F-1/A: Roma Green Finance Eyes $1.26 Million in Best Efforts Self-Underwritten Offering

Roma Green Finance is launching a best efforts self-underwritten offering to sell up to 3,600,000 ordinary shares at a discounted price of US$0.351 per share.

Summary

• Roma Green Finance Limited is undertaking a best efforts self-underwritten offering of up to 3,600,000 ordinary shares.
• The offering price is fixed at US$0.351 per share, representing a 32% discount from the last reported sale price on June 6, 2024.
• The company aims to raise up to US$1,263,600 before expenses.
• There is no minimum offering amount required to close the offering.
• The offering will terminate after 90 days if all shares are not sold, and may not be extended.
• The company plans to use the net proceeds for branding and marketing, investments in ESG-related initiatives, and general working capital.
• Upon completion of the offering, the company will have 15,564,571 ordinary shares outstanding.
• Top Elect Group Limited will remain the controlling shareholder with 39.01% ownership after the offering.
• The company acknowledges risks associated with operating in Hong Kong and potential regulatory impacts from the PRC government.
• The company is an Emerging Growth Company and a Foreign Private Issuer, entitling it to reduced reporting requirements.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company is pursuing growth strategies and operating in a growing industry, it faces significant financial challenges, regulatory risks, and market uncertainties. The discounted offering price and Nasdaq deficiency notice raise concerns about the company's financial health.

Positives

• The company aims to strengthen its market position in the ESG industry.
• The company has an experienced management team.
• The company is expanding its worldwide footprint.
• The company is recruiting and retaining professionals.

Negatives

• The company incurred net losses for the six months ended September 30, 2023 and 2022 and the year ended March 31, 2023.
• The company's revenues, operating income and cash flows are likely to fluctuate.
• The company's revenues are unpredictable due to the nature of its business.
• The company has a limited operating history and its future revenue and profits are subject to uncertainties.
• The company may be unable to successfully implement its business strategies and future plans for its Operating Subsidiaries.
• The company received a deficiency notice from Nasdaq for not maintaining a minimum bid price of $1.00 per share.

Risks

• The company's revenues, operating income and cash flows are likely to fluctuate.
• The company incurred net losses for the six months ended September 30, 2023 and 2022 and the year ended March 31, 2023 and may be unable to generate sufficient operating cash flows and working capital to continue as a going concern.
• The company relies on its management team and other key personnel in operating its business.
• The company's revenues are unpredictable due to the nature of its business.
• The company has a limited operating history and its future revenue and profits are subject to uncertainties.
• The company may be unable to successfully implement its business strategies and future plans for its Operating Subsidiaries.
• Possible adverse impact on the company's business as a result of a loss of business reputation or negative publicity due to, among others, substandard quality of work or reports.
• In general, the company does not enter into long-term contracts with its clients, which may expose the company to potential uncertainty with respect to its revenue from time to time.
• The company is subject to potential exposure to professional liabilities.
• The company may be adversely affected by the losses or liabilities arising from misstatement or leakage of confidential information handled by the company.
• The company's business may face risks of clients default on payment.
• The company may be inadequately insured against losses and liabilities arising from its operations.
• The company may be exposed to risks in relation to compliance standards.
• The company may be exposed to risks relating to its computer hardware system and data storage.
• The company's Group's business may be adversely affected by the downturn of Hong Kong's economy or stock market owing to unforeseen circumstances.
• The company may be adversely affected by changes in the laws and regulations governing its customers and the stock exchanges in which they are listed.
• If the company fails to implement and maintain an effective system of internal controls, it may be unable to accurately or timely report its results of operations or prevent fraud, and investor confidence and the market price of its Ordinary Shares may be materially and adversely affected.
• The company's Operating Subsidiaries' business and operations may be materially and adversely affected in the event of a re-occurrence or a prolonged global pandemic outbreak of COVID-19.
• A downturn in the Hong Kong or global economy, or a change in economic and political policies of the PRC, could materially and adversely affect the company's Hong Kong Operating Subsidiary's business and financial condition.
• Substantially all of the company's operations are in Hong Kong. However, due to the long arm provisions under the current PRC laws and regulations, the Chinese government may exercise significant oversight and discretion over the conduct of the company's business and may intervene in or influence its operations at any time, which could result in a material change in the company's operations and/or the value of its Ordinary Shares. The enforcement of laws and that rules and regulations in China can change quickly with little advance notice. The Chinese government may intervene or influence the company's Operating Subsidiaries' operations at any time, or may exert more control over securities offerings conducted overseas and/or foreign investment in Hong Kong-based issuers, which could result in a material change in the company's Operating Subsidiaries' operations and/or the value of the Ordinary Shares.
• Although the company is based in Hong Kong, if it should become subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, it may have to expend significant resources to investigate and/or defend the allegations, which could harm the company's Hong Kong Operating Subsidiary's business operations, this offering and its reputation, and could result in a loss of your investment in the company's Ordinary Shares if such allegations cannot be addressed and resolved favorably.
• There are political risks associated with conducting business in Hong Kong.
• Changes in international trade policies, trade disputes, barriers to trade or the emergence of a trade war may dampen growth in Hong Kong and other markets where the majority of the company's Operating Subsidiary's customers reside.
• The company may rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements it may have, and any limitations or restrictions, prohibitions, interventions or limitations by the PRC government on the ability of the company or its Operating Subsidiaries to transfer cash or assets in or out of Hong Kong may result in these funds or assets not being available to fund operations or for other uses outside of Hong Kong, which on the ability of the Operating Subsidiaries to make payments to the company could have a material and adverse effect on the business.
• The PCAOB's HFCAA Determination report that the Board is unable to inspect or investigate completely registered public accounting firms headquartered in China or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in China or Hong Kong could result in the prohibition of trading in the company's securities by not being allowed to list on a U.S. exchange, and as a result an exchange may determine to delist the company's securities, which would materially affect the interest of its investors.
• 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 the company's Hong Kong subsidiaries, including one of its Operating Subsidiaries.
• The company may become subject to a variety of PRC laws and other regulations regarding data security or securities offerings that are conducted overseas and/or other foreign investment in China-based issuers, and any failure to comply with applicable laws and regulations could have a material and adverse effect on the company's business, financial condition and results of operations and may hinder its ability to offer or continue to offer Ordinary Shares to investors and cause the value of the company's Ordinary Shares to significantly decline or be worthless.
• The Hong Kong legal system is subject to uncertainties which could limit the legal protections available to RRA.
• The company is selling this offering without an underwriter and may be unable to sell any shares.
• The trading price for the company's Ordinary Shares may fluctuate significantly.
• The company may not maintain the listing of its Ordinary Shares on the Nasdaq Capital Market, which could limit investors' ability to make transactions in its Ordinary Shares and subject the company to additional trading restrictions.
• The trading price of the company's Ordinary Shares may be volatile, which could result in substantial losses to investors.
• If securities or industry analysts do not publish research or reports about the company's business, or if they adversely change their recommendations regarding its shares, the market price for its shares and trading volume could decline.
• The sale or availability for sale of substantial amounts of the company's Ordinary Shares could adversely affect their market price.
• Short selling may drive down the market price of the company's Ordinary Shares.
• Because the company does not expect to pay dividends in the foreseeable future, you must rely on price appreciation of its Ordinary Shares for a return on your investment.
• Because the company's public offering price is substantially higher than its net tangible book value per share, you will experience immediate and substantial dilution.
• You must rely on the judgment of the company's management as to the uses of the net proceeds from this offering, and such uses may not produce income or increase the company's share price.
• If the company is classified as a passive foreign investment company, United States taxpayers who own its securities may have adverse United States federal income tax consequences.
• The company's controlling shareholder has substantial influence over the Company. Its interests may not be aligned with the interests of its other shareholders, and it could prevent or cause a change of control or other transactions.
• As a company incorporated in the Cayman Islands, the company is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if the company complied fully with Nasdaq corporate governance listing standards.
• You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because the company is incorporated under Cayman Islands law.
• Certain judgments obtained against the company by its shareholders may not be enforceable.
• The company is an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
• The company is a foreign private issuer within the meaning of the rules under the Exchange Act, and as such it is exempt from certain provisions applicable to United States domestic public companies.
• The company may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.
• 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 the company's offering, business operations, share price and reputation.
• The company's Ordinary Shares may be prohibited from being traded on a national exchange under the HFCA Act, if the Public Company Accounting Oversight Board (the PCAOB) is unable to inspect its auditors for three consecutive years, or two years if the U.S. House of Representatives passes the bill discussed above and such bill is signed into law, reducing the number of years from three to two. The delisting of the company's Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Future Outlook

The company intends to sustain continuous growth in its business and strengthen its market position in the environmental, social and governance industry in Hong Kong, Singapore and elsewhere with the following strategies: continuing to increase its market penetration in Hong Kong and Singapore; expanding its worldwide footprint in particular the US; recruiting and retaining professionals; and pursing strategic acquisitions.

Industry Context

The ESG consulting services market is growing due to increasing investor demand, regulatory drives, and the establishment of sustainable and green exchanges.

Comparison to Industry Standards

• The ESG consulting services industry in Hong Kong sees increased competition, primarily due to the on-going regulatory reforms, rapid technological innovation, evolving industry standards, and increasing demand for higher levels of client experience.
• The market is relatively fragmented as estimated there were over 200 market participants in the ESG consulting services industry in Hong Kong.
• In Singapore, ESG consulting services market is comparatively fragmented with over 80 market participants.
• Compared with Hong Kong and Singapore, the ESG consulting market in the U.S. is more mature and it is competitive with over 1,000 market participants in the U.S., providing comprehensive ESG consulting services.
• The major market participants include Ernst & Young, KKS Advisors, Advisian, Allianz Global Corporate & Specialty and GreenCo Sustainability Consultants.

Stakeholder Impact

• Shareholders face potential dilution from the new share issuance.
• Shareholders face the risk of the share price declining if the company fails to regain compliance with Nasdaq listing requirements.
• The company's ability to execute its business plan depends on the success of the offering and the effective use of proceeds.

Next Steps

• The company will proceed with the best efforts self-underwritten offering.
• The company will attempt to regain compliance with Nasdaq's minimum bid price rule by November 13, 2024.
• The company will use the net proceeds from the offering for branding and marketing, investments in ESG-related initiatives, and general working capital.

Key Dates

Keywords

ESG, self-underwritten offering, ordinary shares, Roma Green Finance, sustainability, Hong Kong, Singapore, regulatory risks, financial performance, risk management, corporate governance