F-1/A: Decent Holding Inc. Seeks Waiver for IPO Financial Statement Requirements, Files Amendment No. 2 to Registration Statement

Decent Holding Inc. requests a waiver from the SEC regarding the 12-month requirement for audited financial statements in its IPO, citing impracticability and undue hardship.

Summary

• Decent Holding Inc., a Cayman Islands-based company, has filed an amendment to its registration statement for a proposed initial public offering in the United States.
• The company is requesting a waiver from the SEC regarding the requirement to include audited financial statements not older than 12 months from the offering date.
• Decent Holding Inc. states that complying with this 12-month requirement is impracticable and involves undue hardship.
• The company represents that it is not a public reporting company in any jurisdiction and is not required to prepare audited financial statements for any interim period outside the U.S.
• The company anticipates that its audited financial statements for the fiscal year ending October 31, 2024, will not be available until February 2025.
• Decent Holding Inc. assures that it will not seek effectiveness of the registration statement if its audited financial statements are older than 15 months at the time of the IPO.
• The company is offering 1,500,000 ordinary shares with an expected initial public offering price between $4.00 and $4.50 per share.
• The company intends to list its Ordinary Shares on the Nasdaq Capital Market under the symbol DXST.
• The offering is contingent upon the company listing its Ordinary Shares on Nasdaq or another national exchange.
• The company is a holding company with operations conducted by its subsidiaries based in China.
• The company has completed the record filing requirement with the China Securities Regulatory Commission (CSRC) on February 7, 2024.

Sentiment

Score: 6

Explanation: The document is factual and procedural, with a neutral tone. The request for a waiver and the delay in financial statements are potential concerns, but the company is taking steps to address them. The sentiment is cautiously optimistic.

Positives

• The company has completed the record filing requirement with the CSRC, which is a necessary step for the IPO.
• The company has a clear plan for its IPO and is taking steps to ensure compliance with regulations.
• The company has a defined structure as a holding company with operating subsidiaries in China.

Negatives

• The company is requesting a waiver from the SEC, which may indicate a potential issue with meeting regulatory requirements.
• The company's audited financial statements for the fiscal year ending October 31, 2024, will not be available until February 2025, which could delay the IPO.
• The company is a holding company with operations conducted by its subsidiaries in China, which involves unique risks to investors.

Risks

• The company's corporate structure as a Cayman Islands holding company with all operations conducted by its Operating Subsidiary in China involves unique risks to investors.
• Changes in Chinese policies, regulations, rules and the enforcement of laws regarding foreign ownership may occur quickly with little advance notice, which would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale.
• 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.
• The company may be subject to cybersecurity review with the Cyberspace Administration of China (CAC).
• The company is subject to the record filing requirements of the CSRC for this offering.
• The company may be subject to investigations by competent authorities, fines or penalties, ordered to suspend our relevant operations and rectify any non-compliance, prohibited from engaging in relevant business or conducting any offering, if it does not maintain the permissions and approvals of the filing procedure in a timely manner under PRC laws and regulations.
• The company's Ordinary Shares may be prohibited from trading on a U.S. stock exchange under the Holding Foreign Companies Accountable Act (the HFCAA) if the Public Company Accounting Oversight Board (the PCAOB) is unable to inspect its auditor for two consecutive years beginning in 2021.
• The funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets.

Future Outlook

The company does not anticipate that its audited financial statements for the fiscal year ended October 31, 2024 will be available until February 2025. The company will not seek effectiveness of the Registration Statement if its audited financial statements are older than 15 months at the time of the IPO.

Management Comments

• The Company respectfully requests that the Commission waive the requirement of Item 8.A.4 of Form 20-F, which states that in the case of a companys initial public offering, the registration statement on Form F-1 must contain audited financial statements of a date not older than 12 months from the date of the offering.
• Full compliance with Item 8.A.4 of Form 20-F at present is impracticable and involves undue hardship for the Company.
• In no event will the Company seek effectiveness of the Registration Statement if its audited financial statements are older than 15 months at the time of the Companys initial public offering.

Industry Context

This announcement is part of the process for a Chinese company seeking to list on a U.S. stock exchange, which often involves navigating complex regulatory requirements and seeking waivers or accommodations from the SEC.

Comparison to Industry Standards

• The request for a waiver from the 12-month financial statement requirement is not uncommon for foreign private issuers, particularly those based in China, due to differences in accounting practices and reporting timelines.
• Many Chinese companies listed on U.S. exchanges have faced similar challenges and have sought waivers or accommodations from the SEC.
• The 15-month rule is a common benchmark for IPOs, and the company's commitment to not exceed this timeframe is consistent with industry standards.
• The company's structure as a Cayman Islands holding company with operations in China is a common model for Chinese companies seeking to list in the U.S., but it also introduces unique risks that are often highlighted in prospectuses.

Stakeholder Impact

• Shareholders may face risks due to the company's structure and operations in China.
• 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.

Next Steps

• The company needs to obtain the waiver from the SEC.
• The company needs to complete its audited financial statements for the fiscal year ending October 31, 2024.
• The company needs to secure listing approval from Nasdaq or another national exchange.
• The company needs to complete the offering of its ordinary shares.

Key Dates

Keywords

IPO, initial public offering, financial statements, SEC waiver, audited financial statements, China, Nasdaq, CSRC, ordinary shares, Cayman Islands, holding company, subsidiaries, HFCAA, PCAOB, cybersecurity review