year ended September 30, 2020																								For the year ended September 30, 2020
		The Company				The WFOE				The Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated				The Company				The WFOE				The Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated				The Company				The WFOE				The Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				Eliminations				Group Consolidated
		RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB
(in thousands)
Net revenues			—				—				1,233,770				—				—				1,233,770				—				—				965,093				242,870				—				1,207,963				—				—				173,921				862,285				—				1,036,206
Net (loss) income			(498,337	)			(345,779	)			(177,738	)			(3,094	)			526,611				(498,337	)			(1,533,641	)			(46,387	)			(1,491,565	)			(13,042	)			1,550,994				(1,533,641	)			(569,202	)			(56,746	)			(375,470	)			(6,458	)			438,674				(569,202	)
Net cash provided by (used in) operating activities			(20,149	)			(143,025	)			393,847				3,249				(322,111	)			(88,189	)			(17,452	)			—				72,293				—				—				54,841				(30,664	)			45,804				(108,705	)			(16,096	)			—				(109,661	)
Net cash (used in) provided by investing activities			(460,663	)			(98,511	)			(713,653	)			(338,727	)			1,260,104				(351,450	)			(407,297	)			(246,558	)			(99,172	)			(27,851	)			642,208				(138,670	)			(87,232	)			(50,060	)			—				(5,232	)			136,038				(6,486	)
Net cash provided by (used in) financing activities			530,002				238,600				392,388				346,572				(937,993	)			569,569				329,839				246,453				(95,948	)			26,940				(642,208	)			(134,924	)			113,236				3,891				98,466				22,046				(136,038	)			101,601

The following table presents the amount due from (due to) the WFOE, the consolidated VIE and its subsidiaries, and other consolidated subsidiaries in FY 2019, FY 2020 and FY 2021:

 

		As of September 30, 2019																As of September 30, 2020																As of September 30, 2021
Amount due from (due to) WFOE, the consolidated VIE and its subsidiaries and other consolidated subsidiaries		The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries				The Company				The WFOE				Consolidated VIE and its subsidiaries				Other Consolidated Subsidiaries
		RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB				RMB
		(in thousands)																(in thousands)																(in thousands)
Starting Amount			344,580				(381,046	)			37,124				(658	)			522,124				(573,439	)			(140,862	)			192,177				1,385,814				(536,546	)			(549,666	)			(299,602	)
The Company transferred to the VIE			53,047				—				(53,047	)			—				143,314				—				(143,314	)			—				62,033				—				(62,033	)			—
The Company transferred to the WFOE			101,136				(101,136	)			—				—				246,102				(246,102	)			—				—				3,891				(3,891	)			—				—
The consolidated subsidiaries transferred to the VIE			—				—				(201,263	)			201,263				—				—				(7,516	)			7,516				—				—				(37,490	)			37,490
The WFOE transferred to the VIE			—				98,511				(98,511	)			—				—				227,395				(227,395	)			—				—				11,316				(11,316	)			—
Intercompany transactions			—				(165,556	)			174,660				(9,104	)			478,081				32,062				(29,838	)			(480,305	)			—				16,834				9,725				(26,559	)
The Company transferred to the consolidated subsidiaries			—				—				—				—				17,881				—				—				(17,881	)			21,308				—				—				(21,308	)
The consolidated subsidiaries transferred to the WFOE			—				—				—				—				—				(351	)			—				351				—				38,744				—				(38,744	)
Reclassification			—				—				—				—				—				—				—				—				—				—				32				(32	)
Impact of foreign exchange rate			23,361				(24,212	)			175				676				(21,688	)			23,889				(741	)			(1,460	)			(7,734	)			(112	)			8,602				(756	)
Total			522,124				(573,439	)			(140,862	)			192,177				1,385,814				(536,546	)			(549,666	)			(299,602	)			1,465,312				(473,655	)			(642,146	)			(349,511	)

---

Securities and Exchange Commission

Page 5 of 6

 

The Company advises the Staff that the “Other Consolidated Subsidiaries” in the condensed consolidating schedules above comprise the following entities:

 

1.	QK365.com Inc.

 

2.	Qinke (China) Limited

 

3.	Qingke (Shanghai) Artificial Intelligence Technology Co., Ltd.

 

4.	Chengdu Liwu Apartment Management Co., Ltd.

 

5.	Shanghai Qinke Trade Co., Ltd.

 

6.	Yaohan(Shanghai) Artificial Intelligence Technology Co., Ltd.

The Company will present the WFOE in a separate column in future Form 20-F filings.

The Company further advise the Staff that the WFOE had a series of contractual arrangements with the VIE, through which the Company carried out certain rental apartment operation business. The WFOE and the VIE, on a consolidated basis, had been loss making. According to the contractual arrangements, the VIE agreed to pay service fees equivalent to no less than 100% of its annual net profit to the WFOE. However, the WOFE had never charged the VIE and the VIE had never paid any service fee to the WFOE under the contractual arrangement as it had been loss making.

---

Should you have any questions about the responses contained herein, please contact the undersigned at +86-21-6422-8532 or via e-mail at frank@qk365.com or the Company’s U.S. counsel, Ms. Shuang Zhao of Cleary Gottlieb Steen & Hamilton LLP at +852-2532-3783 or via e-mail at szhao@cgsh.com.

 

 

cc:	Mr. Chengcai Qu, Chairman of the board of directors, chief executive officer, chief operating officer and vice president, Q&K International Group Limited

Ms. Shuang Zhao, Partner, Cleary Gottlieb Steen & Hamilton LLP