F-1/A: Concorde International Group Seeks Waiver for IPO Financial Statement Requirements

Concorde International Group Ltd requests a waiver from the SEC regarding the 12-month financial statement requirement for its initial public offering.

Summary

• Concorde International Group Ltd is seeking a waiver from the SEC concerning Item 8.A.4 of Form 20-F, which requires audited financial statements to be no older than 12 months from the filing date for an IPO.
• The company is filing Amendment No. 5 to its Registration Statement on Form F-1 related to its proposed IPO of Class A ordinary shares.
• The company included audited consolidated financial statements for the years ended December 31, 2023 and 2022, and unaudited interim consolidated financial statements as of June 30, 2024, and for the six-month periods ended June 30, 2024 and 2023.
• The company argues that complying with the 12-month requirement is impracticable and involves undue hardship.
• Concorde International Group Ltd represents that it is not a public reporting company in any jurisdiction and is not required to prepare audited interim financial statements outside the United States.
• The company anticipates that its audited financial statements for the year ended December 31, 2024, will not be available until April 2025.
• The company commits to not seeking effectiveness of its registration statement if its audited financial statements are older than 15 months at the time of the IPO.
• In March 2024, the company issued 20,788,886 Class B Ordinary Shares to board members, executive officers, and existing shareholders as part of a share-based compensation plan, valued at $4 per share.
• Softbank Robotics Singapore Pte Ltd subscribed to a USD1,000,000 convertible note with a 24 month maturity period with the Company on June 10, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company is seeking a waiver, which could be seen as a negative, they are also taking steps to proceed with their IPO and have secured funding through a convertible note. The company is also issuing shares as part of a share-based compensation plan.

Positives

• The company is proactively addressing potential compliance issues with the SEC.
• The company is transparently disclosing related party transactions, such as share issuances to board members and executive officers.
• The company has secured a $1,000,000 convertible note from Softbank Robotics Singapore Pte Ltd, indicating investor confidence.

Negatives

• The company's need for a waiver suggests potential difficulties in meeting standard financial reporting timelines.
• The audited financial statements for the year ended December 31, 2024, will not be available until April 2025, which could delay the IPO.
• Issuance of Class B Ordinary Shares to board members, executive officers, and existing shareholders as part of a share-based compensation plan could dilute ownership.

Risks

• The SEC may not grant the requested waiver, potentially delaying or complicating the IPO process.
• The delay in the availability of audited financial statements for 2024 could impact investor confidence.
• The convertible note held by Softbank Robotics Singapore Pte Ltd could lead to dilution upon conversion.
• Indemnification of directors and officers for liabilities arising under the Securities Act may be unenforceable, creating potential legal risks.

Future Outlook

The company anticipates its audited financial statements for the year ended December 31, 2024, will not be available until April 2025 and will not seek effectiveness of its registration statement if its audited financial statements are older than 15 months at the time of the IPO.

Management Comments

• Swee Kheng Chua, Chief Executive Officer, signed the letter requesting the waiver and the Amendment No. 5 to Form F-1.

Industry Context

The request for a waiver highlights the challenges some international companies face in aligning their financial reporting timelines with U.S. SEC requirements for IPOs. This is a common issue, particularly for companies not already subject to U.S. reporting standards.

Comparison to Industry Standards

• Many companies pursuing IPOs aim to have audited financial statements as current as possible to attract investors.
• The standard practice is to have audited financials within 12 months of the filing date, as stipulated by Item 8.A.4 of Form 20-F.
• The company's request for a waiver due to the unavailability of 2024 financials until April 2025 is not uncommon, but it deviates from the ideal scenario.
• Comparable companies like DiDi Global faced similar scrutiny regarding financial reporting and regulatory compliance during their IPO process.

Related Party Transactions

• On March 18, 2024, 20,788,886 Class B Ordinary Shares were issued to members of our Board, executive officers or their affiliates and existing shareholders as part of the share-based compensation plan, with the fair value recognized through comprehensive loss.
• Swee Kheng Chua, our Chief Executive Officer and Director, was issued 18,000,000 Class B Ordinary Shares.
• Terence Wing Khai Yap, our Director, was issued 250,000 Class B Ordinary Shares.
• Sze Yin Ong, our Chief Financial Officer, was issued 46,296 Class B Ordinary Shares.
• Ping Ping Lim, Swee Kheng Chua's spouse, was issued 377,775 Class B Ordinary Shares.
• Jia Wei Chua, Swee Kheng Chua's son, was issued 14,815 Class B Ordinary Shares.
• Meang Fai Pang, freelance contractor of the Company and a close associate of Swee Kheng Chua, was issued 14,815 Class B Ordinary Shares.
• Weilekai Investments Pte Ltd, a Singapore company 50% owned by Swee Kheng Chua and 50% owned by Ping Ping Lim, Spouse of Swee Kheng Chua, was issued 2,000,000 Class B Ordinary Shares.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of Class B Ordinary Shares.
• Employees who are part of the share-based compensation plan will benefit from the issuance of Class B Ordinary Shares.
• Potential investors will need to consider the implications of the waiver request and the timing of financial reporting.
• The IPO will provide the company with additional capital to fund its operations and growth.

Next Steps

• The company awaits the SEC's decision on the waiver request.
• The company will proceed with the IPO process, contingent on SEC approval and market conditions.
• The company will prepare and file its audited financial statements for the year ended December 31, 2024, by April 2025.

Key Dates

Keywords

IPO, waiver, financial statements, SEC, Concorde International Group, registration statement, convertible note, Class A ordinary shares, Class B ordinary shares, audited, unaudited