F-1/A: Garden Stage Limited Files Amendment No. 1 to Form F-1 Registration Statement for Resale of 1,750,000 Ordinary Shares

Garden Stage Limited has filed an amendment to its Form F-1 registration statement for the resale of up to 1,750,000 ordinary shares by the selling shareholder, Oriental Moon Tree Limited.

Summary

• Garden Stage Limited, a Cayman Islands holding company, has filed Amendment No. 1 to its Form F-1 registration statement.
• The filing pertains to the resale of up to 1,750,000 ordinary shares by the selling shareholder, Oriental Moon Tree Limited.
• Garden Stage will not receive any proceeds from the sale of these shares.
• The company's ordinary shares trade on the Nasdaq Stock Market under the symbol GSIW, with a closing price of US$7.16 per share on August 16, 2024.
• Garden Stage conducts all of its operations in Hong Kong through its operating subsidiaries, I Win Securities Limited and I Win Asset Management Limited.
• Investors in this offering will not directly hold equity interests in the operating subsidiaries.
• The company is subject to legal and operational risks associated with its operating subsidiaries being based in Hong Kong and having clients who are Mainland China individuals or companies.
• The company's auditor prior to December 15, 2022, Friedman LLP (Friedman), had been inspected by the PCAOB on a regular basis in the audit period.
• Our auditor from December 15, 2022 to January 26, 2024, Marcum Asia CPAs LLP (Marcum Asia) is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
• Our current auditor, J&S Associate PLT (J&S), is headquartered in Malaysia and subject to the inspections by the PCAOB.
• The company is an emerging growth company and a foreign private issuer, which allows it to take advantage of reduced public company reporting requirements.
• Oriental Moon Tree Limited, the company's largest shareholder, will continue to own more than a majority of the voting power of the outstanding ordinary shares, making Garden Stage a controlled company.
• No transfer of cash or other assets has been made between the Cayman Islands holding company and its subsidiaries in the fiscal years ended March 31, 2024, 2023, and 2022.
• Garden Stage has not declared or made any dividends or other distributions to its shareholders, including U.S. investors, as of the date of the prospectus, nor has any dividends or distributions been made by subsidiaries to our Cayman Islands holding company in the fiscal years ended March 31, 2024, 2023, and 2022.
• Garden Stage and its subsidiaries do not have any plans to distribute earnings in the foreseeable future.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While it highlights growth strategies and competitive strengths, it also acknowledges significant risks and a recent decline in financial performance. The sentiment is therefore cautiously negative.

Positives

• The company's ordinary shares are publicly traded on the Nasdaq Stock Market, providing liquidity for investors.
• As an emerging growth company and foreign private issuer, Garden Stage benefits from reduced reporting requirements, potentially lowering compliance costs.
• The company's operations are conducted through subsidiaries in Hong Kong, which is a major financial center.

Negatives

• Garden Stage will not receive any proceeds from the sale of shares by the selling shareholder.
• Investors will not directly hold equity interests in the operating subsidiaries.
• The company is subject to legal and operational risks associated with its operating subsidiaries being based in Hong Kong and having clients who are Mainland China individuals or companies.
• The company is a controlled company, which may reduce corporate governance protections for public shareholders.
• The company has not declared or made any dividends or other distributions to its shareholders, including U.S. investors, as of the date of the prospectus, nor has any dividends or distributions been made by subsidiaries to our Cayman Islands holding company in the fiscal years ended March 31, 2024, 2023, and 2022.

Risks

• The company is subject to legal and operational risks associated with its operating subsidiaries being based in Hong Kong and having clients who are Mainland China individuals or companies.
• 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.
• The enforcement of laws and rules and regulations in the PRC can change quickly with little advance notice.
• The Hong Kong regulatory requirement of prior approval for the transfer of shares in excess of a certain threshold may restrict future takeovers and other transactions.
• 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 under Cayman Islands law.
• We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.
• Our corporate actions will be substantially controlled by our Controlling Shareholder, Oriental Moon Tree Limited, which has the ability to control or exert significant influence over important corporate matters that require approval of shareholders, which may deprive you of an opportunity to receive a premium for your Ordinary Shares and materially reduce the value of your investment.
• 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 auditors.
• We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary 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.
• 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.
• The sale or availability for sale of substantial amounts of Ordinary Shares could adversely affect their market price.
• We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.
• If we cease to qualify as a foreign private issuer and are considered a U.S. domestic issuer, we would be required to comply fully with the reporting requirements under the Exchange Act that are 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.
• 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 are an emerging growth company, as defined in the JOBS Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, it may be difficult or impossible to compare our performance with other public companies which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period.
• 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 managements attention.
• If we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.
• We have identified a material weakness in our internal control over financial reporting. If we fail to implement and maintain an effective system of internal control to remediate our material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations, or prevent fraud

Future Outlook

The company plans to continue growing its business by strengthening securities brokerage, underwriting, and placement services, and developing its asset management business and margin financing services.

Industry Context

The financial services industry in Hong Kong is highly competitive and subject to evolving regulatory requirements. The company's ability to adapt to these changes and compete effectively will be crucial for its success.

Stakeholder Impact

• Shareholders may experience volatility in the market price of the company's ordinary shares.
• The company's ability to pay dividends is dependent on the performance of its subsidiaries.
• The company's controlling shareholder has significant influence over corporate matters.

Next Steps

• The selling shareholder, Oriental Moon Tree Limited, will determine when and how to dispose of the ordinary shares registered under this prospectus for resale.

Key Dates

Keywords

Ordinary Shares, Resale, Garden Stage Limited, Oriental Moon Tree Limited, Form F-1, Hong Kong, Securities, Nasdaq, GSIW, Financial Services, Emerging Growth Company, Foreign Private Issuer