F-1/A: Linkage Global Inc Files Amendment for Resale of Up to 45.1 Million Class A Ordinary Shares

Sentiment:

F-1/A Filing 26 December 2024 10:49 AM

Linkage Global Inc has filed an amendment to its registration statement for the resale of up to 45,125,000 Class A Ordinary Shares by selling shareholders.

Capital raiseOn September 18, 2024, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which, the Company issued to the investors (the Note Investors), (i) convertible promissory notes in the aggregate principal amount of US$10,830,000, bearing interest at a rate of 8% per annum and having a term of one year from issuance date, issued with an aggregate original issue discount of US$800,000, and (ii) 9,300,000 Class A Ordinary Shares of the Company in aggregate at the purchase price equal to par value of US$0.00025 per share, which is for pre -delivery and subject to the Companys repurchase right upon repayment of the notes.In addition, pursuant to the securities purchase agreement, the Company (i) granted the Note Investors the right to participate up to thirty percent (30%) in future equity or equity -linked financing during the period beginning on the closing date and ending twelve (12) months after the date that the notes are repaid, and (ii) granted the Note Investors the right to reinvest up to US$10,000,000 on the same terms and conditions under the securities purchase agreement, the notes and other transaction documents.The Company has the option to prepay the notes with payment of an amount equal to 120% of the outstanding balance amount.In the event that the Company receives a delisting notice from the Nasdaq Stock Market LLC, the Note Investors have rights to request redemption of the notes by the Company.In the event that the Company has redeemed an amount equal to half of original principal amount in cash, any subsequent redemption in cash is subject to a twenty -five percent (25%) premium.On October 16, 2024, the Company completed its issuance and sale of the note and issuance of Class A Ordinary Shares pursuant to the securities purchase agreement.The gross proceeds from the sale of the notes were $10,830,000, prior to deducting transaction fees and estimated expenses.On December 18, 2024, the Company and the Note Investors entered into an amendment to Securities Purchase Agreement, pursuant to which, (i) the parties mutually agreed to add a conversion floor price of $0.24 per share to the convertible promissory notes, and (ii) the parties mutually agreed to add the maximum number of the conversion shares that each Note Investor may receive and the Company shall issue under the securities purchase agreement and applicable convertible promissory notes.

Summary

Linkage Global Inc has filed an amendment to its registration statement for the resale of up to 45,125,000 Class A Ordinary Shares.
These shares are issuable upon conversion of 8% OID Convertible Promissory Notes issued on September 18, 2024.
The selling shareholders will receive all net proceeds from the sale.
The company will not receive any proceeds from the sale of these shares.
The company's Class A Ordinary Shares currently trade on The Nasdaq Capital Market under the symbol LGCB.
The last reported closing price on December 20, 2024, was $0.3699.
Linkage Global Inc is a controlled company and a foreign private issuer, which allows for reduced public company reporting requirements.
The company conducts its operations through entities in Japan, Hong Kong, and mainland China, which are subject to legal and operational risks.
The company's PRC legal counsel has advised that the company is not required to complete filing procedures with the CSRC for continued offerings.
The document also discusses risks related to cybersecurity, data security, and potential regulatory actions by PRC authorities.

Sentiment

Score: 5

Explanation: The document is primarily a legal filing, so the sentiment is neutral. However, the inclusion of risk factors and potential regulatory challenges tempers any positive outlook.

Positives

The selling shareholders are offering their securities to further enhance liquidity in the public trading market for our equity securities in the United States.
The PCAOB currently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021, which determinations were vacated on December 15, 2022.
Our PRC legal counsel, AllBright, has advised us, based on its understanding of the current PRC law, rules, and regulations currently in effect, that we are not required to complete the filing procedures with the CSRC for our continued offerings, given that (i) we are not a China domestic company; and (ii) any follow -on offering by us would not be determined to be an indirect overseas offering, because the operating revenue, total profit, total assets, or net assets, as documented in our audited consolidated financial statements for the most recent fiscal year ended September 30, 2023, accounted for by the PRC subsidiaries are all under 50%.

Negatives

The PRC subsidiaries and the Hong Kong subsidiaries are subject to certain legal and operational risks associated with the business operations in mainland China and Hong Kong.
PRC laws and regulations governing the current business operations of the PRC subsidiaries are sometimes vague and uncertain.
Recent statements by the Chinese government have indicated an intent to impose more oversight and control over offerings conducted overseas and/or foreign investment in China -based issuers.
The same legal and operational risks associated with operations in mainland China also apply to operations in Hong Kong.
Our Class A Ordinary Shares may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act, or the HFCA Act, if the Public Company Accounting Oversight Board (United States) (the PCAOB) is unable to inspect our auditors for two consecutive years.

Risks

PRC laws and regulations governing the current business operations of the PRC subsidiaries are sometimes vague and uncertain, and as a result, these risks may result in material changes in the operations of the PRC subsidiaries, significant depreciation of the value of our Class A Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors.
Cybersecurity review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations.
There remains substantial uncertainties about the interpretation and implementation of Measures for the Security Assessment of Cross -border Transfer of Data, and it is unclear whether the PRC subsidiaries shall require a security assessment.
If we do not receive or maintain the approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our Class A Ordinary Shares, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
The same legal and operational risks associated with operations in mainland China also apply to operations in Hong Kong.
If there is a significant change to current political arrangements between mainland China and Hong Kong, or if the applicable laws, regulations, or interpretations change, the Hong Kong subsidiaries may become subject to PRC laws or authorities.
As a result, the Hong Kong subsidiaries could incur material costs to ensure compliance, be subject to fines, experience devaluation of securities or delisting, no longer conduct offerings to foreign investors, and no longer be permitted to continue their current business operations.
Our Class A Ordinary Shares may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act, or the HFCA Act, if the Public Company Accounting Oversight Board (United States) (the PCAOB) is unable to inspect our auditors for two consecutive years.

Future Outlook

The Selling Shareholders are offering their securities to further enhance liquidity in the public trading market for our equity securities in the United States.

Industry Context

The document discusses the regulatory environment in China and Hong Kong, which is relevant to companies operating in those regions and seeking to list on U.S. exchanges.

Comparison to Industry Standards

The document does not provide a direct comparison to industry standards.
However, it mentions compliance with regulations and the competitive landscape, which are relevant to assessing the company's position relative to its peers.

Stakeholder Impact

The resale of Class A Ordinary Shares by selling shareholders may impact the share price and liquidity for existing shareholders.
Potential regulatory changes in China and Hong Kong could affect the company's operations and the value of its securities.

Next Steps

The selling shareholders may sell all or a portion of the Class A Ordinary Shares from time to time in market transactions through any market on which our Class A Ordinary Shares are then traded, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the then prevailing market price or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a combination of such methods of sale.

Key Dates

Date	Description
1990-04-04	The Basic Law of the Hong Kong Special Administrative Region of the PRC was adopted and promulgated.
1997-07-01	The PRC resumed the exercise of sovereignty over Hong Kong.
2021-06-22	The U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (AHFCAA).
2022-02-15	The Cybersecurity Review Measures became effective.
2022-07-07	The Cyberspace Administration of China (CAC) issued the Measures for the Security Assessment of Cross -border Transfer of Data.
2022-08-26	The CSRC, the Ministry of Finance of the PRC (the MOF), and the PCAOB signed a Statement of Protocol (the Protocol) governing inspections and investigations of accounting firms based in mainland China and Hong Kong.
2022-12-15	The PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary.
2022-12-29	Legislation entitled Consolidated Appropriations Act, 2023 was signed into law by President Biden, which contained, among other things, an identical provision to the AHFCAA and amended the HFCA Act.
2023-02-17	The China Securities Regulatory Commission (CSRC) promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the Overseas Listing Trial Measures) and relevant five guidelines.
2023-03-31	The Overseas Listing Trial Measures became effective.
2024-09-18	The Company entered into a securities purchase agreement with certain institutional investors, pursuant to which, the Company issued to the investors (the Note Investors), (i) convertible promissory notes in the aggregate principal amount of US$10,830,000, bearing interest at a rate of 8% per annum and having a term of one year from issuance date, issued with an aggregate original issue discount of US$800,000, and (ii) 9,300,000 Class A Ordinary Shares of the Company in aggregate at the purchase price equal to par value of US$0.00025 per share, which is for pre -delivery and subject to the Companys repurchase right upon repayment of the notes.
2024-10-16	The Company completed its issuance and sale of the note and issuance of Class A Ordinary Shares pursuant to the securities purchase agreement.
2024-10-31	The Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (Nasdaq) notifying the Company that based upon the closing bid price of the Class A ordinary shares of the Company for the last 30 consecutive business days, the Company no longer meets the continued listing requirement of Nasdaq under Nasdaq Listing Rules 5550(a)(2) to maintain a minimum bid price of $1 per share.
2024-12-18	The Company and the Note Investors entered into an amendment to Securities Purchase Agreement, pursuant to which, (i) the parties mutually agreed to add a conversion floor price of $0.24 per share to the convertible promissory notes, and (ii) the parties mutually agreed to add the maximum number of the conversion shares that each Note Investor may receive and the Company shall issue under the securities purchase agreement and applicable convertible promissory notes.
2025-04-29	The Company has an 180 calendar days compliance period, or until April 29, 2025, in which to regain compliance with Nasdaq continued listing requirement.

Keywords

Class A Ordinary Shares, Selling Shareholders, Convertible Notes, Linkage Global Inc, PRC, Hong Kong, PCAOB, CSRC, HFCA Act, Cybersecurity, Data Security, Overseas Listing, Risk Factors, Regulations, Compliance

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