F-1/A: EPWK Holdings Ltd. Files Amendment No. 10 to Form F-1 for Initial Public Offering and Resale of Class A Ordinary Shares

EPWK Holdings Ltd. has filed an amendment to its Form F-1 registration statement, detailing its initial public offering of 2,750,000 Class A Ordinary Shares and a resale of 2,500,000 Class A Ordinary Shares by selling shareholders.

Summary

• EPWK Holdings Ltd., a Cayman Islands holding company, is proceeding with its initial public offering of 2,750,000 Class A Ordinary Shares.
• The company also plans for a resale of 2,500,000 Class A Ordinary Shares by selling shareholders.
• The offering is contingent upon listing approval on the Nasdaq Global Market under the symbol EPWK.
• The company operates through subsidiaries and contractual arrangements with a variable interest entity (VIE) in China.
• The VIE structure involves unique risks, as the company does not directly own the Chinese operating entities.
• The company's corporate structure may not be enforceable in the PRC, and the VIE agreements have not been tested in court.
• The company has submitted a written declaration and other materials required for the cybersecurity review to the Cyberspace Administration of China (CAC) and has passed the cybersecurity review for this offering.
• The company has also filed with the CSRC and has been advised that the Company has fulfilled the filing procedures required pursuant to the Trial Measures.
• The company's revenue for the year ended June 30, 2024 was $20.22 million, with a net loss of $1.20 million.
• The company's revenue for the year ended June 30, 2023 was $19.8 million, with a net loss of $1.08 million.
• The company's platform enabled approximately US$1.67 billion of GMV across 4.60 million projects from 2019 to June 30, 2024.
• As of June 30, 2024, the company had 8.74 million registered buyers and 16.92 million registered sellers.
• The company expects the initial public offering price to be between $4.00 and $6.00 per Class A Ordinary Share.
• The company plans to use the net proceeds from the offering for business development, marketing, research and development, and general corporate purposes.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While the company has achieved significant GMV and user growth, it also faces substantial risks related to its VIE structure, regulatory environment, and financial performance. The company's net loss increased in the most recent fiscal year, which is a negative indicator. The company's future success is dependent on its ability to navigate these challenges and achieve profitability.

Positives

• The company's platform has enabled significant gross merchandise volume (GMV) over the past few years.
• The company has a large base of registered buyers and sellers.
• The company has passed the cybersecurity review for this offering by the CAC.
• The company has fulfilled the filing procedures required pursuant to the Trial Measures with the CSRC.

Negatives

• The company operates through a VIE structure, which involves unique risks and uncertainties.
• The company has a history of net losses and may not achieve or sustain profitability.
• The company's corporate structure may not be enforceable in the PRC.
• The VIE agreements have not been tested in court.
• The company is subject to various legal and operational risks associated with its PRC subsidiaries and the VIEs operations in China.
• The company may be subject to sanctions imposed by PRC regulatory agencies.
• The company may not be able to use funds held in the PRC or Hong Kong to fund operations outside of the PRC due to government restrictions.
• The company's Class A Ordinary Shares may be delisted from a national exchange or prohibited from being traded over-the-counter under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect the company's auditor for two consecutive years.

Risks

• The company's VIE structure may not be effective in providing control over the VIE.
• The company is subject to legal and operational risks associated with its PRC subsidiaries and the VIEs operations in China.
• The company may be subject to sanctions imposed by PRC regulatory agencies.
• The company may not be able to use funds held in the PRC or Hong Kong to fund operations outside of the PRC due to government restrictions.
• The company's Class A Ordinary Shares may be delisted from a national exchange or prohibited from being traded over-the-counter under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect the company's auditor for two consecutive years.
• The company may face lawsuits or incur liability as a result of content published or made available through its platform.
• The company faces intense competition and could lose market share to its competitors.
• The company relies upon a third party to perform the payment processing for its clients, and the failure or inability of the third party to provide these services could impair the company's ability to operate.
• The company may be required to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to the listing and trading of its Class A Ordinary Shares on an overseas stock exchange.
• The Chinese government exerts substantial influence over the manner in which the company must conduct its business and may intervene or influence its operations at any time.
• The company is subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on the company's business, its listing on Nasdaq, financial condition, results of operations, and the offering.
• The market price of the company's Class A Ordinary Shares may be volatile or may decline regardless of the company's operating performance, and you may not be able to resell your shares at or above the initial public offering price.

Future Outlook

The company intends to use the proceeds from the offering for business development, marketing, research and development, and general corporate purposes and working capital. The company does not anticipate paying any cash dividends in the foreseeable future.

Management Comments

• Our mission is to add value to our users in both service supply and demand sides.
• We create an innovative and efficient crowdsourcing platform to connect businesses with great talents.
• We design a digital marketplace with a comprehensive services catalog and an efficient search, find and order process to match talents with service needs.

Industry Context

The document highlights the company's position as the second largest online marketplace in China, operating in the growing crowdsourcing industry. The company's business model is influenced by the development of the digital economy in China, including the growth of mobile internet usage and the penetration rate of online services. The company also faces competition from other crowdsourcing platforms and must adapt to rapid technological changes and evolving industry standards.

Comparison to Industry Standards

• The document states that EPWK VIE is the second largest online marketplace in China, only behind Zhubajie, with approximately US$0.35 billion gross transaction volume, or GMV, in 2023, compared to Zhubajies US$0.56 billion GMV.
• The document also mentions that two other competitors and the EPWK VIE take up 27.8% market share of the crowdsourcing market in China.
• The document notes that most platforms solely focus on a particular type of industry such as software, IT, and design, while EPWK VIE's comprehensive platform provides professional services to clients in various fields covering over 300 items in seven categories.

Stakeholder Impact

• Shareholders face risks related to the VIE structure, regulatory environment, and potential delisting.
• Employees may be affected by changes in the company's operations and financial performance.
• Customers may be affected by changes in the company's services and platform.
• Suppliers may be affected by changes in the company's financial condition and ability to pay.

Next Steps

• The company will seek listing approval on the Nasdaq Global Market.
• The company will use the net proceeds from the offering for business development, marketing, research and development, and general corporate purposes and working capital.

Key Dates

Keywords

crowdsourcing, online marketplace, variable interest entity, VIE, China, initial public offering, IPO, Class A Ordinary Shares, Nasdaq, cybersecurity, CSRC, PCAOB, Holding Foreign Companies Accountable Act