TWG Top Wealth Group Holding Ltd

Filed Pursuant to Rule 424(b)(4)

Registration No. 333-282302

 

PROSPECTUS

 

Top Wealth Group Holding Limited

 

Up to 27,000,000 Ordinary Shares

 

We are offering in a best efforts basis up to 27,000,000 ordinary shares with US$0.0001 par value per share (the “Ordinary Shares”) of Top Wealth Group Holding Limited (“Top Wealth”, the “Company” “we”, “our”, “us”) at an offering price of US$ 0.4 per share.

 

Our share price is volatile. From April 19, 2024, the day when the Company announced the closing of its initial public offering through October 11, 2024, our Ordinary Shares have traded at a low of $0.65 and a high of $8.60. There has been no change recently in our financial condition or results of operations that is consistent with the recent change in our share price.

 

Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “TWG”. On October 11, 2024, the last reported sales price of our Ordinary Shares on the Nasdaq Capital Market was US$7.14 per share.

 

The securities are offered at a fixed price and issued in a single closing. We will deliver all securities to be issued in connection with this offering delivery versus payment/receipt versus payment upon receipt of investor funds received by us. Accordingly, neither we nor the placement agent have made any arrangements to place investor funds in an escrow account or trust account since the placement agent will not receive investor funds in connection with the sale of the securities offered hereunder. 

 

Any proceeds from the sale of Ordinary Shares offered by us will be available for our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement our business plan. See “Risk Factors” on page 14 for more information.

 

 

Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 14 to read about factors you should consider before buying our Ordinary Shares.

 

Top Wealth Group Holding Limited is not a PRC or Hong Kong operating company, but a holding company incorporated in the Cayman Islands. As a holding company with no material operations, Top Wealth Group Holding Limited conducts all of its operations in Hong Kong through its subsidiary, Top Wealth Group (International Limited) (the “Operating Subsidiary”), which was incorporated in Hong Kong. Investors are cautioned that you are not buying shares of a Hong Kong-based operating company but instead are buying shares of a Cayman Islands holding company with operations conducted by our subsidiary based in Hong Kong. This structure involves unique risks to the investors, and the PRC regulatory authorities could disallow this structure, which would likely result in a material change in our operations and/or a material change in the value of our Ordinary Shares, including that such event could cause the value of such securities to significantly decline or become worthless. Furthermore, shareholders may face difficulties enforcing their legal rights under United States securities laws against our directors and officers who are located outside of the United States.

 

We are subject to certain legal and operational risks associated with having all business operations in Hong Kong, a Special Administrative Region of the PRC, as well as the risks associated with having clients who are Mainland China individuals or companies that have shareholders or directors that are Mainland China individuals. We are also subject to the risks of uncertainty about any future actions the PRC government or authorities in Hong Kong may take in this regard. Such risks may include changes in the legal, political, and economic policies of the Chinese government, the relations between China and the United States, and Chinese or United States regulations that may materially and adversely affect our business, financial condition, results of operations and the market price of the Ordinary Shares. Any such changes could significantly limit or completely hinder our ability to offer or continue to offer securities to investor and could cause the value of offered securities to significantly decline or become worthless. PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Recently, the PRC government initiated a series of regulatory actions and made statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on the daily business operation of our HK subsidiary. Should the PRC government choose to exercise significant oversight and discretion over the conduct of our business, or in the event that we or the Operating Subsidiary were to become subject to PRC laws and regulations, we could incur material costs to ensure compliance, and we or the Operating Subsidiary might be subject to fines, experience devaluation of securities or delisting, no longer be permitted to conduct offerings to foreign investors, and/or no longer be permitted to continue business operations as presently conducted. See “Risk Factors — Risks Related to Doing Business in the Jurisdictions in which we Operate” beginning on page 14.

 

We are an “Emerging Growth Company” and a “Foreign Private Issuer” under applicable U.S. federal securities laws and are, therefore, eligible for reduced public company reporting requirements. Please read “Emerging Growth Company Status” beginning on page 7 and “Foreign Private Issuer Status” beginning on page 8 for more information.

 

 

Our Ordinary Shares may be prohibited from trading on a national exchange or “over-the-counter” markets under the Holding Foreign Companies Accountable Act (the “HFCAA”) if the Public Company Accounting Oversight Board (“PCAOB”) determines that it is unable to inspect or fully investigate our auditor and as a result the exchange where our securities are traded may delist our securities. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021, which found that the PCAOB was unable to inspect or investigate completely certain named registered public accounting firms headquartered in Mainland China and Hong Kong.

 

Our auditor, Onestop Assurance PAC, the independent registered public accounting firm that issues the audit report for the fiscal years ended December 31, 2023 and 2022, is currently subject to PCAOB inspections and the PCAOB is able to inspect our auditor. Onestop Assurance PAC, headquartered in Singapore, has been inspected by the PCAOB on a regular basis. Our auditor is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. Therefore, we believe that, as of the date of this prospectus, our auditor is not subject to the PCAOB determinations. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit Onestop Assurance PAC to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PACOB expands the scope of the Determination so that we are subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including trading on the national exchange. See “Prospectus Summary — Implications of the Holding Foreign Companies Accountable Act (the “HFCAA”)” on page 12 of this prospectus and “Risk Factors — Risks Related to Our Ordinary Shares — Our Ordinary Shares may be prohibited from being traded on a national exchange under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditor. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the HFCAA to require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.” on page 43 of this prospectus. We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us. Such uncertainty could cause the market price of our Ordinary Shares to be materially and adversely affected.

 

TW Cayman is permitted under the laws of the Cayman Islands to provide funding to TW BVI through loans or capital contributions without restrictions on the amount of the funds. TW BVI is permitted under the respective laws of BVI to provide funding to TW HK through dividend distribution without restrictions on the amount of the funds. There are no restrictions on dividend transfers from BVI to Hong Kong. As a holding company, TW Cayman may rely on dividends and other distributions on equity paid by its subsidiaries for its cash and financing requirements. As of the date of this prospectus, TW Cayman and its subsidiaries do not have any plans to distribute earnings or settle amounts in the foreseeable future. During the fiscal years ended December 31, 2023 and 2022, no dividends or distribution have been made to date by our subsidiaries.

 

		PER SHARE				TOTAL
Public offering price		$	0.4			$	10,800,000
Placement agent commission(1)		$	0.016			$	432,000
Proceeds to the Company before expenses		$	0.384			$	10,368,000

 

(1)

We have agreed to pay AC Sunshine Securities, LLC (the “Placement Agent”) commission of 4.0% of the aggregate gross proceeds raised in this offering. We have also agreed to (i) reimburse the Placement Agent for certain expenses; and (ii) provide a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to the Placement Agent. For a description of compensation payable to the Placement Agent, see “Plan of Distribution.”

 

We have engaged AC Sunshine Securities, LLC as our exclusive placement agent (“AC Sunshine” or the “placement agent”) to use its reasonable best efforts to solicit offers to purchase our securities in this offering. The placement agent has no obligation to purchase any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. Because there is no minimum offering amount required as a condition to closing in this offering, the actual public offering amount, placement agent’s fee and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth above and throughout this prospectus. We have agreed to pay the placement agent the placement agent fees set forth in the table below. See “Plan of Distribution” in this prospectus for more information. 

 

 

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Placement Agent

 

 

The date of this prospectus is October 11, 2024.

 

 

TABLE OF CONTENTS

 

	Page
ABOUT THIS PROSPECTUS	ii
PROSPECTUS SUMMARY	1
THE OFFERING	13
RISK FACTORS	14
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	52
USE OF PROCEEDS	53
DIVIDEND POLICY	54
CAPITALIZATION	55
Dilution	56
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	57
CORPORATE HISTORY AND STRUCTURE	65
BUSINESS	67
REGULATION	81
MANAGEMENT	85
PRINCIPAL SHAREHOLDERS	91
RELATED PARTY TRANSACTIONS	92
DESCRIPTION OF SHARE CAPITAL	94
SHARES ELIGIBLE FOR FUTURE SALE	107
PLAN OF DISTRIBUTION	113
ENFORCEABILITY OF CIVIL LIABILITIES	115
EXPENSES RELATED TO THIS OFFERING	117
LEGAL MATTERS	117
EXPERTS	117
WHERE YOU CAN FIND ADDITIONAL INFORMATION	118

 

You should rely only on the information contained in this prospectus and the documents we incorporate by reference in this prospectus. We have not authorized anyone to provide you with different information. We do not take any responsibility for, and cannot provide any assurance as to the reliability of, any other information that others may give you. We are not making an offer to sell the securities in any jurisdiction where the offer or sale thereof is not permitted. The information contained in this prospectus or incorporated by reference in this prospectus is accurate only as of the respective date of such information, regardless of the time of delivery of this prospectus or of any sale or offer to sell hereunder. You should not assume that the information appearing in this prospectus is accurate as of any date other than the date on the front cover of this prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

 

To the extent this prospectus contains summaries of the documents referred to herein, you are directed to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed, or will be incorporated by reference as exhibits to the registration statement of which this prospectus forms a part, and you may obtain copies of such documents as described below in the section titled “Where You Can Find Additional Information.”

 

 

ABOUT THIS PROSPECTUS

 

Neither we nor the placement agent has authorized anyone to provide you with any information or to make any representations other than as contained in this prospectus or any related free writing prospectus. Neither we nor the placement agent takes responsibility for, and provide no assurance about the reliability of, any information that others may give you. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities. Our business, financial condition, results of operations and prospects may have changed since that date.

 

Neither we nor the placement agent has done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Ordinary Shares and the distribution of this prospectus outside the United States.

 

 

RISK FACTORS

 

An investment in our Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Ordinary Shares, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of our Ordinary Shares to decline, resulting in a loss of all or part of your investment.

 

Risks Related to Doing Business in the Jurisdictions in which We Operate

 

All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our Ordinary Shares. Our Operating Subsidiary in Hong Kong may be subject to laws and regulations of the Mainland China, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of the PRC may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.

 

Our Operating Subsidiary is located and operates its business in Hong Kong, a special administrative region of the PRC. The Operating Subsidiary, or TW HK does not have operation in Mainland China and is not regulated by any regulator in Mainland China. As a result, the laws and regulations of the Mainland China do not currently have any material impact on our business, financial condition and results of operation. Furthermore, except for the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (“Basic Law”), national laws of the Mainland China do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. National laws and regulations relating to data protection, cybersecurity and the anti-monopoly have not been listed in Annex III and so do not apply directly to Hong Kong.

 

However, due to long arm provisions under the current Mainland China laws and regulations, there remain regulatory and legal uncertainty with respect to the implementation of laws and regulations of Mainland China to Hong Kong. As a result, there is no guarantee that the PRC government may not choose to implement the laws of the Mainland China to Hong Kong and exercise significant direct influence and discretion over the operation of our Operating Subsidiary in the future and, it will not have a material adverse impact on our business, financial condition and results of operations, due to changes in laws, political environment or other unforeseeable reasons.

 

In the event that we or our Hong Kong Operating Subsidiary were to become subject to laws and regulations of Mainland China, the legal and operational risks associated in Mainland China may also apply to our operations in Hong Kong, and we face the risks and uncertainties associated with the legal system in the Mainland China, complex and evolving Mainland China laws and regulations, and as to whether and how the recent PRC government statements and regulatory developments, such as those relating to data and cyberspace security and anti-monopoly concerns, would be applicable to companies like our Operating Subsidiary and us, given the substantial operations of our Operating Subsidiary in Hong Kong and the PRC government may exercise significant oversight over the conduct of business in Hong Kong.

 

 

The laws and regulations in the Mainland China are evolving, and their enactment timetable, interpretation, enforcement, and implementation involve significant uncertainties, and may change quickly with little advance notice, along with the risk that the PRC government may intervene or influence our Operating Subsidiary’s operations at any time could result in a material change in our operations and/or the value of our securities. Moreover, there are substantial uncertainties regarding the interpretation and application of Mainland China laws and regulations including, but not limited to, the laws and regulations related to our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

 

The laws, regulations, and other government directives in the Mainland China may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

 

●

delay or impede our development;

 

●

result in negative publicity or increase our operating costs;

 

●

require significant management time and attention;

 

●

cause devaluation of our securities or delisting; and,

 

●

subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business operations.

 

Our business, financial conditions and results of operations, and/or the value of our Ordinary Shares or our ability to offer or continue to offer securities to investors may be materially and adversely affected by existing or future laws and regulations of the mainland China which may become applicable to Hong Kong and thus to company such as us.

 

We are aware that recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in Mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over Mainland China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

 

We have no operations in Mainland China. Our operating subsidiary, or TW HK is located and operate in Hong Kong, a special administrative region of the PRC. As of the date of this prospectus, the PRC government currently does not exert direct influence and discretion over the manner in which we conduct our business activities in Hong Kong, outside of Mainland China. Based on our understanding of the mainland China laws and regulations currently in effect as of the date of this prospectus, as TW HK is located in Hong Kong, we are not currently required to obtain permission from the PRC government to list on a U.S. securities exchange and consummate this Offering. However, there is no guarantee that this will continue to be the case in the future in relation to the continued listing of our securities on a securities exchange outside of the PRC, or even when such permission is obtained, it will not be subsequently denied or rescinded. It remains uncertain as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offering and other capital markets activities and due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future, it remains uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our operating subsidiary located in Hong Kong. It is also uncertain whether the Hong Kong government will be mandated by the PRC government, despite the constitutional constraints of the Basic Law, to control over offerings conducted overseas and/or foreign investment of entities in Hong Kong, including our operating subsidiary. Any actions by the PRC government to exert more oversight and control over offerings (including businesses whose primary operations are in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

 

The PRC government may intervene or influence our operations at any time or may exert control over offerings conducted overseas and foreign investment in Hong Kong-based issuers, which may result in a material change in our operations and/or the value of our Ordinary Shares. For example, there is currently no restriction or limitation under the laws of Hong Kong on the conversion of HK dollar into foreign currencies and the transfer of currencies out of Hong Kong and the laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash between the ultimate holding company and the Operating Subsidiary in Hong Kong. The PRC government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from the other entities within our group or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to the outside of Hong Kong and may affect our ability to receive funds from our Operating Subsidiary in Hong Kong.

 

 

If the PRC government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in Mainland China-based issuers to Hong Kong-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.

 

Recent statements, laws, and regulations by the PRC government, including the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the Draft Rules on Overseas Listing published by CSRC on December 24, 2021 also have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in Mainland China-based issuers. It remains uncertain as to the enactment, interpretation, and implementation of regulatory requirements related to overseas securities offering and other capital markets activities and due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future.

 

It remains uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our Operating Subsidiary. It is also uncertain whether the Hong Kong government will be mandated by the PRC government, despite the constitutional constraints of the Basic Law, to control over offerings conducted overseas and/or foreign investment of entities in Hong Kong, including our Operating Subsidiary. Any actions by the PRC government to exert more oversight and control over offerings (including of businesses whose primary operations are in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. If there is a significant change to current political arrangements between Mainland China and Hong Kong, or the applicable laws, regulations, or interpretations change, and, in such event, if we are required to obtain such approvals in the future and we do not receive or maintain the approvals or is denied permission from Mainland China or Hong Kong authorities, we will not be able to list our Ordinary Shares on a U.S. exchange, or continue to offer securities to investors, which would materially affect the interests of the investors and cause significant the value of our Ordinary Shares significantly decline or be worthless.

 

The enforcement of laws and rules and regulations in the PRC can change quickly with little advance notice. Additionally, the PRC laws and regulations and the enforcement of such that apply or are to be applied to Hong Kong can change quickly with little or no advance notice. As a result, the Hong Kong legal system embodies uncertainties which could limit the availability of legal protections, which could result in a material change in our Operating Subsidiary’s operations and/or the value of the securities we are offering.

 

As one of the conditions for the handover of the sovereignty of Hong Kong to China, China accepted conditions such as Hong Kong’s Basic Law. The Basic Law ensured Hong Kong will retain its currency (the Hong Kong Dollar), legal system, parliamentary system, and people’s rights and freedom for fifty years from 1997. This agreement has given Hong Kong the freedom to function with a high degree of autonomy. The Special Administrative Region of Hong Kong is responsible for its domestic affairs, including, but not limited to, the judiciary and courts of last resort, immigration, and customs, public finance, currencies, and extradition. Hong Kong continues using the English common law system. However, if the PRC government attempts to alter its agreement to allow Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system and may in turn bring about uncertainty in, for example, the enforcement of our contractual rights. This could, in turn, materially and adversely affect our Operating Subsidiary’s business and operations. Additionally, intellectual property rights and confidentiality protections in Hong Kong may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. These uncertainties could limit the legal protections available to us, including the ability to enforce agreements with the customers.

 

 

Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China could adversely affect us and limit the legal protections available to you and us.

 

The HK subsidiary was formed under and are governed by the laws of the HK, however, we may be subject to the uncertainties of PRC legal system. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference, but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general, such as foreign investment, corporate organization and governance, commerce, taxation and trade. As a significant part of our business is conducted in HK, our operations may be governed by PRC laws and regulations. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us. In addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other PRC government authorities (including local government authorities), thus making strict compliance with all regulatory requirements impractical, or in some circumstances impossible. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRC administrative and court authorities have discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede our ability to continue our operations.

 

Furthermore, if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, we may incur increased compliance costs or become subject to additional restrictions in our operations. Intellectual property rights and confidentiality protections in China may also not be as effective as in the United States or other countries. In addition, we cannot predict the effects of future developments in the PRC legal system on our business operations, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors, including you. Moreover, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.

 

If we and/or our subsidiaries were to be required to comply with cybersecurity, data privacy, data protection, or any other PRC laws and regulations related to data and we and/or our subsidiaries cannot comply with such PRC laws and regulations, our subsidiaries’ business, financial condition, and results of operations may be materially and adversely affected.

 

We may be subject to a variety of cybersecurity, data privacy, data protection, and other PRC laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations apply not only to third-party transactions, but also to transfers of information within our organization. These laws and regulations may restrict our subsidiaries’ business activities and require us and/or our subsidiaries to incur increased costs and efforts to comply, and any breach or noncompliance may subject us and/or our subsidiaries to proceedings against such entity(ies), damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our subsidiaries’ business and our financial condition and results of operations.

 

As the laws and regulations related to cybersecurity, data privacy, and data protection in mainland China where our subsidiaries do not have operations are relatively new and evolving, and their interpretation and application may be uncertain, it is still unclear if we and/or our subsidiaries may become subject to such new laws and regulations.

 

 

The PRC Data Security Law, or the Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress on June 10, 2021 and took effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. According to Article 2 of the Data Security Law, it applies to data processing activities within the territory of mainland China as well as data processing activities conducted outside the territory of mainland China which jeopardize the national interest or the public interest of China or the rights and interest of any PRC organization and citizens. Any entity failing to perform the obligations provided in the Data Security Law may be subject to orders to correct, warnings and penalties including ban or suspension of business, revocation of business licenses or other penalties. As of the date of this prospectus, we do not have any operation or maintain any office or personnel in mainland China, and we have not conducted any data processing activities which may endanger the national interest or the public interest of China or the rights and interest of any Chinese organization and citizens. Therefore, we do not believe that the Data Security Law is applicable to us.

 

On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. According to Article 3 of the Personal Information Protection Law, it is applied not only to personal information processing activities carried out in the territory of mainland China but also to personal information processing activities outside the mainland China for the purpose of offering products or services to domestic natural persons in the territory of mainland China. The offending entities could be ordered to correct, or to suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties. As our subsidiaries’ services are provided in Hong Kong, Cayman Islands, British Virgin Islands and the U.S. rather than in the mainland China to clients worldwide, including but not limited to clients of mainland China who visit our offices in these locations, we take the view that we and our subsidiaries are not subject to the Personal Information Protection Law.

 

On July 7, 2022, the Cyberspace Administration of China (the “CAC”) issued the Measures for Security Assessment of Outbound Data Transfer, or the Measures, which took effect on September 1, 2022. According to the Measures, in addition to the self-risk assessment requirement for provision of any data outside mainland China, a data processor shall apply to the competent cyberspace department for data security assessment and clearance of outbound data transfer in any of the following events: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by an operator of critical information infrastructure or a data processor which has processed more than one million users’ personal data; (iii) outbound transfer of personal information by a data processor which has made outbound transfers of more than one hundred thousand users’ personal information or more than ten thousand users’ sensitive personal information cumulatively since January 1 of the previous year; (iv) such other circumstances where ex-ante security assessment and evaluation of cross-border data transfer is required by the CAC. As of the date of this prospectus, we and our subsidiaries have not collected, stored, or managed any personal information in mainland China. therefore, we believe that the Measures is not applicable to us.

  

However, given the recency of the issuance of the above PRC laws and regulations related to cybersecurity and data privacy, we and our subsidiaries still face uncertainties regarding the interpretation and implementation of these laws and regulations and we could not rule out the possibility that any PRC governmental authorities may subject us and/or our subsidiaries to such laws and regulations in the future. If they are deemed to be applicable to us and/or our subsidiaries, we cannot assure you that we and our subsidiaries will be compliant with such new regulations in all respects, and we and/or our subsidiaries may be ordered to rectify and terminate any actions that are deemed illegal by the PRC governmental authorities and become subject to fines and other government sanctions, which may materially and adversely affect our subsidiaries’ business and our financial condition and results of operations.

 

If we and/or our subsidiaries were to be required to obtain any permission or approval from or complete any filing procedure with the China Securities Regulatory Commission (the “CSRC”), the CAC, or other PRC governmental authorities in connection with the initial public offering (“IPO”) or future follow-on offerings under PRC laws, we and/or our subsidiaries may be fined or subject to other sanctions, and our subsidiaries’ business and our reputation, financial condition, and results of operations may be materially and adversely affected.

 

The Cybersecurity Review Measures jointly promulgated by the CAC and other relevant PRC governmental authorities on December 28, 2021 required that, among others, “critical information infrastructure” or network platform operators holding over one million users’ personal information to apply for a cybersecurity review before any public offering on a foreign stock exchange. However, this regulation is recently issued and there remain substantial uncertainties about its interpretation and implementation.

 

 

As of the date of this prospectus, we and our subsidiaries do not have any business operation or maintain any office or personnel in mainland China. We and our subsidiaries have not collected, stored, or managed any personal information in mainland China. Based on our inquiry with the China Cybersecurity Review Technology and Certification Center (the “CCRC”) and the assessment conducted by the management, we believe that we and our subsidiaries are not currently required to proactively apply to a cybersecurity review for our IPO or follow-on offerings overseas, on the basis that (i) our subsidiaries are incorporated in Hong Kong, the British Virgin Islands, and other jurisdictions outside of mainland China and operate in Hong Kong without any subsidiary or variable interest entities (“VIE”) structure in mainland China, and we do not maintain any office or personnel in mainland China; (ii) except for the Basic Law, the National Laws do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation, and National Laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong, and PRC laws and regulations relating to data protection and cyber security have not been listed in Annex III as the date of this Prospectus; (iii) our data processing activities are solely carried out by our overseas entities outside of mainland China for the purpose of offering products or services in Hong Kong and other jurisdictions outside of mainland China; (iv) we and our subsidiaries do not control more than one millions users’ personal information as of the date of this Prospectus; (v) as of the date of this Prospectus, we and our subsidiaries have not received any notice of identifying us as critical information infrastructure from any relevant PRC governmental authorities; (vi) as of the date of this Prospectus, none of us or our subsidiaries have been informed by any PRC governmental authority of any requirement for a cybersecurity review; and (vii) based on our inquiry with the CCRC, the officer who provides cybersecurity review consultation service under CCRC believes that we are currently not required to apply to a cybersecurity review for our public offerings on a foreign stock exchange with the CAC because we neither currently have any operation in mainland China nor control more than one millions users’ personal information as of the date of this Prospectus. Additionally, we believe that we and our subsidiaries are compliant with the regulations and policies that have been issued by the CAC to date and there was no material change to these regulations and policies since our IPO. However, regulatory requirements on cybersecurity and data security in the mainland China are constantly evolving and can be subject to varying interpretations or significant changes, which may result in uncertainties about the scope of our responsibilities in that regard, and there can be no assurance that the relevant PRC governmental authorities, including the CAC, would reach the same conclusion as our PRC counsel. We will closely monitor and assess the implementation and enforcement of the Cybersecurity Review Measures. If the Cybersecurity Review Measures mandates clearance of cybersecurity and/or data security regulators and other specific actions to be completed by companies like us, we may face uncertainties as to whether we can meet such requirements timely, or at all.

 

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which took effect on March 31, 2023. The Trial Measures requires companies in mainland China that seek to offer and list securities overseas, both directly and indirectly, to fulfill the filing procedures with the CSRC. According to the Trial Measures, the determination of the “indirect overseas offering and listing by companies in mainland China” shall comply with the principle of “substance over form” and particularly, an issuer will be required to go through the filing procedures under the Trial Measures if the following criteria are met at the same time: (i) 50% or more of the issuer’s operating revenue, total profits, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by companies in mainland China; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China. On the same day, the CSRC held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (i) on or prior to the effective date of the Trial Measures, companies in mainland China that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges shall complete the filing before the completion of their overseas offering and listing; and (ii) companies in mainland China which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges and are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority or stock exchange, but have not completed the indirect overseas listing, shall complete the overseas offering and listing before September 30,2023, and failure to complete the overseas listing within such six-month period will subject such companies to the filing requirements with the CSRC.

 

Based on the assessment conducted by the management, we are not subject to the Trial Measures, because we are incorporated in the Cayman Islands and our subsidiaries are incorporated in Hong Kong, the British Virgin Islands and other regions outside of mainland China and operate in Hong Kong without any subsidiary or VIE structure in mainland China, and we do not have any business operations or maintain any office or personnel in mainland China. However, as the Trial Measures and the supporting guidelines are newly published, there exists uncertainty with respect to the implementation and interpretation of the principle of “substance over form”. As of the date of this prospectus, there was no material change to these regulations and policies since our IPO. If our offering, including the IPO and future follow-on offerings, and listing were later deemed as “indirect overseas offering and listing by companies in mainland China” under the Trial Measures, we may need to complete the filing procedures for our offering, including the IPO and future follow-on offerings, and listing. If we are subject to the filing requirements, we cannot assure you that we will be able to complete such filings in a timely manner or even at all.

 

 

Since these statements and regulatory actions are new, it is also highly uncertain in the interpretation and the enforcement of the above cybersecurity and overseas listing laws and regulation. There is no assurance that the relevant PRC governmental authorities would reach the same conclusion as us. If we and/or our subsidiaries are required to obtain approval or fillings from any governmental authorities, including the CAC and/or the CSRC, in connection with the listing or continued listing of our securities on a stock exchange outside of Hong Kong or mainland China, it is uncertain how long it will take for us and/or our subsidiaries to obtain such approval or complete such filing, and, even if we and our subsidiaries obtain such approval or complete such filing, the approval or filing could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from or complete the necessary filing procedure with the PRC governmental authorities to conduct offerings or list outside of Hong Kong or mainland China may subject us and/or our subsidiaries to sanctions imposed by the PRC governmental authorities, which could include fines and penalties, suspension of business, proceedings against us and/or our subsidiaries, and even fines on the controlling shareholder and other responsible persons, and our subsidiaries’ ability to conduct our business, our ability to invest into mainland China as foreign investments or accept foreign investments, or our ability to list on a U.S. or other overseas exchange may be restricted, and our subsidiaries’ business, and our reputation, financial condition, and results of operations may be materially and adversely affected.

 

The Chinese government may intervene or influence our Chinese supplier and its exclusive overseas agent’s operations at any time, or may exert more control over how our PRC-based supplier operate their business or cooperate with us. This could result in a material change in our PRC-based supplier’s operations and indirectly the value of our Ordinary Shares.

 

We rely on one PRC-based sturgeon farm for our supply of caviar, with which we entered into supplier agreement through its exclusive overseas agent. The PRC government may choose to exercise significant oversight and discretion, and the policies, regulations, rules, and the enforcement of laws of the Chinese government to which our PRC-based supplier and its exclusive overseas agent is subject to may change rapidly and with little advance notice. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and may be inconsistent with our supplier or its exclusive overseas agent’s current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

 

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Delay or impede our supplier’s development;

 

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result in negative publicity or increase our supplier’s operating costs;

 

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require significant management time and attention; and/or

 

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subject us to remedies, administrative penalties and even criminal liabilities that may harm our supplier’s business, including fines assessed for our supplier’s current or historical operations, or demands or orders that our supplier modifies or even ceases their business practices.

 

The PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a variable interest entity (“VIE”) structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. These regulatory actions and statements emphasize the need to strengthen the administration over illegal securities activities and the supervision of China-based companies seeking overseas listings. Additionally, companies are required to undergo a cybersecurity review if they hold large amounts of data related to issues of national security, economic development or public interest before carrying our mergers, restructuring or splits that affect or may affect national security. These statements were recently issued and their official guidance and interpretation remain unclear at this time.

 

 

The PRC government may intervene or influence our PRC-based supplier’s operations at any time and may exert more control over offerings conducted overseas and foreign investment in China-based companies, which may result in a material change in our PRC-based operations. Any legal or regulatory changes that restrict or otherwise unfavorably impact our PRC-based supplier’s ability to conduct their business could decrease demand for their services, reduce revenues, increase costs, require them to obtain more licenses, permits, approvals or certificates, or subject them to additional liabilities. To the extent any new or more stringent measures are implemented, our supplier’s and our business, financial condition and results of operations could be adversely affected, and the value of our Ordinary Shares could decrease or become worthless.

 

Changes and the downturn in the economic, political, or social conditions of Hong Kong, Mainland China and other countries or changes to the government policies of Hong Kong and Mainland China could have a material adverse effect on our business and operations.

 

Our operations are located in Hong Kong. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in Hong Kong and Mainland China generally. Economic conditions in Hong Kong are sensitive to Mainland China and the global economic conditions. Any major changes to Hong Kong’s social and political landscape will have a material impact on our business.

 

The Mainland China economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the economy in the Mainland China has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on Hong Kong and us.

 

Furthermore, on July 14, 2020, the former President of the U.S., Mr. Donald Trump, signed the Hong Kong Autonomy Act and an executive order to remove the preferential trade status of Hong Kong, pursuant to § 202 of the United States-Hong Kong Policy Act of 1992. The U.S. government has determined that Hong Kong is no longer sufficiently autonomous to justify preferential treatment in relation to the PRC, especially with the issuance of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) on July 1, 2020. Hong Kong will now be treated as Mainland China, in terms of visa application, academic exchange, tariffs and trading, etc. According to § 3(c) of the executive order issued on July 14, 2020, the license exception for exports and re-exports to Hong Kong and transfer within the PRC is revoked, while exports of defense items are banned. On the other hand, the existing punitive tariffs the U.S. imposed on the Mainland China will also be applied to Hong Kong exports. Losing its special status, Hong Kong’s competitiveness as a food trading hub may deteriorate in the future as its tax benefits as a result of preferential situation no longer exists and companies might prefer exporting through other cities. The level of activities of domestic exports and re-exports and other trading activities in Hong Kong may decline owing to the tariff being imposed on Hong Kong exports and the export restriction.

 

In the event that Hong Kong loses its position as a food trading hub in Asia, the demand for food export or re-export from Hong Kong and thus our business, financial conditions and results of operations, may be adversely affected. According to the Hong Kong Policy Act Report issued by the Department of State in 2021, 2022 and 2023, since July 2020, the suspension of an agreement concerning surrender of fugitive offenders and the terminations of an agreement concerning transfer of sentenced persons and an agreement concerning certain reciprocal tax exemptions, there were no terminations pursuant to § 202(d) of the United States-Hong Kong Policy Act of 1992 or determinations under § 201(b) up to the date of this registration statement. The executive order to remove the preferential trade status of Hong Kong remains in effect. Since July 2020 and as of the date of this registration statement, the removal of the preferential trade status of Hong Kong did not have a material impact on our business and operations.

 

Additionally, the outbreak of war in Ukraine in 2022 has already affected global economic markets, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this section. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on the operations, results of operations, financial conditions, liquidity and business outlook of our business.

 

 

There are political risks associated with conducting business in Hong Kong.

 

All of our operations are in Hong Kong. Accordingly, the business operations and financial conditions of our Operating Subsidiary will be affected by the political and legal developments in Hong Kong. Any adverse economic, social and/or political conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may affect the market and may adversely affect our operations. Given the relatively small geographical size of Hong Kong, any of such incidents may have a widespread effect on our business operations, which could in turn adversely and materially affect our business, results of operations and financial condition.

 

Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. However, there is no assurance that there will not be any changes in the political arrangement between PRC and Hong Kong and the economic, political and legal environment in Hong Kong in the future. Since all of our operations are based in Hong Kong, any change of such political arrangements may pose an immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions.

 

Based on certain recent development including the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region issued by the Standing Committee of the PRC National People’s Congress in June 2020, the U.S. State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from China and President Trump signed an executive order and Hong Kong Autonomy Act, or HKAA, to remove Hong Kong’s preferential trade status and to authorize the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. The United States may impose the same tariffs and other trade restrictions on exports from Hong Kong that it places on goods from Mainland China. These and other recent actions may represent an escalation in political and trade tensions involving the U.S, China and Hong Kong, which could potentially harm our business. It is difficult to predict the full impact of the HKAA on Hong Kong and companies with operations in Hong Kong like us. Furthermore, legislative or administrative actions in respect of China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Ordinary Shares could be adversely affected.

 

Risks Related to our Business and Industry

 

We have a short operating history and are subject to risks and uncertainties associated with operating in a rapidly developing and evolving industry. Our limited operating history makes it difficult to evaluate our business and prospects.

 

We established our caviar business in Hong Kong in August 2021 and have subsequently experienced rapid growth. We expect we will continue to expand as global market presence, broaden our product portfolio, enlarge our customer bases and explore new market opportunities. However, due to our limited operating history, our historical growth rate may not be indicative of our future performance. Our future performance may be more susceptible to certain risks than a company with a longer operating history in a different industry. Many of the factors discussed below could adversely affect our business and prospects and future performance, including:

 

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our ability to maintain, expand and further develop our relationships with customers;

 

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our ability to introduce and manage new caviar products in response to changes in customer demographics and consumer tastes and preferences;

 

  

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the continued growth and development of the caviar industry;

 

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our ability to maintain the quality of our caviar products;

 

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our ability to effectively manage our growth;

 

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our ability to compete effectively with our competitors in the caviar industry; and

 

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our ability to attract and retain qualified and skilled employees.

 

You should consider our business and prospects in light of the risks and uncertainties we face as a fast growing company operating in a rapidly developing and evolving market. We may not be successful in addressing the risks and uncertainties listed above, among others, which may materially and adversely affect our business and prospects and future performance.

 

We materially rely on Fujian Aoxuanlaisi Biotechnology Co., Ltd (“Fujian Aoxuanlaisi”), the exclusive distributor of a PRC sturgeon farm, as our major supplier for the supply of caviar raw product. Such arrangement materially and adversely exposes us to unique risk. Any disruption in the supplier’s relationships, either between Fujian Aoxuanlaisi and the PRC sturgeon farm, or between Fujian Aoxuanlaisi and us, could have a material adverse effect on our business. Any disruption in the provision of caviar from Fujian Aoxuanlaisi or PRC sturgeon farm and our inability to identify alternative caviar supplier may materially and adversely affect our business operations and financial results.

 

We materially rely on Fujian Aoxuanlaisi, the agent and distributor of a PRC sturgeon farm, as our supplier for caviar raw product. For years ended December 31, 2023 and 2022, our procurement from the PRC sturgeon farm, through Fujian Aoxuanlaisi, amounted to approximately US$6.2 million and US$5.3 million, respectively, representing approximately 64.3% and 90% of our total purchases for the corresponding year. Before April 2022, we obtain all of the caviar raw product supply from Fujian Aoxuanlaisi on an as-demand per order basis, without any long-term agreement. In April 2022, our Operating Subsidiary, Top Wealth Group (International) Limited, has entered into the Caviar Sales Agreement with Fujian Aoxuanlaisi, the agent and distributor of Fujian Longhuang Biotech Co., Limited (“Fujian Longhuang”), a PRC sturgeon farm. Pursuant to the Caviar Sales Agreement between Fujian Aoxuanlaisi and Top Wealth Group (International) Limited, by way of Power of Attorney, Fujian Aoxuanlaisi appointed Top Wealth Group (International) Limited, our Operating Subsidiary, as its exclusive distributor in Hong Kong and Macau for conducting overseas distribution and granted us the rights to procure caviar directly from it for a term of 10 years, from 30 April 2022 to 30 April 2032.

 

Such arrangement materially and adversely exposes us to unique risk. Our business relies heavily on a stable and adequate supply of caviar from the Fujian Aoxuanlaisi, which ultimately depends on the stable and adequate supply of caviar from Fujian Longhuang, the PRC sturgeon farm, to Fujian Aoxuanlaisi, the PRC sturgeon farm’s distributor. If our business relationships with Fujian Aoxuanlaisi is interrupted or terminated, or if for any reason Fujian Aoxuanlaisi became unable or unwilling to continue to provide raw product caviar to us, these would likely lead to a material interruption of our operation or suspension in our ability to obtain caviar supply or fulfilling customer order, until we found another supplier that could supply our product. Furthermore, if the business relationships between Fujian Aoxuanlaisi and Fujian Longhuang are interrupted or terminated, it would also likely lead to a material interruption of our operation or suspension of our ability to obtain caviar supply or fulfilling customer order. Although Fujian Aoxuanlaisi and Fujian Longhuang maintain a long-term exclusive sales agreement for 15 years, from December 2020 to December 2035, whether their relationship may be interrupted or terminated is beyond our control. There are no also assurances that our Caviar Sales Agreement with Fujian Aoxuanlaisi renewed on commercially favorable terms upon its expiration.

 

Any disruption in our supplier relationships, either between Fujian Aoxuanlaisi and Fujian Longhuang, or between Fujian Aoxuanlaisi and us, could have a material adverse effect on our business. Events that adversely affect our suppliers could impair our ability to obtain caviar inventory in the quantities that we desire. Such events include problems with our suppliers’ businesses, finances, labor relations, ability to obtain caviar, costs, production, quality control, insurance and reputation, as well as natural disasters, pandemics, or other catastrophic occurrences. A failure by any current or future supplier to comply with food safety, environmental or other laws and regulations, meet required timelines, and hire and retain qualified employees may disrupt our supply of products.

 

 

In the event of any early termination or non-renewal of the Caviar Sales Agreement with Fujian Aoxuanlaisi or any early termination or non-renewal of long-term exclusive sales agreement between Fujian Aoxuanlaisi and Fujian Longhuang, or in the event of any disruption, delay or inability on the part of with Fujian Aoxuanlaisi in making sufficient and quality supply to us, we cannot assure you that we would be able to identify alternative suppliers on commercially acceptable terms which may thereby result in material and adverse effects on our business, financial conditions and operating results. Failure to find a suitable replacement, even on a temporary basis, would have an adverse effect on our brand image, financial conditions, and the result of operations. Further, should there be any changes in the commercial terms of the Caviar Sales Agreement, especially to the effect that we could no longer act as the exclusive distributor of Fujian Aoxuanlaisi in Hong Kong and Macau, we may face an increase in competition, and we may not be able to continue to procure caviar from the PRC sturgeon farm on commercially acceptable terms.

 

If Fujian Aoxuanlaisi fails to deliver the caviar raw product we need on the terms we have agreed, we may be challenged to secure alternative sources at commercially acceptable prices or on other satisfactory terms, in a timely manner. Any extended delays in securing an alternative source could result in production delays and late shipments of our products to distributors and end-customers, which could materially and adversely affect our customer relationships, profitability, results of operations, and financial condition. If we experience significant increased demand for our products, there can be no assurance that additional supplies of caviar raw product will be available for us when required on acceptable terms, or at all, or that Fujian Aoxuanlaisi or any supplier would allocate sufficient capacity to us in order to meet our requirements, fill our orders in a timely manner or meet our strict quality standards. Even if our existing supplier is able to meet our needs or we are able to find new sources of caviar supply, we may encounter delays in production, inconsistencies in quality, and added costs. We are not likely to be able to pass increased costs to the customer immediately, if at all, which may decrease or eliminate our profitability in any period. Any delays or interruption in or increased costs of our supply of caviar could have a material and adverse effect on our ability to meet consumer demand for our products and result in lower net sales and profitability both in the short and long term.

 

Adverse weather conditions, natural disasters, disease, pests and other natural conditions, or shutdown, interruption, and damage to the PRC sturgeon farm, or lack of availability of power, fuel, oxygen, eggs, water, or other key components needed for the operations of the PRC sturgeon farm, could result a loss of a material percentage of our caviar raw product supply and a material adverse effect on our operations, business results, reputation, and the value of our brands.

 

Our ability to ensure a continuing supply of caviar raw product from our suppliers depends on many factors beyond our control. An interruption in the power, fuel, oxygen supply, water quality systems, or other critical infrastructure of an aquaculture facility for more than a short period of time could lead to the loss of a large number of sturgeon, hence the caviar supply. A shutdown of or damage to PRC sturgeon farm due to natural disaster, reduction in water supply, deterioration of water quality, contamination of aquifers, interruption in services, or human interference could result in a loss of supply of caviar for production. Sturgeon farming of the PRC sturgeon farm is vulnerable to adverse weather conditions, including severe rains, drought and temperature extremes, typhoon, floods and windstorms, which are quite common but difficult to predict. Sturgeon farms are vulnerable to disease and pests, which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions. Unfavorable growing conditions caused by these factors can reduce both sturgeon populations of our supplier and the quality of the sturgeon, and, in extreme cases, entire harvests may be lost. Additionally, adverse weather or natural disasters, including earthquakes, winter storms, droughts, or fires, could impact the manufacturing and business facilities of our supplier, which could result in significant costs and meaningfully reduce our capacity to fulfill orders and maintain normal business operations. These factors may result in lower sales volume and increased costs due increased costs of products. Incremental costs, including transportation, may also be incurred if we need to find alternate short-term supplies of products from alternative areas. These factors can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition.

 

Climate change may have a long-term adverse impact on our business and operations.

 

Climate change may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event that climate change may a negative effect on sturgeon or caviar productivity of our supplier, we may be subject to decreased availability or less favorable pricing for caviar raw product or other commodities that are necessary for our products. Extreme weather conditions may adversely impact the sturgeon farm or facilities of our supplier, lead to the disruption of distribution networks or the availability and cost of key raw materials used by us in production, or the demand for our products. As a result of climate change, our caviar suppliers or their suppliers are highly rely on the availability and quality of water, and could be materially and adversely impacted by to decreased availability of water, deteriorated quality of water or less favorable pricing for water, which could adversely impact their production and thus our operations and sales, profitability, results of operations and financial condition.

 

 

Our business is affected by the quality and quantity of the caviar that is harvested by the PRC sturgeon farm.

 

Our ability to successfully sell our product and the price therefor, is highly dependent on the quality of the caviar supplied by the PRC sturgeon farm operated by Fujian Longhuang. A number of factors can negatively affect the quality of the caviar sold, including the quality of the broodstock, water conditions in the farm, the food and additives consumed by the fish, population levels in the farm, and the amount of time that it takes to bring a sturgeon to harvest, including transportation and processing, all of which are beyond our control. Optimal growing conditions cannot always be assured. Furthermore, if our caviar product supplied by the PRC sturgeon farm is perceived by the market to be of lower quality than other available sources, we may experience reduced demand for our product and may not be able to sell our products at the prices that we expect or at all. As we continue to expand our operations and to establish relationship with new sturgeon farms, we potentially may face additional challenges with maintaining the quality of our products. We cannot guarantee that we will not face quality issues in the future, any of which could cause damage to our reputation, and a loss of consumer confidence in our products, which could have a material adverse effect on our business results and the value of our brands.

 

Caviar as the luxury food items, any real or perceived quality or food safety concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving us (such as incidents involving our competitors), could cause negative publicity and reduced confidence in our company, brand or products, which could in turn harm our reputation and sales, and could materially adversely affect our business, financial condition and results of operations. Although we believe we have a rigorous quality control process, there can be no assurance that our products will always comply with the standards set for our products.

 

Additionally, we have no control over our products once purchased by consumers. Accordingly, consumers may store our products improperly or for long periods of time, which may adversely affect the quality and safety of our products. While we have procedures in place to handle consumer questions and complaints, there can be no assurance that our responses will be satisfactory to consumers, which could harm our reputation. If consumers do not perceive our products to be safe or of high quality as a result of such actions outside our control or if they believe that we did not respond to a complaint in a satisfactory manner, then the value of our brand would be diminished, and our reputation, business, financial condition and results of operations would be adversely affected. Any loss of confidence on the part of consumers in our products or in the safety and quality of our products would be difficult and costly to overcome. Any such adverse effect c may significantly reduce our brand value. Issues regarding the safety of any of our products, regardless of the cause, may adversely affect our business, financial condition and results of operations.

 

We operate in a highly regulated industry.

 

Wild sturgeon is one the most critically endangered species worldwide. Since 1998, international trade in all species of sturgeons has been regulated under Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”) owing to concerns over the impact of unsustainable harvesting of and illegal trade in sturgeon populations in the wild. The CITES listing of all species of sturgeon means that caviar, the unfertilized sturgeon roe, from wild-caught sturgeon can no longer be traded, but caviar from captive bred sturgeon is exempt.

 

As a supplier of captive bred caviar, which is not only a food product intended for human consumption, but also a product that is regulated worldwide under the CITES, we are therefore subject to extensive governmental regulation. We must comply with various laws and regulations in Hong Kong as well as laws and regulations administered by government entities and agencies outside Hong Kong. Both the PRC and Hong Kong are parties to CITES. Pursuant to the Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”), the importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons are included as regulated species under the PESO. For further details on the regulations applicable to us and our business, please refer to the section titled “Regulations”.

 

 

With respect to our importation of caviar from the PRC sturgeon farm into Hong Kong, the PRC sturgeon farm is responsible for applying for and obtaining CITES permit from the relevant regulatory authority in the PRC; whereas the supply chain management company is responsible for applying for and obtaining import license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on our behalf. The CITES permit needs to be submitted to the customs of HK before the caviar is accepted to HK territories. As of the date of this prospectus, the PRC sturgeon farm, through its distributor for overseas market, possesses the requisite import and export qualification and permit in the PRC. We have obtained all required CITES permits as well as the export and re-export license in respect of each batch of caviar exported to Hong Kong. With respect to our exportation of caviar from Hong Kong to foreign countries, we have engaged the supply chain management company to apply for and obtain re-export license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on our behalf.

 

In the event that the PRC sturgeon farm or we were found to be in violation of the relevant laws and regulations in respect of CITES, and such violations materially impacted the ability of the PRC sturgeon farm or us to continue to export caviar, our business operation will be significantly disturbed, and our business, financial conditions, results of operations and prospects could be materially and adversely affected.

 

We confirm that all the required CITES permits and export and re-export licenses required for our business operation have been received. To ensure third party compliance with the applicable permitting and licensing requirements, we have employed the following control measures:

 

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We require the PRC sturgeon farm or its agent to provide the requisite import and export qualification and permit in the PRC for our confirmation each year;

 

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We examine the required CITES permit in respect of each batch of caviar exported by the PRC sturgeon farm or its agent passed through its distributor to us. If we discover that the distributor has failed to obtain the required CITES permit, we reject the respective batch of caviar exported to us; and

 

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We examine the re-export license obtained by the supply chain management company on our behalf and ensure the supply chain management company obtain all the required licenses.

 

In the event that that the PRC sturgeon farm fails to obtain the required CITES permits, the shipment may experience delay in clearance, seized by authorities or returned. In the event that the supply chain management company fails to obtain the required re-export license on our behalf, we may face prosecution, fine and forfeiture of our products. In such events our business, financial conditions, our results of operations and prospects could be materially and adversely affected by the disruption of supply and the failure to export. Furthermore, the relevant laws, regulations and rules are subject to modification and change. We cannot predict the impact that any such change would have on the caviar industry generally or on our business in particular. Any legislative or regulatory change that imposes further restriction on, among other things, the production, processing, import or export of caviar, could disrupt our supply of caviar or increase our compliance costs, which could materially and adversely affect our business, financial condition, results of operations and prospects.

 

In addition to PESO and CITES, as a food supplier, we are also subject to law and regulations regarding product manufacturing, food safety, required testing, and appropriate labeling and marketing of our products in Hong Kong or overseas. It is possible that such laws and regulations the governing bodies or the interpretation thereof may change over time. As such, there is a risk that our products could become non-compliant with the relevant governing bodies laws or regulations and any such non-compliance could harm our business. The failure to comply with applicable regulatory requirements could result in, among other things, administrative, civil, or criminal penalties or fines, mandatory or voluntary product recalls, warning, cease orders against operations, closure of facilities or operations, the loss, revocation, or modification of any existing licenses, permits, registrations, or approvals or the failure to obtain additional licenses, permits, registrations, or approvals in new jurisdictions where we intend to do business, any of which could negatively affect our business, reputation, financial condition, and results of operations.

 

 

We are subject to the risks associated with sourcing and manufacturing products from, and selling our product outside of Hong Kong, which could adversely affect our business.

 

Our direct purchases from non-Hong Kong suppliers represented substantially all of our raw material purchases in the fiscal years ended December 31, 2023 and 2022, and we expect we will continue to do so. Furthermore, although substantially all of our distributors are in Hong Kong, from our understanding, significant portion of our product are sold overseas by our distributors. We may also in the future enter into agreements with distributors in foreign countries to sell our products. All of these activities are subject to the uncertainties associated with international sales and distribution, including:

 

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difficulties with foreign and geographically dispersed operations;

 

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having to comply with various Hong Kong and international laws;

 

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changes and uncertainties relating to foreign rules and regulations;

 

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tariffs, export or import restrictions, restrictions on remittances abroad, imposition of duties or taxes that limit our ability to import necessary materials;

 

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limitations on our ability to enter into cost-effective arrangements with distributors overseas, or at all;

 

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fluctuations in foreign currency exchange rates;

 

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imposition of limitations on production, sale, or export in foreign countries, including due to COVID-19 or other epidemics, pandemics, outbreaks and quarantines;

 

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imposition of limitations on or increase of withholding and other taxes on remittances and other payments by foreign processors or joint ventures;

 

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economic, political, environmental, health-related or social instability in foreign countries and regions;

 

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an inability, or reduced ability, to protect our intellectual property;

 

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availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us;

 

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difficulties in recruiting and retaining personnel, and managing international operations;

 

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difficulties in enforcing contracts and legal decisions; and

 

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less developed infrastructure.

 

We expect each market to have particular regulatory and funding hurdles to overcome, and future developments in these markets, including the uncertainty relating to governmental policies and regulations, could harm our business. If we expend significant time and resources on expansion plans that fail or are delayed, our reputation, business and financial condition may be adversely affected.

 

Our operations, revenue and profitability could be adversely affected if we fail to adhere to Hong Kong and international regulations to which we are subject to, or due to the changes in laws and regulations in the countries where we do business.

 

We source the caviar from the sturgeon farm in the PRC. Furthermore, we substantially rely on the third-party distributors to place and export our products into the overseas market from Hong Kong. Therefore, we along with our suppliers and distributors may be subject to a variety of Hong Kong and foreign laws and government regulations applicable to food products and caviar trade, including numerous licensing requirements, trade and pricing practices, tax, environmental matters, food safety and other laws and regulations relating to the sourcing, manufacturing, storing, labeling, marketing, advertising, selling, displaying, transporting, distributing and usage of our products in in Hong Kong and outside the Hong Kong in markets in which we source caviar or which our products may be stored, distributed, marketed, transported or sold.

 

 

The governments of countries into which we source raw product or our distributors sell our caviar products, from time to time, may consider regulatory proposals relating to raw materials, tax, food safety and quality, markets, and environmental regulations, which, if adopted, could lead to disruptions in distribution of our products, which, in turn, could affect our profitability. Furthermore, we are not able to control or monitor the markets or jurisdictions where our distributors place or sell our products, and we do not have any agreements or understandings with our distributors regarding the distribution of our product in the foreign market. Therefore, there are significant uncertainty as to the foreign laws and regulations in markets or jurisdictions where we, or our product, may be subject to. The compliance with these highly uncertain, new, evolving, or revised tax, environmental, food quality and safety, labeling or other laws or regulations, or new, evolving, or changed interpretations or enforcement of existing laws or regulations, may have a material adverse effect on our business, financial condition or operating results.

 

Changes in legal or regulatory requirements, such as new food safety requirements and revised labeling regulations, or evolving interpretations, of existing legal or regulatory requirements, may result in increased compliance costs, capital expenditures, and other financial obligations that could adversely affect our business or financial results. If we are found in violation of the applicable laws and regulations in markets where our distributors sell our product, we could be subject to civil remedies, including fines, injunctions, termination of necessary licenses or permits, or recalls, as well as potential criminal sanctions, any of which could have a material adverse effect on our business. Even if regulatory agency review does not result in these types of determinations, it could potentially create negative publicity or perceptions which could harm our business or reputation. Further, modifications to international trade policy, including the imposition of increased or new tariffs, quotas, or trade barriers, could have a negative impact on us or the industries we serve, including as a result of related uncertainty, and could materially and adversely impact our business, financial condition, operating results, and cash flows.

 

In addition, our international sales could be adversely affected by violations of the anti-money laundering and trade sanction laws and similar anti-corruption and international trade laws. Misconducts, including illegal, fraudulent or collusive activities, by our distributors, suppliers, business partners, or our agent may harm our brand and reputation and adversely affect our business and results of operations. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent these activities may not be effective. Violations of laws or allegations of such violations, regardless in Hong Kong or in foreign countries where our suppliers are located or our distributors operate, could materially and adversely affect our reputation, disrupt our business and result in a material adverse effect on our results of operations, cash flows, and financial condition. Our growth strategy depends in part on our ability to expand our operations globally. Competition in various markets is increasing as our competitors grow their global operations and low-cost local manufacturers expand and improve their production capacities. However, certain markets may have greater political, economic, and currency volatility and greater vulnerability to infrastructure and labor disruptions than more established markets. If we cannot successfully manage associated political, economic, and regulatory risks, our product sales, financial condition, and results of operations could be materially and adversely affected.

 

There is no assurance that our customers will continue to place purchase orders with us.

 

All of our customers place purchase orders with us on an as-needed basis. We normally enter into distributorship agreement with our F&B related distributor customers for a term of one year. During the contract term, our F&B related distributor customers are entitled to place purchase orders with us for each of our products at the unit price, which is typically agreed at a fixed price per kilogram, set forth in the distributorship agreement. There is no assurance that our F&B related distributor customers will renew the framework sales agreement with us with similar terms and conditions.

 

Further, all of our customers place purchase orders with us on an as-needed basis. There is no assurance that our major customers will continue to place purchase orders with us in the future. In the event that any of our major customers ceases to place purchase orders with us, reduces the amount of their purchase orders with us, or requests for more favorable terms and conditions, our business, results of operations, financial conditions and future prospects may be adversely affected.

 

  

Our four and three largest customers accounted for a significant portion of our total revenue for the year ended December 31, 2023 and 2022, respectively.

 

We derive a substantial portion of our revenue from a limited number of major customers, all of which are our distributors. For the year ended December 31, 2022, there were four customers each generated over 10% of our total revenue for the year, and they in aggregate accounted for approximately 82.6% of our total revenue for the year. One of these four customers is our related party and all of our transactions with such related party have been ceased after December 31, 2022. Our top five customers are Sunfun (China) Limited, accounting for 37.4% of our sales volume, Channel Power Limited, accounting for 17.7% of sales volume, Beauty and Health International Company Limited, accounting for 15% of sales volume, Beauty and Health International E-Commerce Limited, accounting for 12.5% of our sales volume, and Mother Nature Health (HK) Limited, accounting for 9.4% of our sales volume. For the year ended December 31, 2023, there were three customers each generating over 10% of our total revenue for the period, and they in aggregate accounted for approximately 75.5% of our sales volume. Our top three customers for the year ended December 31, 2023 are, Mother Nature Health (HK) Limited, accounting for 34.5% of our sales volume in the period, Sunfun (China) Limited, accounting for 25.0% of our sales volume, A One Marketing Limited accounting for 16.5% of our sales volume.

 

There is no assurance that any of our major customers will continue to place purchase orders with us in the future. These distributors or any other large customers in the future, may take actions that affect us for reasons it cannot anticipate or control, such as their financial condition, changes in their business strategy or operations, the perceived quality of our products and the availability of competing products. There can be no assurance our customers will continue to purchase its products in the same quantities or on the same terms as in the past. Our major customers rarely provide us with firm, long-or short-term volume purchase commitments. As a result, our customers could significantly decrease or cease their business with us with limited or no notice, and we could have periods with limited orders for our products while still incurring costs related to workforce maintenance, marketing general corporate expenses and other overheads. We may not find new customers to supplement its revenue in periods when it experiences reduced purchase orders, or recover fixed costs incurred during those periods, which could materially and adversely affect our business, financial condition and results of operations. In the event that any of these major customers ceases to place purchase orders with us or reduces the amount of their purchase orders with us, our business, results of operations, financial condition and future prospects may be adversely affected.

 

Any inability to resolve a significant dispute with any of our key customers, a change in the business condition (financial or otherwise) of any of our key customers, even if unrelated to us, or the loss of or a reduction in sales or anticipated sales to one or more of our most significant distributors may negatively affect us. These major customers may seek to leverage their positions to improve their profitability by demanding improved efficiency, lower pricing, more favorable terms, increased promotional spend, or specifically tailored product or promotional offerings, which may have a material adverse effect on our business, results of operations, and financial condition. A reduction in sales to one or more major customers could have a material adverse effect on our business, financial condition, and results of operations.

 

We rely on third-party distributors to place our products into the market and we may not be able to control our distributors.

 

Our customers primarily and substantially consist of the distributors in food and beverage industry, where their end customers are luxurious hotels and restaurants. As we substantially sell and distribute our products through distributors, any one of the following events could result in fluctuation or decline in our revenue and could result in material adverse impact on our financial conditions and results of operations:

 

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reduction, delay or cancelation of orders from one or more of our distributors;

 

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failure to renew distributorship agreements and maintain relationships with our existing distributors;

 

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failure to establish relationships with new distributors on favorable terms; and

 

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inability to timely identify additional or replacement distributors upon the loss of one or more of our distributors.

 

  

We may not be able to successfully manage our distributors. If the sales volume of our caviar products to consumers are not maintained at a satisfactory level, our distributors may not place or lower their purchase orders placed with us. For international markets, we depend exclusively on third-parties distributor to reach the end-customers. Our success in these markets depends almost entirely upon the efforts of our distributors and logistics and fulfillment partners, over whom we have little or no control. If a distributor or logistics or fulfillment partner, fails to fulfill its contracted services, for any reason, we could lose sales and our ability to compete in that market may be adversely affected. The occurrence of any of these factors could result in a significant decrease in the sales volume of our products and therefore adversely affect our financial conditions and results of operations.

 

Product contamination and the failure to maintain food safety and consistent quality could have a material and adverse effect on our brand, business and financial performance.

 

Food safety and quality control are of paramount importance to our reputation and business, and we face an inherent risk of food contamination and liability claims. To ensure food safety and quality, we have established a comprehensive set of standards and requirements covering each facet of our supply chain, ranging from procurement, logistics, warehousing to packaging as detailed in the section titled “Business — Quality Control.” However, due to the rapid growth in scale of our operations, there is no assurance that our quality control systems will prove to be effective at all times, or that we can identify any defects in our quality control systems in a timely manner. The sale of products for human use and consumption involves the risk of injury or illness to the end-consumers. Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties, product contamination or spoilage, the presence of foreign objects, substances, chemicals, or residues introduced during the packing, storage, handling or transportation phases. Any food contamination that we fail to detect or prevent could adversely affect the quality of our caviar products, which could lead to liability claims, and the imposition of penalties or fines by relevant authorities.

 

Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by our actions, could compel us, our suppliers, our distributor or our other customers, depending on the circumstances, to recall or withdraw products, suspend production of our products, or cease operations. in accordance with the laws and regulations in the jurisdictions in which we operate our business or distribute our products. Food recalls could result in significant losses due to their associated costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing distributors or customers and a potential negative impact on our ability to attract new customers and maintain our current customer base due to negative consumer experiences or because of an adverse impact on our brand and reputation. In addition, as a caviar supplier, our product may be subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and pathological organisms into consumer products as well as product substitution. Food business operators like us, or our distributors, must at all stages of production, sales and distribution within the businesses under their control ensure that foods satisfy the requirements of food related laws and regulations, in particular as to food safety. If we or our distributors do not adequately address the possibility, or any actual instance, of product tampering, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could materially adversely affect our business, financial condition and results of operations.

 

Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us. While we are subject to governmental inspection and regulations and believe our facilities and those of our suppliers, supply-chain management company, logistic service providers, and the distributors will comply in all material respects with all applicable laws and regulations, there can be no assurance that our caviar supplier, logistic service provider, and distributors will always be able to adopt appropriate quality control systems and meet our quality control requirements in respect of the products or services they provide. Any failure of our caviar supplier, logistic service provider, or distributor to provide satisfactory products or services could harm our reputation and adversely impact our operations. If the consumption of any of our products causes, or is alleged to have caused, a health-related illness or death to a consumer, we may become subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or physical harm could cause consumers to lose confidence in the safety and quality of our products.

 

Furthermore, we currently do not maintain any product liability insurance and may not have adequate resources to satisfy a judgment in the event of a successful product liability claim against us. The successful assertion of product liability claims against us could result in potentially significant monetary damages and require us to make significant payments.

 

  

Our business depends to a significant extent upon general economic conditions, consumer demand, preferences and discretionary spending patterns.

 

Our success is, and will continue to be, dependent on our ability to select, source and sell quality caviar products. However, there is no assurance that we will always succeed in selecting and sourcing quality caviar supplies that cater to the preferences and needs of consumers or achieve anticipated sales at competitive prices.

 

Through our distributors customers, which mainly are food and beverage distributors, our caviar products are sold and served at places such as high-end restaurants, fine dining establishments, private clubs, hotels, caterers and specialty food stores, our business is significant exposed to the volatility of the general economic conditions and reductions in disposable income levels and discretionary consumer spending. Consumers’ willingness to purchase our caviar products may fluctuate as a result of changes in national, regional or global economic conditions, disposable income, discretionary spending, lifestyle choices, public perception of caviar, publicity of our caviar products or our competitors. Future economic conditions such as employment levels, business conditions, housing, interest rates, inflation rates, energy and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits. The demand for our caviar products may be adversely affected from time to time by economic downturns.

 

If the weak economy continues for a prolonged period of time or worsens, the consumers may choose to spend discretionary money less frequently which could result in a decline in consumers’ purchases of luxury food items, particularly in more expensive restaurants or more expensive food items, and, consequently, the businesses of our target customers by, among other things, reducing the frequency with which our customers’ customers choose to order luxury food items or the amount they spend on meals while dining out. If our customers’ sales decrease, our profitability could decline. Moreover, if the negative economic conditions persist for an extended period of time, consumers might ultimately make long-lasting changes to their discretionary spending behavior, including dining out less frequently on a permanent basis. Accordingly, adverse changes to consumer preferences or consumer discretionary spending, each of which could be affected by many different factors which are out of our control, could harm our business, financial condition or results of operations. Our continued success will depend in part upon our ability to anticipate, identify and respond to changing economic and other conditions and the impact that they may have on discretionary consumer spending. If we fail to successfully adapt our business strategy, brand image and product portfolio to changes in market trends or shifts in consumer preferences and spending patterns, our business, financial conditions and results of operations may be materially and adversely affected.

 

Failure to compete effectively may adversely affect our market share and profitability.

 

The industry we operate in is competitive with respect to, among other things, brand recognition, consistent quality, services and prices. Our competitors include a variety of regional, national and international caviar suppliers. Furthermore, new competitors may emerge from time to time, which may further intensify the competition. Increased competition may reduce our margins and market share and impact brand recognition, or result in significant losses. When we set prices, we have to consider how competitors have set prices for the same or similar products. When they cut prices or offer additional benefits to compete with us, we may have to lower our own prices or offer additional benefits or risk losing market share, either of which could harm our financial conditions and results of operations.

 

Some of our current or future competitors may have longer operating histories, greater brand recognition, better supplier relationships, larger customer bases, more comprehensive distribution network, better access to consumers, higher penetration in certain regions or greater financial, technical or marketing resources than we do. In addition, some of our competitors may be able to secure more favorable terms from suppliers, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to secure more caviar supplies or to their digitalized supply chain management system. We cannot assure you that we will be able to compete successfully against current or future competitors, and competitive pressures may have a material and adverse effect on our business, financial conditions and results of operations.

 

Our ability to effectively compete will depend on various factors, including expansion of our global market presence, enhancement of our sales and marketing activities, expansion of product portfolio and customer base. Failure to successfully compete may prevent us from increasing or sustaining our revenue and profitability and potentially lead to a loss of market share, which could have a material and adverse effect on our business, financial conditions and results of operations.

 

 

Our business depends significantly on the market recognition of our trademarks and brand names. Any damage to our trademarks, brand names or reputation, or any failure to effectively promote our brands, could materially and adversely impact our business and results of operations.

 

We believe that the market recognition of our trademarks and brand names among our customers have contributed significantly to the growth and success of our business. Therefore, maintaining and enhancing the recognition and image of our brands is critical to our ability to differentiate our caviar products and to compete effectively. Nevertheless, whether we are able to maintain and enhance the recognition and image of our brands is subject to our ability in:

 

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maintaining the popularity, attractiveness, diversity and quality of our caviar products;

 

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maintaining or improving customers’ satisfaction with the quality of our caviar products;

 

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offering and maintaining a wide selection of high-quality caviar products;

 

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increasing brand awareness through marketing and brand promotion activities; and

 

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preserving our reputation and goodwill in the event of any negative publicity, internet and data security, product quality, price authenticity, or other issues affecting us or the caviar industry.

 

In the event consumers perceive or experience a reduction in the quality of our products or service, or consider in any way that we fail to deliver quality products consistently, our brand value could suffer, which could have a material and adverse effect on our business.

 

Furthermore, our established brand recognition may attract imitators who intentionally use highly similar trademarks, trade names and/or logos with ours to mislead potential consumers, which may significantly harm our reputation and brand image, thereby causing a decline in our financial performance, reduction in our market share, as well as an increase in the amount of resources for our anti-counterfeiting efforts. We cannot assure you that our measures will provide effective prevention and any infringement act could adversely affect our reputation, results of operations and financial condition.

 

We may not be able to adequately protect our intellectual properties, or we may be subject to intellectual property infringement claims or other allegations by third parties, either of which could adversely affect our business and operations.

 

We rely on a combination of trademarks, copyrights, trade secrets and other intellectual property laws to protect our trademarks, copyrights, trade secrets and other intellectual property rights. As at the date of this prospectus, we have registered trademarks in Hong Kong, Macau and the PRC, respectively.

 

We cannot ensure that third parties will not infringe our intellectual property rights. We may, from time to time, have to initiate litigation, arbitration or other legal proceedings to protect our intellectual property rights. Regardless of the judgment, such process would be lengthy and costly as well as divert management’s time and attention, thereby resulting in material and adverse impacts on our business, financial conditions and results of operations.

 

Conversely, there is also a risk that third parties may bring a claim against us for infringing their intellectual property rights, thereby requiring us to defend or settle any related intellectual property infringement allegations or disputes. Defending against such claims could be costly, and if we are unsuccessful in defending such claims, we may be prohibited from continuing to use such proprietary information in the future, or may be compelled to pay damages, royalties or other expenses for the use of such proprietary information. Any of the above could negatively affect our sales, profitability, business operations and prospects.

 

 

Failure by our supply chain service or transportation providers or distributors to deliver our raw materials to us or our products to customers on time or at all could result in lost sales.

 

Historically and as of the date of prospectus, we have engaged Sunfun (China) Limited (“Sunfun China”), a supply chain management company in Hong Kong as the principal transportation provider for the delivery of finished products to our distributors and the shipment of caviar to our food processing factory through cold-chain. Our utilization of the third-party supply chain and transportation services is subject to risks, including the effects of health epidemics or pandemics or other contagious outbreaks, such as the COVID-19 pandemic, any shortage of drivers and workers, increases in fuel prices, which would increase our shipping costs, employee strikes, labor shortages, failure to meet customer standards, and severe weather conditions and natural disasters such as fires, floods, typhoon, storms, or earthquakes. These risks may impact the ability of Sunfun China or other supply chain and transportation services providers to provide logistics and transportation services that adequately meet our shipping needs. If Sunfun China or other supply chain and transportation services providers were to fail to deliver raw materials to us in a timely manner, or fail to deliver our products to our customers in a timely manner, we might be unable to meet customer and consumer demands for our products.

 

Furthermore, notwithstanding we have implemented comprehensive set of operation manual and technical protocols with respect to temperature, hygiene and physical conditions for caviar in transit, we cannot assure you that Sunfun China or any other supply chain management company we may engage would follow strictly, and the services provided by the supply chain management company may be interrupted, suspended or cancelled due to unforeseen events, which could cause the rotting of our caviar products and increase our loss rate.

 

Although we do not rely on Sunfun China for transportation services, and Sunfun China’s transportation and supply chain services is provided on an as-needed basis, Sunfun has been historically and currently responsible for a significant portion of our shipping needs. Any disruption in our relationship with Sunfun China or the ability of Sunfun China to fulfill its services could affect our business. We may change to other third-party transportation providers at any time, but we could incur costs and expend resources in connection with such change, and we may not be able to obtain terms as favorable as those we receive from Sunfun China, which in turn would increase our costs and adversely affect our business. Any failure of Sunfun China or other third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, negatively impact our customer relationships, and have a material adverse effect on our financial condition or results of operations.

 

For our international markets, we depend exclusively on the distributors to reach our customers. Our success in these markets depends entirely upon the efforts of our distributors and their logistics and fulfillment services supplier, over whom we have no control. If a distributor or logistics or fulfillment service provider, fails to fulfill its contracted services, for any reason, we could lose sales and our ability to compete in that market may be adversely affected.

 

Our caviar products are processed in our single food processing facility and any damage to or disruption at this facility would materially and adversely affect its business, financial condition and results of operations.

 

We process substantially all of our products at a single food processing factory leased from and operated by Sunfun China, the supply chain management service provider we have engaged since 2021. Any facility disruption, equipment failures, natural disaster, fire, power interruption, pandemic, work stoppage (such as due to a COVID-19 outbreak or otherwise), regulatory or food safety issue or other problem at this facility would significantly disrupt our ability to process and deliver our products and operate its business. The facility and equipment is costly and may require substantial time to replace or repair if necessary. During such time, we may not be able to find suitable factory to replace the output from our facility on a timely basis or at a reasonable cost, if at all. We may also experience facility shutdowns or periods of reduced production because of regulatory issues, equipment failure or delays in deliveries. Any such disruption or unanticipated event may cause significant interruptions or delays in our business. Any disruption in the operation of our facility, or damage to a material amount of our equipment or inventory, would materially and adversely affect our business, financial condition and results of operations.

 

We do not own any real properties. The lease agreement for our food processing factory has a term of 18 months and may be renewed upon mutual agreement. The current lease with Sunfun China commenced from September 11, 2024 and until March 31, 2026. There is no assurance that such tenancy agreement will not be terminated before its expiration or will be renewed on commercially favorable terms. In the event that the tenancy agreement is terminated or not renewed, our business and operation may be interrupted and adversely affected as we will have to relocate our food processing factory to other premises. In the event that we fail to relocate our food processing factory to suitable alternative premises in a timely manner or at all, our business operations, financial position, results of operations and reputation would be adversely affected. Even if we are able to relocate our food processing factory to an alternative premises, such relocation will incur relocation costs, which may be substantial and in turn adversely affect our financial conditions. Besides, in the event that our rental expenses for the food processing factory increase, our operating expenses will increase which will in turn materially and adversely affect our business, results of operations and prospects.

 

 

We currently rely on third-party supply chain management company to operate the food processing factory and provision of labor for product packaging. Any failure to adequately store, maintain and deliver our products could materially adversely affect our business, reputation, financial condition, and operating results.

 

Our ability to adequately process, store, maintain, and deliver our caviar products is critical to our business. We contract with third-party supply chain management company, to operate of our food processing factory and to provide labor for packaging and delivery services for our products. As of the date of Prospectus, we have contracted Sunfun China to operate the aforesaid activities on our behalf. In order to maintain the quality, safety and freshness of our caviar products, the food processing factory is equipped with temperature control system that mandates a prescribed temperature range. Any unexpected and adverse changes in the optimal storage conditions of our food processing factory may expedite the deterioration of such products and in turn heighten the risk of inventory obsolescence or exposure to litigation matters. Any failure by Sunfun China or the third-party supply chain management business partner to adequately store, maintain, or transport our products could negatively impact the safety, quality and merchantability of our products and the experience of our customers. The occurrence of any of these risks could materially adversely affect our business, reputation, financial condition, and operating results. In the event of extended power outages, labor disruptions, natural disasters or other catastrophic occurrences, failures of the temperature control system systems in the food processing factory, warehouses or delivery vehicles, or other circumstances, our inability to store inventory at the controlled temperatures could result in significant product inventory losses, as well as increased risk of food-borne illnesses and other food safety incidents.

 

Further, we rely on the supply chain management company for the provision of labor for carrying out product packaging at our food processing factory. There is no guarantee that the supply chain management company will be able to supply stable labor force or continue to supply labor at fees acceptable to us or our relationship with them could be maintained in the future. Any disruption, delay or inability of the supply chain management company in supplying processing labor to us may materially and adversely affect our business, results of operations, financial conditions and prospects.

 

There is no assurance that the quality of works provided by the processing labor from the supply chain management company can fulfil the requirements of us or our customers. We may not be able to monitor the performance of the processing staff supplied by the supply chain management company as directly and efficiently as with our own labor, thereby exposing us to the risks associated with non-performance, late performance or sub-standard performance of the processing staff. Since we remain accountable to our customers for the performance of the processing staff, we may incur additional costs or be subject to liability under the relevant contracts between us and our customers for the processing staff’s unsatisfactory performance, thereby resulting in material adverse impacts on our reputation, business operation and financial position.

 

Failure to maintain and renew the food factory license for our food processing factory premises may materially and adversely our business and results of operations.

 

Pursuant to section 31(1) of the Food Business Regulation (Chapter 132X of the Laws of Hong Kong) (“FBR”), no person shall carry on or cause, permit or suffer to be carried on any food factory business except under and in accordance with a food factory license from the Food and Environmental Hygiene Department of Hong Kong (the “FEHD”), which is required for the food business involving the preparation of food for sale for human consumption off the premises.

 

The FEHD may grant a provisional food factory license to a new applicant who has fulfilled the basic requirements in accordance with the FBR pending fulfilment of all outstanding requirements for the issue of a full food factory license. A provisional food factory licenses is valid for a period of six months or lesser and a full food factory license is valid generally for a period of one year, both subject to payment of the prescribed license fees and continuous compliance with the requirements under the relevant legislation and regulations. A provisional food factory license is renewable once and a full food factory license is renewable annually.

 

We have leased a food processing factory located in Tsuen Wan, Hong Kong from the supply chain management company for carrying out the packaging and labelling of our caviar products. The food processing factory has obtained a full food factory license from the Food and Environmental Hygiene Department of Hong Kong which is essential for food business involving the preparation of food for sale for human consumption off the premises. The license is valid for one year from April 18, 2024 to April 17, 2025, subject to further renewal. In compliance with the FBR, we rely on the landlord of our food processing factory premises to apply for, maintain and renew the food factory license from the FEHD for the operation of our food processing factory premises. There is no assurance that our food processing factory premises will obtain the required food factory license. If we or the landlord fails to comply with the applicable requirements or any required conditions, the food factory license may be suspended, cancelled or denied renewal upon its expiry, which could result in disruption to our ongoing business and thereby materially and adversely affect our business, financial position, results of operations and prospects. We may also be liable to fines and/or other legal consequences for failure to obtain the necessary approvals, licenses and permits, which may materially and adversely affect our business and results of operations.

 

 

Failure to manage our inventory effectively could increase our loss rate, lower our profit margins, or cause us to lose sales, either of which could have a material adverse effect on our business, financial conditions and results of operations.

 

Managing our inventory effectively is critical to the success of our business. Since caviar is perishable in nature, if we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write-downs or write-offs. Moreover, we may be required to lower sale prices in order to reduce inventory level, which may lead to lower gross margins. These factors may materially and adversely affect our results of operations and financial conditions. Further, we are exposed to inventory risks as a result of a variety of factors beyond our control, including changes in consumer preferences or economic conditions, uncertainty of market acceptance of new caviar products, etc. We cannot assure you that there will not be under-stocking or over-stocking of inventory.

 

We are subject to credit risk in relation to the collectability of our trade receivables from customers.

 

We generally grant a credit period of 30 to 60 days to our customers. We cannot assure you that our customers will make payment in full to us on a timely basis. Delays in receiving payments from or non-payment by our customers may result in pressure on our cash flow position and our ability to meet our working capital requirements. Our liquidity and cash flows from operations may be materially and adversely affected if our collection periods lengthen further or if we encounter any material defaults of payment, or provisions for impairment, of our trade receivables from customers. Should these events occur, we may be required to obtain working capital from other sources, such as from third-party financing, in order to maintain our daily operations, and such financing from outside sources may not be available at acceptable terms or at all.

 

We may not be able to maintain our historical growth rates or gross profit margins, and our operating results may fluctuate significantly. If our results fall below market expectations, the trading price of our Ordinary Shares may be affected.

 

We have experienced significant growth in our revenue and gross profit in the past years. We cannot assure you that we will be able to maintain our revenue growth or gross profit margins at historical levels, or at all. Moreover, our operating results may fluctuate significantly as a result of numerous factors, many of which are outside of our control. These factors include, among others:

 

●

our ability to maintain and further promote our operating subsidiary as a world-renowned supplier of caviar products;

 

●

our ability to attract new customers, maintain existing customers and expand our market share;

 

●

the success of our marketing and brand building efforts;

 

●

the timing and market acceptance of new products introduced by us or our competitors;

 

●

our ability to broaden our product portfolio at a reasonable cost and in a timely manner;

 

●

fluctuations in demand for our products as a result of changes in pricing policies by us or our competitors;

 

●

our ability to develop new products in response to changes in customer demographics and consumer tastes and preferences; and

 

●

changes in global economic conditions.

 

 

Any negative publicity regarding our Company, management team, employees or products, regardless of its veracity, could adversely affect our business.

 

As a fast-growing supplier of luxury caviar products, our image is highly relevant to the public’s perception of us as a business in entirety, which includes not only the quality, safety and competitiveness of our products, but also our corporate management and culture. We cannot guarantee that no one will, intentionally or incidentally, distribute information about us, especially regarding the quality and safety of our products or our internal management matters, which may result in negative perception of us by the public. Any negative publicity about us, management team, employees or products, regardless of veracity, could lead to potential loss of consumer confidence or difficulty in retaining or recruiting talent that is essential to our business operations. As a result, our business, financial conditions, results of operations, reputation and prospects may be materially and adversely affected.

 

We may incur higher costs in connection with our branding and marketing efforts, and some marketing campaigns may not be effective in attracting or retaining consumers.

 

We are dedicated to enhancing our brand awareness. As part of our sales and marketing efforts, we have proactively participated in food expo and set up pop-up stores across the world. We have also collaborated with famous food bloggers and used different online platforms and media coverage to promote and strengthen the publicity of our products. We regularly invite chefs of notable hotels and restaurants to our tasting events. However, we cannot guarantee that our marketing efforts will be well received by customers and result in higher sales. In addition, marketing trends and approaches in the caviar market are evolving, which requires us to enhance our marketing approaches and experiment with new marketing methods to keep pace with industry developments and consumer preferences. Failure to refine our marketing approaches or to adopt new, more cost-effective marketing techniques could negatively affect our business, growth prospects and results of operations.

 

We have limited insurance to cover our potential losses and claims.

 

We purchase and maintain insurance policies that we believe are customary with the standard commercial practice in our industry and as required under the relevant laws and regulations. However, we cannot guarantee that our insurance policies will provide adequate coverage for all the risks in connection with our business operations. Consistent with customary practice in the caviar industry, we do not carry any business interruption, product liability, or litigation insurance. If we were to incur substantial losses and liabilities that are not covered by our insurance policies, we could suffer significant costs and diversion of our resources, which could have a material and adverse effect on our financial conditions and results of operations. We may be required to bear our losses to the extent that our insurance coverage is insufficient.

 

We are subject to risks relating to litigation and disputes, which could adversely affect our business, prospects, results of operations and financial conditions, and may face significant liabilities as a result.

 

We may be subject to litigation, disputes or claims of various types brought by our competitors, suppliers, customers, employees, business partners, lenders or other third parties. We cannot assure you that we will not be subject to disputes, complaints or legal proceedings in the future, which may damage our reputation, evolve into litigations or otherwise have a material adverse impact on our reputation and business.

 

Should any future claims against us fall outside the scope and/or limit of insurance coverage, our financial position may be adversely affected. Regardless of the merits, legal proceedings can be time-consuming and costly, and may divert our management’s attention away from our business operation, thereby adversely affecting our business operation and financial position. Legal proceedings which result in unfavorable judgment against us may cause financial losses and damages to our reputation, thereby materially and adversely affecting our business, financial position, results of operations and prospect.

 

Our business and reputation may be affected by product liability claims, litigation, complaints or adverse publicity in relation to our products.

 

As the caviar products we sell are for human consumption, there is an inherent health risk which may result from tampering by unauthorized third parties, or product contamination or degeneration, including the presence of foreign contaminants, chemicals, substances or other agents or residues during the various stages of farming, processing and transportation.

 

 

Litigation and complaints from consumers or government authorities concerning product quality, health or other issues may affect our industry as a whole and may cause consumers to avoid consuming the caviar products that we sell. Any litigation or adverse publicity surrounding any of these allegations may negatively affect our businesses, regardless of whether the allegations are true, thereby discouraging consumers from buying our products. We may also become party to various other lawsuits, claims, and other legal proceedings arising in the normal course of business, which may include lawsuits, claims, or other legal proceedings relating to the marketing and labeling of products or brand, intellectual property, contracts, product recalls or withdrawals, employment matters, environmental matters, or other aspects of our business. Even when lawsuits, claims, and other legal proceedings are not merited, the defense of lawsuits and claims divert the attention of management and other personnel and may result in adverse publicity about our products and brand, and we may incur significant expenses in defending these lawsuits and claims. In connection with claims, litigation or other legal proceedings, we may be required to pay damage awards or settlements or become subject to injunctions or other equitable remedies, which could have a material adverse effect on our financial position, cash flows, or results of operations. Certain claims may not be covered by insurance or certain covered claims may exceed applicable coverage limits, or one or more of our insurance carriers could become insolvent. The outcome of litigation is often difficult to predict and the outcome of pending or future litigation may have a material adverse effect on our financial position, cash flows, or results of operations. Adverse publicity about regulatory or legal action against us or adverse publicity about our products (including the resources needed to produce them) could damage our reputation and brand image, undermine consumer confidence, and reduce demand for our products, even if the regulatory or legal action is unfounded or not material to our operations or even if the adverse publicity regarding our products is unfounded.

 

Moreover, unfavorable studies or media reports (including those regarding the health impact of caviar) may have a negative impact on the public perception of caviar, whether or not the claims are accurate. We cannot guarantee that our products will not cause any health-related illnesses or injury in the future, or that we will not be subject to claims or litigation relating to such matters. If any of the above were to occur, our sales could be negatively impacted, which could have a material and adverse effect on our business, financial conditions, results of operation and prospects.

 

We may not be able to obtain finance from time to time to fund our operations and maintain growth.

 

In order to fund our operations and maintain our growth or expand our business, we may need to obtain future funding including equity financing or banking facilities from our banks from time to time. However, we may face the limitation of not having sufficient amount of security or pledge to secure additional debt financing. Further, there may be occasions where we are unable to obtain financing at commercial terms favorable or acceptable to us or at all. If these circumstances arise, our business, results of operations, and growth could be compromised.

 

Our growth prospects may be limited if we do not successfully implement our future plans and growth strategy.

 

Our growth is based on assumptions of future events which include (a) the continuous growth in the caviar industry; (b) our ability in further expanding our global market presence; (c) our ability in strengthening our sales and marketing activities; (d) expansion in our sources of caviar as well as product portfolio; and (e) expansion in our customer base. Furthermore, our future business plans may be hindered by other factors that are beyond our control, such as competition within the caviar industry and market conditions. Therefore, there is no assurance that any of our future business plans will materialize within the planned timeframe, or that our objectives will be fully or partially accomplished.

 

Our prospects must be considered in light of the risks and challenges which we may encounter in various stages of the development of our business. If the assumptions which underpin our future plans prove to be incorrect, our future plans may not be effective in enhancing our growth, in which case our business, financial conditions and results of operations may be adversely affected.

 

 

We may grow, in part, through acquisitions, which involve various risks, and we may not be able to identify or acquire companies consistent with our growth strategy or successfully integrate acquired businesses into our operations.

 

We may intend to pursue opportunities to expand our business by acquiring other companies in the future. Acquisitions involve risks, including those relating to:

 

●

identification of appropriate acquisition candidates;

 

●

negotiation of acquisitions on favorable terms and valuations;

 

●

integration of acquired businesses and personnel;

 

●

implementation of proper business and accounting controls;

 

●

ability to obtain financing, at favorable terms or at all;

 

●

diversion of management attention;

 

●

retention of employees and customers;

 

●

non-employee driver attrition;

 

●

unexpected liabilities; and

 

●

detrimental issues not discovered during due diligence.

 

Acquisitions also may affect our short-term cash flow and net income as we expend funds, potentially increase indebtedness and incur additional expenses. If we are not able to identify or acquire companies consistent with our growth strategy, or if we fail to successfully integrate any acquired companies into our operations, we may not achieve anticipated increases in revenue, cost savings and economies of scale, our operating results may actually decline and acquired goodwill and intangibles may become impaired.

 

We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial conditions.

 

We believe that our performance and success is, to a certain extent, attributable to the extensive industry knowledge and experience of our key executives and personnel. Our continued success is dependent, to a large extent, on the ability to attract and retain the services of the key management team. However, competition for key personnel in our industry is intense. We may not be able to retain the services of our directors or other key personnel, or attract and retain high-quality personnel in the future. If any of our key personnel departs from us, and we are not able to recruit a suitable replacement with comparable experience to join us on a timely basis, our business, operations and financial conditions may be materially and adversely affected.

 

Acts of God, acts of war, epidemics and other disasters could materially and adversely affect our business.

 

Our business is subject to the general and social conditions in Hong Kong, the PRC and other jurisdictions in or to which our caviar products are grown, produced, distributed or consumed. Natural disasters, epidemics, acts of God and other disasters that are beyond our control could adversely affect the economy, infrastructure and livelihood of the people of such jurisdictions. Our business, results of operations and financial conditions could be adversely affected if these natural disasters occur. Moreover, political unrest, wars and terrorist attacks may cause damage or disruption to us, our employees, suppliers or customers, any of which could adversely affect our business, results of operations, financial conditions or share price. Potential war or threat of terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot currently predict. We cannot control the occurrence of these catastrophic events and our business operations will at the times be subject to the risks of these uncertainties.

 

 

Any future occurrence of force majeure events, natural disasters or outbreaks of contagious diseases, including the COVID-19 outbreak, may materially and adversely affect our business, financial conditions and results of operations.

 

Any future occurrence of force majeure events, natural disasters or outbreaks of epidemics and contagious diseases, including avian influenza, severe acute respiratory syndrome, H1N1 influenza, Ebola virus and the recent COVID-19 outbreak in Hong Kong, the PRC and other jurisdictions in or to which our caviar products are grown, produced, distributed or consumed may materially and adversely affect our business, financial conditions and results of operations. An outbreak of an epidemic or contagious disease or other adverse public health developments in the world could result in a widespread health crisis and restrict the level of business activities in affected areas, which may, in turn, materially and adversely affect our business.

 

Since late 2019, the outbreak of a novel strain of coronavirus named COVID-19 has resulted in a high number of fatalities and materially and adversely affected the global economy. Widespread lockdowns, closure of work places, restrictions on mobility and travel were implemented by governments of different countries to contain the spread of the virus.

 

We cannot assure you that any future occurrence of natural disasters or outbreaks of epidemics and contagious diseases, or the measures taken by the government of different countries in response to such contagious diseases will not seriously disrupt our operations or those of our customers or suppliers, which may materially and adversely affect our business, financial conditions and results of operations.

 

Technology failures or security breaches could disrupt our operations and negatively impact our business.

 

In the normal course of business, we rely on information technology systems to process, transmit, and store electronic information. For example, we utilize information technology to communicate with the supplier, logistic services provider, and distributors, and to manage our production and distribution facilities and inventory. Information technology systems are also integral to the reporting of our results of operations. Furthermore, a significant portion of the communications between, and storage of personal data of, our personnel, customers, and suppliers depend on information technology, including social media platforms.

 

Our information technology systems may be vulnerable to a variety of interruptions due to events beyond our control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other security issues. These events could compromise our confidential information, impede, or interrupt our business operations, and may result in other negative consequences, including remediation costs, loss of revenue, litigation and reputational damage. Furthermore, if a breach or other breakdown results in disclosure of confidential or personal information, we may suffer reputational, competitive and/or business harm. While we have implemented administrative and technical controls and taken other preventive actions to reduce the risk of cyber incidents and protect our information technology, they may be insufficient to prevent physical and electronic break-ins, cyber-attacks, or other security breaches to our computer systems, which could have a material adverse effect on our business, financial condition or results of operations.

 

Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations.

 

We may be subject to a variety of cybersecurity, data privacy, data protection, and other laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations, such as the Data Protection Act (As Revised) of the Cayman Islands, apply not only to third-party transactions, but also to transfers of information within our organization, which relates to our investors, employees, contractors and other counterparties. These laws and regulations may restrict our business activities and require us to incur increased costs and efforts to comply, and any breach or non-compliance may subject us to proceedings against us, damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our business, financial conditions, and results of operations.

 

 

Fluctuations in exchange rates could result in foreign currency exchange losses, which may adversely affect our financial conditions, results of operations and cash flows.

 

We sourced our caviar from the PRC, hence a substantial portion of our purchases were denominated in RMB. Meanwhile, the sales to our customers were billed and settled in HKD. Therefore, we are exposed to foreign exchange risks. The value of HKD against RMB and other currencies may fluctuate and is affected by, among other factors, the policies of the PRC government and changes in the PRC’s and international political and economic conditions. As we did not enter into any formal hedging policy, foreign currency exchange contracts or derivative transactions, we are exposed to foreign currency fluctuations. Any appreciation or depreciation of RMB relative to HKD would affect our financial results.

 

Further, it is difficult to predict how market forces or Hong Kong, Mainland China, the U.S. or other government policies may impact the exchange rate among HKD, RMB, USD and other currencies in the future. Moreover, fluctuation in the exchange rate will affect the relative value of earnings from and the value of any foreign currency-denominated investments we make in the future. Should we face significant volatility in these foreign exchange rates and we cannot procure any specific foreign exchange control measures to mitigate such risks, our results of operations and financial performance shall be adversely affected.

 

We may be affected by the currency peg system in Hong Kong.

 

Since 1983, Hong Kong dollars have been pegged to the US dollars at the rate of approximately HKD7.8 to USD1.0. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and HKD suffer devaluation, the HKD cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.

 

Risks Related to Our Corporate Structure

 

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated in the Cayman Islands.

 

We are an exempted company incorporated under the laws of the Cayman Islands. We conduct our operations outside the United States and substantially all of our assets are located outside the United States. In addition, substantially all of our directors and executive officers named in this prospectus reside outside the United States, and most of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our Directors or officers or to enforce judgments obtained in the United States courts against our Directors and officers. For further information regarding the relevant laws of the Cayman Islands and Hong Kong, please refer to the section titled “Regulations”.

 

 

Our corporate affairs are governed by our memorandum and articles of association (as may be amended from time to time), the Companies Act (Revised) of the Cayman Islands (the “Companies Act”) and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our Directors to us under the Cayman Islands laws are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the English common law, which has persuasive, but not binding authority, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under the Cayman Islands laws may not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

 

We have been advised by our Cayman Islands legal counsel, Ogier, that there is uncertainty as to whether the courts of the Cayman Islands would:

 

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recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and

 

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entertain original actions brought in the Cayman Islands against us or our Directors or officers predicated upon the securities laws of the United States or any state in the United States.

 

There is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a foreign judgment, without any re-examination or re-litigation of matters adjudicated upon, provided such judgment:

 

(a)

is given by a foreign court of competent jurisdiction;

 

(b)

imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;

 

(c)

is final;

 

(d)

is not in respect of taxes, a fine or a penalty;

 

(e)

was not obtained by fraud; and

 

(f)

is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

 

Subject to the above limitations, in appropriate circumstances, a Cayman Islands court may give effect in the Cayman Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.

 

Shareholders of Cayman Islands companies like us have no general rights under the Cayman Islands laws to inspect corporate records, other than the memorandum and articles of association and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our memorandum and articles of association (as may be amended from time to time) to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

 

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. Currently, we do not plan to rely on home country practice with respect to our corporate governance. However, if we choose to follow the Cayman Islands’ practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

 

 

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors, or our Controlling Shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act and the laws applicable to companies incorporated in the United States and their shareholders, please refer to the section titled “Description of Share Capital — Differences in Corporate Law”.

 

Cayman Islands economic substance requirements may have an effect on our business and operations.

 

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of the Cayman Islands, or the ES Act, that came into force on January 1, 2019, a “relevant entity” is required to satisfy the economic substance test set out in the ES Act. A “relevant entity” includes an exempted company incorporated in the Cayman Islands as is our Company. Based on the current interpretation of the ES Act, we believe that our Company is a pure equity holding company since it only holds equity participation in other entities and only earns dividends and capital gains. Accordingly, for so long as our Company is a “pure equity holding company”, it is only subject to the minimum substance requirements, which require us to (i) comply with all applicable filing requirements under the Companies Act; and (ii) has adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities. However, there is no assurance that we will not be subject to more requirements under the ES Act. Uncertainties over the interpretation and implementation of the ES Act may have an adverse impact on our business and operations.

 

We rely on dividends and other distributions on equity paid by our subsidiary to fund any cash and financing requirements we may have. In the future, funds may not be available to fund operations or for other use outside of Hong Kong, due to interventions in, or the imposition of restrictions and limitations on, our ability or our subsidiary by the PRC government to transfer cash. Any limitation on the ability of our subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business and might materially decrease the value of our Ordinary Shares or cause them to be worthless.

 

We are a holding company incorporated in the Cayman Islands, and we rely on dividends and other distributions on equity paid by our subsidiary for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. We do not expect to pay cash dividends in the foreseeable future. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. If any of the Operating Subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. See “Dividend Policy” for more information.

 

We do not expect to pay cash dividends in the foreseeable future. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. If our Operating Subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

 

Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. The PRC laws and regulations do not currently have any material impact on transfers of cash from Top Wealth Group Holding Limited to our subsidiaries or from our subsidiaries to TW Cayman, our shareholders and U.S. investors. However, the Chinese government may, in the future, impose restrictions or limitations on our ability to transfer money out of Hong Kong, to distribute earnings and pay dividends to and from the other entities within our organization, or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to outside of Hong Kong and may affect our ability to receive funds from our subsidiary in Hong Kong. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected and such measured could materially decrease the value of our Ordinary Shares, potentially rendering them worthless.

 

 

Risks Related to our Ordinary Shares

 

This is a best-efforts offering, no minimum amount of securities is required to be sold and we may not raise the amount of capital we believe is required for our business plans. 

 

The placement agent has agreed to use its reasonable best efforts to solicit offers to purchase the securities being offered in this offering. The placement agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. There is no required minimum number of securities or amount of proceeds that must be sold as a condition to completion of this offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth above. We may sell fewer than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of securities sufficient to fund for our operations as described in the “Use of Proceeds” section herein. Thus, we may not raise the amount of capital we believe is required for our operations in the short-term and even if we raise the maximum offering amount in this public offering, we will need to raise additional funds in the future, which may not be available or available on terms acceptable to us. 

 

Short selling may drive down the market price of our Ordinary Shares.

 

Short selling is the practice of selling shares that the seller does not own but rather has borrowed from a third party with the intention of buying identical shares back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the shares between the sale of the borrowed shares and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the shares to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling the shares short. These short attacks have, in the past, led to selling of shares in the market. If we were to become the subject of any unfavorable publicity, whether such allegations are proven to be true or untrue, we would have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality.

 

Our management has broad discretion to determine how to use the funds raised in this offering and may use them in ways that may not enhance our results of operations or the price of our Ordinary Shares.

 

To the extent (i) we raise more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) we determine that the proposed uses set forth in that section are no longer in the best interests of our Company, we cannot specify with any certainty the particular uses of such net proceeds that we will receive from our public offering. Our management will have broad discretion in the application of such net proceeds, including working capital, possible acquisitions, and other general corporate purposes, and we may spend or invest these proceeds in a way with which our shareholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition, fail to improve our results of operations, and/or fail to enhance the market price of our Ordinary Shares. Pending their use, we may invest the net proceeds from our public offering in a manner that does not produce income or that loses value. As of the date of this prospectus, our management has not determined the types of businesses that the Company will target or the terms of any potential acquisition.

 

Our Ordinary Shares may be prohibited from being traded on a national exchange under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditor. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the HFCAA to require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

 

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

 

 

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.

 

On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (“HFCAA”), requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national securities exchange or in the over-the-counter trading market in the U.S. On December 2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law.

 

On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant.

 

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.

 

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

 

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

 

On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022.

 

On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “SOP”) with the China Securities Regulatory Commission and the Ministry of Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreement”), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law.

 

On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.

 

 

Our auditor, Onestop Assurance PAC, the independent registered public accounting firm that issues the audit report for the fiscal years ended December 31, 2023 and 2022, is currently subject to PCAOB inspections and the PCAOB is able to inspect our auditor. Onestop Assurance PAC, headquartered in Singapore, has been inspected by the PCAOB on a regular basis. Our auditor is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. Therefore, we believe that, as of the date of this prospectus, our auditor is not subject to the PCAOB determinations.

 

Our ability to retain an auditor subject to PCAOB inspection and investigation, including but not limited to inspection of the audit working papers related to us, may depend on the relevant positions of U.S. and Chinese regulators. With respect to audits of companies with operations in China, such as the Company, there are uncertainties about the ability of our auditor to fully cooperate with a request by the PCAOB for audit working papers in China without the approval of Chinese authorities. Whether the PCAOB will be able to conduct inspections of our auditor, including but not limited to inspection of the audit working papers related to us, in the future is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. If our shares and shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

 

The trading price of our Ordinary Shares may be volatile, which could result in substantial losses to you.

 

From the closing of our initial public offering on April 19, 2024 to October 11, 2024, the trading price of our Ordinary Shares has ranged from $8.60 to $0.65 per Ordinary Share. The trading price of our Ordinary Shares can be volatile and could fluctuate widely due to factors beyond our control. This may happen due to broad market and industry factors, such as performance and fluctuation in the market prices or underperformance or deteriorating financial results of other listed companies based in Hong Kong and Mainland China. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading price of their securities. The trading performances of other Hong Kong and Chinese companies’ securities after their offerings may affect the attitudes of investors towards Hong Kong-based, U.S.-listed companies, which consequently may affect the trading performance of our Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Hong Kong and Chinese companies may also negatively affect the attitudes of investors towards Hong Kong and Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material and adverse effect on the trading price of our Ordinary Shares.

 

In addition to the above factors, the price and trading volume of our Ordinary Shares may be highly volatile due to multiple factors, including the following:

 

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political, social and economic conditions in Mainland China and Hong Kong;

 

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variations in our revenue, profit, and cash flow;

 

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the operating and stock price performance of other companies, other industries and other events or factors beyond our control;

 

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fluctuations of exchange rates among HKD, RMB, and USD;

 

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general market conditions or other developments affecting us or the caviar industry in which we operate;

 

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actual or anticipated fluctuations in our results of operations and changes or revisions of our expected results;

 

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changes in financial estimates or recommendations by securities research analysts;

 

 

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detrimental negative publicity about us, our services, our officers, directors, major shareholders, other beneficial owners, our business partners, or our industry;

 

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announcements by us or our competitors of new product offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments;

 

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additions to or departures of our senior management;

 

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litigation or regulatory proceedings involving us, our officers, Directors, or major shareholders;

 

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developments in information technology and our capability to catch up with the technology innovations in the industry;

 

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the realization of any of the other risk factors presented in this prospectus;

 

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changes in investors’ perception of our Company and the investment environment generally;

 

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the liquidity of the market for our Ordinary Shares;

 

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release or expiry of lock-up or other transfer restrictions on our outstanding Ordinary Shares; and

 

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sales or perceived potential sales of additional Ordinary Shares.

 

Any of these factors may result in large and sudden changes in the volume and price at which our Ordinary Shares will be traded.

 

Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial conditions or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

 

In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional shares of Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

 

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial conditions and results of operations.

 

 

An active trading market for our Ordinary Shares may not be maintained and the trading price for our Ordinary Shares may fluctuate significantly.

 

We cannot assure you that a liquid public market for our Ordinary Shares will be maintained. If an active public market for our Ordinary Shares is not maintained, the market price and liquidity of our Ordinary Shares may be materially and adversely affected. The public offering price for our Ordinary Shares in the public offering was determined by negotiation between us and the placement agent based upon several factors, and we can provide no assurance that the trading price of our Ordinary Shares after the public offering will not decline below the public offering price. As a result, investors in our Ordinary Shares may experience a significant decrease in the value of their shares.

 

If securities or industry analysts do not publish or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding our Ordinary Shares, the market price for our Ordinary Shares and trading volume could decline.

 

The trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our Ordinary Shares or publishes inaccurate or unfavorable research about our business, the market price for our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of the Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Ordinary Shares to decline.

 

As a public company, we are subject to the reporting requirements under the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations. As such, meeting these requirements may strain our resources and divert management’s attention.

 

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will increase our legal, accounting, and financial compliance costs and investor relations and public relations costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires, among other things, that we file annual and current reports with respect to our business and operating results as well as proxy statements.

 

As a result of disclosure of information in the Form 20-F and in filings required of a public company, our business and financial condition are more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, brand and reputation and results of operations.

 

Being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

 

 

If we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of the Nasdaq Capital Market, specifically, Nasdaq Listing Rule 5550(a)(2), as we’ve received a notice from the Listing Qualifications Department of Nasdaq on July 30, 2024, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

 

Our securities are listed on the Nasdaq Capital Market. We cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the criteria for maintaining our listing, our securities could be subject to delisting.

 

On July 30, 2024, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC notifying the Company that it failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days. If we do not comply with the Nasdaq rules in the future, Nasdaq will provide notice that the Company’s Ordinary Shares will be subject to delisting. The Rules provide the Company a compliance period of 180 calendar days in which to regain compliance. If at any time during this 180 day period the closing bid price of the Company’s security is at least $1 for a minimum of ten consecutive business days, the Staff will provide written confirmation of compliance. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that the Company will regain compliance with the Minimum Bid Price Requirement.

 

If our securities are subsequently delisted from trading, we could face significant consequences, including:

 

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a limited availability for market quotations for our securities;

 

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reduced liquidity with respect to our securities;

 

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a determination that our Ordinary Shares is a “penny stock,” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares;

 

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limited amount of news and analyst coverage; and

 

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a decreased ability to issue additional securities or obtain additional financing in the future.

 

Our Board of Directors may refuse or delay the registration of the transfer of Ordinary Shares in certain circumstances.

 

Except in connection with the settlement of trades or transactions entered into through the facilities of a stock exchange or automated quotation system on which our Ordinary Shares are listed or traded from time to time, our Board of Directors may resolve to refuse or delay the registration of the transfer of our Ordinary Shares. Where our directors do so, they must specify the reason(s) for this refusal or delay in a resolution of the board of directors. Our directors may also refuse or delay the registration of any transfer of Ordinary Shares if the transferor has failed to pay an amount due in respect to those Ordinary Shares. If our directors refuse to register a transfer, they shall, as soon as reasonably practicable, send the transferor and the transferee a notice of the refusal or delay in the approved form.

 

This, however, will not affect market transactions of the Ordinary Shares purchased by investors in a public offering. Where the Ordinary Shares are listed on a stock exchange, the Ordinary Shares may be transferred without the need for a written instrument of transfer, if the transfer is carried out in accordance with the rules of the stock exchange and other requirements applicable to the Ordinary Shares listed on the stock exchange.

 

The sale or availability for sale of substantial amounts of our Ordinary Shares in the public market could adversely affect their market price.

 

Sales of substantial amounts of our Ordinary Shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. On July 2, 2024, we filed the registration statement on Form F-1 with the SEC (File No. 333-280654) (as amended, the “Resale Prospectus”), which was declared effective on July 23, 2024, for 6 existing shareholders of the Company to register their existing shareholding of an aggregate of 6,840,000 Ordinary Shares to be sold pursuant to the Resale Prospectus. Together with the 2,000,000 Ordinary Shares sold in our initial public offering completed, the 6,840,000 Ordinary Shares registered for the 6 existing shareholders are freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, and shares held by our existing shareholders, may also be sold in the public market in the future, subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our Ordinary Shares.

 

 

Because the amount, timing, and whether or not we distribute dividends at all is entirely at the discretion of our Board of Directors, you must rely on price appreciation of our Ordinary Shares for return on your investment.

 

Our board of directors has complete discretion as to whether to distribute dividends. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under the Cayman Islands law, namely that the Company may only pay dividends out of profits or share premium, and provided that under no circumstances may a dividend be paid if this would result in the Company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future price appreciation of our Ordinary Shares. We cannot assure you that our Ordinary Shares will appreciate in value or even maintain the price at which you purchased the Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment in our Ordinary Shares.

 

Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

 

The Nasdaq Listing Rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. In addition, the Nasdaq Listing Rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee and an audit committee. We, as a foreign private issuer, are not subject to these requirements. The Nasdaq Listing Rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the corporate governance requirements of the Nasdaq Listing Rules. However, we may, in the future, consider following home country practice in lieu of the requirements under the Nasdaq Listing Rules with respect to certain corporate governance standards which may afford less protection to investors.

 

Although as a foreign private issuer we are exempt from certain corporate governance standards applicable to U.S. issuers, if we cannot satisfy, or continue to satisfy, the initial listing requirements and other rules of Nasdaq, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

 

In order to maintain our listing on Nasdaq, we will be required to comply with certain rules of Nasdaq, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of Nasdaq, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the criteria of Nasdaq for maintaining our listing, our securities could be subject to delisting, which would have a negative effect on the price of our Ordinary Shares and impair your ability to sell your shares.

 

If Nasdaq does not list our securities, or subsequently delists our securities from trading, we could face significant consequences, including:

 

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a limited availability for market quotations for our Ordinary Shares;

 

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reduced liquidity with respect to our Ordinary Shares;

 

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a determination that our Ordinary Shares are “penny stock,” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares;

 

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limited amount of news and analyst coverage; and

 

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a decreased ability to issue additional securities or obtain additional financing in the future.

 

 

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.

 

We qualify as a foreign private issuer. As a foreign private issuer, we will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic issuers, and we will not be required to disclose in our periodic reports all of the information that U.S. domestic issuers are required to disclose. We may cease to qualify as a foreign private issuer in the future, and consequently, we would be required to fully comply with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.

 

As a company incorporated in the Cayman Islands, we are permitted to adopt certain Cayman Islands’ practices in relation to corporate governance matters that differ significantly from the Nasdaq Capital Market listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Capital Market listing standards.

 

As a Cayman Islands company to be listed on the Nasdaq Capital Market, we are subject to the Nasdaq Capital Market listing standards. However, the Nasdaq Capital Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Capital Market listing standards. Currently, we do not plan to rely on home country practices with respect to our corporate governance. However, if we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq Capital Market listing standards applicable to U.S. domestic issuers.

 

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Ordinary Shares to significant adverse United States income tax consequences.

 

We will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) 75% or more of our gross income for such year consists of certain types of “passive” income, or (ii) 50% or more of the value of our assets (determined on the basis of a quarterly average) during such year produce or are held for the production of passive income (the “asset test”). Based upon our current and expected income and assets, as well as projections as to the market price of our Ordinary Shares, we do not presently expect to be classified as a PFIC for the current taxable year or the foreseeable future.

 

While we do not expect to be a PFIC, because the value of our assets, for purposes of the asset test, may be determined by reference to the market price of our Ordinary Shares, fluctuations in the market price of our Ordinary Shares may cause us to become a PFIC classification for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition and classification of our income, including the relative amounts of income generated by and the value of assets of our future strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the U.S. Internal Revenue Service, or IRS, may challenge our classification of certain income and assets as non-passive which may result in our being or becoming a PFIC in the current or subsequent years. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in the initial public offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.

 

 

If we are a PFIC in any taxable year, a U.S. Holder (as defined in “Taxation — United States Federal Income Tax Considerations”) may incur significantly increased United States income tax on gain recognized on the sale or other disposition of our Ordinary Shares and on the receipt of distributions on our Ordinary Shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules, and such holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. Holder holds our Ordinary Shares, we will generally continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Ordinary Shares. For more information see “Taxation — United States Federal Income Tax Considerations — Passive Foreign Investment Company Rules.”

 

We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare our performance with other public companies.

 

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

 

As an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements. Such reduced disclosure may make our Ordinary Shares less attractive to investors.

 

For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile.

 

We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”

 

The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, Nasdaq Capital Market, impose various requirements on the corporate governance practices of public companies. Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult or costly for us to find qualified persons to serve on our board of directors or as executive officers as a public company. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “goal,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this prospectus are based upon information available to us as of the date of this prospectus and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

 

●

our goals and strategies;

 

●

our future business development, financial condition and results of operations;

 

●

prices and availability of raw materials for our products;

 

●

expected changes in our revenues, costs or expenditures;

 

●

our expectations regarding the demand for and market acceptance of our products;

 

●

changes in our relationships with significant customers, suppliers, and other business relationships;

 

●

competition in our industry;

 

●

uncertainties associated with our ability to implement our business strategy and to innovate successfully;

 

●

any event that could have a material adverse effect on our brands or reputation, such as product contamination or quality control difficulties;

 

●

government policies and regulations relating to our industry;

 

●

our ability to obtain, maintain or procure all necessary certifications, approvals, and/or licenses to conduct our business, and in the relevant jurisdictions in which we operate;

 

●

any recurrence of the COVID-19 pandemic and scope of related government orders and restrictions and the extent of the impact of the COVID-19 pandemic on the global economy;

 

●

other factors set forth under “Risk Factors.”

 

You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus forms a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

 

USE OF PROCEEDS

 

Based on the public offering price of $0.4 per Ordinary Share, we will receive net proceeds from this offering of approximately $9.86million, assuming the sales of all of the securities we are offering, after deducting the placement agent’s commissions, the non-accountable expense allowance, and estimated offering expenses payable by us. However, because this is a best-efforts offering and there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent fees, and net proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth on the cover page of this prospectus.

 

We intend to use the net proceeds of this offering for general corporate and working capital purposes.

 

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this Offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this Offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this Offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this Offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

Because there is no minimum offering amount required as a condition to closing this offering, we may sell fewer than all or any of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell a number of securities sufficient to pursue the business goals outlined in this prospectus.

 

 

DIVIDEND POLICY

 

Top Wealth Group Holding Limited has not made any dividends or distributions to U.S. investors as of the date of this prospectus. During the fiscal years ended December 31, 2023 and 2022, no dividends or distribution have been made to date by our subsidiaries.

 

We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future.

 

Our board of directors has complete discretion on whether to distribute dividends, subject to certain restrictions under applicable Cayman Islands laws. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend either out of profit or share premium account, provided that in no circumstances may a dividend be paid if the dividend payment would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency, and amount of future dividend, if any, will depend upon, among other things, our future operations and earnings and cash flow, capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, general financial condition, contractual restrictions, and other factors that the board of directors may deem relevant. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars. Please see the section titled “Taxation” of this prospectus for information on the potential tax consequences of any cash dividends declared.

 

 

CAPITALIZATION

 

The following table sets forth our capitalization as of December 31, 2023:

 

●

on an actual basis; and

 

●

on an as adjusted basis to give further effect to (i) the issuance and sale of up to 27,000,000 Ordinary Shares offered hereby, based on the public offering price of US$0.40 per share, assuming the sale of all of the Ordinary Shares we are offering, and (ii) the application of the net proceeds after deducting placement agent commissions, the non-accountable expense allowance, and estimated offering expenses payable by us.

 

The pro forma information below is illustrative only, and our capitalization following the completion of this offering is subject to adjustment based on the actual net proceeds to us from the offering. You should read this capitalization table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Use of Proceeds” and the consolidated financial statements and the related notes appearing elsewhere in this prospectus.

 

		As of December 31, 2023
		Actual				As Adjusted
		US$				US$
Shareholders’ equity
Ordinary Shares, $0.0001 par value; 500,000,000 shares authorized, 27,000,000 shares issued and outstanding		$	2,700				5,400
Additional paid-in capital		$	641,015				10,504,369
Retained earnings		$	4,308,921				4,308,921
Total equity		$	4,952,636			$	14,821,690
Total capitalization		$	4,952,636			$	14,821,690

 

 

DILUTION

 

If you invest in our Ordinary Shares, your interest will be diluted for each Ordinary Share you purchase to the extent of the difference between the offering price per ordinary share and our net tangible book value per ordinary share after the Offering. Dilution results from the fact that the offering price per ordinary share is substantially in excess of the net tangible book value per ordinary share attributable to the existing shareholders for our presently outstanding Ordinary Shares.

 

Our net tangible book value as of December 31, 2023 was approximately US$0.18 per Ordinary Share. Net tangible book value per ordinary share represents the amount of total tangible assets, minus the amount of total liabilities, divided by the total number of Ordinary Shares outstanding. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as adjusted for the offering) from the public offering price per Ordinary Share and after deducting the estimated offering expenses payable by us.

 

After giving effect to the issuance and sale of 27,000,000 Ordinary Shares offered in this offering at the public offering price of US$0.40 per share, after deducting the placement agent commissions, the non-accountable expense allowance and the estimated offering expenses payable by us and assuming the sale of all of the Ordinary Shares we are offering, our as-adjusted net tangible book value as of December 31, 2023 would have been approximately $14,818,690, or $0.27 per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of $0.09 per ordinary share to the existing shareholders, and an immediate dilution in net tangible book value of $0.13 per Ordinary Share to investors purchasing Ordinary Shares in this offering.

 

The following table illustrates such dilution:

 

		Per Share Post-Offering(1)
Public offering price per Ordinary Share		$	0.40
Net tangible book value per ordinary share as of December 31, 2023		$	0.18
Increase in net tangible book value per ordinary share attributable to this offering		$	0.09
As-adjusted net tangible book value per ordinary share immediately after this offering		$	0.27
Dilution per share to new investors participating in this offering		$	0.13

 

(1)

The net proceeds of $9,866,054 from this offering of 27,000,000 Ordinary Shares at an the public offering price of $0.40 per share, calculated as follows: $10,800,000 gross offering proceeds, less placement agent commissions of $432,000, the non-accountable expense allowance of $108,800, and offering expenses of approximately $393,946.

  

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

 

Overview

 

We are a holding company incorporated as an exempted company under the laws of the Cayman Islands. As a holding company with no material operations of our own, we conduct our substantial operations solely in Hong Kong and have been established since 2009 and diversified into the caviar business in 2021.

 

Headquartered in Hong Kong, we are a fast-growing supplier of luxury caviar products. We are currently specialized in supplying high quality sturgeon caviar. We believe we are one of the major suppliers of caviar in Hong Kong being able to secure a long-term and exclusive supply of caviar raw products from sturgeon farm.

 

Since we established our caviar business in August 2021, we had supplied caviar to our customers under their brand labels (i.e. private labelling) or without brand labels. Subsequently in November 2021, we established our own caviar brand, “Imperial Cristal Caviar”, and started selling caviar under our own brand as well. With its exquisite package design, our branded caviar is ideal to be presented as both culinary delights and festive gifts. Imperial Cristal Caviar has continuously achieved tremendous sales growth since its launch in the market.

 

Our customers primarily and substantially include food and beverage (“F&B”) related distributors. We have strategically focused on business-to-business sales (B2B) which would allow us access to our customers’ sales network and consumer base that helps us maximize the reach of our products swiftly and effectively. As our caviar products gain popularity worldwide, our customer base has continuously expanded as a result of customers’ referral and our marketing efforts.

 

Recent Trends and Initiatives

 

The growth of high-net-worth individuals, technological development and supportive policies are projected to collaboratively drive the prosperity of global caviar market.

 

●

Ever-growing numbers of global high-net-worth individuals and increasing demands for quality lifestyles: The substantial rise in the global economy over the years resulted in an apparent increase in the growth of ultra-high-net-worth individuals worldwide, with the number hitting record highs annually. As caviar turns to be synonymous with luxury in Western culture, it has long been favored by the ultra-wealthy class, which ensures the stability of the demand side. Besides, driven by the popularization of quality lifestyle, the growing number of high-net-worth individuals, who have cultivated full awareness of caviar’s health benefits and skincare functions, are projected to generate more demands for caviar products in the foreseeable future.

 

●

Technological advancement in sturgeon-farming and caviar processing: The nature of long-lived, late-maturing sturgeon makes it difficult for artificially-farmed sturgeon to quickly make up for the market gap left by the banned wild-caught sturgeon. To fulfil the unsatisfied downstream demands, the market players keep advancing technologies to boost the production of artificially propagated caviar. Meanwhile, with the technological development of the global aquaculture industry, the efficiency of caviar processing and preparation is expected to surge, thus driving the expansion of caviar production volume.

 

●

Series of supportive policies to boost caviar production: To prosper the production of caviar, countries around the globe rolled out supportive policies to propel the artificial reproduction of sturgeon, protect the sturgeon species, and standardize the relevant industries. Besides, international conventions like CITES are dedicated to advocating for regulating the illegal wild-caught sturgeon trade and encouraging the artificial breeding of farmed sturgeon, thus sustaining the international trade of caviar products. Furthermore, geopolitical conflicts significantly impacted the competitive landscape of the cross-border caviar trade as Russia was sanctioned to terminate its international seafood commerce, giving opportunities to other exporters like China to increase its market share from traditional power.

 

 

Stimulated by the expanding demands, the trend of brand-building and the springing up of China’s market, the global caviar market will see continuous growth in the following years.

 

●

Downstream consumption demands to be extensive and diversified: As caviar is proven to be an excellent source of omega-3 and six fatty acids, and other vitamins and minerals, the nutrition benefits of caviar got highly recognized by the market worldwide. The diversification of downstream consumption demands is expanding the caviar’s application in the nutraceutical, cosmeceutical and pharmaceutical industries. Currently, except for food garnish and other edible uses, caviar is gradually applied for skin moisturizing, skin texture improvement and obesity treatment, etc. This wide range of benefits for caviar in the cosmetic and pharmaceutical sectors is projected to continue to boost demand in the future years.

 

●

Emerging branding trend brews market vitality: Currently, as the majority of market players are wholesalers who supply raw materials to top-tiered brands, caviar’s market layout is featured by decentralization. However, due to the strong bargaining power of named brands, they enjoy higher profit margins of terminal retail than manufacturers and suppliers. Predictably, the sturgeon farming enterprises are expected to launch self-owned brands, enlarge the investment in brand building and market to global consumers for more profit.

 

●

The caviar market in China will see explosive growth: Encouraged by the modernization of Chinese aquaculture, increasing sturgeon domestication gives rise to domestic caviar production in China. Today, China’s caviar is among the most affordable and the highest quality in the world, giving the Chinese caviar cartel considerable market control. However, for the masses in China, caviar is still a rare figure on the family table. Driven by continuous economic growth, consumers in China’s high-tier cities are arousing their willingness to afford luxurious consumption for quality lifestyle and health benefits, which is projected to incentivize the future explosive growth of China’s caviar market.

 

Key Factors Affecting Our Business

 

We believe that our performance is principally affected by the following key factors:

 

●

Demographic and macroeconomic trends. Ever-growing numbers of global high-net-worth individuals and increasing demands for quality lifestyles: The substantial rise in the global economy over the years resulted in an apparent increase in the growth of ultra-high-net-worth individuals worldwide, with the number hitting record highs annually. As caviar turns to be synonymous with luxury in Western culture, it has long been favored by the ultra-wealthy class, which ensures the stability of the demand side. Besides, driven by the popularization of quality lifestyle, the growing number of high-net-worth individuals, who have cultivated full awareness of caviar’s health benefits and skincare functions, are projected to generate more demands for caviar products in the foreseeable future.

 

Downstream consumption demands to be extensive and diversified: As caviar is proven to be an excellent source of omega-3 and six fatty acids, and other vitamins and minerals, the nutrition benefits of caviar got highly recognized by the market worldwide. The diversification of downstream consumption demands is expanding the caviar’s application in the nutraceutical, cosmeceutical and pharmaceutical industries.

 

Currently, except for food garnish and other edible uses, caviar is gradually applied for skin moisturizing, skin texture improvement and obesity treatment, etc. This wide range of benefits for caviar in the cosmetic and pharmaceutical sectors is projected to continue to boost demand in the future years.

 

●

Expansion into major consumer market in Europe and United States. Our ability to expand our global market presence in developed markets with a strong consumer base, such as Europe, the United States, Japan, Dubai, Australia and Southeast Asia (collectively, the “Target Regions”). We intend to establish representative offices at each of the Target Regions to access the local consumers. We currently plan to recruit local sales and marketing staff to conduct marketing activities in such regions, ranging from (i) conducting product promotion; (ii) brand building; (iii) maintaining regular communication with local customers; (iv) collecting feedbacks from local consumers on our products; and (v) maintaining regular communication and interaction with different industry players, so we can stay abreast of the latest trend and development of local consumers’ tastes.

 

 

●

Our ability to successfully execute our strategies and implement our initiatives. Our performance will continue to depend on our ability to successfully execute our strategies and to implement our current and future initiatives. The key strategies include pursuing new customers in major markets in Europe and the United States including:

 

●

maintaining the popularity, attractiveness, diversity and quality of our caviar products;

 

●

maintaining or improving customers’ satisfaction with the quality of our caviar products;

 

●

offering and maintaining a wide selection of high-quality caviar products;

 

●

increasing brand awareness through marketing and brand promotion activities;

 

●

preserving our reputation and goodwill in the event of any negative publicity, internet and data security, product quality, price authenticity, or other issues affecting us or the caviar industry;

 

●

our ability to enter into sales distribution agreements in the jurisdictions we planned to expand to and distribute our products to our end-users and strategic partners overseas through a third party logistics company;

 

●

our ability to launch successful marketing and sales activities to sell our products;

 

●

our ability to enter into supply agreements with new potential suppliers and maintain relationship with our existing suppliers at competitive prices;

 

●

our ability to raise additional funds for operations; and

 

●

our ability to enhance our operational efficiency.

 

How We Assess the Performance of Our Business

 

In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures used by our management are discussed below. The percentages on the results presented below are calculated based on the rounded numbers.

 

Net Sales

 

Net sales is equal to gross sales minus sales returns as well as any sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales, and certain other adjustments. Our net sales are driven by changes in case volumes, product inflation prior to pricing of our products, and mix of products sold.

 

Gross Profit

 

Gross profit is equal to our net sales minus our cost of goods sold. Cost of goods sold primarily includes inventory costs (net of supplier consideration) and inbound freight. Cost of goods sold generally changes as we incur higher or lower costs from our suppliers and as our customer and product mix changes.

 

Results of Operations

 

Comparison of the Year Ended December 31, 2023 and December 31, 2022

 

The following financial data are derived from, and should be read in conjunction with, our consolidate financial statements for the year ended December 31, 2023.

 

 

A summary of the Company’s operating results for the year ended December 31 2023 and 2022 are as follows:

 

		Year ended Dec 31
		2023				2022				Change
		USD				USD				USD				%
Revenue			16,943,287				8,512,929				8,430,358				99.0
Cost of Sales			(11,556,006	)			(4,309,747	)			(7,246,259	)			168.1
Gross Profit			5,387,281				4,203,182				1,184,099				28.2
Other income			2				—				2				100.0
Administrative Expenses			(1,846,759	)			(466,477	)			(1,380,282	)			295.9
Selling Expenses			(495,276	)			(1,456,347	)			961,071				(66.0	)
Profit/(loss) before tax			3,045,248				2,280,358				764,890				33.54

 

Our revenue increased by USD8,430,358, or 99%, from USD8,512,929 for the year ended December 31, 2022 to USD16,943,287 for the year ended December 31, 2023, primarily due to the addition of new customers and also increased orders from some existing customers based on the increased popularity of caviar consumption in the fine dining industry. Also, we started trading of fine wine in 2023, which contributed revenue of US$4,460,092, compared to Nil in 2022. An analysis is set out below:

 

		Year ended Dec 31
		2023				2022				Change
		USD				USD				USD				%
Revenue from caviar			12,483,195				8,512,929				3,970,266				46.64
Revenue from wine			4,460,092				—				4,460,092				100.0
			16,943,287				8,512,929				8,430,358				99.0

 

Cost of sales

 

Our cost of sales mainly comprised of purchase costs for caviar and wine. For the year ended December 31, 2023, our cost of sales amounted to USD11,556,006, an increase of USD7,246,259, or 168%, from USD4,309,747 for the year ended December 31, 2022. This increase was in line with the significant increase in revenue.

 

Gross Profit and Gross Margin

 

		For the Year Ended 31 December
		2023				2022				Year on year change
		USD				USD				USD				%
Gross profit of caviar			4,957,157				4,203,182				753,975				17.9
Gross profit of wine			430,124				—				430,124				100.0
Gross Profit			5,387,281				4,203,182				1,184,099				28.2
Gross profit of caviar			39.7	%			49.4	%			—				9.7	%
Gross profit of wine			9.64	%			—
Gross Margin			31.8	%			49.4	%							(17.6	)%

 

Our gross profit margin for the year ended December 31, 2023 was 31.8% as compared to 49.4% for the year ended December 31, 2022. The reduction in our gross profit margin primarily stems from an increase in volume purchases made by certain customers, which enabled them to secure more favorable discounts for those orders.

 

 

Administrative and Selling Expenses

 

Our Company’s administrative expenses came in at USD1,846,759 and USD466,477 for the year ended December 31, 2023 and 2022 respectively, representing approximately 10.90% and 5.48% of our total revenue for the corresponding period.

 

Our administrative expenses for the year ended 30 June 2023 primarily consist of (i) professional fee; (ii) staff cost; (iii) depreciation; (iv) rental fee; (v) travelling and entertainment; (vi) office supplies and upkeep and (vii) miscellaneous expenses. The following table sets forth the breakdown of our administrative expenses for the year ended December 31, 2023 and 2022.

 

		Year ended December 31
		2023								2022
		USD				%				USD				%
Staff cost			444,388				24.1				110,024				23.6
Depreciation			233,659				12.7				173,215				37.1
Operating lease payment			86,038				4.7				53,282				11.4
Office supplies and upkeep expenses			9,793				0.5				29,997				6.4
Professional fees			921,110				49.9				35,322				7.6
Entertainment			76,342				4.1				20,072				4.3
Travelling expense			36,545				1.9				18,142				3.9
Sample and scrap inventory			14,977				0.8				11,440				2.5
Miscellaneous			23,907				1.3				14,983				3.2
			1,846,759				100.0				466,477				100.0

 

The increase in administrative expenses during the year ended December 31, 2023 was primarily due to increased IPO related professional fees, including legal, audit, and consulting fees of approximately USD921,110. The increase in staff cost for the year ended December 31 2023 compared to December 31 2022 was mainly due to the increase in headcount and workforce as our Company pushed for higher sales orders and acquisition of new customers. The higher depreciation expense was due to the completion of the renovation of our office which was only completed in the first half of 2023.

 

Our selling expense in 2023 and 2022 primarily consist of marketing campaign paid to a marketing agency as follows:

 

		Year ended December 31
		2023								2022
		USD				%				USD				%
Marketing expense			404,097				81.6				1,447,766				99.4
Miscellaneous			91,179				18.4				8,581				0.6
			495,276				100.0				1,456,347				100.0

 

The reduction in selling expenses for the year ended December 31 2023 compared to the corresponding period in 2022 can be primarily attributed to the absence of expenditure related to engaging a marketing agency for promotional campaigns. Our own in-house marketing team had developed a better understanding of our industry, target audience and product offerings since our early days. This decision to forego the engagement of a marketing agency has proven to be cost efficient and allowed us to allocate resources more efficiently, reducing cost associated with marketing and agency fee.

 

Liquidity and Capital Resources

 

Our liquidity and working capital requirements primarily related to our operating expenses. Historically, we have met our working capital and other liquidity requirements primarily through cash generated from our operations. Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including but not limited to cash generated from our operations, loans from banking facilities, the net proceeds from the securities offering from the listing and other equity and debt financings as and when appropriate.

 

 

Cash flows

 

The following table summarizes our cash flows for the years ended December 31, 2023 and 2022:

 

		Year ended December 31
		2023				2022
		USD				USD
Cash and cash equivalents at beginning of the year			217,384				1,385
Net cash provided by (used in) operating activities			(863,616	)			120,260
Net cash used in investing activities			—				(481,173	)
Net cash provided by financing activities			780,582				576,912
Net increase (decrease) in cash and cash equivalents			(83,034	)			215,999
Cash and cash equivalents as at end of the year			134,350				217,384

 

For the year ended December 31, 2023, our net cash used in operating activities was USD863,616 and is mainly comprised of increase in accounts receivable as there were promotional sales for the Christmas of 2023. For the years ended December 31, 2022, our net cash of USD120,260 provided by operating activities primarily reflected our net income, as adjusted for non-operating items, such as depreciation of right of use assets, plant and equipment, deferred tax credit and effects of changes in working capital such as increase or decrease in inventories, accounts receivable, accounts and other payables, deposits and accruals.

 

For the year ended December 31 2023, there was no cash outflow from investing activities while for the years ended December 31, 2022, the cash outflows from our investing activities were primarily attributable to acquisition of office equipment and leasehold improvement of our office.

 

For the year ended December 31, 2023, the cash provided by financing activities were attributable to standby bridging loan facilities provided by a third party and also minority shareholder, while for the years ended December 31, 2022, the cash provided by financing activities were attributable to the issue of capital and funds provided by our director.

 

Working Capital

 

We believe that our Company has sufficient working capital for our requirements for at least the next 12 months from the date of this prospectus, in the absence of unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents on hand, cash flows from our operations and the estimated net proceeds from the IPO offering.

 

Capital Expenditures

 

Historical capital expenditures

 

Our capital expenditures for the years ended December 31 2023 and 2022 were nil and USD 481,173 respectively. The capital expenditures incurred in the year ended December 31 2022 are related to purchase of office equipment and leasehold improvement. We principally funded our capital expenditures through cash flows from operations.

 

Off-Balance Sheet Transactions

 

As of December 31, 2023, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

 

Critical Accounting Policies and Estimates

 

Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

 

 

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our unaudited interim condensed consolidated financial statements:

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the recorded amounts of assets, liabilities, shareholders’ equity, revenues and expenses during the reporting period, and the disclosure of contingent liabilities at the date of the consolidated financial statements.

 

On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. The most significant estimates include allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment for property and equipment, valuation allowance for deferred tax assets, accruals for potential liabilities and contingencies. Actual results could vary from the estimates and assumptions that were used.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Update 2014-09, “Revenue from contracts with customers,” (Topic 606). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company’s main revenue stream is from sales of products. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.

 

The Company has one major stream of revenue, that is, the sale of caviar products in Hong Kong.

 

Foreign Currency Translation

 

The Company’s principal country of operations is Hong Kong. The financial position and results of its operation are determined using Hong Kong Dollars (“HK$”), the local currency, as the functional currency. The Company’s consolidated financial statements are reported using U.S. Dollar (“US$” or “$”).

 

The following table outlines the currency exchange rates that were used in preparing the accompanying consolidated financial statements:

 

		December 31, 2023				December 31, 2022
USD to HK$ /Year End			7.8				7.8

 

		December 31,
		2023				2022
USD to HK$ Average Rate			7.8				7.8

 

 

Fair Value Measurements — Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are classified using the following hierarchy:

 

●

Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

 

●

Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.

 

●

Level 3. Inputs are unobservable for the asset or liability and include situations in which there is little, if any, market activity for the asset or liability. The inputs used in the determination of fair value are based on the best information available under the circumstances and may require significant management judgment or estimation.

 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses reflected as current assets and current liabilities. Due to the short-term nature of these instruments, management considers their carrying value to approximate their fair value.

 

New accounting standards

 

Financial Instruments —Credit Losses

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13 (Topic 326), Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires an asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance became effective for the Company beginning January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

Accounts receivables are reviewed for impairment on a quarterly basis and are presented net of an allowance for expected credit losses. The allowance for expected credit losses is estimated based on the Company’s analysis of amounts due, historical delinquencies and write-offs, and current economic conditions, together with reasonable and supportable forecasts of short-term economic conditions. The allowance for expected credit losses is recognized in net income (loss) and any adjustment to the allowance for expected credit losses is recognized in the period in which it is determined. Write-offs of accounts receivable, together with associated allowances for expected credit losses, are recognized in the period in which balances are deemed uncollectible. The Company does not have a history of significant write-offs. As of June 30, 2023 and December 31, 2021, the total allowance for expected credit losses on the Company’s accounts receivable were Nil and Nil.

 

On December 14, 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). In addition, public business entities are required to provide certain qualitative disclosures about the rate reconciliation and the amount of income taxes paid (net of refunds received) disaggregated (1) by federal (national), state, and foreign taxes and (2) by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). For public business entities, the standard is effective for annual periods beginning after December 15, 2024. The amendments in this ASU require a cumulative effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company is evaluating the impact of this standard on the Company’s consolidated financial statements.

 

We have evaluated all the recently issued, but not yet effective, accounting standards that have been issued or proposed by the Financial Accounting Standards Board or other standards-setting bodies through the date of this report and do not believe the future adoption of any such standards will have a material impact on our consolidated financial statements.

 

 

Corporate History and Structure

 

Top Wealth Group Holding Limited is a holding company with no operations of its own. We conduct our operations in Hong Kong primarily through, Top Wealth Group (International Limited), our Operating Subsidiary in Hong Kong. The ordinary shares offered in this prospectus are those of Top Wealth Group Holding Limited.

 

The following diagram illustrates the corporate structure of Top Wealth Group Holding Limited and its subsidiary as of the date of this prospectus.

 

 

Top Wealth Group Holding Limited was incorporated as a limited liability company on February 1, 2023 under law of the Cayman Islands. It is a holding company and is not actively engaged in any business. Under its memorandum of association, Top Wealth Group Holding Limited is authorized to issue 500,000,000 Ordinary Shares, par value US$0.0001 per share. The registered office of Top Wealth Group Holding Limited is at the office of Ogier Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9009, Cayman Islands.

 

Top Wealth (BVI) Holding Limited was incorporated under the law of the British Virgin Islands as the intermediate holding company of Top Wealth Group (International) Limited, on January 18, 2023 as part of the reorganization. Top Wealth (BVI) Holding Limited is wholly-owned by Top Wealth Group Holding Limited.

 

Top Wealth Group (International) Limited was incorporated on September 22, 2009 under the laws of Hong Kong. Top Wealth Group (International) Limited is our operating entity and is indirectly wholly-owned by Top Wealth Group Holding Limited through Top Wealth (BVI) Holding Limited.

 

History of Shares

 

On February 1, 2023, the date of the incorporation of Top Wealth Group Holding Limited, 1 Ordinary Share was issued to Ogier Global Subscriber (Cayman) Limited. On March 1, 2023, the 1 Ordinary Share was transferred from Ogier Global Subscriber (Cayman) Limited to Winwin Development Group Limited and the Top Wealth Group Holding Limited further issued 99 Ordinary Shares to Winwin Development Group Limited on the same date.

 

On April 18, 2023, 650 Ordinary Shares were further issued to Winwin Development Group Limited, whereby Top Wealth Group Holding Limited was then solely owned by Winwin Development Group Limited as to 750 Ordinary Shares.

 

Furthermore, on the same date, April 18, 2023, Winwin Development Group Limited entered into Sale and Purchase Agreements with: Keen Sky Global Limited, State Wisdom Holdings Limited, Beyond Glory Worldwide Limited, Snow Bear Capital Limited and Mercury Universal Investment Limited, respectively. Pursuant to the Sales and Purchase Agreements, Winwin Development Group Limited is to sell, and Beyond Glory Worldwide Limited, Keen Sky Global Limited, State Wisdom Holdings Limited, Snow Bear Capital Limited, and Mercury Universal Investment Limited are to acquire, 6.40%, 6.53%, 6.53%, 3.33%, 2.53% equity interests in Top Wealth Group Holding Limited, at the consideration of HK$1,424,000 (approximately US$182,564), HK$1,453,000 (approximately US$186,282), HK$1,453,000 (approximately US$186,282), HK$742,000 (approximately US$95,128), and HK$565,000(approximately US$72,436), respectively. On the same date, Winwin Development Group Limited executed the instrument of transfers whereby Winwin Development Group Limited have transferred 48, 49, 49, 25, and 19 Ordinary Shares, out of its 750 Ordinary Shares, to Beyond Glory Worldwide Limited, Keen Sky Global Limited, State Wisdom Holdings Limited, Snow Bear Capital Limited and Mercury Universal Investment Limited, respectively.

 

On October 12, 2023, in contemplation of Company’s initial public offering, Top Wealth Group Holding Limited further issued 26,999,250 Ordinary Shares in aggregate to its shareholders at par value, on a pro rata basis proportional to the shareholders’ existing equity interests (collectively refers as the “Pro Rata Share Issuance”), which has been treated as a share split. All references to the number of ordinary shares and per-share data in the accompanying consolidated financial statements have been retroactively adjusted to reflect such issuance of shares. After the Pro Rata Share Issuance, 27,000,000 Ordinary Shares were issued and outstanding. The following table sets forth the breakdown of the Pro Rata Share Issuance to each shareholder:

 

Shareholders		Number of Ordinary Shares Issued
Winwin Development Group Limited			20,159,440
Beyond Glory Worldwide Limited			1,727,952
Keen Sky Global Limited			1,763,951
State Wisdom Holdings Limited			1,763,951
Snow Bear Capital Limited			899,975
Mercury Universal Investment Limited			683,981

 

Subsequent to the Pro Rata Share Issuance, Top Wealth Group Holding Limited was 74.67% (representing 20,160,000 Ordinary Shares) owned by Winwin Development Group Limited, 6.40% (representing 1,728,000 Ordinary Shares) owned by Beyond Glory Worldwide Limited, 6.53% (representing 1,764,000 Ordinary Shares) owned by Keen Sky Global Limited, 6.53% (representing 1,764,000 Ordinary Shares) owned by State Wisdom Holdings Limited, 3.33% (representing 900,000 Ordinary Shares) owned by Snow Bear Capital Limited, and 2.53% (representing 684,000 Ordinary Shares) owned by Mercury Universal Investment Limited, respectively. The percentage of the ownership of equity interests held by the shareholders remained the same before and after the Pro Rata Share Issuance.

 

On October 16, 2023, State Wisdom Holdings Limited and Keen Sky Global Limited transferred 432,000 and 432,000 Ordinary Shares to Greet Harmony Global Limited at the consideration of HK$314,685 (approximately US$40,344) and HK$314,685 (approximately US$40,344), respectively. On the same day, Beyond Global Worldwide Limited transferred 540,000 Ordinary Shares to Mercury Universal Investment Limited at the consideration of HK$393,356 (approximately US$50,430). The following table sets forth the breakdown of equity ownership of the Company after the series of transactions in October 16, 2023:

 

Shareholders		Number of Ordinary Shares Owned
Winwin Development Group Limited			20,160,000
Beyond Glory Worldwide Limited			1,188,000
Keen Sky Global Limited			1,332,000
State Wisdom Holdings Limited			1,332,000
Snow Bear Capital Limited			900,000
Mercury Universal Investment Limited			1,224,000
Greet Harmony Global Limited			864,000

 

On April 18, 2024, the Company closed its initial public offering of 2,000,000 Ordinary Shares at a public offering price of US$4.00 per Ordinary Share.

 

On July 2, 2024, the Company filed the registration statement on Form F-1 with the SEC (File No. 333-280654) (as amended, the “Resale Prospectus”), which was declared effective on July 23, 2024, for 6 existing shareholders of the Company to register their existing shareholding of an aggregate of 6,840,000 Ordinary Shares to be sold pursuant to the Resale Prospectus. The following table sets forth the breakdown of number of ordinary shares registered for sale in the resale prospectus by the existing shareholders:

 

Name of Shareholders		Number of Ordinary Shares Registered for Sale in the Resale Prospectus
Beyond Glory Worldwide Limited			1,188,000
Keen Sky Global Limited			1,332,000
State Wisdom Holdings Limited			1,332,000
Snow Bear Capital Limited			900,000
Mercury Universal Investment Limited			1,224,000
Greet Harmony Global Limited			864,000
Total			6,840,000

 

 

BUSINESS

 

Overview

 

Our mission is to become a world-renowned supplier of the finest selection of caviar and offer caviar-based gourmet products around the globe with unparalleled gastronomical experience.

 

Headquartered in Hong Kong, we are a fast-growing supplier of caviar products. We are currently specialized in supplying high-quality sturgeons caviar. Our caviar is endorsed with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”) permits, which certifies that our caviar is legally traded. We are one of the major suppliers of caviar in Hong Kong. We have secured a long-term and exclusive supply of caviar raw products from a PRC sturgeon farm.

 

Since we established our caviar business in August 2021, we had supplied caviar to our customers under their brand labels (i.e. private labeling) or without brand labels. Subsequently in November 2021, we established our own caviar brand, “Imperial Cristal Caviar”, and started selling caviar under our own brand as well. With its exquisite package design, we consider our branded caviar is ideal to be presented as both culinary delights and festive gifts. Imperial Cristal Caviar has continuously achieved tremendous sales growth since its launch in the market.

 

In March 2023, as the addition to the gastronomical experience of our caviar, we have commenced our wine trading business line, to complement our caviar business. For the fiscal year ended December 31, 2023, our wine trading business line contributed revenue of US$4,460,092, compared to Nil for the fiscal year ended December 31, 2022. The fine wine we distribute include white wine, red wine, and Champagne, from various countries. Our wine trading business only involves the distribution of fine wine within Hong Kong on business-to-business (B2B) sales, primarily to our F&B related distributor customers, in particular, the F&B related distributor customers who we supply our caviar product. We do not import or manufacture the wine we distribute, instead, we source the wines from our wine suppliers in Hong Kong on an as-demand per order basis. Therefore, we are not subject to the relevant licensing requirements that apply to sale of alcoholic beverages in Hong Kong.

 

We take pride in our well-tested, reliable caviar supply chain management module, which helps ensure the palatability and freshness of our products when they reach our customers. We believe we are among one of the few Hong Kong caviar suppliers being able to secure a long-term and exclusive supply of caviar raw products from a PRC sturgeon farm. In April 2022, we entered into an exclusive supply agreement with the agent and distributor of a well-established sturgeon farm in Fujian, the PRC, which appointed us as its exclusive distributor in Hong Kong and Macau for conducting overseas distribution and granted us the rights to procure caviar directly from it for a term of 10 years. This sturgeon farm is one of the six existing PRC sturgeon farms which are officially permitted to export locally-bred roe. We have engaged a Hong Kong-based supply chain management company to handle the logistics, warehousing and packaging workflows in our supply chain, so we can strategically focus on brand-building and product quality assurance.

 

We are dedicated to enhancing our brand awareness. As part of our sales and marketing efforts, we have proactively participated in food expo and set up pop-up stores across the world. We have also collaborated with famous food bloggers and used different online platforms and media coverage to promote and strengthen the publicity of our products. We regularly invite chefs of notable hotels and restaurants to our tasting events.

 

We generate all of our revenues, through our Operating Subsidiary, from trading of caviar products and wine. Our revenues for the years ended December 31, 2023, 2022 and 2021 were US$16.9 million, US$8.5 million and US$19,615, respectively. We have turned around from a loss before tax of approximately US$16,888 for the year ended December 31, 2021 to a profit before tax of approximately US$2.3 million for the year ended December 31, 2022, and we have maintained a profit before tax of approximately US$3.0 million for the year ended December 31, 2023.

 

Our top five customers accounted for 92.0% and 95.8% of our total revenues for the years ended December 31, 2023 and 2022. Our customers, including our top five customers, primarily include food and beverage (“F&B”) related distributors. We have strategically focused on business-to-business sales (B2B) which would allow us access to our customers’ sales network and consumer base that helps us maximize the reach of our products swiftly and effectively. As our caviar products gain popularity worldwide, our customer base has continuously expanded as a result of customers’ referral and our marketing efforts. Our caviar products are mainly sold to customers based in Hong Kong and a substantial portion are exported overseas by our customers. As our products gradually become more well-known in the international market, we aspire to expand our sales channels from only selling through distributors to selling our products directly to overseas customers.

 

 

Our major suppliers include (i) a distributor and agent of a sturgeon farm in the PRC, Fujian Aoxuanlaisi Biotechnology Co., Ltd (“Fujian Aoxuanlaisi”), which supplies caviar raw product to us; (ii) a Hong Kong supply chain management company, Sunfun (China) Limited (“Sunfun China”), which handles the logistics, warehousing and packaging workflows in our supply chain; (iii) a Hong Kong wine distributor, which supplies fine wine to us; and (iv) other suppliers which supply packaging materials and printing services to us. We materially rely on Fujian Aoxuanlaisi as our supplier for caviar raw product. Fujian Aoxuanlaisi is the agent and ppointed distributor of a well-established PRC sturgeon farm, operated by Fujian Longhuang Biotech Co. Limited (“Fujian Longhuang”). Fujian Aoxuanlaisi and Fujian Longhuang currently maintain a long-term exclusive sales agreement for 15 years, from December 2020 to December 2035. Historically, before April 2022, we obtained the supply of caviar raw product from Fujian Aoxuanlaisi on an as-demand per order basis, without any long-term agreements. In April 2022, our Operating Subsidiary, Top Wealth Group (International) Limited, has entered into the Caviar Sales Agreement with Fujian Aoxuanlaisi, appointed us as its exclusive distributor in Hong Kong and Macau. We do not have any direct supply agreement with Fujian Longhuang, the PRC sturgeon farm.

 

For the years ended December 31, 2023, 2022 and 2021, our procurement from Fujian Aoxuanlaisi amounted to approximately US$6.2 million, US$5.3 million, and US$0.3 million respectively, representing approximately 64.3%, 90% and 100% of our total purchases for the corresponding year. Our material reliance on Fujian Aoxuanlaisi as the supplier of our caviar raw product exposes us to unique and significant risk, for detailed discussion, please see “Risk Factors — Risks related to our Business and Industry — We materially rely on Fujian Aoxuanlaisi Biotechnology Co., Ltd (“Fujian Aoxuanlaisi”), the exclusive distributor of a PRC sturgeon farm, as our supplier for the supply of caviar raw product. Such arrangement materially and adversely exposes us to unique risk. Any disruption in the supplier’s relationships, either between Fujian Aoxuanlaisi and the PRC sturgeon farm, or between Fujian Aoxuanlaisi and us, could have a material adverse effect on our business. Any disruption in the provision of caviar from Fujian Aoxuanlaisi or PRC sturgeon farm and our inability to identify alternative caviar supplier may materially and adversely affect our business operations and financial results.”

 

Competitive Strengths

 

A fast-growing luxury caviar products supplier with a premier brand image

 

We position ourselves as a luxury caviar products supplier aiming to supply the finest selection of luxury caviar products and offer gourmet products around the globe with unparalleled gastronomical experience. We are currently specialized in supplying high quality sturgeons caviar. In November 2021, we established our own caviar brand, “Imperial Cristal Caviar”. From the feedback of our distbributors and customers, our Imperial Cristal Caviar is highly recognized by the end-consumers in terms of its tastiness, texture, palatability, appearance and packaging. Our packaging carries a delicate design that conveys elegance and exclusivity and is ideal to be presented as both culinary delights and festive gifts. We also gladly learned from our distributor customers and market survey that our caviar products are also well-received by chefs of restaurants who serve our caviar products on their menus.

 

An extensive distribution network which allows us to stay abreast of the latest trend and development of consumers’ taste

 

We have access to an extensive distribution network through our distributors customers which allows us to connect with a broad range of consumers around the world and to stay abreast of the latest trend and development of consumers’ taste. Our caviar products are mainly sold to F&B related distributors in Hong Kong, which then export and resell such goods to downstream customers such as supermarket, retail stores, F&B chain and consumers across the world. Leveraging the sales network and consumer base of our distributors, our caviar products have been exported overseas to different countries. Through sales channels that cover extensive points of sale across countries and regions, we serve a variety of consumer groups with diversified demands, which deepens our market penetration and extends our geographical coverage.

 

A strict and comprehensive quality control system to effectively control our product safety and quality

 

Food safety and quality control are of paramount importance to our reputation and business. To ensure food safety and quality, we have established a comprehensive standards and requirements regarding our supply chain, ranging from procurement, logistics, warehousing to packaging.

 

We carefully select the source of caviar supplies. We have reviewed all certifications required from our caviar supplier in the PRC for, among other things, the operation of sturgeon farm in the PRC and exporting caviar products overseas. Our caviar products are endorsed with the CITES permits, which certifies that our caviar is legally traded. We conduct sample inspection on each incoming batch of caviar.

 

 

Our food processing factory is operated by the supply chain management company and we require its staff to follow a comprehensive set of operation manual and technical protocols prescribed by us. We provide instruction and regular on-the-job training to the processing staff to ensure their work standard and efficiency. In order to maintain the quality and freshness of our caviar, our food processing factory is equipped with temperature control system that mandates a prescribed temperature range. We implement strict and comprehensive measures in our food processing factory to ensure sanitation and hygiene at the premises, such as mandating the processing staff to wear standardized clothing, conducting regular inspection on the packaging equipment and performing routine maintenance and cleaning.

 

The supply chain management company has designated a quality control staff at our food processing factory to inspect and monitor the processing procedures. The quality control staff will conduct quality control testing and inspection throughout the packaging process and ensure the taste, size, quality and packaging of our caviar products conform with our quality standards and requirements.

 

Since the establishment of our caviar business and up to the date of this prospectus, we did not encounter any material food safety incidents and we had not experienced any product liability claims.

 

A stable and exclusive procurement source of caviar

 

We take pride in our well-tested, reliable caviar supply chain management module, which helps ensure the palatability and freshness of our products when they reach our customers. We believe we are among one of the few Hong Kong caviar suppliers being able to secure long-term and exclusive supply of caviar from sturgeon farm. We have entered into an exclusive supply agreement with the distributor of a well-established sturgeon farm in the PRC in April 2022, which appointed us as its exclusive distributor in Hong Kong and Macau for conducting overseas distribution and granted us the rights to procure caviar directly from it for a term of 10 years. This sturgeon farm is one of the six existing PRC sturgeon farms which are officially permitted to export locally-bred roe. Our end-to-end supply chain business model not only improves cost efficiency, it also promotes consumers’ confidence in our caviar products as well as facilitate our sales and marketing plans.

 

Growth Strategies

 

Expand the global market reach of our caviar product

 

We strive to strengthen the global market reach of our caviar product in developed markets with a strong consumer base, such as Europe, the United States, Japan, Dubai, Australia and Southeast Asia (collectively, the “Target Regions”). We intend to establish representative offices at each of the Target Regions to access the local consumers. We currently plan to recruit local sales and marketing staff to conduct marketing activities in such regions, ranging from (i) conducting product promotion; (ii) brand building; (iii) maintaining regular communication with local customers; (iv) collecting feedbacks from local consumers on our products; and (v) maintaining regular communication and interaction with different industry players, so we can stay abreast of the latest trend and development of local consumers’ tastes.

 

As our products gradually become more well-known in the international market, we aspire to expand our sales channels from only selling through distributors to selling our products directly to overseas customers. Material obstacles that we have to overcome include (i) the competition for high-quality sales and distribution partners is intense and we may not be able to offer more favorable arrangement than our competitors; (ii) there may not be suitable distribution channels or overseas customers in the markets that we planned to expand; (iii) we may not be able to hire, train and retain skilled local sales and marketing staffs; and (iv) we may encounter difficulties in adapting our logistics and management systems to an expanded distribution network. However, leveraging our competitive strengths described in the paragraph headed “Competitive Strengths” above, we are confident that we will be able to expand our sales channels to overseas customers three years after the Offering.

 

Strengthen our sales and marketing activities

 

We plan to strengthen our sales and marketing activities and increase our market exposure and brand awareness by participating in food-expo and collaborating with luxurious restaurants, hotels and private clubs to host tasting events in different countries and regions. Further, we plan to invite the media and chefs from notable restaurants and hotels to visit the sturgeon farm which supplies caviar raw products to us. We believe we can provide the participants with a better understanding of our procurement source and give them stronger assurance with respect to our product safety, quality and hygienic conditions, thereby enhancing the brand image of our products.

 

 

Expand our procurement source and broaden our product portfolio

 

We are committed to sourcing top-quality caviar from the best sturgeon farms around the world. We currently plan to expand our procurement source and broaden our product portfolio by exploring potential co-operations with sturgeon farms located in Europe and/or the United States. In identifying suitable caviar suppliers, we will conduct on-site inspection at the selected sturgeon farms and conduct legal and business due diligence on their background and operations. We would also verify that the caviar supplied by the selected sturgeon farms complies with the Convention on International Trade in Endangered Species of Wild Fauna and Flora. We believe that expansion in our product portfolio will provide a wider selection of caviar for our customers in terms of places of origin, as well as species and ages of sturgeon.

 

Depending on the availability of potential acquisition targets, we also plan to carry out vertical expansion by acquiring non-controlling stakes in suitable sturgeon farms in Europe and/or the United States. We believe that through integration with upstream sturgeon farms, we can guarantee a stable supply of caviar with consistent high quality.

 

Our Caviar Products and Our Own Brand

 

Headquartered in Hong Kong, we are a fast-growing supplier of luxury caviar products. We are currently specialized in supplying premium class sturgeons caviar. Our caviar is endorsed with the CITES permits, which certifies that our caviar is legally traded. We are one of the major suppliers of caviar in Hong Kong being able to secure a long-term and exclusive supply of caviar raw products from sturgeon farm.

 

Since we established our caviar business in August 2021, we had supplied caviar to our customers under their brand labels (i.e. private labelling) or without brand labels. Subsequently in November 2021, we established our own caviar brand, “Imperial Cristal Caviar”, and started selling caviar under our own brand as well. With its exquisite package design, our branded caviar is ideal to be presented as both culinary delights and festive gifts. Imperial Cristal Caviar has continuously achieved tremendous sales growth since its launch in the market.

 

The table below sets forth details of our own brand caviar products:

 

Product Line		:		Imperial
Sturgeon Species		:		Huso Dauricus
Roe Size		:		3.2mm – 3.4mm
Packaging Size		:		10/30/50/100/250 gram

 

Product Line		:		Osietra
Sturgeon Species		:		Acipenser Schrenckii and Huso Dauricus
Roe Size		:		2.9mm – 3.1mm
Packaging Size		:		10/30/50/100/250 gram

 

 

Operation Flow

 

The diagram below illustrates the operation flow of our product supply chain:

 

 

(a) Receipt of purchase order from customer

 

Our customers place orders with us on an as-needed basis and their purchase orders generally set forth the key terms including species of sturgeon, roe size, quantity and unit price per kilogram.

 

(b) Procurement of caviar from sturgeon farm

 

Depending on our inventory level and customers’ orders on hand, our sales and marketing staff will place purchase orders with the agent and exclusive distributor of a sturgeon farm in the PRC. The quantity that we order from the supplier is typically slightly in excess of the quantity ordered by our customers such that we could maintain certain inventory to meet any ad-hoc orders from our customers.

 

(c) Importation from the PRC

 

Our supplier will arrange for the transportation of caviar from the PRC to Hong Kong by air cargo. Our supplier is responsible for obtaining CITES permit in the PRC and handling the required documentation for the export of goods to Hong Kong. The supply chain management company engaged by us will handle the customs clearance procedures in Hong Kong and collect our goods at the designated port.

 

(d) Packaging at the Hong Kong food processing factory

 

We engage a Hong Kong-based supply chain management company to handle the processing of our products. The supply chain management company deploys labor to perform food packaging and labelling at our food processing factory located in Hong Kong. Depending on the purchase order and requirements of our customers, our caviar products are packaged in different sizes of containers and labelled with our own brand or our customers’ brands (i.e. private labelling) or without brand labels. We provide instruction and regular on-the-job training to the processing staff to ensure their work standard and efficiency. In order to maintain the quality and freshness of our caviar, our food processing factory is equipped with temperature control system that mandates a prescribed temperature range.

 

(e) Quality inspection

 

The supply chain management company has designated a quality control staff at our food processing factory to inspect and monitor the processing procedures. The quality control staff will conduct quality control testing and inspection throughout the packaging process and ensure the taste, size, quality and packaging of our caviar products conform with our quality standards and requirements.

 

 

(f) Local delivery/Exportation to foreign countries

 

The supply chain management company engaged by us will also provide logistics, transportation and customs clearance services for delivering our caviar products to the destination specified by our customers on or before our prescribed time. Our products are mainly sold free on board (“FOB”) in Hong Kong. Depending on our customers’ requirements, our caviar products are either delivered to specified locations in Hong Kong or exported overseas. The supply chain management company is responsible for applying for re-export license for the re-exportation of our caviar products to foreign countries on our behalf.

 

Our Customers

 

Our customers primarily and substantially include F&B-related distributors. We have strategically focused on business-to-business sales (B2B) which would allow us access to our customers’ sales network and consumer base that helps us maximize the reach of our products swiftly and effectively. As our caviar products gain popularity worldwide, our customer base has continuously expanded as a result of customers’ referral and our marketing efforts.

 

Furthermore, to complement our caviar business, in March 2023, we have commenced our wine trading business line.

 

Our wine trading business only involves the distribution of fine wine within Hong Kong on business-to-business (B2B) sales, primarily to our F&B related distributor customers, in particular, the F&B related distributor customers who we supply our caviar product.

 

For the year ended December 31, 2022, there were four customers each generated over 10% of our total revenue for the year, and they in aggregate accounted for approximately 82.6% of our total revenue for the year. One of these four customers is our related party and all of our transactions with such related party have been ceased after December 31, 2022. Our top five customers are Sunfun (China) Limited, accounting for 37.4% of our sales volume, Channel Power Limited, accounting for 17.7% of sales volume, Beauty and Health International Company Limited, accounting for 15% of sales volume, Beauty and Health International E-Commerce Limited, accounting for 12.5% of our sales volume, and Mother Nature Health (HK) Limited, accounting for 9.4% of our sales volume. For the year ended December 31, 2023, there were three customers each generated over 10% of our total revenue for the period, and they in aggregate accounted for approximately 75.5% of our sales volume. Our top 3 customers for the year ended December 31, 2023 are, Mother Nature Health (HK) Limited, accounting for 34.5 % of our sales volume in the period, Sunfun (China) Limited, accounting for 25.0% of our sales volume, A One Marketing Limited accounting for 16.5% of our sales volume.

 

Geographical coverage

 

Our caviar products are mainly sold to customers based in Hong Kong and a substantial portion are exported overseas by our customers. As our caviar products gradually become more well-known in the international market, we aspire to expand our sales channels from only selling through distributors to selling our products directly to overseas customers.

 

Substantially all of the fine wine we distributed are sold to F&B distributors customers based in Hong Kong.

 

General terms with customers

 

Our customers place purchase orders for our caviar products and wine with us on an as-needed basis. For our caviar product, we entered into distributorship agreements with our F&B related distributor customers.

 

 

The material terms of our distributorship agreements for our caviar product with our F&B related distributor customers are summarized as follows:

 

Principal term				Description
Product description		:		The distributorship agreements set out the type of caviar products to be supplied by us and other product specifications such as sturgeon species, place of origin, roe size, quality standards, shelf life and annual procurement amount.
Pricing		:		The distributorship agreements set out the unit price for each of our products to be supplied, which is typically agreed at a fixed price per kilogram.
Term		:		Generally one year and may be renewed upon mutual agreement and negotiation.
Delivery arrangements		:		We are responsible for the transportation of products to the destination specified by our customers on or before the date as stipulated in the purchase orders. The transportation costs and other related expenses are borne by us.
Rights and responsibilities of us		:		Our rights and responsibilities under the distributorship agreements mainly include the following:
				(i)	to be informed and supervise the sales and marketing activities conducted by our F&B related distributor customers in relation to our products;
				(ii)	review the sales and marketing materials prepared by our F&B related distributor customers in relation to our products;
				(iii)	provide copies of quality inspection report, production approvals, corporate licences and other relevant documentation in relation to our products to our F&B related distributor customers;
				(iv)	products supplied by us shall comply with applicable quality standards; and
				(v)	any increase in price of our products shall not exceed a certain prescribed percentage upon renewal of the distributorship agreement.
Rights and responsibilities of our F&B related distributor customers		:		The rights and responsibilities of our F&B related distributor customers under the distributorship agreements mainly include the following:
				(i)	achieve a certain percentage of annual sales growth, which shall be a condition for the renewal of the distributorship agreement;
				(ii)	refrain from engaging in any activities which result in damages to our brand image;
				(iii)	only engage in sales and marketing activities of our products within designated region(s) or territory(ies) and prescribed sales channel;
				(iv)	keep our products, business, sales strategies and other information confidential; and
				(v)	provide all sales and marketing materials in relation to our products to us for approval.

 

 

Product return

 

Due to the perishable nature of caviar, we generally do not accept any product return from our customers except under certain limited circumstances, such as when products are defective, poorly packaged or damaged or the quantity delivered was inconsistent with the purchase order. Our customers are normally required to report any quality issue to us within three business days upon their receipt of our products. We have not experienced any material product return so far.

 

Credit and payment terms

 

We generally grant our customers a credit period ranging from 30 to 60 days from the invoice date. Our customers generally settle their payments in Hong Kong dollars by telegraphic transfer.

 

Seasonality

 

Up to the date of this prospectus, we have not experienced any pronounced seasonality, but such fluctuations may have been masked by our rapid growth.

 

Pricing Strategies

 

The selling prices of our caviar products are determined on a cost-plus pricing approach with reference to, among other things, cost of sales which mainly represents procurement costs and costs incurred in relation to our supply chain management and a percentage of mark-up over our estimated cost of sales. The percentage of mark-up may vary based on factors such as (i) prevailing market prices for different caviar products; (ii) size of purchase order; (iii) type of customer; (iv) length of relationship with the customer; (v) supply and demand mechanism in our target markets; (vi) consumer preference; and (vii) any positive impact on our brand reputation.

 

Sales and Marketing

 

We have strategically focused on business-to-business sales (B2B) which would allow us access to our customers’ sales network and consumer base that helps us maximize the reach of our products swiftly and effectively. As our caviar products gain popularity worldwide, our customer base has gradually expanded as a result of customers’ referral and our marketing efforts.

 

We are dedicated to enhancing our brand awareness. Our sales and marketing representatives are primarily responsible for conducting business development and marketing activities. They are responsible for (i) enhancing our promotion and sales efforts; (ii) actively approaching and liaising with our existing and potential customers; and (iii) collecting feedbacks and handling any queries on our products from customers.

 

As part of our sales and marketing efforts, we have proactively participated in food expo and set up pop-up stores across the world. We have also collaborated with famous food bloggers and used different online platforms and media coverage to promote and strengthen the publicity of our products. We regularly invite chefs of notable hotels and restaurants to our tasting events.

 

 

Our Suppliers

 

Our major suppliers include (i) a exclusive distributor and agent of a sturgeon farm in the PRC, Fujian Aoxuanlaisi Biotechnology Co., Ltd (“Fujian Aoxuanlaisi”), which supplies caviar raw product to us; (ii) a Hong Kong supply chain management company, Sunfun (China) Limited (“Sunfun China”), which handles the logistics, warehousing and packaging workflows in our supply chain; (iii) a Hong Kong wine distributor, which supplies fine wine to us; and (iv) other suppliers which supply packaging materials and printing services to us.

 

We materially rely on Fujian Aoxuanlaisi as our supplier for caviar raw product. Fujian Aoxuanlaisi is the agent and appointed distributor of a well-established PRC sturgeon farm, operated by Fujian Longhuang Biotech Co. Limited (“Fujian Longhuang”). Fujian Aoxuanlaisi and Fujian Longhuang currently maintain a long-term exclusive sales agreement for 15 years, from December 2020 to December 2035. Historically, before April 2022, we obtained the supply of caviar raw product from Fujian Aoxuanlaisi on an as-demand per order basis, without any long-term agreements. In April 2022, our Operating Subsidiary, Top Wealth Group (International) Limited, has entered into the Caviar Sales Agreement with Fujian Aoxuanlaisi, appointed us as its exclusive distributor in Hong Kong and Macau. We do not have any direct supply agreement with Fujian Longhuang, the PRC sturgeon farm.

 

For the years ended December 31, 2023, 2022 and 2021, our procurement from Fujian Aoxuanlaisi amounted to approximately US$6.2 million, US$5.3 million, and US$0.3 million respectively, representing approximately 64.3%, 90% and 100% of our total purchases for the corresponding year.

 

For fiscal ended December 31, 2023, Hong Kong wine distributor and importer, Silver Fame International (HK) Limited, supplies fine wine to us. We have not entered any agreement with Silver Fame International (HK) Limited, we obtain the supply of the fine wine from which on an as-demand per order basis. For the years ended December 31, 2023, 2022 and 2021, our procurement from Silver Fame International (HK) Limited amounted to approximately US$3.4 million, US$0.6 million, and nil respectively, representing approximately 35.6%, 10% and 0% of our total purchases for the corresponding year.

 

Fujian Aoxuanlaisi, the distributor of the PRC sturgeon farm

 

In April 2022, our Operating Subsidiary, Top Wealth Group (International) Limited, has entered into the Caviar Sales Agreement with Fujian Aoxuanlaisi, the agent and the distributor of Fujian Longhuang, a PRC sturgeon farm. Pursuant to the Caviar Sales Agreement between Fujian Aoxuanlaisi and Top Wealth Group (International) Limited, by way of Power of Attorney, Fujian Aoxuanlaisi appointed Top Wealth Group (International) Limited as its exclusive distributor in Hong Kong and Macau for conducting overseas distribution and granted Top Wealth Group (International) Limited the rights to procure caviar directly for a term of 10 years, from 30 April 2022 to 30 April 2032. The Caviar Sales Agreement between our Operating Subsidiary and Fujian Aoxuanlaisi and the Power of Attorney granted by Fujian Aoxuanlaisi are collectively referred as the “Exclusive Supply Agreement.”

 

 

The principal terms of the Exclusive Supply Agreement are summarized as follows:

 

Principal term				Description
Product description		:		The agreement sets out the type of caviar to be supplied and other product specifications such as roe size and quality standards.
Pricing		:		The unit price for each type of caviar is typically agreed at a fixed price per kilogram, which is set out in the purchase orders. The unit pricing of caviar shall be determined based on the prevailing market price at the time when we place purchase orders, provided that the average unit price of caviar in any year shall not fluctuate by more than a certain percentage compared to the previous year.
Term		:		10 years; from 30 April 2022 to 30 April 2032
Minimum annual procurement/supply commitment		:		We and the Fujian Aoxuanlaisi are committed to minimum annual procurement/supply commitment, which is subject to pre-agreed increase in quantity from year to year.
Failure to fulfil the minimum annual procurement/supply commitment		:		In the event the Fujian Aoxuanlaisi fails to adhere to the minimum annual supply commitment in any year during the term of the exclusive supply agreement, the Fujian Aoxuanlaisi shall make up the shortfall by increasing the volume of supply in the following year and the unit price attributable to such volume shall be reduced by a certain percentage.   In the event we fail to adhere to the minimum annual procurement commitment in any year during the term of the exclusive supply agreement, we shall make up the shortfall by increasing the volume of procurement in the following year and the unit price attributable to such volume shall increase by a certain percentage.
Exclusivity		:		Fujian Aoxuanlaisi appointed Top Wealth Group (International) Limited as its exclusive distributor in Hong Kong and Macau for conducting overseas distribution.
Warranty		:		The caviar supplied shall have a shell life of 12 months provided that it remains unopened and is maintained at a temperature of -20°C.
Credit and payment terms		:		Fujian Aoxuanlaisi grants us certain credit period after shipment. We generally settle payments in HKD by telegraphic transfer
Delivery arrangements		:		Fujian Aoxuanlaisi is responsible for arranging the transportation of caviar from the PRC to Hong Kong by air cargo as well as obtaining CITES permit in the PRC and handling the required documentation for the exportation of caviar from the PRC to Hong Kong.
Amendment and termination		:		No amendment or termination of the exclusive supply agreement shall be effective unless agreed in writing.
Rights and responsibilities of the supplier		:		The rights and responsibilities of the Fujian Aoxuanlaisi under the exclusive supply agreement mainly include the following:
				(i)	provide inspection reports, production reports, business licenses and other information relevant to their caviar products;
				(ii)	maintain long-term stable supply of caviar to us; and
				(iii)	in the event the caviar products supplied by Fujian Aoxuanlaisi fails to fulfil the quality tests conducted by a third party inspection agency, Fujian Aoxuanlaisi shall arrange for a refund or replacement of the defected products for us and shall bear all the direct costs incurred by us as a result.

 

There are no limitations on our business or ability to enter contracts with other caviar producers. There are no obligations for us to distribute caviar in Macau and we currently do not have plans to expand our business to Macau. To the best of our management’s understanding, the Fujian Aoxuanlaisi also supplies its caviar to other distributors in the PRC, Japan and various European countries. According to the exclusive supply agreement, Fujian Aoxuanlaisi has obligation to maintain long-term stable supply of caviar to us, even in the event of limited supply. According to the exclusive supply agreement, in the event Fujian Aoxuanlaisi fails to adhere to the minimum annual supply commitment in any year during the term of the exclusive supply agreement, Fujian Aoxuanlaisi shall make up the shortfall by increasing the volume of supply in the following year and the unit price attributable to such volume shall be reduced by a certain percentage.

 

 

Supply chain management company

 

Historically and as of the date of this prospectus, we have engaged a Hong Kong-based supply chain management company, Sunfun China Limited (“Sunfun China”), to handle the logistics, warehousing and packaging workflows in our supply chain, so we can strategically focus on brand-building and product quality assurance. On July 31, 2021, our Operating Subsidiary, Top Wealth Group (International) Limited has entered into a Food Processing Factory Leasing and Service Project Agreement (“Leasing and Service Agreement”) with Sunfun China, and such agreement is subsequently renewed on September 10, 2024, until March 11, 2026.

 

Pursuant to Leasing and Service Agreement, in respect of logistics services, Sunfun China is responsible for handling the customs clearance procedures and applying for import license in Hong Kong and collecting our goods at the designated delivery port. The supply chain management company is also responsible for the transportation of our caviar through cold-chain to the places designated by our customers and handling the application procedures for re-export license for delivery to foreign countries. Furthermore, Sunfun China has also leased a food processing factory located in Tsuen Wan, Hong Kong, to Top Wealth Group (International) Limited, for carrying out the packaging and labelling of our caviar products. The food processing factory has obtained a food factory license from the Food and Environmental Hygiene Department of Hong Kong which is essential for food business involving the preparation of food for sale for human consumption off the premises. The license is valid for one year from April 18, 2024 to April 17, 2025. To safeguard the palatability and freshness of our caviar products, the food processing factory is equipped with temperature control system that mandates a prescribed temperature range. Upon our requests, the Sunfun China will deploy labor for food packaging and labelling at our food processing factory located in Hong Kong.

 

The principal terms of Leasing and Service Agreement are summarized as follows:

 

Principal term						Description
		Term		:		18 months
(A)		Leasing of food processing factory premises
		License		:		Food factory license
		Facility and storage capacity		:		The premises shall have the capacity to store a specified volume of caviar and be equipped with cold storage facility which is maintained at the temperature between -18°C to -5°C
		Rental		:		Fixed monthly rental
(B)		Packaging services
		Pricing		:		Subject to quotation based on packaging size and quantity
(C)		Logistics services
		Local delivery		:		Fixed price which varies by delivery location
		National delivery		:		Subject to separate quotation

 

As of the date of this prospectus, we have not experienced any material dispute with our suppliers and we do not foresee any material circumstances which would result in early termination of the supply agreement with our suppliers.

 

Inventory Management

 

Our inventory is mainly comprised of caviar. Depending on our inventory level and customers’ orders on hand, our sales and marketing staff will place purchase orders with our caviar supplier in the PRC. The quantity that we order from the supplier is generally slightly in excess of the quantity ordered by our customers such that we could maintain certain inventory to meet any ad-hoc orders from our customers.

 

 

We have implemented inventory management policies to monitor and control our inventory level at an optimal level to avoid obsolescence. We adopt a “first-in-first-out” policy to preserve the freshness of our caviar and reduce our loss rate. We maintain an inventory register which clearly records each inflow and outflow of our inventory. Periodic stock-take is conducted to ensure the accuracy of stock-in and stock-out information on record. To safeguard the palatability and freshness of our caviar products, they are stored at our food processing factory which is equipped with temperature control system that mandates a prescribed temperature range.

 

Quality Control

 

Food safety and quality control are of paramount importance to our reputation and business. To ensure food safety and quality, we have established a comprehensive set of standards and requirements covering each facet of our supply chain, ranging from procurement, logistics, warehousing to packaging.

 

We have adopted a stringent policy and procedure on selecting the source of caviar supply. Due to the perishable nature of caviar, we strictly require the caviar processing procedures which involve over 10 works steps covering roe removal from sturgeons, washing and salting of caviar, to be completed over a timeframe of 15 minutes. We have reviewed all certifications required from our caviar supplier in the PRC for, among other things, the operation of sturgeon farm in the PRC and exporting caviar products overseas. Our caviar products are endorsed with the CITES permits, which certifies that our caviar is legally traded. We conduct sample inspection on each incoming batch of caviar.

 

The supply chain management company has designated a quality control staff at our food processing factory to inspect and monitor the processing procedures. The quality control staff will conduct quality control testing and inspection throughout the packaging process and ensure the taste, size, quality and packaging of our caviar products conform with our quality standards and requirements.

 

Our caviar products are transported through cold-chain from the PRC sturgeon farm to the places designated by our customers in order to ensure their palatability and freshness.

 

Since the establishment of our caviar business and up to the date of this prospectus, we have not encountered any material food safety incidents and we had not experienced any product liability claims.

 

Environmental Protection

 

Both the PRC and Hong Kong are parties to the CITES. Pursuant to the Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”), the importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons are included as regulated species under the PESO. In compliance with the PESO, our caviar is endorsed with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”) permits, which certifies that our caviar is legally traded. For further details, please refer to the paragraph headed “Licenses and Permits” in this section below.

 

Due to the nature of our business, our operational activities do not directly generate industrial pollutants. As such, we have not directly incurred any cost of compliance with applicable environmental protection rules and regulations as of the date of this prospectus and do not expect that we will directly incur significant costs for such compliance in the future.

 

As of the date of this prospectus, we have not come across any material non-compliance issues in respect of any applicable laws and regulations on environmental protection. We have not been subject to any administrative sanctions or penalties that have a material and adverse effect on our financial condition or business operation.

 

 

Insurance

 

We maintain employees’ compensation insurance for our directors and employees at our office with AXA General Insurance Hong Kong Limited, which covers the liability to make payment in the case of death, injury or disability of all our employees under the Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) and at common law for injuries sustained at work. We believe that our current insurance policies are sufficient for our operations.

 

Employees

 

We had 9 full-time employees as of the date of the prospectus. All of our employees are stationed in Hong Kong. The following table sets forth the number of our full-time employees categorized by function:

 

Function		Number of Employees
General management			2
Sales and Marketing			3
Administrative			2
Accounting and Finance			2
Total			9

 

We consider that we have maintained a good relationship with our employees and have not experienced any significant disputes with our employees or any disruption to our operations due to any labor disputes. In addition, we have not experienced any difficulties in the recruitment and retention of experienced core staff or skilled personnel.

 

Our remuneration package includes salary and discretionary bonuses. In general, we determine employees’ salaries based on their qualifications, position and seniority. In order to attract and retain valuable employees, we review the performance of our employees annually which will be taken into account in annual salary review and promotion appraisal. We provide a defined contribution to the Mandatory Provident Fund as required under the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) for our eligible employees in Hong Kong.

 

Facilities

 

As of the date of this prospectus, we entered into the following lease agreements:

 

Location		Term of Lease		Usage
Units 714 & 715, 7/F Hong Kong Plaza 188 Connaught Road West Sai Wan, Hong Kong		May 10, 2024 to May 9, 2026		Principal executive office
Flat E, 8/F Golden Bear Industrial Centre 66 Chai Wan Kok Street Tsuen Wan, New Territories Hong Kong		September 11, 2024 to March 11, 2026		Food processing factory and transportation supplier

 

We believe that we will be able to obtain adequate facilities on reasonable terms principally through leasing, to accommodate our future expansion plans.

 

Licenses and Permits

 

CITES permits

 

Both the PRC and Hong Kong are parties to the CITES. Pursuant to the Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”), the importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons are included as regulated species under the PESO.

 

 

Importation from the PRC to Hong Kong

 

Under the PESO, an importer may import caviar into Hong Kong from any other jurisdiction (including the PRC) only if the importer (i) obtains an import license issued by the Director of Agriculture, Fisheries and Conservation Department of Hong Kong and produces such import license to an authorized officer of the Customs and Excise Department; and (ii) produces and surrenders the CITES permit issued by the relevant authorities of the exporting country to the authorized officer, for retention and cancellation.

 

In compliance with the PESO, the sturgeon farm or its agent is responsible for applying for CITES permit from the relevant regulatory authority in the PRC, while the supply chain management company is responsible for applying for import license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on behalf of us.

 

Exportation from Hong Kong to foreign countries

 

Pursuant to the PESO, prior to the re-exportation of caviar out of Hong Kong, the re-exporter shall, pursuant to the PESO, apply for a re-export license from the Director of Agriculture, Fisheries and Conservation, which may be issued with or without conditions as the director considers appropriate. Any such re-export license obtained by the re-exporter shall be produced to an authorized officer of the Customs and Excise Department before the caviar is re-exported from Hong Kong.

 

In compliance with the PESO, we have engaged the supply chain management company to apply for re-export license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on behalf of us when our caviar products are to be exported to foreign countries.

 

Food factory license

 

Pursuant to section 31(1) of the Food Business Regulation (Chapter 132X of the Laws of Hong Kong) (“FBR”), no person shall carry on or cause, permit or suffer to be carried on any food factory business except under and in accordance with a food factory license from the Food and Environmental Hygiene Department of Hong Kong (the “FEHD”), which is required for the food business involving the preparation of food for sale for human consumption off the premises.

 

The FEHD may grant a provisional food factory license to a new applicant who has fulfilled the basic requirements in accordance with the FBR pending fulfilment of all outstanding requirements for the issue of a full food factory license. A provisional food factory licenses is valid for a period of six months or lesser and a full food factory license is valid generally for a period of one year, both subject to payment of the prescribed license fees and continuous compliance with the requirements under the relevant legislation and regulations. A provisional food factory license is renewable once and a full food factory license is renewable annually.

 

In compliance with the FBR, the supply chain management company, being the landlord of our food processing factory premises, has obtained a food factory license from the FEHD for the operation of our food processing factory, which is valid for one year from April 18, 2024 to April 17, 2025, subject to further renewal.

 

Intellectual Property

 

As of the date of this prospectus, we have registered the following trademarks:

 

Place of registration		Trademark		Status		Trademark Number		Classes		Expiry Date
Hong Kong				Registered, August 24, 2022		306044355		29, 35		August 23, 2032
Hong Kong				Registered, October 20, 2021		305776886		29		October 19, 2031
The PRC				Registered, October 7, 2022		59662676		29		October 6, 2032
Macau				Registered, August 10, 2022		N/194408		29		August 10, 2029

 

Legal Proceedings

 

We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business. During the years ended December 31, 2023 and 2022 and as of the date hereof, neither we nor any of our subsidiaries have been involved in any litigation, claim, administrative action or arbitration which had a material adverse effect on the operations or financial condition of the Company.

 

REGULATION

 

Our business operations are conducted in Hong Kong and are subject to Hong Kong laws and regulations. This section summarizes the most significant rules and regulations that affect our business activities in Hong Kong.

 

Public Health and Municipal Services Ordinance

 

The legal framework for food safety control in Hong Kong is set out in Part V of the Public Health and Municipal Services Ordinance (Chapter 132 of the Laws of Hong Kong) (the “Public Health Ordinance”) and the relevant sub-legislations thereunder. The Public Health Ordinance requires the manufacturers and sellers of food to ensure that their products are fit for human consumption and comply with the requirements in respect of food safety, food standards and labeling.

 

As the business of our Group principally involves retail of natural and organic foods in Hong Kong, our Group is subject to the Public Health Ordinance.

 

Section 50 of the Public Health Ordinance prohibits the manufacturing, advertising and sale in Hong Kong of food or drugs that are injurious to health. Anyone who fails to comply with this section commits an offence which carries a maximum penalty of HK$10,000 and imprisonment for three months.

 

Section 52 of the Public Health Ordinance provides that, subject to a number of defenses in section 53 of the same ordinance, if a seller sells to the prejudice of a purchaser any food or drug which is not of the nature, substance or quality of the food or drug demanded by the purchaser, the seller shall be guilty of an offence which carries a maximum penalty of HK$10,000 and imprisonment for three months.

 

According to section 54 of the Public Health Ordinance, any person who sells or offers or exposes for sale or has in his possession for the purpose of sale or preparation for sale or deposits with, or consigns to, any person for the purpose of sale or of preparation for sale, any food intended for, but unfit for, human consumption, or any drug intended for use by human but unfit for that purpose, shall be guilty of an offence. The maximum penalty for contravention of section 54 is a fine of HK$50,000 and imprisonment for six months.

 

Section 61 of the Public Health Ordinance provides that it shall be an offense for any person to give with any food or drug sold by him/her, or to display with any food or drug offered for sale by him/her, any label which falsely describes the food or drug or which is calculated to mislead as to its nature, substance or quality. Further, it shall also be an offense if any person publishes, or is a party to the publication of, an advertisement falsely describing any food or drug or that is likely to mislead as to the nature, substance or quality of any food or drug. However, the offender can rely on warranty as a defense.

 

Section 71(2) of the Public Health Ordinance specifies that if a warranty is given by a person resident outside Hong Kong, it shall only be a defense if the company (i) has, not later than three clear days before the date of the hearing, sent to the prosecutor a copy of the warranty with a notice stating that he/she intends to rely on it and specifying the name and address of the person from whom he/she received it; and (ii) has also sent a like notice to that person. In addition, the company has to prove that it had taken reasonable steps to ascertain, and did in fact believe in, the accuracy of the statement contained therein.

 

Import and Export Ordinance

 

The Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) provides for the regulation and control of, amongst other things, the import and export of articles into or out of Hong Kong. According to the Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong), a subsidiary legislation of the Import and Export Ordinance, an importer is under an obligation to lodge with the Customs and Excise Department an accurate and complete import declaration through a specified “Government Electronic Trading Services” provider. Further, a similar obligation is imposed on an exporter by the same Regulations.

 

 

Food Safety Ordinance

 

Food Safety Ordinance (Chapter 612 of the Laws of Hong Kong) (the “Food Safety Ordinance”) establishes a registration scheme for food importers and food distributors to require the keeping of records by persons who acquire, capture, import or supply food and to enable food import controls to be imposed.

 

Registration as food importer or distributor

 

Sections 4 and 5 of the Food Safety Ordinance require any person who carries on a food importation business or food distribution business to register with the Food and Environmental Hygiene Department as a food importer or food distributor.

 

Any person who does not register but carries on a food importation or distribution business, without reasonable excuse, commits an offence and is liable to a maximum fine of HK$50,000 and imprisonment for six months.

 

Record-keeping requirement relating to movement of food

 

Section 22 of the Food Safety Ordinance provides that a person who, in the course of business, imports food must record the following information about the acquisition of the food:

 

●

the date the food was acquired;

 

●

the name and contact details of the person from whom the food was acquired;

 

●

the place from where the food was imported;

 

●

the total quantity of the food; and

 

●

a description of the food.

 

A record must be made under this section at or before the time the food is imported. Any person who fails to comply with the record-keeping requirement, without reasonable excuse, commits an offence and is liable to a maximum fine of HK$10,000 and imprisonment for three months.

 

Section 24 of the Food Safety Ordinance provides that a person who, in the course of business, supplies food in Hong Kong by wholesale must record the following information about the supply:

 

●

the date the food was supplied;

 

●

the name and contact details of the person to whom the food was supplied;

 

●

the total quantity of the food; and

 

●

a description of the food.

 

A record must be made under this section within 72 hours after the time the supply took place. Any person who fails to comply with the record-keeping requirement, without reasonable excuse, commits an offence and is liable to a maximum fine of HK$10,000 and imprisonment for three months.

 

Protection of Endangered Species of Animals and Plants Ordinance

 

Both China and Hong Kong are parties to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”). The Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”) came into effect on 1 December 2006 to give effect to the CITES in Hong Kong. The importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are thus regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons (except the species included in Appendix I) are included as an “Appendix II species”.

 

Under the PESO, an importer may import into Hong Kong from any other jurisdiction (including the PRC) caviar if (i) the importer produces the CITES permit issued by the relevant authorities of the exporting country to an authorized officer of the Customs and Excise Department; (ii) an authorized officer has inspected the caviar to compare it with the particulars on the CITES permit and is satisfied that the particulars tally; and (iii) the importer surrenders to the authorized officer the CITES permit for retention and cancellation.

 

 

Prior to the re-exportation of caviar out of Hong Kong, the re-exporter shall, pursuant to the PESO, apply for a re-export license from the Director of Agriculture, Fisheries and Conservation, which may be issued with or without conditions as the director considers appropriate. Any such re-export license obtained by the re-exporter shall be produced to an authorized officer of the Customs and Excise Department before the caviar is re-exported from Hong Kong.

 

As stipulated in the PESO, a person commits an offence if he or she imports caviar without an import license or re-exports caviar without a re-export license. A person guilty of an offence above is liable on conviction to a fine and imprisonment. Higher penalties can be imposed by the court if the offence is committed for commercial purposes.

 

Consumer Goods Safety Ordinance

 

The Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong) (the “Consumer Goods Safety Ordinance”) imposes a duty on manufacturers, importers and suppliers of certain consumer goods to ensure that the consumer goods they supply are safe and for incidental purposes.

 

Our products, other than food (which are specifically excluded under the schedule of the Consumer Goods Safety Ordinance), are regulated by the Consumer Goods Safety Ordinance and the Consumer Goods Safety Regulation (Chapter 456A of the Laws of Hong Kong) (the “Consumer Goods Safety Regulation”).

 

Section 4(1) of the Consumer Goods Safety Ordinance requires consumer goods to be reasonably safe having regard to all of the circumstances including (a) the manner in which, and the purpose for which the products are presented, promoted or marketed; (b) the use of any mark in relation to the consumer goods, instructions or warnings given for the keeping, use or consumption of the consumer goods; (c) reasonable safety standards published by a standards institute or similar bodies for consumer goods of the description which applies to the consumer goods or for matters relating to consumer goods of that description; and (d) the existence of any reasonable means to make the consumer goods safer.

 

According to section 2(1) of the Consumer Goods Safety Regulation, where consumer goods on their packages are marked with, or where any labels affixed to or any documents enclosed in their packages contain, any warning or caution regarding the safe keeping, use, consumption or disposal, such warning or caution shall be in both the English and the Chinese languages. Such warnings and cautions, as required by section 2(2) of the Consumer Goods Safety Regulation, shall be legible and be placed in a conspicuous position on (a) the consumer goods; (b) any package of the consumer goods; (c) a label securely affixed to the package; or (d) a document enclosed in the package.

 

Food and Drugs (Composition and Labelling) Regulations

 

Food and Drugs (Composition and Labelling) Regulations (Chapter 132W of the Laws of Hong Kong) (the “Food and Drugs Regulations”), which are under the Public Health Ordinance, contains provisions governing the advertising and labeling of food.

 

Regulation 3 of the Food and Drugs Regulations provides that the composition of foods and drugs specified in Schedule 1 shall be up to the standards as specified in that schedule. The applicability of individual standards specified thereunder depends on whether the individual product in question is considered “drug” as defined in the Public Health Ordinance.

 

Pursuant to Regulation 5 of the Food and Drugs Regulations, any person who advertises for sale, sells or manufactures for sale any food or drug which does not conform to the relevant requirements as to the composition prescribed in Schedule 1 to the Food and Drugs Regulations commits an offence and is liable to a fine of HK$50,000 and imprisonment for six months.

 

Regulation 4A of the Food and Drugs Regulations requires all pre-packaged food and products sold by our Group (except for those listed in Schedule 4 thereto) to be marked and labeled in the manner prescribed in Schedule 3 to the Food and Drugs Regulations. Schedule 3 contains labeling requirements in respect of stating the product’s name or designation, ingredients, “best before” or “use by” date, special conditions for storage or instructions for use, manufacturer’s or packer’s name and address and count, weight or volume. Additionally, Schedule 3 also includes requirements on the appropriate language or languages for marking or labelling pre-packaged food. Contravention of those requirements may result in a conviction carrying a maximum penalty of HK$50,000 and imprisonment for six months.

 

In accordance with Regulation 4B of the Food and Drugs Regulations, generally pre-packaged food sold by our Group should be marked or labeled with its energy value and nutrient content in the manner prescribed in Part 1 of Schedule 5, and nutrition claims, if any, made on the label of the product or in any advertisement for the product should comply with Part 2 of Schedule 5. Contravention of those requirements may result in a conviction carrying a maximum penalty of HK$50,000 and imprisonment for six months.

 

 

Food Business Regulation

 

Regulation 31 of the Food Business Regulation (Chapter 132X of the Laws of Hong Kong) (the “Food Business Regulation”) provides that, except under and in accordance with a license granted under the Food Business Regulation, no person shall carry on or cause or permit or suffer to be carried on any food business including a food factory. “Food factory” is defined as any food business which involves the preparation of food for sale for human consumption off the premises.

 

Trade Descriptions Ordinance

 

The Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) makes it an offence for any person, in the course of trade or business, to (i) apply for a false trade description to any goods; (ii) supply or offer to supply any goods to which a false trade description is applied; or (iii) has in his possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied. Furthermore, pursuant to the same legislation, it is an offence for a person to import or export any goods to which a false trade description is applied.

 

Employment Ordinance

 

The Employment Ordinance (Chapter 57 of the Laws of Hong Kong) (the “EO”) provides for the protection of the wages of employees and regulates the general conditions of employment and employment agencies. Under the EO, an employee is generally entitled to, amongst other things, notice of termination of his or her employment contract; payment in lieu of notice; maternity protection in the case of a pregnant employee; not less than one rest day in every period of seven days; severance payments or long service payments; sickness allowance; statutory holidays or alternative holidays; and paid annual leave of up to 14 days depending on the period of employment.

 

Employees’ Compensation Ordinance

 

The Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) (the “ECO”) is provides for the payment of compensation to employees injured in the course of employment. As stipulated by the ECO, an employer is required to take out an insurance policy to insure against the injury risk of his or her employees. Any employer who contravenes this requirement commits a criminal offence and is liable on conviction to a fine and imprisonment. An employer who has taken out an insurance policy under the ECO is required to display a prescribed notice of insurance in a conspicuous place on each of its premises where any employee is employed.

 

Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong)

 

The Minimum Wage Ordinance provides for a prescribed minimum hourly wage rate (set at HK$40 per hour as at the date of this prospectus) during the wage period for every employee engaged under a contract of employment under the Employment Ordinance. Any provision of the employment contract which purports to extinguish or reduce the right, benefit or protection conferred on the employee by the Minimum Wage Ordinance is void.

 

Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) (“MPF Schemes Ordinance”)

 

Employers are required to enroll their regular employees (except for certain exempt persons) aged between at least 18 but under 65 years of age and employed for 60 days or more in a Mandatory Provident Fund (“MPF”) scheme within the first 60 days of employment.

 

For both employees and employers, it is mandatory to make regular contributions into a MPF scheme. For an employee, subject to the maximum and minimum levels of income (set at HK$30,000 and HK$7,100 per month, respectively, as at the date of this prospectus), an employer will deduct 5% of the relevant income on behalf of an employee as mandatory contributions to a registered MPF scheme with a ceiling (set at HK$1,500 as at the date of this prospectus). Employer will also be required to contribute an amount equivalent to 5% of an employee’s relevant income to the MPF scheme, subject only to the maximum level of income (set at HK$30,000 as at the date of this prospectus).

 

 

MANAGEMENT

 

Directors and Executive Officers

 

The following table provides information regarding our executive officers and directors as of the date hereof:

 

Name		Age		Position(s)
Kim Kwan Kings, WONG		53		Chief Executive Officer, Chairman of the board, and Director
Hung, CHEUNG		55		Director
Kwok Kuen, YUEN		39		Chief Financial Officer
Feiyong, LI		41		Director
Phei Suan, HO		44		Director
Wai Chun, CHIK		39		Director

 

Kim Kwan Kings, WONG  is the chief executive officer, Director, and the Chairman of the board of the Company, overseeing the general corporate strategy and brand promotion management and business expansion. Mr. Wong is one of the founders of the Company, and has committed to expanding and promoting the Company’s business and international market for caviar products. Mr. Wong has extensive experience in market promotion, brand promotion, sales channel expansion, business planning in industries including new retail, health supplement, biotechnology, artificial intelligence. In the past five years, Mr. Wong has been the chief executive officer of TW HK.

 

Kwok Kuen, YUEN has served as our chief financial officer since December 1, 2022. Mr. Yuen has more than 20 years of experience of handling financial and audit operation in companies. From February 2004 to January 2008, Mr. Yuen worked in PricewaterhouseCoopers, with his last position as manager of the assurance department and from February 2008 to March 2015, he worked at PKF Hong Kong Limited with his last position as senior audit manager. Mr. Yuen has extensive experience in providing consulting services to reverse acquisition projects, merger and acquisition, due diligence, corporate reorganization, internal control and system inspection. Mr. Yuen is familiar with Hong Kong audit principals, corporation laws, listing rules, corporate audit, public offering and private placement. Mr. Yuen received a Bachelor degree of business from Monash University in September 1998. He is also member of CPA Australia and Hong Kong Institute of Certified Public Accountants. Since August 2016, Mr. Yuen has been an independent non-executive director of China Tian Yuan Healthcare Group Limited (HKEx: 557), a company listed on the Hong Kong Stock Exchange.

 

Feiyong, LI is our director and the chairman of the nominating committee and the member of the compensation committee and audit committee. Mr. Li has served as an independent director and the chairman of Nominating and Corporate Governance Committee of Jayud Global Logistics Limited (NASDAQ: JYD) since March 31, 2023. Mr. Li has extensive experience in advising equity investment projects in the Hong Kong and U.S. market and served a number of licensed corporations under the Securities and Futures Ordinance of Hong Kong. Mr. Li has been serving as the investment manager at Koala Securities Limited since 2019. Mr. Li previously served as the general manager of Zen Corporate Consulting Limited from 2012 to 2021, where he focused on providing public relations processing services, listing consulting services, and corporate investment and financing services. From 2013 to 2020, Mr. Li also served as the chief investment officer of CNI Securities Group Limited, where he was responsible for project investment and financing. From 2009 to 2011, Mr. Li consecutively served as the investment consultant of Kingston Securities Limited and Guoyuan Securities Brokerage (Hong Kong) Limited. Mr. Li received an advanced diploma in business studies from the Windsor Management College of Singapore in 2021.

 

 

Phei Suan, HO is our director and the chairwoman of the audit committee and the member of the nominating committee and the compensation committee. Ms. Ho has over 20 years’ experience in accounting, audit and corporate financing experience. Since October 2017, Ms. Ho served as the chief financial officer of Furniweb Holdings Limited (HKEx: 8480), a company listed on GEM of the Stock Exchange of Hong Kong Limited. From May 2014 to September 2017, Ms. Ho served as the group financial controller of PRG Holdings Berhad, a company listed on the main market of Busa Malaysia Securities Berhad. From April 2012 to April 2014, Ms. Ho served as the head of corporate finance of Encorp Berhad, a company listed on the main market of Busa Malaysia Securities Berhad. From April 2011 to March 2012, Ms. Ho served as the financial business consultant of Hewlett-Packard (Malaysia) Sdn Bhd. From March 2008 to October 2010, Ms. Ho served as an audit manager of KPMG China. From August 2002 to February 2008, Ms. Ho served as an audit manager of Ernst & Young in Malaysia. Ms. Ho obtained a bachelor degree of Accountancy from the University of Malaya in Malaysia in 2002. She has been a Chartered Accountant under the Malaysian Institute of Accountants since 2006 and a Certified Public Accountant of the Malaysian Institute of Certified Public Accountants since 2007.

 

Wai Chun, CHIK is our director and the chair of our compensation committee and the member of the nominating committee and audit committee. Ms. Chik has over 15 years of experience in the auditing, accounting, corporate governance and company secretarial matters. She currently serves as the company secretary of P.B. Group Limited, a company that is listed on the Hong Kong Stock Exchange (HKEx: 8331) since August 2019, and FingerTango Inc., a company that is listed on the Hong Kong Stock Exchange (HKEx: 6860) since July 2023. She also currently serves as the independent non-executive director at Boltek Holdings Limited, a company that is listed on the Hong Kong Stock Exchange (HKEx: 8601), since September 2021. Furthermore, Ms. Chik is currently the head of company secretarial department of P.B. Advisory Limited. Ms. Chik obtained the master of corporate governance degree from the Hong Kong Polytechnic University in 2015. She was admitted as a member of CPA Australia in June 2011. Ms. Chik was also certified as a certified public accountant by the Hong Kong Institute of Certified Public Accountants in September 2011, and was admitted as an associate of both the Hong Kong Chartered Governance Institute (formerly known as the Hong Kong Institute of Chartered Secretaries) and the Chartered Governance Institute (formerly known as the Institute of Chartered Secretaries and Administrators) in March 2016.

 

Family Relationships

 

None of the directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.

 

Board of Directors

 

Our board of directors consists of five directors. A director is not required to hold any shares in our company to qualify to serve as a director. Subject to the rules of the relevant stock exchange and disqualification by the chairman of the board of directors, a director may vote with respect to any contract, proposed contract, or arrangement in which he or she is materially interested. A director may exercise all the powers of the company to borrow money, mortgage its business, property and uncalled capital and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of any third party. There are no directors’ service contracts with the Company or its subsidiaries providing for benefits upon termination of employment.

 

Committees of the Board of Directors

 

Our board of directors has established an audit committee, a compensation committee, and a nominating committee under the board of directors, and an investment committee under the management. Our board of directors has adopted a charter for the audit committee, the compensation committee, and the nominating committee. Each committee’s members and functions are described below.

 

 

Audit Committee. Our audit committee consists of Feiyong, LI, Phei Suan, HO, Wai Chun, CHIK. Ms. Phei Suan, HO is the chair of our audit committee. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee will be responsible for, among other things:

 

●

appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

 

●

reviewing with the independent auditors any audit problems or difficulties and management’s response;

 

●

discussing the annual audited financial statements with management and the independent auditors;

 

●

reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

 

●

reviewing and approving all proposed related party transactions;

 

●

meeting separately and periodically with management and the independent auditors; and

 

●

monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

 

Compensation Committee. Our compensation committee consists of Feiyong, LI, Phei Suan, HO, Wai Chun, CHIK. Ms. Wai Chun, CHIK is the chair of our compensation committee. The compensation committee will be responsible for, among other things:

 

●

reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

 

●

reviewing and recommending to the shareholders for determination with respect to the compensation of our directors;

 

●

reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

 

●

selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.

 

Nominating Committee. Our nominating committee consists of Feiyong, LI, Phei Suan, HO, Wai Chun. CHIK Mr. Feiyong, LI is the chair of our nominating committee. We have determined that Feiyong, LI, Phei Suan, HO, and Wai Chun, CHIK satisfy the “independence” requirements under NASDAQ Rule 5605. The nominating committee will assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating committee will be responsible for, among other things:

 

●

selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

 

●

reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;

 

●

making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

 

●

advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.

 

 

Duties of Directors

 

Under Cayman Islands law, our directors owe fiduciary duties to us, including a duty of loyalty, a duty to act honestly, in good faith and with a view to our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to act with skill and care. English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association (as may be amended from time to time) and the class rights vested thereunder in the holders of the shares. Our company has a right to seek damages against any director who breaches a duty owed to us. A shareholder may in certain limited exceptional circumstances have the right to seek damages in our name if a duty owed by our directors is breached.

 

Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

 

●

convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;

 

●

declaring dividends and distributions;

 

●

appointing officers and determining the term of office of the officers;

 

●

exercising the borrowing powers of our company and mortgaging the property of our company; and

 

●

approving the transfer of shares in our company, including the registration of such shares in our share register.

 

Terms of Directors and Officers

 

Our officers are elected by and serve at the discretion of the board of directors. Our directors are not subject to a term of office and hold office until their resignation, death or incapacity, or until their respective successors have been elected and qualified or until his or her office is otherwise vacated in accordance with our articles of association as may be amended from time to time.

 

A director will also be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors, (ii) dies or is found to be or becomes of unsound mind, (iii) resigns his office by notice in writing, (iv) without special leave of absence from our board, is absent from meetings of our board for a continuous period of six months, or (v) is removed from office pursuant to any other provisions of our memorandum and articles of association (as may be amended from time to time).

 

Limitation on Liability and Other Indemnification Matters

 

Cayman Islands law allows us to indemnify our directors, officers and auditors acting in relation to any of our affairs against actions, costs, charges, losses, damages and expenses incurred by reason of any act done or omitted in the execution of their duties as our directors, officers and auditors.

 

Under our memorandum and articles of association, we may indemnify our directors and officers, among other persons, from and against all actions, costs, charges, losses, damages and expenses which they or any of them may incur or sustain by reason of any act done, concurred in or omitted in or about the execution of their duty or supposed duty in their respective offices or trusts, except such (if any) as they shall incur or sustain through their own fraud or dishonesty.

 

Board Diversity

 

Board Diversity Matrix
Country of Principal Executive Offices:		Hong Kong
Foreign Private Issuer		Yes
Disclosure Prohibited Under Home Country Law		No
Total Number of Directors		5
		Female		Male		Non-Binary		Did Not Disclose Gender
Part I: Gender Identity
Directors		2		3		0		0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction		—
LGBTQ+		—

 

 

Agreements with Executive Officers and/or Directors

 

We have entered into employment agreements with our senior executive officers and/or Directors.

 

Mr. Kim Kwan Kings, WONG and Mr. Hung, CHEUNG

 

TW Cayman entered into separate employment agreements with: (a) Mr. Kim Kwan Kings, WONG, the Director, Chief Executive Officer, and the Chairman of the Board, on May 16, 2023; and (b) Mr. Mr. Hung, CHEUNG, the Director, on October 27, 2023, respectively (collectively, the Directors Employment Agreements).

 

The initial term of employment under the Directors Employment Agreements is for a term of one year unless terminated earlier. Upon expiration of the initial-year term, the Employment Agreements shall be automatically extended for successive one-year terms unless a three-months prior written notice to terminate the Directors Employment Agreement or unless terminated earlier pursuant to the terms of the Directors Employment Agreements.

 

Pursuant to the Directors Employment Agreements, Mr. Wong and Mr. Cheung will receive a nominal cash compensation of salary US$ 1 annually, each, for their capacities with TW Cayman. TW Cayman is entitled to terminate their agreement for cause at any time without remuneration for certain acts of Mr. Wong and Mr. Cheung, as being convicted of any criminal conduct, any act of gross or willful misconduct, or any severe, willful, grossly negligent, or persistent breach of any employment agreement provision, or engaging in any conduct which may make the continued employment of such officer detrimental to our company. Mr. Wong and Mr. Cheung have agreed to hold, both during and after the terms of his or her agreement, in confidence and not to use for the officer’s benefit or the benefit of any third party, any trade secrets, other information of a confidential nature or non-public information of or relating to us in respect of which we owe a duty of confidentiality to a third party. In addition, each Mr. Wong and Mr. Cheung has agreed not to, for a period of one year following the termination of his employment, carry on any business in direct competition with the business of the Top Wealth group of companies, solicit or seek or endeavor to entice away any customers, clients, representative, or agent of the Top Wealth group of companies or in the habit of dealing with the Top Wealth group of companies who is or shall at any time within two years prior to such cessation have been a customer, client, representative, or agent of the Top Wealth group of companies, and use a name including the words used by the Top Wealth group of companies in its name or in the name of any of its products, services or their derivative terms, or Chinese or English equivalent in such a way as to be capable of or likely to be confused with the name of the Top Wealth group of companies.

 

Furthermore, TW HK, our Operating Subsidiary, has entered letter of employment with Mr. Hung, CHEUNG on June 25, 2022. Pursuant to the letter of employment, commenced on July 1, 2022, Mr. Cheung have been employed as the Manager of TW HK, for a base monthly salary of HK$ 20,000 (approximately US$2,560) and Mandatory Provident Fund (MPF) pension contribution. As provided by the letter of employment, Mr. Cheung is required to refrain from servicing other company or business which will conflict with TW HK’s interest and from infringing the confidentiality principal of TW HK. Either Mr. Cheung or TW HK may terminate employment of Mr. Cheung with TW HK, by giving one month notice in writing.

 

Mr. Cheung will continue to receive compensation, in the form of salary and pension, from the Operating Subsidiary.

 

Mr. Kwok Kuen, YUEN

 

On May 16, 2023, TW Cayman entered into employment agreement with Mr. Kwok Kuen, YUEN, the Chief Financial Officer. This employment agreement shall continue to be effect until or unless terminated by either Mr. Yuen or TW Cayman by giving not less than three (3) months’ notice in writing or payment in lieu, or terminated earlier pursuant to the terms of the employment agreement. TW Cayman may terminate the Mr. Yuen’s employment immediately without notice or payment in lieu if Mr. Yuen: willfully disobeys a lawful and reasonable order, misconducts himself such conduct being inconsistent with the due and faithful discharge of his duties, commits a fraudulent or dishonest acts, is habitually neglectful in his duties; or on any other ground on which the TW Cayman would be entitled to terminate Mr. Yuen’s employment without notice at common law.

 

Pursuant to his employment agreements, Mr. Yuen receive cash compensation of salary HK$35,000 (approximately US$4,490) monthly.

 

 

Mr. Yuen further undertook to maintain in strict confidence any and all information of Top Wealth group of companies or of any other third parties to which he may have access. During and for a period of two (2) years after Mr. Yuen’s employment, Mr. Yuen will not use for his own account or divulge or disclose to any person, firm or company any trade secret, intellectual property or any other confidential information of the Top Wealth group of companies, include but shall not be limited to all information not in the public domain concerning the business, products, customer and client lists and contact details, procedures, processes and management strategies know-how, technology, accounts, finances, business and marketing plans, contracts, suppliers and business affairs of Top Wealth group of companies.

 

Both during and after a further period of six (6) months following the termination of his employment, Mr. Yuen has agreed not to, approach, canvass, solicit or otherwise endeavor to entice away from any person who at any time during the twelve (12) months preceding the termination of Mr. Yuen’s employment that has been a customer or supplier of the Top Wealth group of companies and during such period he shall not use his knowledge of or influence over any such customer or supplier to or for his own benefit or the benefit of any other person carrying on business in competition with the Company or otherwise use his knowledge of or influence over any such customer or supplier to the detriment of the Company, and not to solicit or entice or endeavor to solicit or entice away from Top Wealth group of companies any person who at the date of termination is employed or engaged by the Top Wealth group of companies in a managerial, executive or sales capacity and with whom Mr. Yuen has had material dealings or was directly managed by or reported to Mr. Yuen within the period of twelve (12) months immediately prior to the date of termination.

 

Furthermore, TW HK, our Operating Subsidiary, has entered letter of employment with Mr. Yuen on November 20, 2022. Pursuant to the letter of employment, commenced on December 1, 2022, Mr. Yuen have been employed as the Chief Financial Officer of TW HK, for a base monthly salary of HK$ 35,000 (approximately US$4,490) and Mandatory Provident Fund (MPF) pension contribution.

 

Compensation of Directors and Executive Officers

 

For the fiscal year ended December 31, 2023, we paid an aggregate of HK$ 980,000 (US$125,641) as compensation to our directors and executive officers as well as an aggregate of HK$36,000 (US$4,615) contributions to the Mandatory Provident Fund (“MPF”), a statutory retirement scheme introduced after the enactment of the Mandatory Provident Fund Schemes Ordinance in Hong Kong.

 

For the fiscal year ended December 31,2022 we paid an aggregate of HK$153,000 (US$19,615) as compensation to our directors and executive officers as well as an aggregate of HK$6,000 (US$769) contributions to the MPF.

 

As the appointments of our independent directors was effective on March 29, 2024, for the fiscal year ended December 31, 2023 and 2022, we did not have any non-executive directors and therefore have not paid any compensation to any non-executive directors.

 

Except our contribution to the MPF, we have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers. We do not have any equity incentive plan in place as of the date of this prospectus.

 

Code of Conduct and Ethics and Executive Compensation Recovery Policy

 

We have adopted (i) a written code of business conduct and ethics and (ii) Executive Compensation Recovery Policy that applies to our officers, and employees, including our chief executive officer, chief financial officer, principal accounting officer or controller or persons performing similar functions, (collectively the “Policies”). We intend to disclose any amendments to the Policies, and any waivers of the Policies for our Directors, executive officers and senior finance executives, on our website to the extent required by applicable U.S. federal securities laws and the corporate governance rules of Nasdaq.

 

 

PRINCIPAL SHAREHOLDERS

 

The following table sets forth information regarding the beneficial ownership of our share capital by:

 

	●	each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares;
	●	each of our named Executive Officers;
	●	each of our Directors and Director nominees; and
	●	all of our current Executive Officers, Directors and Director nominees as a group.

 

The calculations in the table below are based on 29,000,000 Ordinary Shares outstanding prior to the offering, and 56,000,000 Ordinary Shares issued and outstanding immediately after the completion of this offering. All of our shareholders who own our Ordinary Shares have the same voting rights.

 

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the SEC and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within sixty (60) days through the conversion or exercise of any convertible security, warrant, option or other right. More than one (1) person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within sixty (60) days, by the sum of the number of shares outstanding as of such date, plus the number of shares as to which such person has the right to acquire voting or investment power within sixty (60) days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our shares listed below have sole voting and investment power with respect to the shares shown.

 

		Ordinary Shares Beneficially Owned Prior to This Offering								Ordinary Shares Beneficially Owned Immediately after This Offering
		Number of Ordinary Shares				Approximate percentage of outstanding Ordinary Shares				Number of Ordinary Shares				Approximate percentage of outstanding Ordinary Shares
Directors and Executive Officers:
Kim Kwan Kings, WONG(1)			20,160,000				69.52	%			20,160,000				36	%
Hung, CHEUNG			—				—				—				—
Kwok Kuen, YUEN			—				—				—				—
Feiyong, LI			—				—				—				—
Phei Suan, HO			—				—				—				—
Wai Chun, CHIK			—				—				—				—
All Directors and Executive Officers as a Group			20,160,000				69.52	%			20,160,000				36	%
Principal Shareholders holding 5% or more:
Winwin Development Group Limited(1)			20,160,000				69.52	%			20,160,000				36	%

 

(1)

Kim Kwan Kings, WONG beneficially owns 20,160,000 Ordinary Shares through Winwin Development Group Limited, a company incorporated under the laws of the British Virgin Islands, which is owned as to 90% by Mr. Kim Kwan Kings, WONG and 10% by Mr. Kin Fai, CHONG. Mr. Kim Kwan Kings, WONG is the sole director of Winwin Development Group Limited. Mr. Wong may be deemed the beneficial owners of the Ordinary Shares held by Winwin Development Group Limited, and Mr. Wong holds the voting and dispositive power over the Ordinary Shares held by Winwin Development Group Limited. The registered address of Winwin Development Group Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands.

 

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.

 

 

RELATED PARTY TRANSACTIONS

 

Employment Agreements and Indemnification Agreements

 

See “Management — Employment Agreements and Indemnification Agreements.”

 

Other Transactions with Related Parties

 

As of December 31, 2023, the Company had the following balances due with related parties:

 

Name		Amount				Relationship		Note
Wong Kim Kwan Kings		$	160,089			Director and controlling shareholder of the Company		Unsecured interest free loan payable, repayable on demand
Snow Bear Capital Limited		$	429,065			Shareholder of the Company		Unsecured interest free loan payable, repayable within one year from draw down

 

As of December 31, 2022, the Company had the following balances due with related parties:

 

Name		Amount				Relationship		Note
Mother Nature Health (HK) Limited		$	5,436			The former director of Top Wealth Group (International) Limited, the Operating Subsidiary, and the former director of the related company, Mother Nature Health (HK) Limited.		Account receivable
Kin Fai, CHONG		$	63,735			A former director and the former principal owner of Top Wealth Group (International) Limited. The current shareholder of Winwin Development Group Limited, the Company’s controlling shareholder		Amount receivable for common stock issued in Top Wealth Group (International) Limited
Kim Kwan Kings, WONG		$	(217,779	)		Director and controlling shareholder of the Company		Unsecured interest free loan payable, repayable on demand

 

Mother Nature Health (HK) Limited has ceased to be a related party after December 31, 2022. On August 9, 2022, Mother Nature Health (HK) Limited entered into the trade transaction with the Operating Subsidiary, Top Wealth Group (International) Limited, from which the account receivables of the amount of $5,436 was incurred. The $5,436 account receivable have been fully paid by Mother Nature Health (HK) Limited as of the date of the prospectus. These transactions with Mother Nature Health (HK) Limited were not considered as related party transactions in the year ended December 31, 2023.

 

Kin Fai, CHONG, the former director and the former principal owner of Top Wealth Group (International) Limited prior to the reorganization of the group, currently a 10% shareholder of Winwin Development Group Limited, the Company’s controlling shareholder, received from the Company cash advance in the form of interest-free loans, which was to pay for his expenses generated from his business trip on July 14, 2021. The advance has been fully repaid as of the date of the this report.

 

Kim Kwan Kings, WONG is a director and CEO of the Company. On July 14, 2022 and December 31, 2021, Mr. Wong has lent cash to the Top Wealth Group (International) Limited, the Operating Subsidiary, in the form of interest-free loan, with the purpose of solidifying the its work capital. The outstanding amount due to Mr. Wong as of the date of the prospectus is $160,089.

 

 

During the fiscal year ended December 31, 2023, the Company had following related party transactions:

 

Name		Amount				Relationship		Note
Kin Fai, CHONG		$	63,735			A former director and principal owner of the Company		Repayment of unsecured interest free loan payable, repayable on demand
Kim Kwan Kings, WONG		$	57,690			Director and controlling shareholder of the Company		Repayment of unsecured interest free loan payable, repayable on demand
Snow Bear Capital Limited		$	429,065			Shareholder of the Company		Proceeds from unsecured interest free loan payable, repayable within one year from drawdown.

 

During the fiscal year ended December 31, 2022, the Company had following related party transactions:

 

Name		Amount				Relationship		Note
Beauty & Health International Company Limited (1)		$	1,281,077			A company under common control		Revenue - sale of caviar
Beauty & Health International E-Commerce Limited (Customer C) (note b)		$	1,063,334			A company under common control		Revenue - sale of caviar
Mother Nature Health (HK) Limited (2)		$	797,872			The Company’s former director  was also this related company’s former director		Revenue - sale of caviar
Sky Channel Management Limited (3)		$	1,418,141			The Company’s principal owner was a former director of this related company		Marketing expense
Kin Fai, CHONG		$	(898	)		A former director and principal owner of the Company		Proceeds from unsecured interest free loan payable, repayable on demand
Kin Fai, CHONG		$	64,101			A former director and principal owner of the Company		Amount receivable for issuance of common stock in Top Wealth International as of December 31, 2022. The amount was paid on May 13, 2023.
Kim Kwan Kings, WONG		$	(467,315	)		Director and controlling shareholder of the Company		Proceeds from unsecured interest free loan payable, repayable on demand
Kin Fai, CHONG		$	576,912			Director and controlling shareholder of the Company		Conversion of unsecured interest free loan payable, repayable on demand into common stock in Top Wealth International

 

During 2021, the Company had following related party transactions:

 

Name		Amount				Relationship		Note
Kin Fai, CHONG			532			A former director and principal owner of the Company		Cash advanced for unsecured interest free loan receivable, repayable on demand
Kim Kwan Kings, WONG			(293,410	)		Director and controlling shareholder of the Company		Proceeds from unsecured interest free loan payable, repayable on demand

 

(1)	The transaction with this related party was ceased after August 31, 2022.

 

(2)	The transaction with this related party started on September 3, 2022. The controlling shareholder disposed all of his interest in this related party on 28 August 2022. These transactions were not considered as related party transactions in the year ended December 31, 2023

 

(3)	The transaction with this related party was ceased after December 31, 2022.

 

 

DESCRIPTION OF SHARE CAPITAL

 

Top Wealth Group Holding Limited is an exempted company incorporated in the Cayman Islands and our corporate affairs are governed by our articles of association, the Companies Act, and the common law of the Cayman Islands.

 

At incorporation, our authorized share capital is US$50,000, divided into 500,000,000 ordinary shares, par value US$0.0001 per share. Upon incorporation, 1 ordinary share of US$0.0001 was issued a par. On March 1, 2023, 99 ordinary shares of US$0.0001 each were issued at par. All these ordinary shares rank pari-passu with the exiting share in all respect.

 

Thereafter, on April 28, 2023, 650 ordinary shares of US$0.0001 each were issued to the Company’s then-sole owner at par. All these ordinary shares rank pari-passu with the existing shares in all respect.

 

Furthermore, on the same date, April 18, 2023, the then-sole owner of the Company sold a total of 190 Ordinary Shares, out of its 750 Ordinary Shares, to five shareholders.

 

On October 12, 2023, in contemplation of Company’s initial public offering, the Company further issued 26,999,250 ordinary shares in aggregate to its existing shareholders at par value, on a pro rata basis proportional to the shareholders’ existing equity interests (collectively refers as the “Pro Rata Share Issuance”). After the Pro Rata Share Issuance, 27,000,000 Ordinary Shares were issued and outstanding. All these ordinary shares rank pari-passu with the exiting shares in all respect. This Pro Rata Share Issuance has treated as share split.

 

On April 18, 2024, the Company closed its initial public offering of 2,000,000 Ordinary Shares at a public offering price of US$4.00 per Ordinary Share.

 

After the Offering, 56,000,000 Ordinary Shares are issued and outstanding.

 

Ordinary Shares

 

General

 

Our ordinary shares are issued in registered form, and are issued when registered in our register of members. Unless the board of directors determine otherwise, each holder of our ordinary shares will not receive a certificate in respect of such ordinary shares. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their ordinary shares. We may not issue shares or warrants to bearer.

 

As at the date of this Prospectus, the Company has no outstanding options, warrants and other convertible securities.

 

Subject to the provisions of the Companies Act and our articles regarding redemption and purchase of the shares, the directors have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options over or otherwise deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. The directors may deal with unissued shares either at a premium or at par, or with or without preferred, deferred or other special rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise. No share may be issued at a discount except in accordance with the provisions of the Companies Act. The directors may refuse to accept any application for shares, and may accept any application in whole or in part, for any reason or for no reason.

 

Listing

 

Our Ordinary Share are traded on the Nasdaq Capital Market under the ticker symbol “TWG.”

 

Transfer Agent and Registrar

 

The transfer agent and registrar for the Ordinary Shares is VStock Transfer, LLC. The transfer agent and registrar’s address is 18 Lafayette Place, Woodmere, NY 11598.

 

 

Dividends

 

The holders of our Ordinary Shares are entitled to such dividends as may be declared by our Board of Directors, subject to the Companies Act. Subject to the provisions of the Companies Act and any rights attaching to any class or classes of shares under and in accordance with the articles, our articles provide that the directors may from time to time declare dividends (including interim dividends) and other distributions on shares of the Company in issue and authorize payment of the same out of the funds of the Company lawfully available therefor. Our shareholders may, by ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors. No dividend shall be paid otherwise than out of profits or, subject to the restrictions of the Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, the share premium account. The directors when paying dividends to shareholders may make such payment either in cash or in specie.

 

Unless provided by the rights attached to a share, no dividend shall bear interest.

 

Voting Rights

 

Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands every shareholder of record present in person or by proxy at a general meeting shall have one vote and on a poll every shareholder of record present in person or by proxy shall have one (1) vote for each share registered in his name in the register of Members.

 

An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attached to the Ordinary Shares cast by those shareholders entitled to vote who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting, while a special resolution requires the affirmative vote of a majority of not less than two-thirds of the votes attached to the Ordinary Shares cast by those shareholders who are present in person or by proxy (or, in the case of corporations, by their duly authorized representatives) at a general meeting. Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all the shareholders of our company, as permitted by the Companies Act and our amended and restated memorandum and articles of association. A special resolution will be required for important matters such as a change of name or making changes to our amended and restated memorandum and articles of association.

 

Cumulative Voting

 

Delaware law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our amended and restated memorandum and articles of association do not provide for cumulative voting.

 

Pre-emptive Rights

 

There are no pre-emptive rights applicable to the issue by us of Ordinary Shares under our amended and restated memorandum and articles of association.

 

Options Grants

 

Effective on August 1, 2022, Top Wealth (International) Limited (“TW HK”), the Operating Subsidiary, entered into a Corporate Development Consultant Appointment Agreement with Mr. Haitong, CHEN (the “Consultancy Agreement”), in which TW HK appointed Mr. Chen for a term of 10 months commencing from August 1, 2022 to June 30, 2023, subject to extension or early termination, to provide corporate development, project management, and capital financing consultancy services in connection to the Company’s IPO in the United States. Pursuant to the Consultancy Agreement, in addition to a fixed cash remuneration to Mr. Chen, TW HK will also cause TW Cayman to grant stock options to Mr. Chen to acquire an aggregate of 1,080,000 Ordinary Shares of TW Cayman after Company’s IPO, representing 4% of the Ordinary Shares of TW Cayman issued and outstanding prior to the IPO (the “Consultancy Stock Option”). The options granted to Mr. Chen will vest and become exercisable over a period of three years in three equal tranches, on the first, second, and third anniversary of the date of Company’s listing on Nasdaq capital market. All options shall be exercised after three anniversaries and within 60 months of Company’s listing, otherwise the unexercised options will be null and void. The applicable exercise price for the Consultancy Stock Option that to be granted to Mr. Chen is fifty percent (50%) of the IPO Price per Ordinary Shares offered by the Company.

 

Upon the expiration of the term of the Consultancy Agreement, Mr. Chen and the Company mutually agreed not to extend Consultancy Agreement.

 

 

Our Memorandum and Articles of Association

 

The following are summaries of the material provisions of our amended and restated memorandum and articles of association and the Companies Act, insofar as they relate to the material terms of our Ordinary Shares. They do not purport to be complete. Reference is made to our amended and restated memorandum and articles of association, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part (and which is referred to in this section as, respectively, the “memorandum” and the “articles”).

 

Meetings of Shareholders

 

As a Cayman Islands exempted company, we are not obligated by the Companies Act to call shareholders’ annual general meetings; accordingly, we may, but shall not be obliged to, in each year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general meetings.

 

The directors may convene a meeting of shareholders whenever they think necessary or desirable. At least 5 clear days’ notice of a general meeting shall be given to shareholders entitled to attend and vote at such meeting. The notice shall specify the place, the day and the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors. Subject to the Cayman Companies Act and with the consent of the shareholders who, individually or collectively, hold at least 90 percent of the voting rights of all those who have a right to vote at a general meeting, a general meeting may be convened on shorter notice.

 

Our board of directors must convene a general meeting upon the written requisition of one or more shareholders entitled to attend and vote at a general meeting of the Company holding not less than 10% of the rights to vote at such general meeting in respect to the matter for which the meeting is requested, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting within 21 clear days’ from the date of receipt of the written requisition, those shareholders who requested the meeting or any of them may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us.

 

No business may be transacted at any general meeting unless a quorum is present at the time the meeting proceeds to business. A quorum shall consist of the presence (whether in person or represented by proxy) of one shareholder if the Company has one shareholder and two shareholders if the Company has more than one shareholder. If, within fifteen minutes from the time appointed for the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved. In any other case, it shall stand adjourned to the same time and place seven days hence or to such other time or place as is determined by the directors, and if, at the adjourned meeting, a quorum is not present within fifteen minutes from the time appointed for the meeting, the shareholders present in person or by proxy at the meeting shall be a quorum. Subject to the articles, at every meeting, the shareholders present in person or by proxy may choose someone of their number to be the chairman.

 

A corporation that is a shareholder shall be deemed for the purpose of our memorandum and articles of association to be present at a general meeting in person if represented by its duly authorized representative. Where a duly authorized representative is present at a meeting that shareholder who is a corporate is deemed to be present in person; and the acts of the duly authorized representative are personal acts of that shareholder.

 

 

At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before, or on, the declaration of the result of the show of hands) demanded by the chairman of the meeting or by one or more shareholders present who together hold not less than ten percent of the voting rights of all those who are entitled to vote on the resolution. Unless a poll is so demanded, a declaration by the chairman as to the result of a resolution and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of the outcome of a show of hands, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution.

 

If a poll is duly demanded it shall be taken in such manner as the chairman directs and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

 

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, may, if he wishes, cast a second or casting vote.

 

Meetings of Directors

 

The business of our company is managed by the directors. Our directors are free to meet at such times and in such manner and places within or outside the Cayman Islands as the directors determine to be necessary or desirable. The quorum for the transaction of business at a meeting of directors shall be two unless the directors fix some other number. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented to in writing by all of the directors.

 

Winding Up

 

If we are wound up, the shareholders may, subject to the articles and any other sanction required by the Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:

 

●

to divide in specie among the shareholders the whole or any part of our assets and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholders; and

 

●

to vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up.

 

Calls on Ordinary Shares and forfeiture of Ordinary Shares

 

Subject to the terms of allotment, the directors may make calls on the shareholders in respect of any monies unpaid on their shares including any premium and each shareholder shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made), pay to us the amount called on his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or if no rate is fixed, at the rate of ten percent per annum. The directors may waive payment of the interest wholly or in part.

 

We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder’s estate:

 

●

either alone or jointly with any other person, whether or not that other person is a shareholder; and

 

●

whether or not those monies are presently payable.

 

At any time the directors may declare any share to be wholly or partly exempt from the lien on shares provisions of the articles.

 

 

We may sell, in such manner as the directors may determine, any share on which the sum in respect of which the lien exists is presently payable, if due notice that such sum is payable has been given (as prescribed by the articles) and, within 14 clear days of the date on which the notice is deemed to be given under the articles, such notice has not been complied with.

 

Redemption, Repurchase and Surrender of Ordinary Shares

 

We may issue shares on terms that such shares are subject to redemption, at our option, on such terms and in such manner as may be determined, before the issue of such shares, by our board of directors or by an ordinary resolution of our shareholders.

 

The Companies Act and our memorandum and articles of association permits us to purchase our own shares, subject to certain restrictions and requirements. Subject to the Companies Act and any rights for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:

 

●

issue shares that are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares, on the terms and in the manner our directors determine before the issue of those shares;

 

●

with the consent by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at our option on the terms and in the manner which the directors determine at the time of such variation; and

 

●

purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine at the time of such purchase.

 

Under the Companies Act, the repurchase of any share may be paid out of our Company’s profits, or out of the share premium account, or out of the proceeds of a fresh issue of shares made for the purpose of such repurchase, or out of capital. If the repurchase proceeds are paid out of our Company’s capital, our Company must, immediately following such payment, be able to pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act, no such share may be repurchased (1) unless it is fully paid up, and (2) if such repurchase would result in there being no shares outstanding other than shares held as treasury shares. The repurchase of shares may be effected in such manner and upon such terms as may be authorized by or pursuant to the articles. If the articles do not authorize the manner and terms of the purchase, a company shall not repurchase any of its own shares unless the manner and terms of purchase have first been authorized by a resolution of the company. In addition, under the Companies Act and our memorandum and articles of association, our Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender would result in there being no shares outstanding (other than shares held as treasury shares).

 

Variations of Rights of Shares

 

If at any time, our share capital is divided into different classes of shares, all or any of the rights attached to any class of our shares may (unless otherwise provided by the terms of issue of the shares of that class) be varied with the consent in writing of the holders of two-thirds of the issued shares of that class or with the sanction of a resolution passed by a majority of not less than two-thirds of holders of shares of that class as may be present in person or by proxy at a separate general meeting of the holders of shares of that class.

 

Unless the terms on which a class of shares was issued state otherwise, the rights conferred on the shareholder holding shares of any class shall not be deemed to be varied by the creation or issue of further shares ranking pari passu with the existing shares of that class.

 

Changes in Capital

 

We may from time to time by an ordinary resolution of our shareholders:

 

●

increase our share capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges set out in that ordinary resolution;

 

●

consolidate and divide all or any of our share capital into shares of larger amount than our existing shares;

 

 

●

convert all or any of our paid-up shares into stock, and reconvert that stock into paid up shares of any denomination;

 

●

subdivide our existing shares, or any of them, into shares of a smaller amount than that fixed by the memorandum, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; and

 

●

cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled, or, in the case of shares without nominal par value, diminish the number of shares into which our capital is divided.

 

Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for an order confirming such reduction, reduce its share capital in any manner authorized by the Companies Act.

 

Inspection of Books and Records

 

Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect any account or book or document of the Company except as conferred by the Companies Act or authorized by the Directors or by the Company in general meeting. However, we will provide our shareholders with annual audited financial statements. See “Where You Can Find Additional Information” on page 118.

 

Rights of Non-Resident or Foreign Shareholders

 

There are no limitations imposed by our memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

 

Issuance of additional Ordinary Shares

 

Our articles of association authorizes our Board of Directors to issue additional Ordinary Shares from authorized but unissued shares, to the extent available, from time to time as our board of directors shall determine.

 

Exempted Company

 

We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

 

●

does not have to file an annual return of its shareholders with the Registrar of Companies;

 

●

is not required to open its register of members for inspection;

 

●

does not have to hold an annual general meeting;

 

●

may issue negotiable or bearer shares or shares with no par value;

 

●

may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

 

●

may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

 

●

may register as a limited duration company; and

 

●

may register as a segregated portfolio company.

 

 

“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

 

Differences in Corporate Law

 

The Companies Act and the laws of the Cayman Islands affecting Cayman Islands companies like us and our shareholders differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the material differences between the provisions of the laws of the Cayman Islands applicable to us and the laws applicable to companies incorporated in the United States and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Companies Act applicable to us and the comparable laws applicable to companies incorporated in the State of Delaware in the United States.

 

		Delaware		Cayman Islands
Title of Organizational Documents		Certificate of Incorporation and Bylaws		Certificate of Incorporation and Memorandum and Articles of Association
Duties of Directors		Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of the corporation’s employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the shareholders.		Under the laws of the Cayman Islands, directors have a fiduciary duty to act honestly in good faith with a view to the company’s best interests. Our directors also have a duty to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. A shareholder has the right to seek damages if a duty owed by the directors is breached.
Limitations on Personal Liability of Directors		Subject to the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability of a director to the corporation or its shareholders for monetary damages for a breach of fiduciary duty as a director. Such provision cannot limit liability for breach of loyalty, bad faith, intentional misconduct, unlawful payment of dividends or unlawful share purchase or redemption. In addition, the certificate of incorporation cannot limit liability for any act or omission occurring prior to the date when such provision becomes effective.		The Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of Officers and directors. However, as a matter of public policy, Cayman Islands law will not allow the limitation of a director’s liability to the extent that the liability is a consequence of the director committing a crime or of the director’s own fraud, dishonesty or wilful default.

 

 

		Delaware		Cayman Islands
Indemnification of Directors, Officers, Agents, and Others		A corporation has the power to indemnify any director, officer, employee, or agent of corporation who was, is, or is threatened to be made a party who acted in good faith and in a manner he believed to be in the best interests of the corporation, and if with respect to a criminal proceeding, had no reasonable cause to believe his conduct would be unlawful, against amounts actually and reasonably incurred.		The ability of Cayman Islands companies to provide in their articles of association for indemnification of officers and directors is limited, insofar as it is not permissible for the directors to contract out of the core fiduciary duties they owe to the company, nor would any indemnity be effective if it were held by the Cayman Islands courts to be contrary to public policy, which would include any attempt to provide indemnification against civil fraud or the consequences of committing a crime.
				Our articles of association provide to the extent permitted by law, the directors and officers for the time being of the Company and any trustee for the time being acting in relation to any of the affairs of the Company and their heirs, executors, administrators and personal representatives respectively shall be indemnified out of the assets of the Company from and against all actions, proceedings, costs, charges, losses, damages and expenses which they or any of them shall or may incur or sustain by reason of any act done or omitted in or about the execution of their duty in their respective offices or trusts, except such (if any) as they shall incur or sustain by or through their own wilful neglect or default respectively and no such director, officer or trustee shall be answerable for the acts, receipts, neglects or defaults of any other director, officer or trustee or for joining in any receipt for the sake of conformity or for the solvency or honesty of any banker or other persons with whom any monies or effects belonging to the Company may be lodged or deposited for safe custody or for any insufficiency of any security upon which any monies of the Company may be invested or for any other loss or damage due to any such cause as aforesaid or which may happen in or about the execution of his office or trust unless the same shall happen through the wilful neglect or default of such director, officer or trustee.

 

 

		Delaware		Cayman Islands
Interested Directors		Under Delaware law, a transaction in which a director who has an interest in such transaction would not be voidable if (i) the material facts as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum, (ii) such material facts are disclosed or are known to the shareholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the shareholders, or (iii) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, a director could be held liable for any transaction in which such director derived an improper personal benefit.		Interested director transactions are governed by the terms of a company’s Memorandum and Articles of Association.
Voting Requirements		The certificate of incorporation may include a provision requiring supermajority approval by the directors or shareholders for any corporate action.   In addition, under Delaware law, certain business combinations involving interested shareholders require approval by a supermajority of the non-interested shareholders.		For the protection of shareholders, certain matters must be approved by special resolution of the shareholders as a matter of Cayman Islands law, including alteration of the memorandum or articles of association, appointment of inspectors to examine company affairs, reduction of share capital (subject, in relevant circumstances, to court approval), change of name, authorization of a plan of merger or transfer by way of continuation to another jurisdiction or consolidation or voluntary winding up of the company.   The Companies Act requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the Memorandum and Articles of Association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting.
Voting for election of Directors		Under Delaware law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.		Directors are appointed in accordance with the terms of the Memorandum and Articles of Association of the company.
Cumulative Voting		No cumulative voting for the election of directors unless so provided in the certificate of incorporation.		Our currently effective articles of association do not provide for cumulative voting.

 

 

		Delaware		Cayman Islands
Directors’ Powers Regarding Bylaws		The certificate of incorporation may grant the directors the power to adopt, amend or repeal bylaws.		The Memorandum and Articles of Association may only be amended by a special resolution of the shareholders.
Nomination and Removal of Directors and Filling Vacancies on Board		Shareholders may generally nominate directors if they comply with advance notice provisions and other procedural requirements in company bylaws. Holders of a majority of the shares may remove a director with or without cause, except in certain cases involving a classified board or if the company uses cumulative voting. Unless otherwise provided for in the certificate of incorporation, directorship vacancies are filled by a majority of the directors elected or then in office.		Nomination, appointment and removal of directors and filling of board vacancies are governed by the terms of the Memorandum and Articles of Association.
Mergers and Similar Arrangements		Under Delaware law, with certain exceptions, a merger, consolidation, exchange or sale of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration such shareholder would otherwise receive in the transaction.   Delaware law also provides that a parent corporation, by resolution of its board of directors, may merge with any subsidiary, of which it owns at least 90% of each class of capital stock without a vote by shareholders of such subsidiary. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights.		The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

 

 

		Delaware		Cayman Islands
				Save in certain limited circumstances under the Companies Act of the Cayman Islands, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
				Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement; provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. Dissentient members/creditors are entitled to appear and be heard. At the hearing, the Grand Court considers (in light of any opposition) whether:   ● approval of the scheme was reasonable (whether a reasonable member would have approved it);   ● each class was fairly represented at the meeting;   ●  the majority acted bona fide without coercion of the minority to promote interests adverse to those of the class;   ●   all notice periods were complied with;   ● the resolutions carried by the requisite majority.

 

 

		Delaware		Cayman Islands
Shareholder Suits		Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action.		In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:   ● a company acts or proposes to act illegally or ultra vires;   ● the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and   ●  those who control the company are perpetrating a “fraud on the minority.”
Inspection of Corporate Records		Under Delaware law, shareholders of a Delaware corporation have the right during normal business hours to inspect for any proper purpose, and to obtain copies of list(s) of shareholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation.		Shareholders of a Cayman Islands exempted company have no general right under Cayman Islands law to inspect or obtain copies of a list of shareholders or other corporate records (other than the copies of Memorandum and Articles of Association and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies) of the company. However, these rights may be provided in the company’s Memorandum and Articles of Association.
Shareholder Proposals		Unless provided in the corporation’s certificate of incorporation or bylaws, Delaware law does not include a provision restricting the manner in which shareholders may bring business before a meeting.		Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to table resolutions at a general meeting. However, these rights may be provided in a company’s articles of association. Our articles provide that the directors may whenever they think fit, and they shall on the requisition of Members of the Company holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up capital of the Company as at the date of the deposit carries the right of voting at general meetings of the Company, proceed to convene a general meeting of the Company. If the directors do not within 21 days from the date of the deposit of the requisition duly proceed to convene a general meeting, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three months after the expiration of the said 21 days.

 

 

		Delaware		Cayman Islands
Approval of Corporate Matters by Written Consent		Delaware law permits shareholders to take action by written consent signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting of shareholders.		The Companies Act allows a special resolution to be passed in writing if signed by all the voting shareholders (if authorized by the Memorandum and Articles of Association).
Calling of Special Shareholders Meetings		Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bylaws to call a special meeting of shareholders.		The Companies Act does not have provisions governing the proceedings of shareholders meetings which are usually provided in the Memorandum and Articles of Association.
Dissolution; Winding Up		Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors.		Under the Companies Act and our articles, the Company may be wound up by a special resolution of our shareholders, or if the winding up is initiated by our board of directors, by either a special resolution of our members or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

 

 

SHARES ELIGIBLE FOR FUTURE SALE

 

Rule 144

 

In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares without complying with any of the requirements of Rule 144.

 

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

 

●

1% of the number of ordinary shares; or

 

●

the average weekly trading volume of the ordinary shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

 

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

 

Options Grants

 

Effective on August 1, 2022, Top Wealth (International) Limited (“TW HK”), the Operating Subsidiary, entered into a Corporate Development Consultant Appointment Agreement with Mr. Haitong, CHEN (the “Consultancy Agreement”), in which TW HK appointed Mr. Chen for a term of 10 months commencing from August 1, 2022 to June 30, 2023, subject to extension or early termination, to provide corporate development, project management, and capital financing consultancy services in connection to the Company’s IPO in the United States. Pursuant to the Consultancy Agreement, in addition to a fixed cash remuneration to Mr. Chen, TW HK will also cause TW Cayman to grant stock options to Mr. Chen to acquire an aggregate of 1,080,000 Ordinary Shares of TW Cayman after the Company’s IPO, representing 4% of the Ordinary Shares of TW Cayman issued and outstanding prior to the Offering (the “Consultancy Stock Option”). The options granted to Mr. Chen will vest and become exercisable over a period of three years in three equal tranches, on the first, second, and third anniversary of the date of Company’s listing on Nasdaq capital market. All options shall be exercised after three anniversaries and within 60 months of Company’s listing, otherwise the unexercised options will be null and void. The applicable exercise price for the Consultancy Stock Option that to be granted to Mr. Chen is fifty percent (50%) of the Offering Price per Ordinary Shares offered by the Company.

 

Upon the expiration of the term of the Consultancy Agreement, Mr. Chen and the Company mutually agreed not to extend Consultancy Agreement.

 

 

TAXATION

 

The following summary of material Cayman Islands, Hong Kong, and United States federal income tax consequences of an investment in our Ordinary Shares is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our Ordinary Shares, such as the tax consequences under state, local and other tax laws.

 

Cayman Islands Taxation

 

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is a party to a double tax treaty entered with the United Kingdom in 2010 but is otherwise not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

 

Payments of dividends and capital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporation tax.

 

The Cayman Islands enacted the International Tax Co-operation (Economic Substance) Act (2021 Revision) together with the Guidance Notes published by the Cayman Islands Tax Information Authority from time to time. The Company is required to comply with the economic substance requirements from July 1, 2019 and make an annual report in the Cayman Islands as to whether or not it is carrying on any relevant activities and if it is, it must satisfy an economic substance test.

 

Hong Kong Taxation

 

The following summary of certain relevant taxation provisions under the laws of Hong Kong is based on current law and practice and is subject to changes therein. This summary does not purport to address all possible tax consequences relating to purchasing, holding or selling our Ordinary Shares, and does not take into account the specific circumstances of any particular investors, some of whom may be subject to special rules. Accordingly, holders or prospective purchasers (particularly those subject to special tax rules, such as banks, dealers, insurance companies and tax-exempt entities) should consult their own tax advisers regarding the tax consequences of purchasing, holding or selling our Ordinary Shares. Under the current laws of Hong Kong:

 

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No profit tax is imposed in Hong Kong in respect of capital gains from the sale of the Ordinary Shares.

 

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Revenues gains from the sale of our Ordinary Shares by persons carrying on a trade, profession or business in Hong Kong where the gains are derived from or arise in Hong Kong from the trade, profession or business will be chargeable to Hong Kong profits tax, which is currently imposed at the rate of 16.5% on corporations and at a maximum rate of 15% on individuals and unincorporated businesses.

 

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Gains arising from the sale of Ordinary Shares, where the purchases and sales of the Ordinary Shares are effected outside of Hong Kong such as, for example, on Cayman Islands, should not be subject to Hong Kong profits tax.

 

According to the current tax practice of the Hong Kong Inland Revenue Department, dividends paid on the Ordinary Shares would not be subject to any Hong Kong tax.

 

No Hong Kong stamp duty is payable on the purchase and sale of the Ordinary Shares.

 

 

United States Federal Income Tax Considerations

 

The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our Ordinary Shares by a U.S. Holder (as defined below) that acquires our Ordinary Shares in this offering and holds our Ordinary Shares as “capital assets” (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any U.S. federal income tax considerations described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, and alternative minimum tax considerations, the Medicare tax on certain net investment income, information reporting or backup withholding or any state, local, and non-U.S. tax considerations, relating to the ownership or disposition of our Ordinary Shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:

 

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banks and other financial institutions;

 

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insurance companies;

 

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pension plans;

 

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cooperatives;

 

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regulated investment companies;

 

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real estate investment trusts;

 

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broker-dealers;

 

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traders that elect to use a mark-to-market method of accounting;

 

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certain former U.S. citizens or long-term residents;

 

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tax-exempt entities (including private foundations);

 

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individual retirement accounts or other tax-deferred accounts;

 

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persons liable for alternative minimum tax;

 

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persons who acquire their Ordinary Shares pursuant to any employee share option or otherwise as compensation;

 

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investors that will hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes;

 

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investors that have a functional currency other than the U.S. dollar;

 

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persons that actually or constructively own 10% or more of our Ordinary Shares (by vote or value); or

 

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partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding the Ordinary Shares through such entities,

 

all of whom may be subject to tax rules that differ significantly from those discussed below.

 

Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and the state, local, non-U.S., and other tax considerations of the ownership and disposition of our Ordinary Shares.

 

 

General

 

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Ordinary Shares that is, for U.S. federal income tax purposes:

 

●

an individual who is a citizen or resident of the United States;

 

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a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the laws of the United States or any state thereof or the District of Columbia;

 

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an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

 

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a trust (i) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust, or (ii) that has otherwise validly elected to be treated as a U.S. person under the Code.

 

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If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Ordinary Shares and their partners are urged to consult their tax advisors regarding an investment in our Ordinary Shares.

 

Passive Foreign Investment Company Considerations

 

A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income, or the asset test. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. Passive assets are those which give rise to passive income, and include assets held for investment, as well as cash, assets readily convertible into cash, and working capital. The company’s goodwill and other unbooked intangibles are taken into account and may be classified as active or passive depending upon the relative amounts of income generated by the company in each category. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.

 

Based upon our current and projected income and assets, the expected proceeds from this offering, and projections as to the market price of our Ordinary Shares immediately following this offering, we do not expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a factual determination made annually that will depend, in part, upon the composition and classification of our income and assets, including the relative amounts of income generated by our strategic investment business as compared to our other businesses, and the value of the assets held by our strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the IRS may challenge our classification of certain income and assets as non-passive, which may result in our being or becoming classified as a PFIC in the current or subsequent years. Furthermore fluctuations in the market price of our Ordinary Shares may cause us to be a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our Ordinary Shares from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our anticipated market capitalization immediately following the close of this offering. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the current or future taxable years. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. Under circumstances where our revenues from activities that produce passive income significantly increases relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase.

 

If we are a PFIC for any year during which a U.S. Holder holds our Ordinary Shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Ordinary Shares unless, in such case, we cease to be treated as a PFIC and such U.S. Holder makes a deemed sole election.

 

The discussion below under “— Dividends” and “— Sale or Other Disposition” is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as a PFIC are discussed below under “— Passive Foreign Investment Company Rules.”

 

 

Dividends

 

Any cash distributions paid on our Ordinary Shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. Dividends received on our Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations in respect of dividends-received from U.S. corporations.

 

Individuals and other non-corporate U.S. Holders may be subject to tax on any such dividends at the lower capital gain tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (i) our Ordinary Shares on which the dividends are paid are readily tradable on an established securities market in the United States, (ii) we are neither a PFIC nor treated as such with respect to a U.S. Holder for the taxable year in which the dividend is paid and the preceding taxable year, and (iii) certain holding period requirements are met. We intend to list the Ordinary Shares on Nasdaq Capital Market. Provided that this listing is approved, we believe that the ordinary should generally be considered to be readily tradeable on an established securities market in the United States. There can be no assurance that the Ordinary Shares will continue to be considered readily tradable on an established securities market in later years. U.S. Holders are urged to consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to the Ordinary Shares.

 

For U.S. foreign tax credit purposes, dividends paid on our Ordinary Shares will generally be treated as income from foreign sources and will generally constitute passive category income. The rules governing the foreign tax credit are complex and U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

 

Sale or Other Disposition

 

A U.S. Holder will generally recognize gain or loss upon the sale or other disposition of Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such Ordinary Shares. Such gain or loss will generally be capital gain or loss. Any such capital gain or loss will be long term if the Ordinary Shares have been held for more than one year. Non-corporate U.S. Holders (including individuals) generally will be subject to United States federal income tax on long-term capital gain at preferential rates. The deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes, which could limit the availability of foreign tax credits. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences if a foreign tax is imposed on a disposition of our Ordinary Shares, including the applicability of any tax treaty and the availability of the foreign tax credit under its particular circumstances.

 

Passive Foreign Investment Company Rules

 

If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, Ordinary Shares. Under the PFIC rules:

 

●

the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the Ordinary Shares;

 

●

the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; and

 

●

the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such taxable year.

 

 

As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election with respect to such stock. If a U.S. Holder makes this election with respect to our Ordinary Shares, the holder will generally(i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over the adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Ordinary Shares over the fair market value of such Ordinary Shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to- market election in respect of our Ordinary Shares and we cease to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our Ordinary Shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.

 

The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter, or regularly traded, on a qualified exchange or other market, as defined in applicable United States Treasury regulations. Our Ordinary Shares will be treated as marketable stock upon their listing on Nasdaq Capital Market. We anticipate that our Ordinary Shares should qualify as being regularly traded, but no assurances may be given in this regard.

 

Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

 

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.

 

If a U.S. Holder owns our Ordinary Shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. You should consult your tax advisor regarding the U.S. federal income tax consequences of owning and disposing of our Ordinary Shares if we are or become a PFIC.

 

 

PLAN OF DISTRIBUTION

 

Placement Agent Fees and Expenses; Other Fees

 

Upon the closing of this offering, will pay AC Sunshine Securities, LLC (the “Placement Agent”) a commission of 4.0% of the aggregate gross proceeds raised in this offering. We have also agreed to (i) reimburse the Placement Agent for certain expenses; and (ii) provide a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to the Placement Agent.

 

The following table shows the public offering price, Placement Agent fees, other fees, and proceeds, before expenses, to us, assuming the purchase of all the shares of Ordinary Shares we are offering.

 

		PER SHARE				TOTAL
Public offering price		$	0.4			$	10,800,000
Placement agent commission(1)		$	0.016			$	432,000
Proceeds to the Company before expenses		$	0.384			$	10,368,000

 

(1)

We have agreed to pay AC Sunshine Securities, LLC (the “Placement Agent”) commission of 4.0% of the aggregate gross proceeds raised in this offering. We have also agreed to (i) reimburse the Placement Agent for certain expenses; and (ii) provide a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to the Placement Agent.

 

We estimate that the total expenses of the offering, excluding Placement Agent Commission and non-accountable expense payable to the Placement Agent, will be approximately $393,946, all of which are payable by us.

 

Indemnification

 

We have agreed to indemnify the Placement Agent against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the Placement Agent may be required to make for these liabilities.

 

Regulation M

 

The Placement Agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized on the resale of the securities sold by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, each Placement Agent would be required to comply with the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of our securities by the Placement Agent acting as principal. Under these rules and regulations, the Placement Agent (i) may not engage in any stabilization activity in connection with our securities and (ii) may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.

 

Determination of Offering Price

 

The actual offering price of the securities will be negotiated between us, the Placement Agent, and the prospective investors in the offering based on the trading of our ordinary shares prior to the offering, among other things. Other factors considered in determining the public offering price of the securities we are offering, include our history and prospects, the stage of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment of our management, the general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.

 

 

Electronic Distribution

 

A prospectus in electronic format may be made available on a website maintained by the Placement Agent. In connection with the offering, the Placement Agent or selected dealers may distribute prospectuses electronically. No forms of electronic prospectus other than prospectuses that are printable as Adobe® PDF will be used in connection with this offering.

 

Other than the prospectus in electronic format, the information on the Placement Agent’s website and any information contained in any other website maintained by the Placement Agent is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the Placement Agent in its capacity as placement agent and should not be relied upon by investors.

 

Certain Relationships

 

The Placement Agent and its affiliates may in the future provide, from time to time, investment banking and financial advisory services to us in the ordinary course of business, for which they may receive customary fees and commissions.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for the Ordinary Shares is VStock Transfer, LLC. The transfer agent and registrar’s address is 18 Lafayette Place, Woodmere, NY 11598. 

 

Listing

 

Our Ordinary Shares are listed on the Nasdaq Capital Market under the trading symbol “TWG.”

 

Selling Restrictions

 

Other than in the United States of America, no action has been taken by us or the Placement Agent that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

 

 

ENFORCEABILITY OF CIVIL LIABILITIES

 

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands exempted company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws than the United States and provides less protection for investors. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States.

 

Our constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, among us, our officers, directors and shareholders, be arbitrated.

 

Substantially all of our assets are located outside the United States. In addition, all of our directors and officers are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors.

 

We have appointed Cogency Global Inc. as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.

 

Cayman Islands

 

We have been advised by Ogier, our counsel as to Cayman Islands laws, that it is uncertain whether the courts of the Cayman Islands will (i) recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers predicted upon the securities laws of the United States or any state in the United States. In addition, there is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. We have been further advised by Ogier, our counsel as to Cayman Islands laws, that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, in certain circumstances a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination or re-litigation of matters adjudicated upon, provided such judgment:

 

(a)

is given by a foreign court of competent jurisdiction;

 

(b)

imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;

 

(c)

is final;

 

(d)

is not in respect of taxes, a fine or a penalty;

 

(e)

was not obtained by fraud; and

 

(f)

is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

 

Subject to the above limitations, in appropriate circumstances, a Cayman Islands court may give effect in the Cayman Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.

 

 

British Virgin Islands

 

In addition, there is uncertainty as to whether the courts of the British Virgin Islands would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in the British Virgin Islands against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

 

There is uncertainty with regard to British Virgin Islands law as to whether a judgment obtained from the United States courts under civil liability provisions of the securities laws will be determined by the courts of the British Virgin Islands as penal or punitive in nature. If such a determination is made, the courts of the British Virgin Islands are also unlikely to recognize or enforce the judgment against a British Virgin Islands company. Because the courts of the British Virgin Islands have yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether they would be enforceable in the British Virgin Islands. Although there is no statutory enforcement in the British Virgin Islands of judgments obtained in the federal or state courts of the United States, in certain circumstances a judgment obtained in such jurisdiction may be recognized and enforced in the courts of the British Virgin Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the High Court of the British Virgin Islands, provided such judgment:

 

●

is given by a foreign court of competent jurisdiction and such foreign court had proper jurisdiction over the parties subject to such judgment;

 

●

imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;

 

●

is final;

 

●

no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the British Virgin Islands;

 

●

is not in respect of taxes, a fine, a penalty or similar fiscal or revenue obligations of the company;

 

●

was not obtained in a fraudulent manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the British Virgin Islands.

 

In appropriate circumstances, a BVI Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.

 

Original action in the British Virgin Islands based upon the U.S. federal securities laws

 

If an action is capable of amounting to a cause of action under common law and thus capable of being sustained as a cause of action in itself under English law then it may be possible for such action to be brought in the British Virgin Islands. For example, if the action to be brought in the British Virgin Islands is based on a provision within the U.S. federal securities laws which prohibits fraud, deceit or misrepresentation in the sale of securities, an investor may be able to bring an original action in the British Virgin Islands if the facts and circumstances of their case amount to an action for fraud, misrepresentation or deceit based solely on the common law without reference to or independent of the U.S. federal securities laws.

 

However, where such action can only be based on a particular provision within the U.S. federal securities laws, for example, such action that may relate to strict reporting or registration requirements to particular bodies established under or recognized by such law (such as the SEC); it is very unlikely that such action would have extra-territorial effect unless specifically stated within that law and recognized as having such effect under British Virgin Islands law. Consequently, an investor would not be able to bring such an action in the British Virgin Islands in those circumstances.

 

Hong Kong

 

The judgment of United States courts will not be directly enforced in Hong Kong. There are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the United States. However, the common law permits an action to be brought upon a foreign judgment. That is to say, a foreign judgment itself may form the basis of a cause of action since the judgment may be regarded as creating a debt between the parties to it. In a common law action for enforcement of a foreign judgment in Hong Kong, the enforcement is subject to various conditions, including but not limited to, that the foreign judgment is a final judgment conclusive upon the merits of the claim, the judgment is for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a “competent” court as determined by the private international law rules applied by the Hong Kong courts. The defenses that are available to a defendant in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from the judgment debtor.

 

 

EXPENSES RELATED TO THIS OFFERING

 

Set forth below is an itemization of the total expenses, excluding placement agent’s fees, expected to be incurred in connection with the offer and sale of our securities. Except for the SEC registration fee and the Financial Industry Regulatory Authority Inc. filing fee, all amounts are estimates.

 

SEC Registration Fee		$	3,946
FINRA Filing Fee		$	5,000
Legal Fees and Expenses		$	135,000
Accounting Fees and Expenses		$	10,000
Miscellaneous Expenses		$	240,000
Total Expenses		$	393,946

 

These expenses will be borne by us. Placement agent fees and the non-accountable expense allowance will be borne by us in proportion to the numbers of Ordinary Shares sold in the offering.

 

LEGAL MATTERS

 

We are being represented by Ortoli Rosenstadt LLP with respect to certain legal matters as to U.S. federal securities law. The validity of the Ordinary Shares offered hereby and certain legal matters as to Cayman Islands law will be passed upon for us by Ogier, our counsel as to Cayman Islands law. iTKG Law LLC is acting as U.S. securities counsel to AC Sunshine Securities LLC. Certain legal matters as to Hong Kong law will be passed upon for the Company by David Fong & Co. Ortoli Rosenstadt LLP may rely upon Ogier with respect to matters governed by the law of the Cayman Islands. Certain matters as to Hong Kong law will be passed for AC Sunshine Securities LLC by CFN Lawyers. iTKG Law LLC may rely upon CFN Lawyers with respect to matters governed by Hong Kong law.

 

EXPERTS

 

The consolidated financial statements of Top Wealth Group Holding Limited at December 31, 2023 and 2022, appearing in this prospectus have been audited by OneStop Assurance PAC, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. The offices of OneStop Assurance PAC are located at 10 Anson Road, #13-09 International Plaza, Singapore 079903.

 

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

We have filed with the SEC an annual report and registration statement on Form F-1 (including amendments and exhibits to the registration statement) under the Securities Act with respect to the Ordinary Shares offered hereby. Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits filed therewith. For further information about us and the Ordinary Shares offered hereby, reference is made to the registration statement and the exhibits filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and in each instance we refer you to the copy of such contract or other document filed as an exhibit to the registration statement. However, statements in the prospectus contain the material provisions of such contracts, agreements and other documents.

 

We are subject to periodic reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders under the federal proxy rules contained in Sections 14(a), (b), and (c) of the Exchange Act, and our executive officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

 

In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. A copy of the registration statement and the exhibits filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, NE, Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from that office. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains a website that contains reports, information statements and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.

 

We have maintained our website at https://www.imperialcristalcaviar.com/ and https://ir.imperialcristalcaviar.com. The registration statement and the documents referred to under “Incorporation of Certain Information by Reference” are also available on our website. Information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus.

 

No dealers, salesperson, or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

 

 

Top Wealth Group Holding Limited

 

Reports and Financial Statements

For the years ended December 31, 2023 and 2022

 

Top Wealth Group Holding Limited

 

Reports and Index to Consolidated Financial Information

For the years ended December 31, 2023, 2022 and 2021

 

	Page
Report of independent registered public accounting firm (PCAOB ID: 6732)	F-2
Consolidated balance sheets as of December 31, 202 and 2022	F-3
Consolidated statements of operation and other comprehensive income(loss) for the financial years ended December 31, 2023, 2022 and 2021	F-4
Consolidated statements of changes in shareholders’ equity for the financial years ended December 31, 2023 , 2022 and 2021	F-5
Consolidated statements of cash flows for the financial years ended December 31, 2023, 2022 and 2021	F-6
Notes to the consolidated financial statements for the financial years ended December 31, 2023, 2022 and 2021	F-7 - F-19

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of Top Wealth Group Holding Limited:

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Top Wealth Group Holding Limited together with its subsidiaries (“the Company”) as of December 31, 2023 and 2022, and related consolidated statements of operations and comprehensive income(loss), stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial positions of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. 

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Emphasis of Matter

 

The Company has significant transactions with related parties, which are described in Note 10 to the financial statements. Transactions involving related party cannot be presumed to be carried out on an arm’s length basis, as the requisite conditions of competitive, free market dealings may not exist.

 

/s/ Onestop Assurance PAC

 

We have served as the Company’s auditor since 2022.

 

Singapore

May 29, 2024

 

 

Top Wealth Group Holding Limited

Consolidated balance sheets

(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)

 

		As of December 31
		2023				2022
Assets
Current assets
Cash and cash equivalents		$	134,350			$	217,384
Accounts receivable			5,972,736				33,382
Accounts receivable from related parties			-				6,866
Inventories			153,209				2,071,708
Prepayments			274,417				-
Deposits paid			595,063				586,096
Amount due from a related party			-				63,735
			7,129,775				2,979,171
Non-current assets
Property, plant and equipment, net			134,538				368,197
Right-of-use assets – operating lease			40,421				71,076
Deferred tax assets			44,248				13,725
Total non-current assets			219,207				452,998
Total assets		$	7,348,982			$	3,432,169
Current liabilities
Accounts payable			-				200,608
Accrued expenses and other payables			425,673				60,435
Operating lease liabilities - current			40,421				53,313
Amount due to a related party			160,089				217,779
Borrowings			777,893				-
Current income tax payable			992,270				370,419
Total current liabilities			2,396,346				902,554
Non-current liabilities
Operating lease liabilities – non-current			-				17,763
Total liabilities		$	2,396,346			$	920,317
Commitments and contingencies
Shareholders’ equity
Common stock, $0.0001 par value; 500,000,000 shares authorized, 27,000,000 (2022: 27,000,000)* shares issued and outstanding			2,700				2,700
Additional paid-in capital			641,015				638,326
Retained earnings			4,308,921				1,870,826
Total shareholders’ equity			4,952,636				2,511,852
Total liabilities and equity		$	7,348,982			$	3,432,169

 

*	Giving retroactive effect to all the 27,000,000 shares issued and outstanding after the Pro Rata Share Issuance on October 12, 2023, which has been treated as share split, from the earliest period presented.

 

The accompany notes form an integral part of these consolidated financial statements.

 

 

Top Wealth Group Holding Limited

Consolidated statements of operation and other comprehensive income/(loss)

(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)

 

		For the year ended December 31,
		2023				2022				2021
Sales (including sales to related parties of nil for 2023, $3,142,283 for 2022 and nil for 2021)		$	16,943,287			$	8,512,929			$	19,615
Cost of sales			(11,556,006	)			(4,309,747	)			(4,313	)
Gross profit			5,387,281				4,203,182				15,302
Other income			2				-				-
Selling expenses (including marketing expenses to a related party of nil for 2023, $1,418,141 for 2022 and nil for 2021)			(495,276	)			(1,456,347	)			(11,186	)
Administrative expense			(1,846,759	)			(466,477	)			(21,004	)
Profit (loss) before income tax			3,045,248				2,280,358				(16,888	)
Income tax (expense) credit			(607,153	)			(362,587	)			5,893
Profit and total comprehensive income for the year		$	2,438,095			$	1,917,771			$	(10,995	)
Earnings per share:
Ordinary shares, - basic and diluted		$	0.090			$	0.071			$	(0.001	)
Weighted average shares outstanding used in calculating basic and diluted earnings per share
Ordinary shares, - basic and diluted*			27,000,000				27,000,000				27,000,000

 

*	Giving retroactive effect to all the 27,000,000 shares issued and outstanding after the Pro Rata Share Issuance on October 12, 2023, which has been treated as share split, from the earliest period presented.

 

The accompany notes form an integral part of these consolidated financial statements.

 

 

Top Wealth Group Holding Limited

Consolidated statements of changes in equity

(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)

 

		Common stock outstanding*				Amount				Additional paid-in capital				(Accumulated losses) retained earnings				Total
Balance as of January 1, 2021			27,000,000			$	2,700			$	(2,699	)		$	(35,950	)		$	(35,949	)
Issuance of common stock of Top Wealth International			-				-				12				-				12
Loss and total comprehensive loss for the year			-				-				-				(10,995	)			(10,995	)
Balance as of December 31, 2021			27,000,000			$	2,700			$	(2,687	)		$	(46,945	)		$	(46,932	)
Issuance of common stock of Top Wealth International			-				-				641,013				-				641,013
Profit and total comprehensive income for the year			-				-				-				1,917,771				1,917,771
Balance as of December 31, 2022			27,000,000			$	2,700			$	638,326			$	1,870,826			$	2,511,852
Pro Rata Share Issuance deemed as share split			-				-				2,699				-				2,699
Deemed capital reduction in reorganisation			-				-				(10	)			-				(10	)
Profit and total comprehensive income for the year			-				-				-				2,438,095				2,438,095
Balance as of December 31, 2023			27,000,000			$	2,700			$	641,015			$	4,308,921			$	4,952,636

 

*	Giving retroactive effect to all the 27,000,000 shares issued and outstanding after the Pro Rata Share Issuance on October 12, 2023, which has been treated as share split, from the earliest period presented.

 

The accompany notes form an integral part of the consolidated financial statements.

 

 

Top Wealth Group Holding Limited

Consolidated statements of cash flows

(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)

 

		For the years ended December 31,
		2023				2022				2021
Cash flows from operating activities
Net profit (loss)		$	2,438,095			$	1,917,771			$	(10,995	)
Adjustments for:-
Depreciation of property, plant and equipment			233,659				173,215				2,484
Deferred tax credit			(30,523	)			(7,832	)			(5,893	)
Changes in operating assets and liabilities:
Accounts receivable			(5,932,488	)			(40,219	)			(29	)
Inventories			1,918,499				(1,822,381	)			(249,327	)
Prepayments			(274,417	)			-				-
Deposits paid			(8,967	)			(586,096	)			-
Accounts payable			(200,608	)			200,608				-
Accrued expenses and other payables			365,238				23,474				34,397
Amounts due with related parties			6,045				(108,699	)			292,878
Current income tax payable			621,851				370,419				-
Net cash (used in) provided by operating activities			(863,616	)			120,260				63,515
Cash flows from investing activities
Acquisition of property, plant and equipment			-				(481,173	)			(62,723	)
Net cash used in investing activities			-				(481,173	)			(62,723	)
Cash flows from financing activities
Proceeds from borrowings			777,893				-				-
Deemed capital reduction on reorganization			(10	)			-				-
Proceeds from Pro Rata Share Issuance deemed as share split			2,699				-				-
Proceeds from issuance of shares of Top Wealth International			-				576,912				12
Net cash provided by financing activities			780,582				576,912				12
(Decease) increase in cash and cash equivalents			(83,034	)			215,999				804
Cash and cash equivalents at beginning of year			217,384				1,385				581
Cash and cash equivalents at end of year		$	134,350			$	217,384			$	1,385
Analysis of the balance of cash and cash equivalents
Bank balances		$	134,350			$	217,384			$	1,385

 

The accompany notes form an integral part of the consolidated financial statements.

 

 

Top Wealth Group Holding Limited

Notes to the consolidated financial statements

For the years ended December 31, 2023 and 2022

 

1.	General information and basis of operation

 

Top Wealth Group Holding Limited is a limited liability company incorporated in incorporated in the Cayman Islands. Top Wealth Group Holding Limited together with its subsidiaries are defined as the “Company”. As of the date of this report, the Company immediate and ultimate parent company is Winwin Development Group Limited (“Winwin”). As of the date of this report, Winwin is 90% owned by Mr. Wong Kim Kwan Kings and 10% owned by Mr. Chong Kin Fai. As of the date of this report, details of the Company and its subsidiaries are as follows:

 

Name of entity		Date of incorporation		Holding company		Nature of business
Top Wealth Group Holding Limited		February 1, 2023		Winwin Development Group Limited		Investment holding
Top Wealth (BVI) Group Limited		January 18, 2023		Top Wealth Group Holding Limited		Investment holding
Top Wealth Group (International) Limited		September 22, 2009		Top Wealth (BVI) Group Limited		Trading of caviar

 

On March 21, 2023, the Company acquired 100% interest in Top Wealth (BVI) Group Limited (“Top Wealth BVI”), a company incorporated in the British Virgin Islands, at a nominal value of US$10 from the shareholders of Winwin. On March 24, 2023, the Company, through Top Wealth BVI, acquired 100% interest in the Top Wealth Group (International) Limited (“Top Wealth International”), a company incorporated and operating in Hong Kong, at a nominal consideration of US$10 from the shareholders of Winwin.

 

On April 28, 2023, 650 ordinary shares were issued at par value.

 

On October 12, 2023, in contemplation of Company’s initial public offering, the Company further issued 26,999,250 ordinary shares in aggregate to its shareholders at par value, on a pro rata basis proportional to the shareholders’ existing equity interests (collectively refers as the “Pro Rata Share Issuance”), which have been treated as share split. After the Pro Rata Share Issuance, 27,000,000 Ordinary Shares are issued and outstanding.

 

As of December 31, 2023, the Company’s shareholders were as follows:

 

Name of shareholder		Percentage of interest
Winwin Development Group Limited			74.67
Beyond Glory Worldwide Limited			4.40
Keen Sky Global Limited			4.93
State Wisdom Holdings Limited			4.93
Snow Bear Capital Limited			3.33
Mercury Universal Investment Limited			4.54
Greet Harmony Global Limited			3.20

 

Top Wealth International have been trading Caviar. During the periods covered in these consolidated financial statements, the control of the entities has remained consistent, with Top Wealth Group Holding Limited always exercising control. Consequently, the combination has been considered as a corporate restructuring (“Reorganization”) of entities under common control. In compliance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods during which they were under common control. The current capital structure is retroactively reflected in prior periods as if it had existed at that time.

 

The consolidation of Top Wealth Group Holding Limited and its subsidiaries has been accounted for at historical cost and prepared as if the aforementioned transactions had been effective from the beginning of the first period presented in the accompanying consolidated financial statements.

 

 

2.	Significant accounting policies

 

Basis of Presentation and Consolidation —The consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”), and include the accounts of the Company and its consolidated and wholly owned subsidiaries. The consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions.

 

Use of Estimates—The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the recorded amounts of assets, liabilities, shareholders’ equity, revenues and expenses during the reporting period, and the disclosure of contingent liabilities at the date of the consolidated financial statements.

 

On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. The most significant estimates include allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment for property and equipment, valuation allowance for deferred tax assets, accruals for potential liabilities and contingencies. Actual results could vary from the estimates and assumptions that were used.

 

Cash and Cash Equivalents— Cash and cash equivalents consist of the Company’s demand deposit placed with financial institutions, which have original maturities of less than three months and unrestricted as to withdrawal and use. The Hong Kong government provides a guarantee for deposits held in each bank up to HK$500,000 (approximately $64,000). As a result, an amount of $70,350 is not covered by this guarantee.

 

Property and Equipment— Property and equipment included equipment and leasehold improvement and are stated at cost less accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of depreciable assets at the following rate:

 

Equipment		5 to 10 years
Leasehold improvement		Over the lease term

 

Cost and accumulated depreciation for property retired or disposed of are removed from the accounts, and any resulting gain or loss is included in earnings. Expenditures for maintenance and repairs are charged to expense as incurred.

 

Impairment of Long-Lived Assets— We evaluate our long-lived assets, including property, plant and equipment and right-of-use assets – operating lease  with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, we evaluate the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, we recognize an impairment loss based on the excess of the carrying amount of the assets over their fair value. There were no impairment recognised for the years ended December 2023 and 2022.

 

Accounts Receivable and Allowance for Doubtful Accounts— Accounts receivable are carried at the original invoiced amount. Accounts receivable are reviewed for impairment on a quarterly basis and are presented net of an allowance for expected credit losses. The allowance for expected credit losses is estimated based on the Company’s analysis of amounts due, historical delinquencies and write-offs, and current economic conditions, together with reasonable and supportable forecasts of short-term economic conditions. The allowance for expected credit losses is recognized in net income (loss) and any adjustment to the allowance for expected credit losses is recognized in the period in which it is determined. Write-offs of accounts receivable, together with associated allowances for expected credit losses, are recognized in the period in which balances are deemed uncollectible. The Company does not have a history of significant write-offs. As of December 31, 2023 and 2022, the total allowance for expected credit losses on the Company’s accounts receivable were Nil and Nil.

 

Income Taxes— Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss, capital loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

 

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses.

 

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

Revenue Recognition—The Company recognizes revenue in accordance with Accounting Standards Update 2014-09, “Revenue from contracts with customers,” (Topic 606). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company’s revenue is from sales of products. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied. Generally, the Company’s performance obligations are transfer of products title to customers at a point in time, typically upon delivery.

 

The Company has two streams of revenue:

 

1. the sale of caviar products in Hong Kong.

 

2. the sale of wine in Hong Kong

 

An analysis of their revenue is set out below:

 

		Years ended December 31,
		2023				2022				2021
Sale of caviar products		$	12,483,195			$	8,512,929			$	19,615
Sale of wine			4,460,092				-				-
Total		$	16,943,287			$	8,512,929			$	19,615

 

Inventories - The cost of inventories is computed according to the weighted average method. Cost includes the costs of purchases and materials. Inventories are evaluated based on individual inventory items. Reserves are established to reduce the value of inventories to the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period. The Company calculates provisions based on the expiry date. Management provides full provision of for those inventories that would expire within 6 months. There can be no assurance that the amount ultimately realized for inventories will not be materially different than that assumed in the calculation of the provisions. There were no provision recognised for the years ended December 2023 and 2022.

 

Leases— Under ASC Top 842, “Leases”, the Company determines if an agreement is a lease at inception. Operating leases are included in operating lease – right to use, current portion of operating lease liability, and operating lease liability, less current portion in the Company’s consolidated balance sheets.

 

As permitted under ASU Topic 842, the Company has made an accounting policy election not to apply the recognition provisions of ASU 2016-02 to short term leases (leases with a lease term of 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term.

 

 

Foreign Currency Translation - The Company’s principal country of operations is Hong Kong. The financial position and results of its operation are determined using Hong Kong Dollars (“HK$”), the local currency, as the functional currency. The Company’s consolidated financial statements are reported using U.S. Dollar (“US$” or “$”).

 

The consolidated statements of income and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of exchange prevailing at the balance sheet date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. As the cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

 

The following table outlines the currency exchange rates that were used in preparing the accompanying consolidated financial statements:

 

		December 31,
		2023				2022				2021
USD to HK$ Year End			7.8				7.8				7.8
USD to HK$ Average Rate			7.8				7.8				7.8

 

Pension Obligations - The Company provides for defined contribution plan in accordance with the Mandatory Provident Fund Schemes Ordinance in Hong Kong. A defined contribution plan generally specifies the periodic amount that the employer must contribute to the plan and how that amount will be allocated to the eligible employees who perform services during the same period.

 

Segment Reporting and Reporting Units - As of December 31, 2023, the Company operated in Hong Kong through its subsidiaries, which primarily engaged in trading of caviars.

 

Management determined that the Company functions as a single operating segment, and thus reports as a single reportable segment. This determination is based on rules prescribed by GAAP applied to the manner in which management operates the Company. The chief operating decision maker is responsible for allocating resources to its operations and assessing performance and obtains financial information, being the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows, about the Company as a whole.

 

Fair Value Measurements - Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are classified using the following hierarchy:

 

●

Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

 

●

Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.

 

●

Level 3. Inputs are unobservable for the asset or liability and include situations in which there is little, if any, market activity for the asset or liability. The inputs used in the determination of fair value are based on the best information available under the circumstances and may require significant management judgment or estimation.

 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses reflected as current assets and current liabilities. Due to the short-term nature of these instruments, management considers their carrying value to approximate their fair value.

 

 

Related parties – We adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

 

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of their immediate families and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

New accounting standards

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13 (Topic 326), Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires an asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance became effective for the Company beginning January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

 

On December 14, 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). In addition, public business entities are required to provide certain qualitative disclosures about the rate reconciliation and the amount of income taxes paid (net of refunds received) disaggregated (1) by federal (national), state, and foreign taxes and (2) by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). For public business entities, the standard is effective for annual periods beginning after December 15, 2024. The amendments in this ASU require a cumulative effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company is evaluating the impact of this standard on the Company’s consolidated financial statements.

 

We have evaluated all the recently issued, but not yet effective, accounting standards that have been issued or proposed by the Financial Accounting Standards Board or other standards-setting bodies through the date of this report and do not believe the future adoption of any such standards will have a material impact on our consolidated financial statements.

 

3.	Accounts receivable

 

		At December 31,
		2023				2022
Accounts receivable from third parties		$	5,972,736			$	33,382
Accounts receivable from related parties			-				6,866
Total accounts receivable			5,972,736				40,248
Allowance			-				-
		$	5,972,736			$	40,248

 

Accounts receivable increase significantly as there was $5,390,276 revenue in December 2023. As of the date of this report, US$5,432,603 has been collected.

 

 

4.	Inventories

 

		At December 31,
		2023				2022
Finished products		$	153,209			$	2,071,708
Allowance			-				-
		$	153,209			$	2,071,708

 

5.	Deposits paid

 

The deposits mainly related to refundable security deposit to supplier of sturgeon farm and lease agreement of officers and processing factory in Hong Kong. Deposits are to be recovered when the Company terminated the supplier agreement and upon the expiry of the leases respectively.

 

6.	Property, plant and equipment

 

		At December 31,
		2023				2022
Equipment		$	104,294			$	104,294
Leasehold improvement			439,602				439,602
Property, plant and equipment			543,896				543,896
Accumulated depreciation			(409,358	)			(175,699	)
		$	134,538			$	368,197

 

Depreciation included in:

 

		Years ended December 31,
		2023				2022
Administrative expense		$	233,659			$	173,215

 

7.	Accrued expenses and other payables

 

Accrued expenses and other payables mainly represents accrued salaries and other payables for professional fees.

 

8.	Borrowings

 

During the year ended December 31, 2023, the Company has established two unsecured, interest-free standby bridging loan facilities. One, obtained from a minority shareholder, has a facility limit of US$1,000,000, of which US$429,065 has been drawn down to date and the other, from an independent third party, is set at US$500,000, of which US$348,828 has been drawn down. Both facilities are due for repayment within one year from the date of the initial drawdown.

 

 

6.

Leases

 

The Company has operating leases for office and warehouse storage. The Company’s leases have remaining lease terms of 1 to 2 years.

 

As of December 31, 2022, the Company has no additional material operating leases that have not yet commenced.

 

The following tables provide information about the Company’s operating leases.

 

		As of December 31,
Right-of-use asset – operating lease		2023				2022
Cost		$	147,539			$	131,138
Accumulated amortisation			(107,118	)			(60,062	)
Total lease cost		$	40,421			$	71,076

 

Other information		Years ended December 31,
		2023				2022
New right-of-uses asset – operating lease and lease liabilities recognized		$	45,992			$	102,280
Cash paid for amounts included in the measurement of operating lease liabilities			79,769				57,128
Weighted-average remaining lease term - operating leases			0.5 years				1.5 years
Weighted-average discount rate - operating leases			5.625	%			5	%

 

Maturities of operating lease liabilities (undiscounted cash flows) are as follows:

 

		Maturities
2024		$	41,141
Total operating lease payments			41,141
Less imputed interest			(720	)
Total operating lease liabilities		$	40,421

 

7.	Income tax

 

The Company and its subsidiaries are subject to income taxes on an entity basis on income derived from the location in which each entity is domiciled.

 

The Company and its subsidiary, Top Wealth BVI, are domiciled in the Cayman Islands and the British Virgin Islands respectively. Both companies currently enjoy permanent income tax holidays; accordingly, both companies do not accrue for income taxes.

 

 

The Company’s operating subsidiary, Top Wealth International incorporated in Hong Kong is subject to an income tax rate of 8.25% for first HK$2,000,000 assessable profits and 16.5% for the assessable profits thereafter.

 

		Years ended December 31,
Provision for income tax		2023				2022				2021
Current
Hong Kong		$	669,016			$	370,419			$	-
Over provision in previous years			(31,340	)			-				-
			637,676				370,419				-
Deferred
Hong Kong			(34,998	)			(7,832	)			(5,893	)
Under provision in previous years			4,475				-				-
			(30,523	)			(7,832	)			(5,893	)
Total		$	607,153			$	362,587			$	(5,893	)

 

Numerical reconciliation of income tax expenses to prima facie tax payable:

 

		Years ended December 31,
		2023				2022				2021
Profit (loss) before income tax		$	3,045,248			$	2,280,358			$	(16,888	)
Tax effect at the Hong Kong profits tax rate of 16.5%			502,466				376,259				(2,787	)
Tax effect of preferential tax rate			(21,154	)			(21,154	)			-
Tax effect of tax loss not previously recognized			-				-				(3,106	)
Non-deductible expenditure			153,475				8,251				-
Over provision in previous years			(26,865	)			-				-
Tax effect of tax reduction			(769	)			(769	)			-
Total		$	607,153			$	362,587				(5,893	)

 

Effective income tax rate (%)

 

		Years ended December 31,
		2023				2022				2021
Effective income tax rate – Hong Kong			19.94	%			15.9	%			14.9	%

 

There were no material unrecognised temporary differences.

 

 

The components of deferred tax assets and liabilities and their movements were as follows:

 

		Tax losses				Depreciation allowance				Total
Balance as of January 1, 2022		$	(12,521	)		$	6,628			$	(5,893	)
Charged (credited) to statement of operations			12,521				(20,353	)			(7,832	)
Balance as of December 31, 2022		$	-			$	(13,725	)		$	(13,725	)
Credited to statement of operations			-				(30,523	)			(30,523	)
Balance as of December 31, 2023		$	-			$	(44,248	)		$	(44,248	)

 

8.	Commitments and contingencies

 

In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable.

 

The Company entered into a 10-month consultant agreement with a third party on August 1, 2022 to assist the Company in planning, coordination and implementation of corporate development as well as capital financing strategies. There are two components of this service agreement, first component is fixed fee amounted HKD 1,000,000 (US$128,205), payable with 5 working days upon successful listing. This amount has been accrued during six months period ended June 30, 2023, and the second component is stock option. The option is contingent upon the occurrence of a future event, i.e., successful initial public offering. The Company will grant   the consultant stock option equivalent to 4% of total number of shares of the Company before public offering with the exercise price at 50% discount of the public offering price.

 

As the compensation cost is contingent upon the occurrence of a performance condition (i.e., the successful initial public offering), the compensation cost shall not be recognized until the performance condition becomes probable in accordance with ASC 718-10-30-28.

 

Upon the initial public offering completed on April 18, 2024, the Company paid up the fixed fee of US$128,205 and the stock option was vested to the consultant. The fair value of this stock option recognised on April 18, 2024 is US$470,148.

 

In the opinion of management, there were no pending or threatened claims and litigation as of December 31, 2023 and through the issuance date of these consolidated financial statements.

 

9.	Supplemental Cash Flow Information

 

Payments for interest and income taxes were as follows:

 

		Years ended December 31,
		2023				2022				2021
Interest		$	-			$	-			$	-
Income taxes		$	15,825			$	-			$	-

 

 

10.	Related party transactions

 

During 2023, the Company had following related party transactions:

 

Name		Amount				Relationship		Note
Chong Kin Fai		$	63,735			A former director and principal owner of the Company		Repayment of unsecured interest free loan payable, repayable on demand
Wong Kim Kwan Kings		$	57,690			Director and controlling shareholder of the Company		Repayment of unsecured interest free loan payable, repayable on demand
Snow Bear Capital Limited		$	429,065			Shareholder of the Company		Proceeds from unsecured interest free loan payable, repayable within one year from drawdown.

 

During 2022, the Company had following related party transactions:

 

Name		Amount				Relationship		Note
Beauty & Health International Company Limited (Customer B) (note a)		$	1,281,077			A company under common control		Revenue - sale of caviar
Beauty & Health International E-Commerce Limited (Customer C) (note b)			1,063,334			A company under common control		Revenue - sale of caviar
Mother Nature Health (HK) Limited (Customer E) (note b)			797,872			The Company’s former director  was also this related company’s former director		Revenue - sale of caviar
Sky Channel Management Limited (note d)			1,418,141			The Company’s principal owner was a former director of this related company		Marketing expense
Chong Kin Fai			(898	)		A former director and principal owner of the Company		Proceeds from unsecured interest free loan payable, repayable on demand
Chong Kin Fai			64,101			A former director and principal owner of the Company		Amount receivable for issuance of common stock in Top Wealth International as of December 31, 2022. The amount was paid on May 13, 2023.
Wong Kim Kwan Kings			(467,315	)		Director and controlling shareholder of the Company		Proceeds from unsecured interest free loan payable, repayable on demand
Wong Kim Kwan Kings			576,912			Director and controlling shareholder of the Company		Conversion of unsecured interest free loan payable, repayable on demand into common stock in Top Wealth International

 

During 2021, the Company had following related party transactions:

 

Name		Amount				Relationship		Note
Chong Kin Fai			532			A former director and principal owner of the Company		Cash advanced for unsecured interest free loan receivable, repayable on demand
Wong Kim Kwan Kings			(293,410	)		Director and controlling shareholder of the Company		Proceeds from unsecured interest free loan payable, repayable on demand

 

 

As of December 31, 2023, the Company had the following balances due with related parties:

 

Name		Amount				Relationship		Note
Wong Kim Kwan Kings		$	160,089			Director and controlling shareholder of the Company		Unsecured interest free loan payable, repayable on demand
Snow Bear Capital Limited		$	429,065			Shareholder of the Company		Unsecured interest free loan payable, repayable within one year from draw down

 

As of December 31, 2022, the Company had the following balances due with related parties:

 

Name		Amount				Relationship		Note
Mother Nature Health (HK) Limited (Customer E) (note c)		$	5,436			The Company’s former director was also this related company’s former director		Account receivable
Chong Kin Fai		$	63,735			A former director and principal owner of the Company		Unsecured interest free loan receivable, repayable on demand
Wong Kim Kwan Kings		$	(217,779	)		Director and controlling shareholder of the Company		Unsecured interest free loan payable, repayable on demand

 

Note:

 

(a)	The transaction with this related party was ceased after August 31, 2022.

 

(b)	The transaction with this related party started on September 3, 2022. The controlling shareholder disposed all of his interest in this related party on 28 August 2022. These transactions were not considered as related party transactions in the year ended December 31, 2023

 

(c)	The transaction with this related party started on January 27, 2022. The former director of the Company resigned on February 10, 2022. These transactions were not considered as related party transactions in the year ended December 31, 2023.

 

(d)	The transaction with this related party was ceased after December 31, 2022.

 

11.	Concentration and risks

 

The Company is not exposed to significant financial risks other than the concentration risk, which is analysed as follows:

 

Customers

 

Customers who accounted for 10% or more of the Company’s revenues or with significant outstanding receivables are analysed as follows:

 

		Revenue for years ended December 31,												Balance as of December 31,
		2023				2022				2021				2023				2022
Customer A			25	%			37	%			-	%			8	%			46	%
Customer B			-				15				-				-				-
Customer C			-				12				-				-				4
Customer D			-				18				-				-				22
Customer E			35				9				-				40				13
Customer F			-				4				-				-				15
Customer G			16				-				-				9				-
Customer H			8				-				-				14				-
Customer I			5				-				-				13				-
Customer J			8				-				-				16				-
			97	%			95	%			-	%			100	%			100	%

 

 

Major suppliers

 

Suppliers who accounted for 10% or more of the Company’s purchase or with significant outstanding payable are analysed as follows:

 

		Purchase for years ended December 31,												Balance as of December 31,
		2023				2022				2021				2023				2022
Supplier A			64	%			90	%			100	%			100	%			100	%
Supplier B			36				10				-				-				-
			100	%			100	%			100	%			100	%			100	%

 

The Company has an exclusive supply agreement with a sturgeon farm and all purchases of caviar were made from the this supplier.

 

The Company recognizes that its dependence on a single supplier for caviar represents a significant business risk. The Company closely monitors its relationship with the exclusive supplier to ensure that the quality of products received remains high and that the risk of supply disruptions is minimized.

 

The Company has significant trading in wine, which is currently sourced from a single supplier. However, wine could be sourced from many channels. Also, the trading of wine is not our major business. The management believe the risk to the Company is not significant.

 

12.

Equity

 

Ordinary Shares

 

The Company is authorized to issue one class of ordinary share. The Company was established under the laws of Cayman Islands (the Cayman law) on February 1, 2023 with authorized share of 500,000,000 ordinary shares of par value US$0.0001 each.

 

Upon incorporation, 1 ordinary share of US$0.0001 was issued a par.

 

On March 1, 2023, 99 ordinary shares of US$0.0001 each were issued at par. All these ordinary shares rank pari-passu with the exiting share in all respect.

 

On April 28, 2023, 650 ordinary shares of US$0.0001 each were issued at par. All these ordinary shares rank pari-passu with the exiting shares in all respect.

 

On October 12, 2023, in contemplation of Company’s initial public offering, the Company further issued 26,999,250 ordinary shares in aggregate to its shareholders at par value, on a pro rata basis proportional to the shareholders’ existing equity interests (collectively refers as the “Pro Rata Share Issuance”). After the Pro Rata Share Issuance, 27,000,000 Ordinary Shares are issued and outstanding. All these ordinary shares rank pari-passu with the exiting shares in all respect. This Pro Rata Share Issuance has treated as share split.

 

As of the December 31, 2023, 27,000,000 ordinary shares were issued and outstanding.

 

 

The Company is authorized to issue one class of ordinary share.

 

The holders of the Company’s ordinary share are entitled to the following rights:

 

Voting Rights: Each share of the Company’s ordinary share entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders. Holders of the Company’s ordinary shares are not entitled to cumulative voting rights with respect to the election of directors.

 

Dividend Right: Subject to limitations under the Cayman law and preferences that may apply to any shares of preferred stock that the Company may decide to issue in the future, holders of the Company’s ordinary share are entitled to receive rateably such dividends or other distributions, if any, as may be declared by the Board of the Company out of funds legally available therefor.

 

Liquidation Right: In the event of the liquidation, dissolution or winding up of our business, the holders of the Company’s ordinary share are entitled to share rateably in the assets available for distribution after the payment of all of the debts and other liabilities of the Company, subject to the prior rights of the holders of the Company’s preferred stock.

 

Other Matters: The holders of the Company’s ordinary share have no subscription, redemption or conversion privileges. The Company’s ordinary share does not entitle its holders to pre-emptive rights. All of the outstanding shares of the Company’s ordinary share are fully paid and non-assessable. The rights, preferences and privileges of the holders of the Company’s ordinary share are subject to the rights of the holders of shares of any series of preferred stock which the Company may issue in the future.

 

13.	Subsequent event

 

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that these consolidated financial statements were available to be issued, there was no other subsequent event that required recognition or disclosure.

 

 

Up to 27,000,000 Ordinary Shares

 

Top Wealth Group Holding Limited

 

PROSPECTUS

 

 

October 11, 2024

 

 

 

 

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