F-1/A: Galaxy Payroll Group Limited Files Amendment for IPO of Ordinary Shares

Galaxy Payroll Group Limited has filed an amendment to its Form F-1 registration statement for the initial public offering of 2,000,000 Ordinary Shares, with a resale prospectus for 2,240,000 Ordinary Shares by selling shareholders.

Summary

• Galaxy Payroll Group Limited, a British Virgin Islands holding company, has filed an amendment to its Form F-1 registration statement for an initial public offering.
• The offering includes 2,000,000 Ordinary Shares offered by the company and 2,240,000 Ordinary Shares offered by selling shareholders via a resale prospectus.
• The company expects the initial public offering price to be $4.00 per Ordinary Share and has applied to list its Ordinary Shares on the Nasdaq Capital Market under the symbol GLXG.
• The company intends to use the proceeds from the offering for working capital and general corporate purposes, including business expansion.
• The company's operations are conducted through its indirect wholly-owned subsidiaries in Hong Kong, PRC, Taiwan, and Macau, providing payroll outsourcing and employment services.
• The company faces legal and operational risks associated with its operations in Hong Kong and the PRC, including uncertainties related to PRC laws and regulations.
• The company believes it is not subject to the filing requirements under the Trial Administrative Measures for overseas listings by PRC domestic companies.
• The company's auditor is headquartered in New York and subject to PCAOB inspections, but future restrictions could impact access to U.S. capital markets.
• Cash may be transferred to Galaxy HR (SZ), Galaxy HR (TW) and Galaxy HR (Macau) through our subsidiaries in Hong Kong, Galaxy Payroll (China), Galaxy Payroll (TW) and Galaxy Payroll (HK) respectively, by additional capital contributions or shareholders loans.
• The funds were paid directly through Melkweg Cayman after reorganization since the bank account of Galaxy Payroll Group Limited had not been opened until November 15, 2022.
• Since then the dividends were paid through Galaxy Payroll BVI.

Sentiment

Score: 6

Explanation: The document is largely factual, presenting information about the company's IPO and business operations. While it highlights both opportunities and risks, the overall tone is neutral.

Positives

• The company is expanding its business operation in the payroll outsourcing service industry and employment service industry in the Asia market.
• The company is enhancing its IT system to support its business operation.
• The company is developing marketing capability and conduct marketing campaigns to promote its payroll outsourcing services and employment services to direct end-users.

Negatives

• The company faces legal and operational risks and uncertainties relating to its operations in Hong Kong and in PRC.
• The company's current corporate structure could be disallowed by PRC or Hong Kong regulatory authorities, leading to adverse changes in operations.
• The company faces risks and uncertainties associated with the complex and evolving PRC laws and regulations.
• The company cannot assure that the CSRC will have the same interpretation as us and if they request us to proceed with the filing nevertheless, we cannot give you an estimated time frame for completing such a filing which is beyond our control.

Risks

• Changes in the political and economic policies of the PRC government and PRC laws and regulations could significantly impact the business.
• There remain some uncertainties as to whether we will be required to obtain approvals from Chinese authorities to list on the U.S. exchanges and offer securities in the future, and if required, we cannot assure you that we will be able to obtain such approval.
• The Chinese government is exerting more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, which 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 Trial Administrative Measures effective from March 31, 2023 posed additional filing requirements to PRC domestic companies which seek to offer securities overseas.
• Recently, the Cyberspace Administration of China has taken action against several Chinese internet companies in connection with their initial public offerings on U.S. securities exchanges, for alleged national security risks and improper collection and use of the personal information of Chinese data subjects.
• Restrictions on currency exchange may limit our ability to receive and use our revenue effectively.
• You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.
• If the PCAOB determines that it cannot inspect or fully investigate our auditors for two consecutive years, you may be deprived of the benefits of such inspection and our common stock could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act.

Future Outlook

The company intends to retain all available funds and future earnings for the operation and expansion of its business and does not anticipate that any cash dividends will be paid or any assets will be transferred in the foreseeable future.

Industry Context

The document relates to the payroll outsourcing and employment services industry, particularly in Greater China, where there is increasing demand for such services due to economic growth, foreign investment, and complex regulatory environments.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors.
• However, it mentions that the company operates in a highly competitive market with numerous players, some of whom may have advantages such as wider geographical coverage, service offerings, and technology.

Related Party Transactions

• Noah Trust (Asia) Limited, of which Mr. Yiu Kong Kenneth But (Mr. Kenneth But) being one of its directors, signed a service agreement with the Group.
• Under the agreement, the Group will provide payroll outsourcing service to Noah for HKD1,000 per month for a term of one year, as of the date of this prospectus, other than we changed the pricing from HK$1,000 to HK$500 per month, since May 2020, through verbal amendment, the contract remains valid.

Stakeholder Impact

• Shareholders face potential dilution and market volatility.
• Employees may benefit from business expansion and potential job creation.
• Customers may experience enhanced services and IT systems.
• Suppliers may see increased business opportunities.

Next Steps

• The company awaits Nasdaq's approval of its listing application.
• The underwriter expects to deliver the Ordinary Shares against payment on or about [], 2024.

Key Dates

Keywords

Ordinary Shares, Initial Public Offering, Payroll Outsourcing, Employment Services, Hong Kong, China, BVI, CSRC, PCAOB, HFCAA