F-1/A: Raytech Holding Seeks Nasdaq Listing with $11.25 Million IPO, Selling Shareholders to Offer Additional Shares

Raytech Holding Limited aims to raise capital and list on the Nasdaq Capital Market through an initial public offering of 2,500,000 ordinary shares, while existing shareholders plan to resell 1,920,000 shares.

Summary

• Raytech Holding Limited, a British Virgin Islands holding company, is planning an initial public offering (IPO) to list its ordinary shares on the Nasdaq Capital Market under the symbol RAY.
• The IPO involves the offering of 2,500,000 ordinary shares, with an estimated initial public offering price between $4.00 and $5.00 per share, potentially raising $11.25 million at the midpoint.
• Selling shareholders are also offering 1,920,000 ordinary shares through a Resale Prospectus, but Raytech Holding will not receive any proceeds from these sales.
• Upon completion of the offering, Raytech Holding will have 18,500,000 ordinary shares issued and outstanding, with the CEO and Chairman, Mr. Tim Hoi Ching, controlling 69.2% of the total voting power.
• The company generated all its revenues from Hong Kong for the fiscal years ended March 31, 2023, and 2022, and collaborates with manufacturers located in mainland China.
• Raytech Holding is an emerging growth company and may elect not to comply with certain corporate governance requirements.
• The company intends to use the net proceeds from the offering for brand promotion and marketing, recruitment of talented personnel, strategic investments and acquisitions, and general working capital.
• Revere Securities LLC is acting as the underwriter for the offering, with an option to purchase up to 15% of the total number of ordinary shares to cover over-allotments.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company is pursuing growth through an IPO and expansion plans, there are significant risks and uncertainties related to its business, corporate structure, and the regulatory environment in Hong Kong and mainland China. The decrease in net income for the year ended March 31, 2023, is also a concern.

Positives

• The company has over 10 years of experience in the personal care electrical appliance industry.
• The company maintains long-term business relationships with its customers.
• The company has a quality control system in place.
• The company has a strong and experienced management team.

Negatives

• The company has a substantial customer concentration, with a limited number of customers accounting for a substantial portion of its revenues.
• The company relies on a limited number of manufacturers.
• The company does not retain effective intellectual property rights.
• The company may be subject to intellectual property infringement claims.
• The company may experience extreme stock price volatility.

Risks

• Changes in capital markets, merger and acquisition activity, legal or regulatory requirements, general economic conditions and monetary or geopolitical disruptions, as well as other factors beyond our control, could reduce demand for our practice offerings or services, in which case our revenues and profitability could decline.
• Our revenues, operating income and cash flows are likely to fluctuate.
• We have a substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues.
• We rely on a limited number of manufacturers. A loss of any of these manufacturers could significantly negatively affect our business.
• Inadequate or inaccurate external and internal information, including budget and planning data, could lead to inaccurate financial forecasts and inappropriate financial decisions.
• We may not manage our growth effectively, and our profitability may suffer.
• Our reputation is crucial to our business. Any harm to our reputation or failure to enhance our brand recognition may materially and adversely affect our business, financial condition and results of operations.
• We may not be able to grow at the historical rate of growth, and if we fail to manage our growth effectively, our business may be materially and adversely affected.
• If we fail to prevent security breaches, improper access to or disclosure of our data or user data, or other hacking and attacks, we may lose users, and our business, reputation, financial condition and results of operations may be materially and adversely affected.
• We do not retain effective intellectual property rights.
• We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
• Compromise of confidential or proprietary information could damage our reputation, harm our businesses and adversely impact our financial results.
• Increases in labor costs in Hong Kong may adversely affect our business and results of operations.
• Raytech Holdings principal shareholders have substantial influence over Raytech Holding and their interests may not be aligned with the interests of Raytech Holdings other shareholders.
• As a controlled company under the rules of the Nasdaq Capital Market, Raytech Holding may choose to exempt itself from certain corporate governance requirements that could have an adverse effect on Raytech Holdings public shareholders.
• We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations.
• Although our business operations so far have not been materially and adversely affected by the outbreak of the coronavirus (COVID-19) due to our business nature, there can be no assurance that our business operations will not be materially and adversely affected by the continuous effect of the COVID-19 pandemic in the future.
• Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose customers or otherwise harm our business.
• Members of our management team may in the future be involved in governmental investigations and civil litigation relating to the business affairs of companies with which they are, were or may in the future be affiliated with.
• If Raytech Holding becomes directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, Raytech Holding may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation and could result in a loss of your investment in Raytech Holdings stock, especially if such matter cannot be addressed and resolved favorably.
• If we fail to compete effectively, we may miss new business opportunities or lose existing customers, and our revenues and profitability may decline.
• If we are unable to rely on the services and connections of our key personnel, or retain the current key personnel, our business could be adversely affected.
• Certain of our officers or directors may have actual or potential conflicts of interest because of their equity interests in or positions with Raytech Holdings Company Limited and Zhongshan Raytech.
• Employees may leave us to form or join competitors, and we may not have, or may choose not to pursue, legal recourse against such professionals.
• Our business and sales are subject to the business strategies of the brand owners.
• We cannot assure that our products can meet consumer preferences and needs, and will continue to gain market acceptance and secure market share.
• We rely on external manufacturers for production of some of our products.
• Our operating results may fluctuate due to seasonality and other factors.
• We may be unable to maintain rapid growth and implement our future plans.
• A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.
• Raytech Holding may rely on dividends and other distributions on equity paid by its subsidiary to fund any cash and financing requirements Raytech Holding may have, and any limitation on the ability of its subsidiary to make payments to it could have a material adverse effect on Raytech Holdings ability to conduct its business.
• Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud which may affect the market for and price of Raytech Holdings Ordinary Shares.
• If Raytech Holding ceases to qualify as a foreign private issuer, Raytech Holding would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and Raytech Holding would incur significant additional legal, accounting and other expenses that it would not incur as a foreign private issuer.
• Raytech Holding is an emerging growth company within the meaning of the Securities Act, and if Raytech Holding takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare Raytech Holdings performance with other public companies.
• Raytech Holding will incur increased costs as a result of being a public company, particularly after Raytech Holding ceases to qualify as an emerging growth company.
• Raytech Holdings board of directors may decline to register transfers of Ordinary Shares in certain circumstances.
• All of Pure Beautys operations are in Hong Kong. However, due to the long arm provisions under the current laws and regulations of mainland China, the government of mainland China may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of Raytech Holdings Ordinary Shares. The government of mainland China may also intervene or impose restrictions on our ability to move money out of Hong Kong to distribute earnings and pay dividends or to reinvest in our business outside of Hong Kong. Changes in the policies, regulations, rules, and the enforcement of laws of the government of mainland China may also be quick with little advance notice and our assertions and beliefs of the risk imposed by the legal and regulatory system of mainland China cannot be certain.
• The enactment of Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the Hong Kong National Security Law) could impact Raytech Holdings subsidiary.
• There are political risks associated with conducting business in Hong Kong.
• There remain some uncertainties as to whether we will be required to obtain approvals from authorities of mainland China and Hong Kong to list Raytech Holdings securities 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.
• Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies for cross-border provision and examination of auditing records and other materials in connection with overseas securities issuance and listing by domestic Chinese companies was released by the CSRC and took effect since March 31, 2023. The government of mainland China may impose more stringent requirement for domestic Chinese companies to share business and accounting records with foreign auditing firms and other securities service institutions, which could significantly limit or completely hinder Raytech Holdings ability to offer or continue to offer its Ordinary Shares to investors and could cause the value of Raytech Holdings Ordinary Shares to significantly decline or become worthless.
• It may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within China.
• You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against Raytech Holding or its management named in the prospectus based on Hong Kong laws.
• We may be affected by the currency peg system in Hong Kong.
• Prior to this offering there has been no public market for Raytech Holdings Ordinary Shares and the sales of our Ordinary Shares by the selling shareholders pursuant to the Resale Prospectus filed contemporaneously herewith, and if an active trading market does not develop you may not be able to resell Raytech Holdings Ordinary Shares at or above the price you paid, or at all.
• Although the audit report included in this prospectus is prepared by U.S. auditors who are subject to PCAOB inspections on a regular basis, there is no guarantee that future audit reports will be prepared by auditors inspected by the PCAOB and, as such, in the future investors may be deprived of the benefits of such inspection. Furthermore, trading in Raytech Holdings securities may be prohibited under the HFCA Act if the SEC subsequently determines Raytech Holdings audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, and as a result, U.S. national securities exchanges, such as the Nasdaq, may determine to delist Raytech Holdings securities. Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which would amend the HFCA Act and require the SEC to prohibit an issuers securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading.
• The recent joint statement by the SEC, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate and the U.S. House of Representatives, all call for additional and more stringent criteria to be applied to emerging market companies. These developments could add uncertainties to Raytech Holdings offering, business operations, share price and reputation.
• Nasdaq may apply additional and more stringent criteria for Raytech Holdings initial and continued listing because Raytech Holding plans to have a small public offering and our insiders will hold a large portion of Raytech Holdings listed securities.
• Raytech Holdings Ordinary Shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your Ordinary Shares to raise money or otherwise desire to liquidate your shares.
• The initial public offering price for Raytech Holdings Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.
• You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares purchased.
• Substantial future sales of Raytech Holdings Ordinary Shares or the anticipation of future sales of Raytech Holdings Ordinary Shares in the public market could cause the price of Raytech Holdings Ordinary Shares to decline.
• Raytech Holding does not intend to pay dividends for the foreseeable future.
• The offering price of this underwritten public offering and resale offering could differ.
• The resale by the selling shareholders may cause the market price of our Ordinary Shares to decline.
• If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding Raytech Holdings Ordinary Shares, the price of Raytech Holdings Ordinary Shares and trading volume could decline.
• Raytech Holding may experience extreme stock price, making it difficult for prospective investors to assess the rapidly changing value of Raytech Holdings Ordinary Shares, and such volatility may subject Raytech Holding to securities litigation.
• You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because Raytech Holding is incorporated under British Virgin Islands law.
• As a foreign private issuer, Raytech Holding is permitted to, and Raytech Holding will, rely on exemptions from certain Nasdaq Stock Exchange corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of Raytech Holdings shares.
• If Raytech Holding cannot satisfy, or continue to satisfy, the initial listing requirements and other rules of the Nasdaq Capital Market, although it is exempt from certain corporate governance standards applicable to US issuers as a Foreign Private Issuer, Raytech Holdings securities may not be listed or may be delisted, which could negatively impact the price of Raytech Holdings securities and your ability to sell them.
• Because our business is conducted in Hong Kong dollars and the price of Raytech Holdings Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments.
• Raytech Holding has broad discretion in the use of the net proceeds from this offering and may not use them effectively.
• Raytech Holdings pre-IPO shareholders will be able to sell their shares after completion of this offering subject to restrictions under Rule 144.
• There can be no assurance that Raytech Holding will not be a passive foreign investment company (PFIC), for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of Raytech Holdings Ordinary Shares.

Future Outlook

The company aims to become a leading product design and development company in the personal care and lifestyle electrical appliances industry in Asia, with plans to expand into new product lines and markets.

Industry Context

The global personal care electrical appliances market is expected to reach US$30.2 billion by 2028, representing a growth rate (CAGR) of 5.5% during 2023-2028. Asia Pacific is anticipated to be the fastest growing market during the forecast period.

Comparison to Industry Standards

• The major sellers in the global personal care appliances sector include: Conair Corporation, Dyson Ltd, Helen of Troy Limited, Colgate-Palmolive Company, Koninklijke Philips N.V., The Procter & Gamble Company, The Wahl Clipper Corporation, Vega Industries Pvt Ltd, Panasonic Corporation, Samsung Electronics Co., Ltd., LG Corporation, and Braun GmbH.
• Panasonic Corp is the major seller which represented 44.8% of the market share in the personal care electrical appliance industry in Japan in 2023.
• Koizumi Seiki Corp., Tescom Co. Ltd., Procter & Gamble Far East Inc., Philips Electronics Japan Ltd. and Hitachi Appliances Inc represented 7.6%, 7.6%, 5.9%, 3.6% and 3.3%, respectively, of the total market share in Japanese personal care electrical appliance industry.

Related Party Transactions

• Zhongshan Raytech Electrical Appliances Manufacturing Co. Ltd., a mainland China-based corporation controlled by our founder, Chairman and CEO, Mr. Tim Hoi Ching, and (ii) Zhongshan Leimi Electrical Appliances Company Limited (Zhongshan Leimi), a mainland China-based corporation.
• For the year ended March 31, 2023, payments to each of Zhongshan Raytech and Zhongshan Leimi accounted for 83.1% and 10.4%, respectively, of the total manufacturing costs of the Company.
• For the year ended March 31, 2022, payments to each of Zhongshan Raytech and Zhongshan Leimi accounted for 77.3% and 22.3%, respectively, of the total manufacturing costs of the Company.
• For the six months ended September 30, 2023, payments to Zhongshan Raytech accounted for 92.7% of the total manufacturing costs of the Company.
• For the six months ended September 30, 2022, payments to each of Zhongshan Raytech and Zhongshan Leimi accounted for 82.9% and 17.1%, respectively, of the total manufacturing costs of the Company.

Stakeholder Impact

• Shareholders: Dilution of ownership, potential for stock price volatility, and dependence on management's ability to effectively use proceeds from the offering.
• Employees: Potential for increased hiring and expansion of the company, but also potential risks related to the company's financial performance and regulatory compliance.
• Customers: Continued access to personal care electrical appliances, but potential risks related to product quality and safety.
• Suppliers: Continued business relationships, but potential risks related to the company's financial stability and ability to pay for goods and services.
• Creditors: Potential risks related to the company's ability to repay debt, but also potential benefits from the company's growth and expansion.

Next Steps

• Obtain final approval from Nasdaq for listing.
• Complete the initial public offering.
• Implement plans for brand promotion and marketing.
• Recruit additional experienced staff.
• Explore strategic investments and acquisitions.

Key Dates

Keywords

Raytech Holding, IPO, Ordinary Shares, Nasdaq, Personal Care Appliances, Hong Kong, Revere Securities, Emerging Growth Company, Risk Factors, Resale Prospectus