F-1/A: Junee Limited Files Amendment No. 12 to Form F-1 Registration Statement for Proposed IPO

Junee Limited, a British Virgin Islands holding company with Hong Kong-based interior design operations, has filed Amendment No. 12 to its Form F-1 registration statement for a proposed initial public offering of 2,000,000 ordinary shares.

Summary

• Junee Limited, a holding company incorporated in the British Virgin Islands, has filed Amendment No. 12 to its Form F-1 registration statement.
• The company plans to offer 2,000,000 ordinary shares to the public, with an anticipated offering price between US$4.00 and US$6.00 per share.
• The company has reserved the symbol JUNE for its listing on the NASDAQ Capital Market, but approval is still pending.
• OPS Interior Design Consultant Limited (OPS HK), the company's Hong Kong-based subsidiary, conducts all operations.
• The company's revenue for the fiscal year ended June 30, 2023, was $6,140,731, with a net profit of $38,678.
• For the fiscal year ended June 30, 2022, the company's revenue was $9,620,570, with a net loss of $65,911.
• OPS Holdings Limited, the company's largest shareholder, will own approximately 69.5% of the voting power after the offering.
• The company intends to use the proceeds from the offering for expanding service capacity, strategic investments and acquisitions, and working capital.
• The company acknowledges risks associated with its corporate structure, including potential regulatory actions by the PRC government and restrictions on the transfer of cash out of Hong Kong.
• The company is an emerging growth company and will take advantage of reduced reporting requirements.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company is pursuing an IPO and has plans for future growth, it also acknowledges significant risks and a decline in revenue. The overall tone is cautiously optimistic.

Positives

• The company has an experienced management team.
• OPS HK has established stable relationships with a number of recurring clients.
• OPS HK has strong working relationships with subcontractors.
• The company intends to expand its service capacity and improve customer interaction through technology.
• The company intends to use the IPO proceeds for expanding service capacity, strategic investments and acquisitions, and working capital.

Negatives

• The company's revenue decreased from $9,620,570 in 2022 to $6,140,731 in 2023.
• The company acknowledges risks associated with its corporate structure, including potential regulatory actions by the PRC government and restrictions on the transfer of cash out of Hong Kong.
• The company is an emerging growth company and will take advantage of reduced reporting requirements, which could make it more difficult to compare its performance with other public companies.

Risks

• The company's business is project-based, and profitability depends on negotiated terms.
• A significant portion of the company's revenue is derived from a few major customers.
• The company's business operations have been, and may continue to be, materially and adversely affected by the spread of the coronavirus (COVID-19).
• The company is a BVI holding company with a subsidiary based in Hong Kong and is subject to risks and uncertainties related to this corporate structure.
• The company relies on dividends and other distributions on equity paid by its subsidiary to fund any cash and financing requirements it may have.
• The PRC government may exercise significant oversight and discretion over the conduct of the company's business and may intervene in or influence such operations at any time.
• The company is an emerging growth company within the meaning of the Securities Act, and if it takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare its performance with other public companies.
• Following this Offering, OPS Holdings Limited, the company's largest shareholder, will continue to own more than a majority of the voting power of the company's outstanding Ordinary Shares.
• There are some political risks associated with conducting business in Hong Kong.
• There has been no public market for the company's Ordinary Shares prior to this Offering, and if an active trading market does not develop you may not be able to resell the company's Ordinary Shares at or above the price you paid, or at all.
• The company's Ordinary Shares may be prohibited from being traded on a national exchange under the HFCA Act if the PCAOB determines that it cannot inspect or fully investigate the company's auditors for two consecutive years, and, as a result, an exchange may determine to delist the company's securities.
• NASDAQ may apply additional and more stringent criteria for the company's initial and continued listing because the company plans to have a small public offering and its insiders will hold a large portion of its listed securities.
• The initial public offering price for the company's Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.
• The price of the company's Ordinary Shares could be subject to rapid and substantial volatility, and such volatility may make it difficult for prospective investors to assess the rapidly changing value of the company's Ordinary Shares.
• Any resale of the company's Ordinary Shares in the public market by the Selling Shareholders or by investors in this Offering may cause the market price of the company's Ordinary Shares to decline.

Future Outlook

The company aims to increase its market share and grow its business by expanding OPS HK's customer base and service capacity. The company expects revenue to increase in the following years, provided interest rate increases stop, unless there is a resurgence of the COVID-19 pandemic in Hong Kong due to the spread of new variants of the coronavirus or increasing effects of global inflation and a continuation of rising interest rates by major central banks, any of which events which could adversely affect the economies and financial markets in Hong Kong and our business and results.

Management Comments

• The company will continue to adhere to its business principles of providing professional design service in high standard.
• The company believes that its pursuit of goal will lead it to sustainable growth, solidify its position in the industry, and create long-term value for its shareholders.

Industry Context

The interior design and fit-out market in Hong Kong is highly fragmented and competitive, with approximately a thousand companies offering interior design services with fit-out work. The key factors considered by customers include budgetary concerns, quality of services, timeline of project completion and track record.

Comparison to Industry Standards

• The company's estimated market share in the Hong Kong interior design and fit-out market is approximately 0.2% in 2020, according to Frost & Sullivan.
• The average cost of designing and building workspaces in Hong Kong raised 8.3% to US$130 per square feet in 2022, according to Jones Lang LaSalle's Asia Pacific Fit-Out Cost Guide 2022/2023.

Management Changes

Corporate Governance

Legal Proceedings

• The company has been involved in one claim from a client about defects and the company has since settled such claim, which amounted to $2,577 (HK$20,000), with the client, without admitting any legal liability, in Sham Shui Po Small Claim Tribunal, Hong Kong.

Related Party Transactions

• The company rents office spaces from Sannogi Holdings Limited and Sannogi Engineering Consultants Limited.
• The company provided management services to Kin On Engineering (International) Limited and received management fee income.
• The company has entered into employment agreements with its CEO appointee and with its CFO appointee.

Stakeholder Impact

• Shareholders: Potential dilution from the issuance of new shares.
• Employees: Potential for increased job opportunities and career growth.
• Customers: Potential for improved services and customer interaction.
• Suppliers: Potential for increased business opportunities.
• Creditors: Potential for increased financial stability.

Next Steps

• Obtain NASDAQ approval for listing.
• Complete the initial public offering.
• Implement plans for expanding service capacity, strategic investments, and working capital.

Key Dates

Keywords

IPO, initial public offering, Junee Limited, OPS HK, interior design, Hong Kong, emerging growth company, ordinary shares, registration statement, corporate structure