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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-42014
TOP WEALTH GROUP HOLDING LIMITED
(Exact name of Registrant as specified in its charter)
Cayman Islands
(Jurisdiction of incorporation or organization)
Units 714 & 715, Hong Kong Plaza
188 Connaught Road West
Hong Kong
(Address of principal executive offices)
Telephone: +852 36158567
Email:ir@topwealth.cc
Units 714 & 715, Hong Kong Plaza
Connaught Road West
Hong Kong
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Class A Ordinary Shares, par value $0.009 per share | TWG | The Nasdaq Stock Market LLC (Nasdaq Capital Market) |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 1,427,901 shares of Class A ordinary shares issued and outstanding and 166,667 Class B ordinary shares issued and outstanding as of December 31, 2025.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | ||
| Emerging growth company ☒ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☒ | International Financial Reporting Standards as issued | Other ☐ | ||
| by the International Accounting Standards Board ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
☐ Yes ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐ Yes ☐ No
Table of Contents
INTRODUCTION
Except where the context otherwise requires and for purposes of this annual report only the term:
| ● | “China” or “PRC” are to the People’s Republic of China, excluding, for the purpose of this annual report only, Taiwan region, Hong Kong, and Macau; |
| ● | “Class A Ordinary Shares” are to the Class A ordinary shares of Top Wealth Group Holding Limited, par value US$0.009 per share; |
| ● | “Class B Ordinary Shares” are to the Class B ordinary shares of Top Wealth Group Holding Limited, par value US$0.009 per share; |
| ● | “HK$” or “Hong Kong dollars” are to the legal currency of Hong Kong; |
| ● | “Hong Kong” is to Hong Kong Special Administrative Region of the People’s Republic of China; | |
| ● | “Mainland China” or “mainland China” are to the mainland of the People’s Republic of China, excluding Hong Kong and Macau; |
| ● | “Ordinary Shares” are to the Class A and Class B ordinary shares of Top Wealth Group Holding Limited, par value US$0.009 per share; | |
| ● | “Operating Subsidiaries” refers to TW HK and Airentity Technology Limited; |
| ● | “PRC government” are to the government and governmental authorities of Mainland China, for the purpose of this annual report only; |
| ● | “SEC” is to the United States Securities and Exchange Commission; |
| ● | “TW BVI” are to Top Wealth (BVI) Holding Limited; |
| ● | “TW Cayman” or the “Company” are to Top Wealth Group Holding Limited, a Cayman Islands exempted company, that is the holding company of our businesses; |
| ● | “TW HK” refers to Top Wealth Group (International) Limited; |
| ● | “US$” or “U.S. dollars” refers to the legal currency of the United States; |
| ● | “Winwin Development (BVI)” refers to Winwin Development Group Limited; and |
| ● | “we,” “us,” “our”, or “the Group”, refers to Top Wealth Group Holding Limited, the Cayman Islands holding company of our businesses, and/or its subsidiaries, as the context requires. |
This annual report on Form 20-F includes our audited consolidated financial statements for the years ended December 31, 2025, 2024, and 2023. In this annual report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of Hong Kong dollars to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets.
This annual report contains translations of certain Hong Kong dollar amounts into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this annual report:
| December 31, | ||||||||||||
| US$ Exchange Rate | 2025 | 2024 | 2023 | |||||||||
| At the end of the year – HK$ | HK$7.8 to $1.00 | HK$7.8 to $1.00 | HK$7.8 to $1.00 | |||||||||
| Average rate for the year – HK$ | HK$7.8 to $1.00 | HK$7.8 to $1.00 | HK$7.8 to $1.00 | |||||||||
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions in this annual report. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
| ● | our goals and strategies; |
| ● | our future business development, financial condition and results of operations; |
| ● | prices and availability of raw materials for our products,; |
| ● | expected changes in our revenues, costs or expenditures; |
| ● | our expectations regarding the demand for and market acceptance of our products; |
| ● | changes in our relationships with significant customers, suppliers, and other business relationships; |
| ● | competition in our industry; |
| ● | uncertainties associated with our ability to implement our business strategy and to innovate successfully; |
| ● | any event that could have a material adverse effect on our brands or reputation, such as product contamination or quality control difficulties; |
| ● | government policies and regulations relating to our industry; |
| ● | our ability to obtain, maintain or procure all necessary certifications, approvals, and/or licenses to conduct our business, and in the relevant jurisdictions in which we operate; |
| ● | other factors that may affect our financial condition, liquidity and results of operations; and |
| ● | other risk factors discussed under “Item 3. Key Information — 3.D. Risk Factors.” |
We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this annual report, whether as a result of new information, future events, changes in assumptions, or otherwise.
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable for annual reports on Form 20-F.
Item 2. Offer Statistics and Expected Timetable
Not applicable for annual reports on Form 20-F.
Item 3. Key Information
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not applicable for annual reports on Form 20-F.
3.C. Reasons for the Offer and Use of Proceeds
Not applicable for annual reports on Form 20-F.
3.D. Risk Factors
You should carefully consider the following risk factors, together with all of the other information included in this Annual Report. Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this Annual Report before making an investment decision. The risks and uncertainties described below represent our known material risks to our business. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, you may lose all or part of your investment.
Risks Related to Doing Business in the Jurisdictions in which We Operate
All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, 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 Class A Ordinary Shares. Our Operating Subsidiaries in Hong Kong may be subject to laws and regulations of the Mainland China, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Class A Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of laws of the PRC may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.
Our Operating Subsidiaries are located and operate their business in Hong Kong, a special administrative region of the PRC. Our Operating Subsidiaries do not have operation in Mainland China and are not regulated by any regulator in Mainland China. As a result, the laws and regulations of the Mainland China do not currently have any material impact on our business, financial condition and results of operation. Furthermore, except for the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (“Basic Law”), national laws of the Mainland China do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. National laws and regulations relating to data protection, cybersecurity and the anti-monopoly have not been listed in Annex III and so do not apply directly to Hong Kong.
However, due to long arm provisions under the current Mainland China laws and regulations, there remain regulatory and legal uncertainty with respect to the implementation of laws and regulations of Mainland China to Hong Kong. As a result, there is no guarantee that the PRC government may not choose to implement the laws of the Mainland China to Hong Kong and exercise significant direct influence and discretion over the operation of our Operating Subsidiaries in the future and, it will not have a material adverse impact on our business, financial condition and results of operations, due to changes in laws, political environment or other unforeseeable reasons.
In the event that we or our Hong Kong Operating Subsidiaries were to become subject to laws and regulations of Mainland China, the legal and operational risks associated in Mainland China may also apply to our operations in Hong Kong, and we face the risks and uncertainties associated with the legal system in the Mainland China, complex and evolving Mainland China laws and regulations, and as to whether and how the recent PRC government statements and regulatory developments, such as those relating to data and cyberspace security and anti-monopoly concerns, would be applicable to companies like our Operating Subsidiaries and us, given the substantial operations of our Operating Subsidiaries in Hong Kong and the PRC government may exercise significant oversight over the conduct of business in Hong Kong.
The laws and regulations in the Mainland China are evolving, and their enactment timetable, interpretation, enforcement, and implementation involve significant uncertainties, and may change quickly with little advance notice, along with the risk that the PRC government may intervene or influence our Operating Subsidiaries’ operations at any time could result in a material change in our operations and/or the value of our securities. Moreover, there are substantial uncertainties regarding the interpretation and application of Mainland China laws and regulations including, but not limited to, the laws and regulations related to our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.
The laws, regulations, and other government directives in the Mainland China may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:
| ● | delay or impede our development; |
| ● | result in negative publicity or increase our operating costs; |
| ● | require significant management time and attention; |
| ● | cause devaluation of our securities or delisting; and, |
| ● | subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business operations. |
The PRC government may intervene or influence the Hong Kong operations of an offshore holding company, such as ours, at any time. The PRC government may exert more control over offerings conducted overseas and/or foreign investment in Hong Kong-based issuers. If the PRC government exerts more oversight and control over offerings that are conducted overseas and/or foreign investment in Hong Kong-based issuers and we were to be subject to such oversight and control, it may result in a material adverse change to our subsidiaries’ business operations, including our subsidiaries’ operations in Hong Kong.
As a company mainly conducting business in Hong Kong, a special administrative region of China and our subsidiaries’ clients include mainland China residents, our subsidiaries’ business and our prospects, financial condition, and results of operations may be influenced to a significant degree by political, economic, and social conditions in China generally. The PRC government may intervene or influence the operations in mainland China of an offshore holding company at any time, which, if extended to our subsidiaries’ operations in Hong Kong, could result in a material adverse change to our subsidiaries’ operations. The PRC government has recently indicated an intent to exert more oversight and control over listings conducted overseas and/or foreign investment in issuers based in mainland China. For instance, on July 6, 2021, the relevant PRC governmental authorities promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, which emphasized the need to strengthen the supervision over overseas listings by companies in mainland China. We cannot assure you that the oversight will not be extended to companies operating in Hong Kong like us and any such action may significantly limit or completely hinder our ability to offer or continue to offer our securities to investors, result in a material adverse change to our subsidiaries’ business operations, including our subsidiaries’ Hong Kong operations, and damage our reputation.
Our subsidiaries’ business, our financial condition and results of operations, and/or the value of our Class A Ordinary Shares or our ability to offer or continue to offer securities to investors may be materially and adversely affected by existing or future PRC laws and regulations which may become applicable to our subsidiaries.
We have no operations in Mainland China. However, our Operating Subsidiaries are located and operate in Hong Kong, a special administrative region of the PRC, there is no guarantee that if certain existing or future PRC laws become applicable to our subsidiaries, it will not have a material adverse impact on our subsidiaries’ business, financial condition and results of operations and/or our ability to offer or continue to offer securities to investors.
Except for the Basic Law of the Hong Kong Special Region of the People’s Republic of China (“Basic Law”), national laws of mainland China (“National Laws”) do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National Laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. PRC laws and regulations relating to data protection, cyber security and the anti-monopoly have not been listed in Annex III and thus they may not apply directly to Hong Kong.
The PRC laws and regulations are evolving, and their enactment timetable, interpretation and implementation involve significant uncertainties. To the extent any PRC laws and regulations become applicable to our subsidiaries, we may be subject to the risks and uncertainties associated with the legal system in mainland China, including with respect to the enforcement of laws and the possibility of changes of rules and regulations with little or no advance notice.
We may also become subject to the PRC laws and regulations to the extent our subsidiaries commence business and customer facing operations in mainland China as a result of any future acquisition, expansion or organic growth. There is no guarantee that this will continue to be the case in the future in relation to the continued listing of our securities on a securities exchange outside of the PRC, or even when such permission is obtained, it will not be subsequently denied or rescinded. It remains uncertain as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offering and other capital markets activities and due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future, it remains uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our operating subsidiaries located in Hong Kong. It is also uncertain whether the Hong Kong government will be mandated by the PRC government, despite the constitutional constraints of the Basic Law, to control over offerings conducted overseas and/or foreign investment of entities in Hong Kong, including our operating subsidiaries. Any actions by the PRC government to exert more oversight and control over offerings (including businesses whose primary operations are in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.
The PRC government may exert substantial influence and discretion over mainland China residents and the manner in which companies incorporated under the PRC laws must conduct their business activities. Through our subsidiaries, we are a Hong Kong-based company with no operations in mainland China, and mainland China residents may purchase our subsidiaries’ product in Hong Kong. If we were to become subject to such direct influence or discretion, it may result in a material change in our subsidiaries’ operations.
We currently have no operations in mainland China. Our principal executive offices are located, and our subsidiaries operate, in Hong Kong, a special administrative region of China. In addition, we do not solicit any client or collect, store or process in mainland China any personal data of any client. As of the date of this Annual Report, the PRC government has not exerted direct influence and discretion over the manner in which our subsidiaries conduct their business activities outside of mainland China. However, there is no guarantee that we will not be subject to such direct influence or discretion in the future due to changes in laws or other unforeseeable reasons or as a result of our expansion or acquisition of operations in mainland China, considering our subsidiaries’ clients include residents of mainland China.
The legal system of mainland China is evolving rapidly and the PRC laws, regulations, and rules may change quickly with little advance notice. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the non-precedential nature of these decisions, the interpretation of these laws, rules and regulations may contain inconsistences, the enforcement of which involves uncertainties. The PRC government may exercise substantial control over many sectors of the economy in mainland China through regulation and/or state ownership. Government actions have had, and may continue to have, a significant effect on economic conditions in mainland China and businesses which are subject to such government actions.
If we or our subsidiaries to become subject to the direct intervention or influence of the PRC government at any time due to changes in laws or other unforeseeable reasons or as a result of our development, expansion or acquisition of operations in mainland China, it may require a material change in our subsidiaries’ operations and/or result in increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China could adversely affect us and limit the legal protections available to you and us.
Our Hong Kong subsidiaries were formed under and are governed by the laws of Hong Kong, however, we may be subject to the uncertainties of PRC legal system. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference, but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general, such as foreign investment, corporate organization and governance, commerce, taxation and trade. As a significant part of our business is conducted in Hong Kong, our operations may be governed by PRC laws and regulations. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us. In addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other PRC government authorities (including local government authorities), thus making strict compliance with all regulatory requirements impractical, or in some circumstances impossible. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRC administrative and court authorities have discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede our ability to continue our operations.
Furthermore, if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, we may incur increased compliance costs or become subject to additional restrictions in our operations. Intellectual property rights and confidentiality protections in China may also not be as effective as in the United States or other countries. In addition, we cannot predict the effects of future developments in the PRC legal system on our business operations, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors, including you. Moreover, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.
If we and/or our subsidiaries were to be required to comply with cybersecurity, data privacy, data protection, or any other PRC laws and regulations related to data and we and/or our subsidiaries cannot comply with such PRC laws and regulations, our subsidiaries’ business, financial condition, and results of operations may be materially and adversely affected.
We may be subject to a variety of cybersecurity, data privacy, data protection, and other PRC laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations apply not only to third-party transactions, but also to transfers of information within our organization. These laws and regulations may restrict our subsidiaries’ business activities and require us and/or our subsidiaries to incur increased costs and efforts to comply, and any breach or noncompliance may subject us and/or our subsidiaries to proceedings against such entity(ies), damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our subsidiaries’ business and our financial condition and results of operations.
As the laws and regulations related to cybersecurity, data privacy, and data protection in mainland China where our subsidiaries do not have operations are relatively new and evolving, and their interpretation and application may be uncertain, it is still unclear if we and/or our subsidiaries may become subject to such new laws and regulations.
The PRC Data Security Law, or the Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress on June 10, 2021 and took effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. According to Article 2 of the Data Security Law, it applies to data processing activities within the territory of mainland China as well as data processing activities conducted outside the territory of mainland China which jeopardize the national interest or the public interest of China or the rights and interest of any PRC organization and citizens. Any entity failing to perform the obligations provided in the Data Security Law may be subject to orders to correct, warnings and penalties including ban or suspension of business, revocation of business licenses or other penalties. As of the date of this Annual Report, we do not have any operation or maintain any office or personnel in mainland China, and we have not conducted any data processing activities which may endanger the national interest or the public interest of China or the rights and interest of any Chinese organization and citizens. Therefore, we do not believe that the Data Security Law is applicable to us.
On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. According to Article 3 of the Personal Information Protection Law, it is applied not only to personal information processing activities carried out in the territory of mainland China but also to personal information processing activities outside the mainland China for the purpose of offering products or services to domestic natural persons in the territory of mainland China. The offending entities could be ordered to correct, or to suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties. As our subsidiaries’ services are provided in Hong Kong, Cayman Islands, British Virgin Islands and the U.S. rather than in the mainland China to clients worldwide, including but not limited to clients of mainland China who visit our offices in these locations, we take the view that we and our subsidiaries are not subject to the Personal Information Protection Law.
On July 7, 2022, the Cyberspace Administration of China (the “CAC”) issued the Measures for Security Assessment of Outbound Data Transfer, or the Measures, which took effect on September 1, 2022. According to the Measures, in addition to the self-risk assessment requirement for provision of any data outside mainland China, a data processor shall apply to the competent cyberspace department for data security assessment and clearance of outbound data transfer in any of the following events: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by an operator of critical information infrastructure or a data processor which has processed more than one million users’ personal data; (iii) outbound transfer of personal information by a data processor which has made outbound transfers of more than one hundred thousand users’ personal information or more than ten thousand users’ sensitive personal information cumulatively since January 1 of the previous year; (iv) such other circumstances where ex-ante security assessment and evaluation of cross-border data transfer is required by the CAC. As of the date of this Annual Report, we and our subsidiaries have not collected, stored, or managed any personal information in mainland China. therefore, we believe that the Measures is not applicable to us.
However, given the recency of the issuance of the above PRC laws and regulations related to cybersecurity and data privacy, we and our subsidiaries still face uncertainties regarding the interpretation and implementation of these laws and regulations and we could not rule out the possibility that any PRC governmental authorities may subject us and/or our subsidiaries to such laws and regulations in the future. If they are deemed to be applicable to us and/or our subsidiaries, we cannot assure you that we and our subsidiaries will be compliant with such new regulations in all respects, and we and/or our subsidiaries may be ordered to rectify and terminate any actions that are deemed illegal by the PRC governmental authorities and become subject to fines and other government sanctions, which may materially and adversely affect our subsidiaries’ business and our financial condition and results of operations.
If we and/or our subsidiaries were to be required to obtain any permission or approval from or complete any filing procedure with the China Securities Regulatory Commission (the “CSRC”), the CAC, or other PRC governmental authorities in connection with future follow-on offerings under PRC laws, we and/or our subsidiaries may be fined or subject to other sanctions, and our subsidiaries’ business and our reputation, financial condition, and results of operations may be materially and adversely affected.
The Cybersecurity Review Measures jointly promulgated by the CAC and other relevant PRC governmental authorities on December 28, 2021 required that, among others, “critical information infrastructure” or network platform operators holding over one million users’ personal information to apply for a cybersecurity review before any public offering on a foreign stock exchange. However, this regulation is recently issued and there remain substantial uncertainties about its interpretation and implementation.
As of the date of this Annual Report, we and our subsidiaries do not have any business operation or maintain any office or personnel in mainland China. We and our subsidiaries have not collected, stored, or managed any personal information in mainland China. Based on our inquiry with the China Cybersecurity Review Technology and Certification Center (the “CCRC”) and the assessment conducted by the management, we believe that we and our subsidiaries are not currently required to proactively apply to a cybersecurity review for our future follow-on offerings overseas, on the basis that (i) our subsidiaries are incorporated in Hong Kong, the British Virgin Islands, and other jurisdictions outside of mainland China and operate in Hong Kong without any subsidiary or variable interest entities (“VIE”) structure in mainland China, and we do not maintain any office or personnel in mainland China; (ii) except for the Basic Law, the National Laws do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation, and National Laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong, and PRC laws and regulations relating to data protection and cyber security have not been listed in Annex III as the date of this Annual Report; (iii) our data processing activities are solely carried out by our overseas entities outside of mainland China for the purpose of offering products or services in Hong Kong and other jurisdictions outside of mainland China; (iv) we and our subsidiaries do not control more than one millions users’ personal information as of the date of this Annual Report; (v) as of the date of this Annual Report, we and our subsidiaries have not received any notice of identifying us as critical information infrastructure from any relevant PRC governmental authorities; (vi) as of the date of this Annual Report, none of us or our subsidiaries have been informed by any PRC governmental authority of any requirement for a cybersecurity review; and (vii) based on our inquiry with the CCRC, the officer who provides cybersecurity review consultation service under CCRC believes that we are currently not required to apply to a cybersecurity review for our public offerings on a foreign stock exchange with the CAC because we neither currently have any operation in mainland China nor control more than one millions users’ personal information as of the date of this Annual Report. Additionally, we believe that we and our subsidiaries are compliant with the regulations and policies that have been issued by the CAC to date and there was no material change to these regulations and policies. However, regulatory requirements on cybersecurity and data security in the mainland China are constantly evolving and can be subject to varying interpretations or significant changes, which may result in uncertainties about the scope of our responsibilities in that regard. We will closely monitor and assess the implementation and enforcement of the Cybersecurity Review Measures. If the Cybersecurity Review Measures mandates clearance of cybersecurity and/or data security regulators and other specific actions to be completed by companies like us, we may face uncertainties as to whether we can meet such requirements timely, or at all.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which took effect on March 31, 2023. The Trial Measures requires companies in mainland China that seek to offer and list securities overseas, both directly and indirectly, to fulfill the filing procedures with the CSRC. According to the Trial Measures, the determination of the “indirect overseas offering and listing by companies in mainland China” shall comply with the principle of “substance over form” and particularly, an issuer will be required to go through the filing procedures under the Trial Measures if the following criteria are met at the same time: (i) 50% or more of the issuer’s operating revenue, total profits, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by companies in mainland China; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China. On the same day, the CSRC held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (i) on or prior to the effective date of the Trial Measures, companies in mainland China that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges shall complete the filing before the completion of their overseas offering and listing; and (ii) companies in mainland China which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges and are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority or stock exchange, but have not completed the indirect overseas listing, shall complete the overseas offering and listing before September 30,2023, and failure to complete the overseas listing within such six-month period will subject such companies to the filing requirements with the CSRC.
Based on the assessment conducted by the management, we are not subject to the Trial Measures, because we are incorporated in the Cayman Islands and our subsidiaries are incorporated in Hong Kong, the British Virgin Islands and other regions outside of mainland China and operate in Hong Kong without any subsidiary or VIE structure in mainland China, and we do not have any business operations or maintain any office or personnel in mainland China. However, as the Trial Measures and the supporting guidelines are newly published, there exists uncertainty with respect to the implementation and interpretation of the principle of “substance over form”. As of the date of this Annual Report, there was no material change to these regulations and policies. If our future follow-on offerings, and listing were later deemed as “indirect overseas offering and listing by companies in mainland China” under the Trial Measures, we may need to complete the filing procedures for our future follow-on offerings, and listing. If we are subject to the filing requirements, we cannot assure you that we will be able to complete such filings in a timely manner or even at all.
Since these statements and regulatory actions are new, it is also highly uncertain in the interpretation and the enforcement of the above cybersecurity and overseas listing laws and regulation. There is no assurance that the relevant PRC governmental authorities would reach the same conclusion as us. If we and/or our subsidiaries are required to obtain approval or fillings from any governmental authorities, including the CAC and/or the CSRC, in connection with the listing or continued listing of our securities on a stock exchange outside of Hong Kong or mainland China, it is uncertain how long it will take for us and/or our subsidiaries to obtain such approval or complete such filing, and, even if we and our subsidiaries obtain such approval or complete such filing, the approval or filing could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from or complete the necessary filing procedure with the PRC governmental authorities to conduct offerings or list outside of Hong Kong or mainland China may subject us and/or our subsidiaries to sanctions imposed by the PRC governmental authorities, which could include fines and penalties, suspension of business, proceedings against us and/or our subsidiaries, and even fines on the controlling shareholder and other responsible persons, and our subsidiaries’ ability to conduct our business, our ability to invest into mainland China as foreign investments or accept foreign investments, or our ability to list on a U.S. or other overseas exchange may be restricted, and our subsidiaries’ business, and our reputation, financial condition, and results of operations may be materially and adversely affected.
Our Hong Kong subsidiaries may be subject to restrictions on paying dividends or making other payments to us, which may restrict their ability to satisfy liquidity requirements, conduct business and pay dividends to holders of our Class A Ordinary Shares.
We are a holding company incorporated in the Cayman Islands with the majority of our operations in Hong Kong. Accordingly, most of our cash is maintained in Hong Kong dollars. We rely in part on dividends from our Hong Kong subsidiaries for our cash and financing requirements, such as the funds necessary to service any debt we may incur.
There is currently no restriction or limitation under the laws of Hong Kong on the conversion of Hong Kong dollars into foreign currencies and the transfer of currencies out of Hong Kong and the foreign currency regulations of mainland China do not currently have any material impact on the transfer of cash between us and our Hong Kong subsidiaries. However, there is a possibility that certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to our Hong Kong subsidiaries in the future and the PRC government may prevent our cash maintained in Hong Kong from leaving or restrict the deployment of the cash into our business or for the payment of dividends in the future. Any such controls or restrictions, if imposed in the future and to the extent cash is generated in our Hong Kong subsidiaries and to the extent assets (other than cash) in our business are located in Hong Kong or held by a Hong Kong entity and may need to be used to fund operations outside of Hong Kong, may adversely affect our ability to finance our cash requirements, service debt or make dividend or other distributions to our shareholders. Furthermore, there can be no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer or distribute cash within our organization, which could result in an inability or prohibition on making transfers or distributions to entities outside of Hong Kong and adversely affect our business.
The Chinese government may intervene or influence our Chinese supplier and its exclusive overseas agent’s operations at any time, or may exert more control over how our PRC-based supplier operate their business or cooperate with us. This could result in a material change in our PRC-based supplier’s operations and indirectly the value of our Class A Ordinary Shares.
We rely on one PRC-based sturgeon farm for our supply of caviar, with which we entered into supplier agreement through its exclusive overseas agent. The PRC government may choose to exercise significant oversight and discretion, and the policies, regulations, rules, and the enforcement of laws of the Chinese government to which our PRC-based supplier and its exclusive overseas agent is subject to may change rapidly and with little advance notice. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and may be inconsistent with our supplier or its exclusive overseas agent’s current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:
| ● | Delay or impede our supplier’s development; |
| ● | result in negative publicity or increase our supplier’s operating costs; |
| ● | require significant management time and attention; and/or |
| ● | subject us to remedies, administrative penalties and even criminal liabilities that may harm our supplier’s business, including fines assessed for our supplier’s current or historical operations, or demands or orders that our supplier modifies or even ceases their business practices. |
The PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a variable interest entity (“VIE”) structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. These regulatory actions and statements emphasize the need to strengthen the administration over illegal securities activities and the supervision of China-based companies seeking overseas listings. Additionally, companies are required to undergo a cybersecurity review if they hold large amounts of data related to issues of national security, economic development or public interest before carrying our mergers, restructuring or splits that affect or may affect national security. These statements were recently issued and their official guidance and interpretation remain unclear at this time.
The Chinese government may intervene or influence our PRC-based supplier’s operations at any time and may exert more control over offerings conducted overseas and foreign investment in China-based companies, which may result in a material change in our PRC-based operations. Any legal or regulatory changes that restrict or otherwise unfavorably impact our PRC-based supplier’s ability to conduct their business could decrease demand for their services, reduce revenues, increase costs, require them to obtain more licenses, permits, approvals or certificates, or subject them to additional liabilities. To the extent any new or more stringent measures are implemented, our supplier’s and our business, financial condition and results of operations could be adversely affected, and the value of our Class A Ordinary Shares could decrease or become worthless.
The Hong Kong legal system embodies uncertainties which could limit the legal protections available to our Operating Subsidiaries.
Hong Kong is a Special Administrative Region of the PRC. Following British colonial rule from 1842 to 1997, China assumed sovereignty under the “one country, two systems” principle. The Hong Kong Special Administrative Region’s constitutional document, the Basic Law, ensures that the current principles and policies regarding Hong Kong will remain unchanged for 50 years. Hong Kong has enjoyed the freedom to function with a high degree of autonomy for its affairs, including currencies, immigration and customs operations, and its independent judiciary system.
On July 14, 2020, the President of the U.S., Mr. Donald Trump, signed the Hong Kong Autonomy Act and an executive order to remove the preferential trade status of Hong Kong, pursuant to § 202 of the United States-Hong Kong Policy Act of 1992. The U.S. government has determined that Hong Kong is no longer sufficiently autonomous to justify preferential treatment in relation to the PRC, especially with the issuance of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) on July 1, 2020. Hong Kong will now be treated as Mainland China, in terms of visa application, academic exchange, tariffs and trading, etc. According to § 3(c) of the executive order issued on July 14, 2020, the license exception for exports and re-exports to Hong Kong and transfer within the PRC is revoked, while exports of defense items are banned. On the other hand, the existing punitive tariffs the U.S. imposed on the Mainland China will also be applied to Hong Kong exports. Losing its special status, Hong Kong’s competitiveness as a food trading hub may deteriorate in the future as its tax benefits as a result of preferential situation no longer exists and companies might prefer exporting through other cities. The level of activities of domestic exports and re-exports and other trading activities in Hong Kong may decline owing to the tariff being imposed on Hong Kong exports and the export restriction. In the event that Hong Kong loses its position as a food trading hub in Asia, the demand for food export or re-export from Hong Kong and thus our business, financial conditions and results of operations, may be adversely affected. According to the Hong Kong Policy Act Report issued by the Department of State in 2021, 2022 and 2023, since July 2020, the suspension of an agreement concerning surrender of fugitive offenders and the terminations of an agreement concerning transfer of sentenced persons and an agreement concerning certain reciprocal tax exemptions, there were no terminations pursuant to § 202(d) of the United States-Hong Kong Policy Act of 1992 or determinations under § 201(b) up to the date of this annual report. The executive order to remove the preferential trade status of Hong Kong remains in effect. Since July 2020 and as of the date of this annual report, the removal of the preferential trade status of Hong Kong did not have a material impact on our business and operations.
Amid the ongoing tariff war between the United States and China as of the date of this annual report, the Trump administration might proceed toward a removal of Chinese companies from American stock exchanges. Our shares may be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States, which will materially and adversely affect the value of your investment.
Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities between the two major economies. Besides, China is also facing the challenges of technological blockade and the economic decoupling between the U.S. and China. Any of these factors could have a material adverse effect on our business, prospects, financial condition and results of operations. Such tensions between the United States and China, and any escalation thereof, may have a negative impact on the general, economic, political, and social conditions in China.
Current and future actions or escalations by either United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on our business, financial condition and results of operations, and we cannot provide any assurance as to whether such actions will occur or the form that they may take. Amid the ongoing tariff war between the United States and China as of the date of this annual report, the Trump administration might proceed toward a removal of Chinese companies from American stock exchanges. Our shares may be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States, which will materially and adversely affect the value of your investment.
The current trade tension between the U.S. and the PRC may potentially have a negative impact on our business, financial condition and results of operations.
The U.S. government has imposed, and has proposed to impose additional, new or higher tariffs on specified products imported from PRC to penalize PRC for what it characterizes as unfair trade practices. PRC has responded by imposing, and proposing to impose additional, new or higher tariffs on specified products imported from the U.S. Certain tariffs have already been adopted by both sides, and the two countries often meet to negotiate arrangements that would include the decreasing or removal of tariffs, but we cannot assure you that the negotiations will be successful in reducing tariffs or that other tariffs will not be imposed, even if an agreement will be reached. In addition, any further escalation in trade tensions between PRC and the United States or a trade war, or the perception that such escalation or trade war could occur, may have negative impact on the economies of not only the two countries concerned, but the global economy as a whole.
Although we are currently not subject to any of those tariff measures, the proposed tariffs may adversely affect the economic growth in Mainland China, Hong Kong and other markets in which we operate, as well as the financial condition of our customers. With the potential decrease in the spending power of our target customers, we cannot guarantee that there will be no negative impact on our operations. In addition, the current and future actions or escalations by either the U.S. or PRC that affect trade relations may cause global economic turmoil and potentially have a negative impact on our business, financial condition and results of operations, and we cannot provide any assurance as to whether such actions will occur or the form that they may take.
Changes and the downturn in the economic, political, or social conditions of Hong Kong, Mainland China and other countries or changes to the government policies of Hong Kong and Mainland China could have a material adverse effect on our business and operations.
Our operations are located in Hong Kong. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in Hong Kong and Mainland China generally. Economic conditions in Hong Kong are sensitive to Mainland China and the global economic conditions. Any major changes to Hong Kong’s social and political landscape will have a material impact on our business. The Mainland China economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the economy in the Mainland China has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on Hong Kong and us.
Furthermore, on July 14, 2020, the President of the U.S., Mr. Donald Trump, signed the Hong Kong Autonomy Act and an executive order to remove the preferential trade status of Hong Kong, pursuant to § 202 of the United States-Hong Kong Policy Act of 1992. The U.S. government has determined that Hong Kong is no longer sufficiently autonomous to justify preferential treatment in relation to the PRC, especially with the issuance of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) on July 1, 2020. Hong Kong will now be treated as Mainland China, in terms of visa application, academic exchange, tariffs and trading, etc. According to § 3(c) of the executive order issued on July 14, 2020, the license exception for exports and re-exports to Hong Kong and transfer within the PRC is revoked, while exports of defense items are banned. On the other hand, the existing punitive tariffs the U.S. imposed on the Mainland China will also be applied to Hong Kong exports. Losing its special status, Hong Kong’s competitiveness as a food trading hub may deteriorate in the future as its tax benefits as a result of preferential situation no longer exists and companies might prefer exporting through other cities. The level of activities of domestic exports and re-exports and other trading activities in Hong Kong may decline owing to the tariff being imposed on Hong Kong exports and the export restriction.
In the event that Hong Kong loses its position as a food trading hub in Asia, the demand for food export or re-export from Hong Kong and thus our business, financial conditions and results of operations, may be adversely affected. According to the Hong Kong Policy Act Report issued by the Department of State in 2021, 2022 and 2023, since July 2020, the suspension of an agreement concerning surrender of fugitive offenders and the terminations of an agreement concerning transfer of sentenced persons and an agreement concerning certain reciprocal tax exemptions, there were no terminations pursuant to § 202(d) of the United States-Hong Kong Policy Act of 1992 or determinations under § 201(b) up to the date of this registration statement. The executive order to remove the preferential trade status of Hong Kong remains in effect. Since July 2020 and as of the date of this registration statement, the removal of the preferential trade status of Hong Kong did not have a material impact on our business and operations.
Additionally, the outbreak of war in Ukraine in 2022 has already affected global economic markets, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this section. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on the operations, results of operations, financial conditions, liquidity and business outlook of our business.
Risks Related to our Business and Industry
We have a short operating history and are subject to risks and uncertainties associated with operating in a rapidly developing and evolving industry. Our limited operating history makes it difficult to evaluate our business and prospects.
We established our caviar business in Hong Kong in August 2021 and have subsequently experienced rapid growth. We also began to seek opportunities in wine trading along with our caviar business as both products enjoy the similar distributors looking for premium luxurious products that are not readily available in major selling platforms.
We expect we will continue to expand as global market presence, broaden our product portfolio, enlarge our customer bases and explore new market opportunities. However, due to our limited operating history, our historical growth rate may not be indicative of our future performance. Our future performance may be more susceptible to certain risks than a company with a longer operating history in a different industry. Many of the factors discussed below could adversely affect our business and prospects and future performance, including:
| ● | our ability to maintain, expand and further develop our relationships with customers; |
| ● | our ability to introduce and manage new caviar and wine products in response to changes in customer demographics and consumer tastes and preferences; |
| ● | the continued growth and development of the caviar and wine industry; |
| ● | our ability to maintain the quality of our caviar products and ability to source appropriate premium wine products; |
| ● | our ability to effectively manage our growth; |
| ● | our ability to compete effectively with our competitors in the caviar and wine industry; and |
| ● | our ability to attract and retain qualified and skilled employees. |
You should consider our business and prospects in light of the risks and uncertainties we face as a fast growing company operating in a rapidly developing and evolving market. We may not be successful in addressing the risks and uncertainties listed above, among others, which may materially and adversely affect our business and prospects and future performance.
Beginning in 2025, we have begun to diverse our source of caviar and wine from different suppliers. However, the source of caviar maintains to be from China as it produces over 70% of world’s caviar. Our wine sourcing is more concentrated from France which responded to our customers demand we learnt from these years of operation. Adverse weather conditions, natural disasters, disease, pests and other natural conditions, or shutdown, interruption, and damage to the PRC sturgeon farm, or lack of availability of power, fuel, oxygen, eggs, water, or other key components needed for the operations of the PRC sturgeon farm, could result a loss of a material percentage of our caviar raw product supply and a material adverse effect on our operations, business results, reputation, and the value of our brans.
Our ability to ensure a continuing supply of caviar raw product from our suppliers depends on many factors beyond our control. An interruption in the power, fuel, oxygen supply, water quality systems, or other critical infrastructure of an aquaculture facility for more than a short period of time could lead to the loss of a large number of sturgeon, hence the caviar supply. A shutdown of or damage to PRC sturgeon farm due to natural disaster, reduction in water supply, deterioration of water quality, contamination of aquifers, interruption in services, or human interference could result in a loss of supply of caviar for production. Sturgeon farming of the PRC sturgeon farm is vulnerable to adverse weather conditions, including severe rains, drought and temperature extremes, typhoon, floods and windstorms, which are quite common but difficult to predict. Sturgeon farms are vulnerable to disease and pests, which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions. Unfavorable growing conditions caused by these factors can reduce both sturgeon populations of our supplier and the quality of the sturgeon, and, in extreme cases, entire harvests may be lost. Additionally, adverse weather or natural disasters, including earthquakes, winter storms, droughts, or fires, could impact the manufacturing and business facilities of our supplier, which could result in significant costs and meaningfully reduce our capacity to fulfill orders and maintain normal business operations. These factors may result in lower sales volume and increased costs due increased costs of products. Incremental costs, including transportation, may also be incurred if we need to find alternate short-term supplies of products from alternative areas. These factors can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition.
Climate change may have a long-term adverse impact on our business and operations.
Climate change may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event that climate change may a negative effect on sturgeon or caviar productivity of our supplier, we may be subject to decreased availability or less favorable pricing for caviar raw product or other commodities that are necessary for our products. Extreme weather conditions may adversely impact the sturgeon farm or facilities of our supplier, lead to the disruption of distribution networks or the availability and cost of key raw materials used by us in production, or the demand for our products. As a result of climate change, our caviar suppliers or their suppliers are highly rely on the availability and quality of water, and could be materially and adversely impacted by to decreased availability of water, deteriorated quality of water or less favorable pricing for water, which could adversely impact their production and thus our operations and sales, profitability, results of operations and financial condition.
Our business is affected by the quality and quantity of the caviar that is harvested by the PRC sturgeon farm.
Our ability to successfully sell our product and the price therefor, is highly dependent on the quality of the caviar supplied by the PRC sturgeon farm operated by Fujian Longhuang. A number of factors can negatively affect the quality of the caviar sold, including the quality of the broodstock, water conditions in the farm, the food and additives consumed by the fish, population levels in the farm, and the amount of time that it takes to bring a sturgeon to harvest, including transportation and processing, all of which are beyond our control. Optimal growing conditions cannot always be assured. Furthermore, if our caviar product supplied by the PRC sturgeon farm is perceived by the market to be of lower quality than other available sources, we may experience reduced demand for our product and may not be able to sell our products at the prices that we expect or at all. As we continue to expand our operations and to establish relationship with new sturgeon farms, we potentially may face additional challenges with maintaining the quality of our products. We cannot guarantee that we will not face quality issues in the future, any of which could cause damage to our reputation, and a loss of consumer confidence in our products, which could have a material adverse effect on our business results and the value of our brands.
Caviar as the luxury food items, any real or perceived quality or food safety concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving us (such as incidents involving our competitors), could cause negative publicity and reduced confidence in our company, brand or products, which could in turn harm our reputation and sales, and could materially adversely affect our business, financial condition and results of operations. Although we believe we have a rigorous quality control process, there can be no assurance that our products will always comply with the standards set for our products.
Additionally, we have no control over our products once purchased by consumers. Accordingly, consumers may store our products improperly or for long periods of time, which may adversely affect the quality and safety of our products. While we have procedures in place to handle consumer questions and complaints, there can be no assurance that our responses will be satisfactory to consumers, which could harm our reputation. If consumers do not perceive our products to be safe or of high quality as a result of such actions outside our control or if they believe that we did not respond to a complaint in a satisfactory manner, then the value of our brand would be diminished, and our reputation, business, financial condition and results of operations would be adversely affected. Any loss of confidence on the part of consumers in our products or in the safety and quality of our products would be difficult and costly to overcome. Any such adverse effect c may significantly reduce our brand value. Issues regarding the safety of any of our products, regardless of the cause, may adversely affect our business, financial condition and results of operations.
We operate in a highly regulated industry.
Wild sturgeon is one the most critically endangered species worldwide. Since 1998, international trade in all species of sturgeons has been regulated under Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”) owing to concerns over the impact of unsustainable harvesting of and illegal trade in sturgeon populations in the wild. The CITES listing of all species of sturgeon means that caviar, the unfertilized sturgeon roe, from wild-caught sturgeon can no longer be traded, but caviar from captive bred sturgeon is exempt.
As a supplier of captive bred caviar, which is not only a food product intended for human consumption, but also a product that is regulated worldwide under the CITES, we are therefore subject to extensive governmental regulation. We must comply with various laws and regulations in Hong Kong as well as laws and regulations administered by government entities and agencies outside Hong Kong. Both the PRC and Hong Kong are parties to CITES. Pursuant to the Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”), the importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons are included as regulated species under the PESO. For further details on the regulations applicable to us and our business, please refer to the section titled “Regulations”.
With respect to our importation of caviar from the PRC sturgeon farm into Hong Kong, the PRC sturgeon farm is responsible for applying for and obtaining CITES permit from the relevant regulatory authority in the PRC; whereas the supply chain management company is responsible for applying for and obtaining import license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on our behalf. The CITES permit needs to be submitted to the customs of HK before the caviar is accepted to HK territories. As of the date of this annual report, the PRC sturgeon farm, through its sole appointed distributor for overseas market, possesses the requisite import and export qualification and permit in the PRC. We have obtained all required CITES permits as well as the export and re-export license in respect of each batch of caviar exported to Hong Kong. With respect to our exportation of caviar from Hong Kong to foreign countries, we have engaged the supply chain management company to apply for and obtain re-export license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on our behalf.
In the event that the PRC sturgeon farm or we were found to be in violation of the relevant laws and regulations in respect of CITES, and such violations materially impacted the ability of the PRC sturgeon farm or us to continue to export caviar, our business operation will be significantly disturbed, and our business, financial conditions, results of operations and prospects could be materially and adversely affected.
We confirm that all the required CITES permits and export and re-export licenses required for our business operation have been received. To ensure third party compliance with the applicable permitting and licensing requirements, we have employed the following control measures:
| ● | We require the PRC sturgeon farm or its agent to provide the requisite import and export qualification and permit in the PRC for our confirmation each year; |
| ● | We examine the required CITES permit in respect of each batch of caviar exported by the PRC sturgeon farm or its agent passed through its distributor to us. If we discover that the distributor has failed to obtain the required CITES permit, we reject the respective batch of caviar exported to us; and |
| ● | We examine the re-export license obtained by the supply chain management company on our behalf and ensure the supply chain management company obtain all the required licenses. |
In the event that that the PRC sturgeon farm fails to obtain the required CITES permits, the shipment may experience delay in clearance, seized by authorities or returned. In the event that the supply chain management company fails to obtain the required re-export license on our behalf, we may face prosecution, fine and forfeiture of our products. In such events our business, financial conditions, our results of operations and prospects could be materially and adversely affected by the disruption of supply and the failure to export. Furthermore, the relevant laws, regulations and rules are subject to modification and change. We cannot predict the impact that any such change would have on the caviar industry generally or on our business in particular. Any legislative or regulatory change that imposes further restriction on, among other things, the production, processing, import or export of caviar, could disrupt our supply of caviar or increase our compliance costs, which could materially and adversely affect our business, financial condition, results of operations and prospects.
In addition to PESO and CITES, as a food supplier, we are also subject to law and regulations regarding product manufacturing, food safety, required testing, and appropriate labeling and marketing of our products in Hong Kong or overseas. It is possible that such laws and regulations the governing bodies or the interpretation thereof may change over time. As such, there is a risk that our products could become non-compliant with the relevant governing bodies laws or regulations and any such non-compliance could harm our business. The failure to comply with applicable regulatory requirements could result in, among other things, administrative, civil, or criminal penalties or fines, mandatory or voluntary product recalls, warning, cease orders against operations, closure of facilities or operations, the loss, revocation, or modification of any existing licenses, permits, registrations, or approvals or the failure to obtain additional licenses, permits, registrations, or approvals in new jurisdictions where we intend to do business, any of which could negatively affect our business, reputation, financial condition, and results of operations.
We are subject to the risks associated with sourcing and manufacturing products from, and selling our product outside of Hong Kong, which could adversely affect our business.
Our direct purchases from non-Hong Kong suppliers represented substantially all of our raw material purchases in the fiscal years 2024, 2023, and 2022, and we expect we will continue to do so. Furthermore, although substantially all of our distributors are in Hong Kong, from our understanding, significant portion of our product are sold overseas by our distributors. We may also in the future enter into agreements with distributors in foreign countries to sell our products. All of these activities are subject to the uncertainties associated with international sales and distribution, including:
| ● | difficulties with foreign and geographically dispersed operations; |
| ● | having to comply with various Hong Kong and international laws; |
| ● | changes and uncertainties relating to foreign rules and regulations; |
| ● | tariffs, export or import restrictions, restrictions on remittances abroad, imposition of duties or taxes that limit our ability to import necessary materials; |
| ● | limitations on our ability to enter into cost-effective arrangements with distributors overseas, or at all; |
| ● | fluctuations in foreign currency exchange rates; |
| ● | imposition of limitations on production, sale, or export in foreign countries, including due to epidemics, pandemics, outbreaks and quarantines; |
| ● | imposition of limitations on or increase of withholding and other taxes on remittances and other payments by foreign processors or joint ventures; |
| ● | economic, political, environmental, health-related or social instability in foreign countries and regions; |
| ● | an inability, or reduced ability, to protect our intellectual property; |
| ● | availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us; |
| ● | difficulties in recruiting and retaining personnel, and managing international operations; |
| ● | difficulties in enforcing contracts and legal decisions; and |
| ● | less developed infrastructure. |
We expect each market to have particular regulatory and funding hurdles to overcome, and future developments in these markets, including the uncertainty relating to governmental policies and regulations, could harm our business. If we expend significant time and resources on expansion plans that fail or are delayed, our reputation, business and financial condition may be adversely affected.
Our operations, revenue and profitability could be adversely affected if we fail to adhere to Hong Kong and international regulations to which we are subject to, or due to the changes in laws and regulations in the countries where we do business.
We source the caviar from the sturgeon farm in the PRC. Furthermore, we substantially rely on the third-party distributors to place and export our products into the overseas market from Hong Kong. Therefore, we along with our suppliers and distributors may be subject to a variety of Hong Kong and foreign laws and government regulations applicable to food products and caviar trade, including numerous licensing requirements, trade and pricing practices, tax, environmental matters, food safety and other laws and regulations relating to the sourcing, manufacturing, storing, labeling, marketing, advertising, selling, displaying, transporting, distributing and usage of our products in in Hong Kong and outside the Hong Kong in markets in which we source caviar or which our products may be stored, distributed, marketed, transported or sold.
The governments of countries into which we source raw product or our distributors sell our caviar products, from time to time, may consider regulatory proposals relating to raw materials, tax, food safety and quality, markets, and environmental regulations, which, if adopted, could lead to disruptions in distribution of our products, which, in turn, could affect our profitability. Furthermore, we are not able to control or monitor the markets or jurisdictions where our distributors place or sell our products, and we do not have any agreements or understandings with our distributors regarding the distribution of our product in the foreign market. Therefore, there are significant uncertainty as to the foreign laws and regulations in markets or jurisdictions where we, or our product, may be subject to. The compliance with these highly uncertain, new, evolving, or revised tax, environmental, food quality and safety, labeling or other laws or regulations, or new, evolving, or changed interpretations or enforcement of existing laws or regulations, may have a material adverse effect on our business, financial condition or operating results.
Changes in legal or regulatory requirements, such as new food safety requirements and revised labeling regulations, or evolving interpretations, of existing legal or regulatory requirements, may result in increased compliance costs, capital expenditures, and other financial obligations that could adversely affect our business or financial results. If we are found in violation of the applicable laws and regulations in markets where our distributors sell our product, we could be subject to civil remedies, including fines, injunctions, termination of necessary licenses or permits, or recalls, as well as potential criminal sanctions, any of which could have a material adverse effect on our business. Even if regulatory agency review does not result in these types of determinations, it could potentially create negative publicity or perceptions which could harm our business or reputation. Further, modifications to international trade policy, including the imposition of increased or new tariffs, quotas, or trade barriers, could have a negative impact on us or the industries we serve, including as a result of related uncertainty, and could materially and adversely impact our business, financial condition, operating results, and cash flows.
In addition, our international sales could be adversely affected by violations of the anti-money laundering and trade sanction laws and similar anti-corruption and international trade laws. Misconducts, including illegal, fraudulent or collusive activities, by our distributors, suppliers, business partners, or our agent may harm our brand and reputation and adversely affect our business and results of operations. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent these activities may not be effective. Violations of laws or allegations of such violations, regardless in Hong Kong or in foreign countries where our suppliers are located or our distributors operate, could materially and adversely affect our reputation, disrupt our business and result in a material adverse effect on our results of operations, cash flows, and financial condition. Our growth strategy depends in part on our ability to expand our operations globally. Competition in various markets is increasing as our competitors grow their global operations and low-cost local manufacturers expand and improve their production capacities. However, certain markets may have greater political, economic, and currency volatility and greater vulnerability to infrastructure and labor disruptions than more established markets. If we cannot successfully manage associated political, economic, and regulatory risks, our product sales, financial condition, and results of operations could be materially and adversely affected.
There is no assurance that our customers will continue to place purchase orders with us.
All of our customers place purchase orders with us on an as-needed basis. We normally enter into distributorship agreement with our F&B related distributor customers for a term of one year. During the contract term, our F&B related distributor customers are entitled to place purchase orders with us for each of our products at the unit price, which is typically agreed at a fixed price per kilogram, set forth in the distributorship agreement. There is no assurance that our F&B related distributor customers will renew the framework sales agreement with us with similar terms and conditions.
Further, all of our customers place purchase orders with us on an as-needed basis. There is no assurance that our major customers will continue to place purchase orders with us in the future. In the event that any of our major customers ceases to place purchase orders with us, reduces the amount of their purchase orders with us, or requests for more favorable terms and conditions, our business, results of operations, financial conditions and future prospects may be adversely affected.
Our major customers accounted for a significant portion of our total revenue for the year ended December 31, 2025 and 2024, respectively.
We derive a substantial portion of our revenue from wine, caviar and health products trading in 2025 from a limited number of major customers, all of which are our distributors. For the year ended December 31, 2025, there were five customers each generating over 10% of our total revenue for the period, and they in aggregate accounted for approximately 100% of our sales volume. For the year ended December 31, 2024, there were 3 customers each generated over 10% of our total revenue for the year, and they in aggregate accounted for approximately 94.2% of our total revenue for the year.
There is no assurance that any of our major customers will continue to place purchase orders with us in the future. These distributors or any other large customers in the future, may take actions that affect us for reasons it cannot anticipate or control, such as their financial condition, changes in their business strategy or operations, the perceived quality of our products and the availability of competing products. There can be no assurance our customers will continue to purchase its products in the same quantities or on the same terms as in the past. Our major customers rarely provide us with firm, long- or short-term volume purchase commitments. As a result, our customers could significantly decrease or cease their business with us with limited or no notice, and we could have periods with limited orders for our products while still incurring costs related to workforce maintenance, marketing general corporate expenses and other overheads. We may not find new customers to supplement its revenue in periods when it experiences reduced purchase orders, or recover fixed costs incurred during those periods, which could materially and adversely affect our business, financial condition and results of operations. In the event that any of these major customers ceases to place purchase orders with us or reduces the amount of their purchase orders with us, our business, results of operations, financial condition and future prospects may be adversely affected.
Any inability to resolve a significant dispute with any of our key customers, a change in the business condition (financial or otherwise) of any of our key customers, even if unrelated to us, or the loss of or a reduction in sales or anticipated sales to one or more of our most significant distributors may negatively affect us. These major customers may seek to leverage their positions to improve their profitability by demanding improved efficiency, lower pricing, more favorable terms, increased promotional spend, or specifically tailored product or promotional offerings, which may have a material adverse effect on our business, results of operations, and financial condition. A reduction in sales to one or more major customers could have a material adverse effect on our business, financial condition, and results of operations.
We rely on third-party distributors to place our products into the market and we may not be able to control our distributors.
Our customers primarily and substantially consist of the distributors in food and beverage industry, where their end customers are luxurious hotels and restaurants. As we substantially sell and distribute our products through distributors, any one of the following events could result in fluctuation or decline in our revenue and could result in material adverse impact on our financial conditions and results of operations:
| ● | reduction, delay or cancelation of orders from one or more of our distributors; |
| ● | failure to renew distributorship agreements and maintain relationships with our existing distributors; |
| ● | failure to establish relationships with new distributors on favorable terms; and |
| ● | inability to timely identify additional or replacement distributors upon the loss of one or more of our distributors. |
We may not be able to successfully manage our distributors. If the sales volume of our wine and caviar products to consumers are not maintained at a satisfactory level, our distributors may not place or lower their purchase orders placed with us. For international markets, we depend exclusively on third-parties distributor to reach the end-customers. Our success in these markets depends almost entirely upon the efforts of our distributors and logistics and fulfillment partners, over whom we have little or no control. If a distributor or logistics or fulfillment partner, fails to fulfill its contracted services, for any reason, we could lose sales and our ability to compete in that market may be adversely affected. The occurrence of any of these factors could result in a significant decrease in the sales volume of our products and therefore adversely affect our financial conditions and results of operations.
Product contamination and the failure to maintain food safety and consistent quality could have a material and adverse effect on our brand, business and financial performance.
Food safety and quality control are of paramount importance to our reputation and business, and we face an inherent risk of food contamination and liability claims. To ensure food safety and quality, we have established a comprehensive set of standards and requirements covering each facet of our supply chain, ranging from procurement, logistics, warehousing to packaging. However, due to the rapid growth in scale of our operations, there is no assurance that our quality control systems will prove to be effective at all times, or that we can identify any defects in our quality control systems in a timely manner. The sale of products for human use and consumption involves the risk of injury or illness to the end-consumers. Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties, product contamination or spoilage, the presence of foreign objects, substances, chemicals, or residues introduced during the packing, storage, handling or transportation phases. Any food contamination that we fail to detect or prevent could adversely affect the quality of our caviar products, which could lead to liability claims, and the imposition of penalties or fines by relevant authorities.
Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by our actions, could compel us, our suppliers, our distributor or our other customers, depending on the circumstances, to recall or withdraw products, suspend production of our products, or cease operations. in accordance with the laws and regulations in the jurisdictions in which we operate our business or distribute our products. Food recalls could result in significant losses due to their associated costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing distributors or customers and a potential negative impact on our ability to attract new customers and maintain our current customer base due to negative consumer experiences or because of an adverse impact on our brand and reputation. In addition, as a wine and caviar supplier, our product may be subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and pathological organisms into consumer products as well as product substitution. Food business operators like us, or our distributors, must at all stages of production, sales and distribution within the businesses under their control ensure that foods satisfy the requirements of food related laws and regulations, in particular as to food safety. If we or our distributors do not adequately address the possibility, or any actual instance, of product tampering, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could materially adversely affect our business, financial condition and results of operations.
Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us. While we are subject to governmental inspection and regulations and believe our facilities and those of our suppliers, supply-chain management company, logistic service providers, and the distributors will comply in all material respects with all applicable laws and regulations, there can be no assurance that our wine and caviar supplier, logistic service provider, and distributors will always be able to adopt appropriate quality control systems and meet our quality control requirements in respect of the products or services they provide. Any failure of our wine and caviar supplier, logistic service provider, or distributor to provide satisfactory products or services could harm our reputation and adversely impact our operations. If the consumption of any of our products causes, or is alleged to have caused, a health-related illness or death to a consumer, we may become subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or physical harm could cause consumers to lose confidence in the safety and quality of our products.
Furthermore, we currently do not maintain any product liability insurance and may not have adequate resources to satisfy a judgment in the event of a successful product liability claim against us. The successful assertion of product liability claims against us could result in potentially significant monetary damages and require us to make significant payments.
Our business depends to a significant extent upon general economic conditions, consumer demand, preferences and discretionary spending patterns.
Our success is, and will continue to be, dependent on our ability to select, source and sell quality wine and caviar products. However, there is no assurance that we will always succeed in selecting and sourcing quality wine and caviar supplies that cater to the preferences and needs of consumers or achieve anticipated sales at competitive prices.
As our wine and caviar products are served at places such as menu-driven high-end restaurants, fine dining establishments, private clubs, hotels, caterers and specialty food stores, our business is significant exposed to the volatility of the general economic conditions and reductions in disposable income levels and discretionary consumer spending. Consumers’ willingness to purchase our wine and caviar products may fluctuate as a result of changes in national, regional or global economic conditions, disposable income, discretionary spending, lifestyle choices, public perception of wine and caviar, publicity of our wine and caviar products or our competitors. Future economic conditions such as employment levels, business conditions, housing, interest rates, inflation rates, energy and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits. The demand for our wine and caviar products may be adversely affected from time to time by economic downturns.
If the weak economy continues for a prolonged period of time or worsens, the consumers may choose to spend discretionary money less frequently which could result in a decline in consumers’ purchases of luxury food items, particularly in more expensive restaurants or more expensive food items, and, consequently, the businesses of our target customers by, among other things, reducing the frequency with which our customers’ customers choose to order luxury food items or the amount they spend on meals while dining out. If our customers’ sales decrease, our profitability could decline. Moreover, if the negative economic conditions persist for an extended period of time, consumers might ultimately make long-lasting changes to their discretionary spending behavior, including dining out less frequently on a permanent basis. Accordingly, adverse changes to consumer preferences or consumer discretionary spending, each of which could be affected by many different factors which are out of our control, could harm our business, financial condition or results of operations. Our continued success will depend in part upon our ability to anticipate, identify and respond to changing economic and other conditions and the impact that they may have on discretionary consumer spending. If we fail to successfully adapt our business strategy, brand image and product portfolio to changes in market trends or shifts in consumer preferences and spending patterns, our business, financial conditions and results of operations may be materially and adversely affected.
Failure to compete effectively may adversely affect our market share and profitability.
The industry we operate in is competitive with respect to, among other things, brand recognition, consistent quality, services and prices. Our competitors include a variety of regional, national and international wine and caviar suppliers. Furthermore, new competitors may emerge from time to time, which may further intensify the competition. Increased competition may reduce our margins and market share and impact brand recognition, or result in significant losses. When we set prices, we have to consider how competitors have set prices for the same or similar products. When they cut prices or offer additional benefits to compete with us, we may have to lower our own prices or offer additional benefits or risk losing market share, either of which could harm our financial conditions and results of operations.
Some of our current or future competitors may have longer operating histories, greater brand recognition, better supplier relationships, larger customer bases, more comprehensive distribution network, better access to consumers, higher penetration in certain regions or greater financial, technical or marketing resources than we do. In addition, some of our competitors may be able to secure more favorable terms from suppliers, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to secure more wine and caviar supplies or to their digitalized supply chain management system. We cannot assure you that we will be able to compete successfully against current or future competitors, and competitive pressures may have a material and adverse effect on our business, financial conditions and results of operations.
Our ability to effectively compete will depend on various factors, including expansion of our global market presence, enhancement of our sales and marketing activities, expansion of product portfolio and customer base. Failure to successfully compete may prevent us from increasing or sustaining our revenue and profitability and potentially lead to a loss of market share, which could have a material and adverse effect on our business, financial conditions and results of operations.
Our business depends significantly on the market recognition of our trademarks and brand names. Any damage to our trademarks, brand names or reputation, or any failure to effectively promote our brands, could materially and adversely impact our business and results of operations.
We believe that the market recognition of our trademarks and brand names among our customers have contributed significantly to the growth and success of our business. Therefore, maintaining and enhancing the recognition and image of our brands is critical to our ability to differentiate our wine and caviar products and to compete effectively. Nevertheless, whether we are able to maintain and enhance the recognition and image of our brands is subject to our ability in:
| ● | maintaining the popularity, attractiveness, diversity and quality of our wine and caviar products; |
| ● | maintaining or improving customers’ satisfaction with the quality of our wine and caviar products; |
| ● | offering and maintaining a wide selection of high-quality wine and caviar products; |
| ● | increasing brand awareness through marketing and brand promotion activities; and |
| ● | preserving our reputation and goodwill in the event of any negative publicity, internet and data security, product quality, price authenticity, or other issues affecting us or the wine and caviar industry. |
In the event consumers perceive or experience a reduction in the quality of our products or service, or consider in any way that we fail to deliver quality products consistently, our brand value could suffer, which could have a material and adverse effect on our business.
Furthermore, our established brand recognition may attract imitators who intentionally use highly similar trademarks, trade names and/or logos with ours to mislead potential consumers, which may significantly harm our reputation and brand image, thereby causing a decline in our financial performance, reduction in our market share, as well as an increase in the amount of resources for our anti-counterfeiting efforts. We cannot assure you that our measures will provide effective prevention and any infringement act could adversely affect our reputation, results of operations and financial condition.
We may not be able to adequately protect our intellectual properties, or we may be subject to intellectual property infringement claims or other allegations by third parties, either of which could adversely affect our business and operations.
We rely on a combination of trademarks, copyrights, trade secrets and other intellectual property laws to protect our trademarks, copyrights, trade secrets and other intellectual property rights. As at the date of this annual report, we have registered trademarks in Hong Kong, Macau and the PRC, respectively.
We cannot ensure that third parties will not infringe our intellectual property rights. We may, from time to time, have to initiate litigation, arbitration or other legal proceedings to protect our intellectual property rights. Regardless of the judgment, such process would be lengthy and costly as well as divert management’s time and attention, thereby resulting in material and adverse impacts on our business, financial conditions and results of operations.
Conversely, there is also a risk that third parties may bring a claim against us for infringing their intellectual property rights, thereby requiring us to defend or settle any related intellectual property infringement allegations or disputes. Defending against such claims could be costly, and if we are unsuccessful in defending such claims, we may be prohibited from continuing to use such proprietary information in the future, or may be compelled to pay damages, royalties or other expenses for the use of such proprietary information. Any of the above could negatively affect our sales, profitability, business operations and prospects.
Failure by our supply chain service or transportation providers or distributors to deliver our raw materials to us or our products to customers on time or at all could result in lost sales.
Historically and as of the date of annual report, we have engaged a reputable Hong Kong-based supply chain management company (“Supply Chain Company”) as the principal transportation provider for the delivery of finished products to our distributors and the shipment of wine and caviar to our food processing factory through cold-chain. Our utilization of the third-party supply chain and transportation services is subject to risks, including the effects of health epidemics or pandemics or other contagious outbreaks, any shortage of drivers and workers, increases in fuel prices, which would increase our shipping costs, employee strikes, labor shortages, failure to meet customer standards, and severe weather conditions and natural disasters such as fires, floods, typhoon, storms, or earthquakes. These risks may impact the ability of our Supply Chain Company or other supply chain and transportation services providers to provide logistics and transportation services that adequately meet our shipping needs. If our Supply Chain company or other supply chain and transportation services providers were to fail to deliver raw materials to us in a timely manner, or fail to deliver our products to our customers in a timely manner, we might be unable to meet customer and consumer demands for our products.
Furthermore, notwithstanding we have implemented comprehensive set of operation manual and technical protocols with respect to temperature, hygiene and physical conditions for wine and caviar in transit, we cannot assure you that our Supply Chain Company or any other supply chain management company we may engage would follow strictly, and the services provided by the supply chain management company may be interrupted, suspended or cancelled due to unforeseen events, which could cause the rotting of our wine and caviar products and increase our loss rate.
Although we do not rely on our Supply Chain Company for transportation services, and our Supply Chain Company’s transportation and supply chain services is provided on an as-needed basis, Our Supply Chain Company has been historically and currently responsible for a significant portion of our shipping needs. Any disruption in our relationship with our Supply Chain Company or the ability of our Supply Chain Company to fulfill its services could affect our business. We may change to other third-party transportation providers at any time, but we could incur costs and expend resources in connection with such change, and we may not be able to obtain terms as favorable as those we receive from our Supply Chain Company, which in turn would increase our costs and adversely affect our business. Any failure of our Supply Chain Company or other third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, negatively impact our customer relationships, and have a material adverse effect on our financial condition or results of operations.
For our international markets, we depend exclusively on the distributors to reach our customers. Our success in these markets depends entirely upon the efforts of our distributors and their logistics and fulfillment services supplier, over whom we have no control. If a distributor or logistics or fulfillment service provider, fails to fulfill its contracted services, for any reason, we could lose sales and our ability to compete in that market may be adversely affected.
Our wine and caviar products are processed in our single food processing facility and any damage to or disruption at this facility would materially and adversely affect its business, financial condition and results of operations.
We process substantially all of our products at a single food processing factory leased from and operated by , our Supply Chain Company we have engaged since 2021. Any facility disruption, equipment failures, natural disaster, fire, power interruption, pandemic, work stoppage, regulatory or food safety issue or other problem at this facility would significantly disrupt our ability to process and deliver our products and operate its business. The facility and equipment is costly and may require substantial time to replace or repair if necessary. During such time, we may not be able to find suitable factory to replace the output from our facility on a timely basis or at a reasonable cost, if at all. We may also experience facility shutdowns or periods of reduced production because of regulatory issues, equipment failure or delays in deliveries. Any such disruption or unanticipated event may cause significant interruptions or delays in our business. Any disruption in the operation of our facility, or damage to a material amount of our equipment or inventory, would materially and adversely affect our business, financial condition and results of operations.
We do not own any real properties. The lease agreement for our food processing factory has a term of 18 months and may be renewed upon mutual agreement. There is no assurance that such tenancy agreement will not be terminated or will be renewed on commercially favorable terms. In the event that the tenancy agreement is terminated or not renewed, our business and operation may be interrupted and adversely affected as we will have to relocate our food processing factory to other premises. In the event that we fail to relocate our food processing factory to suitable alternative premises in a timely manner or at all, our business operations, financial position, results of operations and reputation would be adversely affected. Even if we are able to relocate our food processing factory to an alternative premises, such relocation will incur relocation costs, which may be substantial and in turn adversely affect our financial conditions. Besides, in the event that our rental expenses for the food processing factory increase, our operating expenses will increase which will in turn materially and adversely affect our business, results of operations and prospects.
We currently rely on third-party supply chain management company to operate the food processing factory and provision of labor for product packaging. Any failure to adequately store, maintain and deliver our products could materially adversely affect our business, reputation, financial condition, and operating results.
Our ability to adequately process, store, maintain, and deliver our wine and caviar products is critical to our business. We contract with third-party supply chain management company, to operate of our food processing factory and to provide labor for packaging and delivery services for our products. As of the date of this Annual Report, we have contracted our Supply Chain Company to operate the aforesaid activities on our behalf. In order to maintain the quality, safety and freshness of our wine and caviar products, the food processing factory is equipped with temperature control system that mandates a prescribed temperature range. Any unexpected and adverse changes in the optimal storage conditions of our food processing factory may expedite the deterioration of such products and in turn heighten the risk of inventory obsolescence or exposure to litigation matters. Any failure by our Supply Chain Company or the third-party supply chain management business partner to adequately store, maintain, or transport our products could negatively impact the safety, quality and merchantability of our products and the experience of our customers. The occurrence of any of these risks could materially adversely affect our business, reputation, financial condition, and operating results. In the event of extended power outages, labor disruptions, natural disasters or other catastrophic occurrences, failures of the temperature control system systems in the food processing factory, warehouses or delivery vehicles, or other circumstances, our inability to store inventory at the controlled temperatures could result in significant product inventory losses, as well as increased risk of food-borne illnesses and other food safety incidents.
Further, we rely on the supply chain management company for the provision of labor for carrying out product packaging at our food processing factory. There is no guarantee that the supply chain management company will be able to supply stable labor force or continue to supply labor at fees acceptable to us or our relationship with them could be maintained in the future. Any disruption, delay or inability of the supply chain management company in supplying processing labor to us may materially and adversely affect our business, results of operations, financial conditions and prospects.
There is no assurance that the quality of works provided by the processing labor from the supply chain management company can fulfil the requirements of us or our customers. We may not be able to monitor the performance of the processing staff supplied by the supply chain management company as directly and efficiently as with our own labor, thereby exposing us to the risks associated with non-performance, late performance or sub-standard performance of the processing staff. Since we remain accountable to our customers for the performance of the processing staff, we may incur additional costs or be subject to liability under the relevant contracts between us and our customers for the processing staff’s unsatisfactory performance, thereby resulting in material adverse impacts on our reputation, business operation and financial position.
Failure to maintain and renew the food factory license for our food processing factory premises may materially and adversely our business and results of operations.
Pursuant to section 31(1) of the Food Business Regulation (Chapter 132X of the Laws of Hong Kong) (“FBR”), no person shall carry on or cause, permit or suffer to be carried on any food factory business except under and in accordance with a food factory license from the Food and Environmental Hygiene Department of Hong Kong (the “FEHD”), which is required for the food business involving the preparation of food for sale for human consumption off the premises.
The FEHD may grant a provisional food factory license to a new applicant who has fulfilled the basic requirements in accordance with the FBR pending fulfilment of all outstanding requirements for the issue of a full food factory license. A provisional food factory licenses is valid for a period of six months or lesser and a full food factory license is valid generally for a period of one year, both subject to payment of the prescribed license fees and continuous compliance with the requirements under the relevant legislation and regulations. A provisional food factory license is renewable once and a full food factory license is renewable annually.
We have leased a food processing factory located in Tsuen Wan, Hong Kong from the supply chain management company for carrying out the packaging and labelling of our wine and caviar products. The food processing factory has obtained a full food factory license from the Food and Environmental Hygiene Department of Hong Kong which is essential for food business involving the preparation of food for sale for human consumption off the premises. In compliance with the FBR, we rely on the landlord of our food processing factory premises to apply for, maintain and renew the food factory license from the FEHD for the operation of our food processing factory premises. There is no assurance that our food processing factory premises will obtain the required food factory license. If we or the landlord fails to comply with the applicable requirements or any required conditions, the food factory license may be suspended, cancelled or denied renewal upon its expiry, which could result in disruption to our ongoing business and thereby materially and adversely affect our business, financial position, results of operations and prospects. We may also be liable to fines and/or other legal consequences for failure to obtain the necessary approvals, licenses and permits, which may materially and adversely affect our business and results of operations.
Failure to manage our inventory effectively could increase our loss rate, lower our profit margins, or cause us to lose sales, either of which could have a material adverse effect on our business, financial conditions and results of operations.
Managing our inventory effectively is critical to the success of our business. Since wine and caviar is perishable in nature, if we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write-downs or write-offs. Moreover, we may be required to lower sale prices in order to reduce inventory level, which may lead to lower gross margins. These factors may materially and adversely affect our results of operations and financial conditions. Further, we are exposed to inventory risks as a result of a variety of factors beyond our control, including changes in consumer preferences or economic conditions, uncertainty of market acceptance of new wine and caviar products, etc. We cannot assure you that there will not be under-stocking or over-stocking of inventory.
We are subject to credit risk in relation to the collectability of our trade receivables from customers.
We generally grant a credit period of 30 to 60 days to our customers. We cannot assure you that our customers will make payment in full to us on a timely basis. Delays in receiving payments from or non-payment by our customers may result in pressure on our cash flow position and our ability to meet our working capital requirements. Our liquidity and cash flows from operations may be materially and adversely affected if our collection periods lengthen further or if we encounter any material defaults of payment, or provisions for impairment, of our trade receivables from customers. Should these events occur, we may be required to obtain working capital from other sources, such as from third-party financing, in order to maintain our daily operations, and such financing from outside sources may not be available at acceptable terms or at all.
We may not be able to maintain our historical growth rates or gross profit margins, and our operating results may fluctuate significantly. If our results fall below market expectations, the trading price of our Class A Ordinary Shares may be affected.
We have experienced significant growth in our revenue and gross profit in the past years. We cannot assure you that we will be able to maintain our revenue growth or gross profit margins at historical levels, or at all. Moreover, our operating results may fluctuate significantly as a result of numerous factors, many of which are outside of our control. These factors include, among others:
| ● | our ability to maintain and further promote our operating subsidiary as a world-renowned supplier of wine and caviar products; |
| ● | our ability to attract new customers, maintain existing customers and expand our market share; |
| ● | the success of our marketing and brand building efforts; |
| ● | the timing and market acceptance of new products introduced by us or our competitors; |
| ● | our ability to broaden our product portfolio at a reasonable cost and in a timely manner; |
| ● | fluctuations in demand for our products as a result of changes in pricing policies by us or our competitors; |
| ● | our ability to develop new products in response to changes in customer demographics and consumer tastes and preferences; and |
| ● | changes in global economic conditions. |
Any negative publicity regarding our Company, management team, employees or products, regardless of its veracity, could adversely affect our business.
As a fast-growing supplier of luxury wine and caviar products, our image is highly relevant to the public’s perception of us as a business in entirety, which includes not only the quality, safety and competitiveness of our products, but also our corporate management and culture. We cannot guarantee that no one will, intentionally or incidentally, distribute information about us, especially regarding the quality and safety of our products or our internal management matters, which may result in negative perception of us by the public. Any negative publicity about us, management team, employees or products, regardless of veracity, could lead to potential loss of consumer confidence or difficulty in retaining or recruiting talent that is essential to our business operations. As a result, our business, financial conditions, results of operations, reputation and prospects may be materially and adversely affected.
We may incur higher costs in connection with our branding and marketing efforts, and some marketing campaigns may not be effective in attracting or retaining consumers.
We are dedicated to enhancing our brand awareness. As part of our sales and marketing efforts, we have proactively participated in food expo and set up pop-up stores across the world. We have also collaborated with famous food bloggers and used different online platforms and media coverage to promote and strengthen the publicity of our products. We regularly invite chefs of notable hotels and restaurants to our tasting events. However, we cannot guarantee that our marketing efforts will be well received by customers and result in higher sales. In addition, marketing trends and approaches in the wine and caviar market are evolving, which requires us to enhance our marketing approaches and experiment with new marketing methods to keep pace with industry developments and consumer preferences. Failure to refine our marketing approaches or to adopt new, more cost-effective marketing techniques could negatively affect our business, growth prospects and results of operations.
We have limited insurance to cover our potential losses and claims.
We purchase and maintain insurance policies that we believe are customary with the standard commercial practice in our industry and as required under the relevant laws and regulations. However, we cannot guarantee that our insurance policies will provide adequate coverage for all the risks in connection with our business operations. Consistent with customary practice in the wine and caviar industry, we do not carry any business interruption, product liability, or litigation insurance. If we were to incur substantial losses and liabilities that are not covered by our insurance policies, we could suffer significant costs and diversion of our resources, which could have a material and adverse effect on our financial conditions and results of operations. We may be required to bear our losses to the extent that our insurance coverage is insufficient.
We are subject to risks relating to litigation and disputes, which could adversely affect our business, prospects, results of operations and financial conditions, and may face significant liabilities as a result.
We may be subject to litigation, disputes or claims of various types brought by our competitors, suppliers, customers, employees, business partners, lenders or other third parties. We cannot assure you that we will not be subject to disputes, complaints or legal proceedings in the future, which may damage our reputation, evolve into litigations or otherwise have a material adverse impact on our reputation and business.
Should any future claims against us fall outside the scope and/or limit of insurance coverage, our financial position may be adversely affected. Regardless of the merits, legal proceedings can be time-consuming and costly, and may divert our management’s attention away from our business operation, thereby adversely affecting our business operation and financial position. Legal proceedings which result in unfavorable judgment against us may cause financial losses and damages to our reputation, thereby materially and adversely affecting our business, financial position, results of operations and prospect.
Our business and reputation may be affected by product liability claims, litigation, complaints or adverse publicity in relation to our products.
As the wine and caviar products we sell are for human consumption, there is an inherent health risk which may result from tampering by unauthorized third parties, or product contamination or degeneration, including the presence of foreign contaminants, chemicals, substances or other agents or residues during the various stages of farming, processing and transportation.
Litigation and complaints from consumers or government authorities concerning product quality, health or other issues may affect our industry as a whole and may cause consumers to avoid consuming the wine and caviar products that we sell. Any litigation or adverse publicity surrounding any of these allegations may negatively affect our businesses, regardless of whether the allegations are true, thereby discouraging consumers from buying our products. We may also become party to various other lawsuits, claims, and other legal proceedings arising in the normal course of business, which may include lawsuits, claims, or other legal proceedings relating to the marketing and labeling of products or brand, intellectual property, contracts, product recalls or withdrawals, employment matters, environmental matters, or other aspects of our business. Even when lawsuits, claims, and other legal proceedings are not merited, the defense of lawsuits and claims divert the attention of management and other personnel and may result in adverse publicity about our products and brand, and we may incur significant expenses in defending these lawsuits and claims. In connection with claims, litigation or other legal proceedings, we may be required to pay damage awards or settlements or become subject to injunctions or other equitable remedies, which could have a material adverse effect on our financial position, cash flows, or results of operations. Certain claims may not be covered by insurance or certain covered claims may exceed applicable coverage limits, or one or more of our insurance carriers could become insolvent. The outcome of litigation is often difficult to predict and the outcome of pending or future litigation may have a material adverse effect on our financial position, cash flows, or results of operations. Adverse publicity about regulatory or legal action against us or adverse publicity about our products (including the resources needed to produce them) could damage our reputation and brand image, undermine consumer confidence, and reduce demand for our products, even if the regulatory or legal action is unfounded or not material to our operations or even if the adverse publicity regarding our products is unfounded.
Moreover, unfavorable studies or media reports (including those regarding the health impact of wine and caviar) may have a negative impact on the public perception of wine and caviar, whether or not the claims are accurate. We cannot guarantee that our products will not cause any health-related illnesses or injury in the future, or that we will not be subject to claims or litigation relating to such matters. If any of the above were to occur, our sales could be negatively impacted, which could have a material and adverse effect on our business, financial conditions, results of operation and prospects.
We may not be able to obtain finance from time to time to fund our operations and maintain growth.
In order to fund our operations and maintain our growth or expand our business, we may need to obtain future funding including equity financing or banking facilities from our banks from time to time. However, we may face the limitation of not having sufficient amount of security or pledge to secure additional debt financing. Further, there may be occasions where we are unable to obtain financing at commercial terms favorable or acceptable to us or at all. If these circumstances arise, our business, results of operations, and growth could be compromised.
Our growth prospects may be limited if we do not successfully implement our future plans and growth strategy.
Our growth is based on assumptions of future events which include (a) the continuous growth in the wine and caviar industry; (b) our ability in further expanding our global market presence; (c) our ability in strengthening our sales and marketing activities; (d) expansion in our sources of wine and caviar as well as product portfolio; and (e) expansion in our customer base. Furthermore, our future business plans may be hindered by other factors that are beyond our control, such as competition within the wine and caviar industry and market conditions. Therefore, there is no assurance that any of our future business plans will materialize within the planned timeframe, or that our objectives will be fully or partially accomplished.
Our prospects must be considered in light of the risks and challenges which we may encounter in various stages of the development of our business. If the assumptions which underpin our future plans prove to be incorrect, our future plans may not be effective in enhancing our growth, in which case our business, financial conditions and results of operations may be adversely affected.
We may grow, in part, through acquisitions, which involve various risks, and we may not be able to identify or acquire companies consistent with our growth strategy or successfully integrate acquired businesses into our operations.
We may intend to pursue opportunities to expand our business by acquiring other companies in the future. Acquisitions involve risks, including those relating to:
| ● | identification of appropriate acquisition candidates; |
| ● | negotiation of acquisitions on favorable terms and valuations; |
| ● | integration of acquired businesses and personnel; |
| ● | implementation of proper business and accounting controls; |
| ● | ability to obtain financing, at favorable terms or at all; |
| ● | diversion of management attention; |
| ● | retention of employees and customers; |
| ● | non-employee driver attrition; |
| ● | unexpected liabilities; and |
| ● | detrimental issues not discovered during due diligence. |
Acquisitions also may affect our short-term cash flow and net income as we expend funds, potentially increase indebtedness and incur additional expenses. If we are not able to identify or acquire companies consistent with our growth strategy, or if we fail to successfully integrate any acquired companies into our operations, we may not achieve anticipated increases in revenue, cost savings and economies of scale, our operating results may actually decline and acquired goodwill and intangibles may become impaired.
We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial conditions.
We believe that our performance and success is, to a certain extent, attributable to the extensive industry knowledge and experience of our key executives and personnel. Our continued success is dependent, to a large extent, on the ability to attract and retain the services of the key management team. However, competition for key personnel in our industry is intense. We may not be able to retain the services of our directors or other key personnel, or attract and retain high-quality personnel in the future. If any of our key personnel departs from us, and we are not able to recruit a suitable replacement with comparable experience to join us on a timely basis, our business, operations and financial conditions may be materially and adversely affected.
Acts of God, acts of war, epidemics and other disasters could materially and adversely affect our business.
Our business is subject to the general and social conditions in Hong Kong, the PRC and other jurisdictions in or to which our wine and caviar products are grown, produced, distributed or consumed. Natural disasters, epidemics, acts of God and other disasters that are beyond our control could adversely affect the economy, infrastructure and livelihood of the people of such jurisdictions. Our business, results of operations and financial conditions could be adversely affected if these natural disasters occur. Moreover, political unrest, wars and terrorist attacks may cause damage or disruption to us, our employees, suppliers or customers, any of which could adversely affect our business, results of operations, financial conditions or share price. Potential war or threat of terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot currently predict. We cannot control the occurrence of these catastrophic events and our business operations will at the times be subject to the risks of these uncertainties.
Any future occurrence of force majeure events, natural disasters or outbreaks of contagious diseases, may materially and adversely affect our business, financial conditions and results of operations.
Any future occurrence of force majeure events, natural disasters or outbreaks of epidemics and contagious diseases, including avian influenza, severe acute respiratory syndrome, H1N1 influenza and Ebola virus in Hong Kong, the PRC and other jurisdictions in or to which our wine and caviar products are grown, produced, distributed or consumed may materially and adversely affect our business, financial conditions and results of operations. An outbreak of an epidemic or contagious disease or other adverse public health developments in the world could result in a widespread health crisis and restrict the level of business activities in affected areas, which may, in turn, materially and adversely affect our business.
We cannot assure you that any future occurrence of natural disasters or outbreaks of epidemics and contagious diseases, or the measures taken by the government of different countries in response to such contagious diseases will not seriously disrupt our operations or those of our customers or suppliers, which may materially and adversely affect our business, financial conditions and results of operations.
Technology failures or security breaches could disrupt our operations and negatively impact our business.
In the normal course of business, we rely on information technology systems to process, transmit, and store electronic information. For example, we utilize information technology to communicate with the supplier, logistic services provider, and distributors, and to manage our production and distribution facilities and inventory. Information technology systems are also integral to the reporting of our results of operations. Furthermore, a significant portion of the communications between, and storage of personal data of, our personnel, customers, and suppliers depend on information technology, including social media platforms.
Our information technology systems may be vulnerable to a variety of interruptions due to events beyond our control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other security issues. These events could compromise our confidential information, impede, or interrupt our business operations, and may result in other negative consequences, including remediation costs, loss of revenue, litigation and reputational damage. Furthermore, if a breach or other breakdown results in disclosure of confidential or personal information, we may suffer reputational, competitive and/or business harm. While we have implemented administrative and technical controls and taken other preventive actions to reduce the risk of cyber incidents and protect our information technology, they may be insufficient to prevent physical and electronic break-ins, cyber-attacks, or other security breaches to our computer systems, which could have a material adverse effect on our business, financial condition or results of operations.
Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations.
We may be subject to a variety of cybersecurity, data privacy, data protection, and other laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations, such as the Data Protection Act (As Revised) of the Cayman Islands, apply not only to third-party transactions, but also to transfers of information within our organization, which relates to our investors, employees, contractors and other counterparties. These laws and regulations may restrict our business activities and require us to incur increased costs and efforts to comply, and any breach or non-compliance may subject us to proceedings against us, damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our business, financial conditions, and results of operations.
Fluctuations in exchange rates could result in foreign currency exchange losses, which may adversely affect our financial conditions, results of operations and cash flows.
We sourced substantial portion of our wine and caviar from the PRC, hence a substantial portion of our purchases were denominated in RMB. Meanwhile, the sales to our customers were billed and settled in HKD. Therefore, we are exposed to foreign exchange risks. The value of HKD against RMB and other currencies may fluctuate and is affected by, among other factors, the policies of the PRC government and changes in the PRC’s and international political and economic conditions. As we did not enter into any formal hedging policy, foreign currency exchange contracts or derivative transactions, we are exposed to foreign currency fluctuations. Any appreciation or depreciation of RMB relative to HKD would affect our financial results.
Further, it is difficult to predict how market forces or Hong Kong, Mainland China, the U.S. or other government policies may impact the exchange rate among HKD, RMB, USD and other currencies in the future. Moreover, fluctuation in the exchange rate will affect the relative value of earnings from and the value of any foreign currency-denominated investments we make in the future. Should we face significant volatility in these foreign exchange rates and we cannot procure any specific foreign exchange control measures to mitigate such risks, our results of operations and financial performance shall be adversely affected.
We may be affected by the currency peg system in Hong Kong.
Since 1983, Hong Kong dollars have been pegged to the US dollars at the rate of approximately HKD7.8 to USD1.0. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and HKD suffer devaluation, the HKD cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.
Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.
Prior to our initial public offering, we were a private company with limited accounting personnel and other resources to address our internal controls and procedures. Accordingly, we will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that will allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002.
As a company with less than US$1.235 billion in revenue for the fiscal year of 2025, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report by our independent registered public accounting firm due to a transition period established by rules of the SEC for newly listed public companies.
Risks Related to our Class A Ordinary Shares
Short selling may drive down the market price of our Class A Ordinary Shares.
Short selling is the practice of selling shares that the seller does not own but rather has borrowed from a third party with the intention of buying identical shares back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the shares between the sale of the borrowed shares and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the shares to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling the shares short. These short attacks have, in the past, led to selling of shares in the market. If we were to become the subject of any unfavorable publicity, whether such allegations are proven to be true or untrue, we would have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality.
Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial.
We have a dual-class share structure such that our ordinary shares consist of Class A Ordinary Shares and Class B Ordinary Shares with disparate voting powers. In respect of matters requiring the votes of shareholders, holders of Class A Ordinary Shares will be entitled to one vote per share, while holders of Class B ordinary shares will be entitled to thirty (30) votes per share based on our dual-class share structure.
Through Winwin Development Group Limited, Mr. Kim Kwan Kings, WONG owned approximately 40.07 of our issued and outstanding Class A Ordinary Shares and 100% of our issued and outstanding Class B Ordinary Shares, representing 89.76% voting rights as of the date of this annual report. See “Item 6. Directors, Senior Management and Employees—6.E. Share Ownership” for details on ordinary shares beneficially owned by Mr. Kim Kwan Kings, WONG. As a result of the dual-class share structure and the concentration of ownership, holders of Class B Ordinary Shares will have considerable influence over matters such as decisions regarding mergers and consolidations, election of directors and other significant corporate actions. Such holders may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their Class A Ordinary Shares as part of a sale of our company and may reduce the price of our Class A Ordinary Shares. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares may view as beneficial.
The dual-class structure of our shares may adversely affect the trading market for our Class A Ordinary Shares.
S&P Dow Jones and FTSE Russell have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our shares may prevent the inclusion of Class A Ordinary Shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our Class A Ordinary Shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A Ordinary Shares.
We are a “controlled company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
We are, and will continue to be, a “controlled company” as defined under corporate governance rules of Nasdaq Stock Market, because Mr. Kim Kwan Kings, WONG, our CEO and Chairman of the Board, beneficially owned approximately 40.07 of our issued and outstanding Class A Ordinary Shares and 100% of our issued and outstanding Class B Ordinary Shares, representing 89.76% voting rights as of the date of this annual report. For further information, see “Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS – 7.A. Major Shareholders.”
Under the Nasdaq Listing Rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to elect to rely, and may rely, on certain exemptions from the obligation to comply with certain corporate governance requirements, including:
| ● | the requirement that our director nominees must be selected or recommended solely by independent directors; and |
| ● | the requirement that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. |
Although we do not intend to rely on the “controlled company” exemptions under the Nasdaq Listing Rules even if we are deemed to be a “controlled company,” we could elect to rely on these exemptions in the future. If we were to elect to rely on the “controlled company” exemptions, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
Our controlling shareholders have substantial influence over and our interests may not be aligned with the interests of our other shareholders.
As of the date of this annual report, Mr. Kim Kwan Kings, WONG, our CEO and Chairman, beneficially owned approximately 40.07 of our issued and outstanding Class A Ordinary Shares and 100% of our issued and outstanding Class B Ordinary Shares, representing 89.76% voting rights as of the date of this annual report. Kim Kwan Kings, WONG has substantial influence over our business, including decisions regarding mergers, consolidations, the sale of all or substantially all of our assets, election of directors, declaration of dividends and other significant corporate actions. As a controlling shareholder, Kim Kwan Kings, WONG may take actions that are not in the best interests of our other shareholders. These actions may be taken in many cases even if they are opposed by our other shareholders. In addition, this concentration of ownership may discourage, delay or prevent a change in control which could deprive you of an opportunity to receive a premium for your securities as part of a sale of our Company.
The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCAA, as amended. If the PCAOB is unable to conduct such inspections for two consecutive years, the SEC will prohibit the trading of our shares. The delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections.
On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.
On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (“HFCAA”), requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national securities exchange or in the over-the-counter trading market in the U.S. On December 2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law.
On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.
On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.
On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022.
On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “SOP”) with the China Securities Regulatory Commission and the Ministry of Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreement”), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law.
On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.
We have engaged CHI-LLTC as our current auditor. CHI-LLTC is headquartered in Malaysia and registered with the PCAOB. CHI-LLTC is subject to the laws in the United States, which enable the PCAOB to conduct regular inspections to assess the firm’s compliance with the relevant professional standards. Our previous auditor, Audit Alliance LLP, is a firm headquartered in Singapore and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards. As of the date of this annual report, our current and previous auditors are not subject to the PCAOB determinations.
Our ability to retain an auditor subject to PCAOB inspection and investigation, including but not limited to inspection of the audit working papers related to us, may depend on the relevant positions of U.S. and Chinese regulators. With respect to audits of companies with operations in China, such as the Company, there are uncertainties about the ability of our auditor to fully cooperate with a request by the PCAOB for audit working papers in China without the approval of Chinese authorities. Whether the PCAOB will be able to conduct inspections of our auditor, including but not limited to inspection of the audit working papers related to us, in the future is subject to substantial uncertainty and depends on a number of factors out of our, and our auditor’s, control. If our shares and shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
The trading price of our Class A Ordinary Shares may be volatile, which could result in substantial losses to you.
The trading price of our Class A Ordinary Shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen due to broad market and industry factors, such as performance and fluctuation in the market prices or underperformance or deteriorating financial results of other listed companies based in Hong Kong and Mainland China. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading price of their securities. The trading performances of other Hong Kong and Chinese companies’ securities after their offerings may affect the attitudes of investors towards Hong Kong-based, U.S.-listed companies, which consequently may affect the trading performance of our Class A Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Hong Kong and Chinese companies may also negatively affect the attitudes of investors towards Hong Kong and Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material and adverse effect on the trading price of our Class A Ordinary Shares.
In addition to the above factors, the price and trading volume of our Class A Ordinary Shares may be highly volatile due to multiple factors, including the following:
| ● | political, social and economic conditions in Mainland China and Hong Kong; |
| ● | variations in our revenue, profit, and cash flow; |
| ● | the operating and stock price performance of other companies, other industries and other events or factors beyond our control; |
| ● | fluctuations of exchange rates among HKD, RMB, and USD; |
| ● | general market conditions or other developments affecting us or the wine and caviar industry in which we operate; |
| ● | actual or anticipated fluctuations in our results of operations and changes or revisions of our expected results; |
| ● | changes in financial estimates or recommendations by securities research analysts; |
| ● | detrimental negative publicity about us, our services, our officers, directors, Controlling Shareholders, other beneficial owners, our business partners, or our industry; |
| ● | announcements by us or our competitors of new product offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; |
| ● | additions to or departures of our senior management; |
| ● | litigation or regulatory proceedings involving us, our officers, Directors, or Controlling Shareholders; |
| ● | developments in information technology and our capability to catch up with the technology innovations in the industry; |
| ● | the realization of any of the other risk factors presented in this annual report; |
| ● | changes in investors’ perception of our Company and the investment environment generally; |
| ● | the liquidity of the market for our Class A Ordinary Shares; |
| ● | release or expiry of lock-up or other transfer restrictions on our outstanding Class A Ordinary Shares; and |
| ● | sales or perceived potential sales of additional Class A Ordinary Shares. |
Any of these factors may result in large and sudden changes in the volume and price at which our Class A Ordinary Shares will be traded.
Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Class A Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial conditions or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares.
In addition, if the trading volumes of our Class A Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Class A Ordinary Shares. This low volume of trades could also cause the price of our Class A Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Class A Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Class A Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. A decline in the market price of our Class A Ordinary Shares also could adversely affect our ability to issue additional shares of Class A Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Class A Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Class A Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.
In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial conditions and results of operations.
Our Class A 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 shares to raise money or otherwise desire to liquidate your shares.
Our Class A Ordinary Shares may be “thinly-traded,” meaning that the number of persons interested in purchasing our Class A Ordinary Shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we come to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broad or active public trading market for our Class A Ordinary Shares may not develop or be sustained.
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 Class A Ordinary Shares, the market price for our Class A Ordinary Shares and trading volume could decline.
The trading market for our Class A Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our Class A Ordinary Shares or publishes inaccurate or unfavorable research about our business, the market price for our Class A Ordinary Shares would likely decline. If one or more of these analysts cease coverage of the Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Class A Ordinary Shares to decline.
If we fail to meet applicable listing requirements, Nasdaq may delist our Class A Ordinary Shares from trading, in which case the liquidity and market price of our Class A Ordinary Shares could decline.
Our securities are listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. The Nasdaq Listing Rules require a company to maintain a minimum closing bid price of US$1.00 per share.
On December 9, 2024, we received a notice from Nasdaq that we failed to comply with the minimum closing bid price requirement set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules as the closing bid price per share had been below US$1.00 for a period of 30 consecutive business days. The Nasdaq notification letter does not result in the immediate delisting of our securities. Pursuant to Rule 5810(c)(3)(A) of the Nasdaq Listing Rules, we have a compliance period of 180 calendar days, or until or until June 9, 2025 to regain compliance with Nasdaq’s minimum bid price requirement. If we do not regain compliance during such 180-day period, we may be eligible for an additional 180 calendar days, provided that we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provides Nasdaq with a written notice of its intention to cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
On June 10, 2025, our Company received a letter from Nasdaq, indicating that our Company is granted an additional 180 calendar days, until December 8, 2025, to regain compliance with the minimum bid price requirement of $1 per share, as stipulated by Nasdaq Listing Rule 5550(a)(2). If compliance cannot be demonstrated by December 8, 2025, Nasdaq staff will provide written notification that our Company’s securities will be delisted. At that time, our Company may appeal Nasdaq staff’s determination to a Hearings Panel.
On July 17, 2025, our Company issued a press release announcing the approval of a proposed 1-for-90 share consolidation of our Company’s Class A Ordinary Shares and Class B Ordinary Shares, each with a par value of $0.0001 (the “Share Consolidation”). The Share Consolidation was approved by our Company’s board of directors on June 11, 2025 and by its shareholders at the 2025 Annual General Meeting held on April 8, 2025. At the opening of trading on July 21, 2025, being the market effective date, the Class A Ordinary Shares began trading on a post-Share Consolidation basis on the Nasdaq Capital Market under the same symbol “TWG” but under a new CUSIP number G8945S110. The objective of the Share Consolidation was to enable our Company to regain compliance with Nasdaq Marketplace Rule 5550(a)(2) and maintain our listing on the Nasdaq Capital Market.
Upon effectiveness of the Share Consolidation, every 90 issued and outstanding Ordinary Shares of a par value of $0.0001 each were automatically consolidated into one issued and outstanding Ordinary Share of a par value of $0.009 each. No fractional shares were issued in connection with the Share Consolidation; any fractional shares that would have resulted were rounded up to the next whole number. The Share Consolidation was effected equally for all shareholders and did not alter any shareholder’s percentage ownership interest in the Company’s outstanding Ordinary Shares, except for adjustments resulting from the treatment of fractional shares.
While we are currently able to regain compliance with Nasdaq Marketplace Rule 5550(a)(2) and maintain our listing on the Nasdaq Capital Market, sales of substantial amounts of our Class A Ordinary Shares in the public market in our future offerings, or the perception that these sales could occur, could adversely affect the market price of our Class A Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. The Class A Ordinary Shares sold in our future offerings may be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future, subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. Any potential decline in the market price of our Class A Ordinary Shares after this offering may affect our ability to maintain compliance with the listing rules relating to minimum bid price and market value of our listed securities.
In addition, we are aware that on September 3, 2025, Nasdaq proposed to introduce an accelerated process for suspending and delisting companies with a listings deficiency that also have a market value listed securities below $5.0 million. Nasdaq proposes further enhancing investor protections by providing for suspension from Nasdaq trading and immediate delisting (rather than providing a compliance period) of any company that becomes non-compliant with a numeric listing requirement, including the bid price, market value of public float, equity, income and total assets/revenue requirements, and that has a market value of listed securities of less than $5 million. To effect this change, Nasdaq proposes to modify Listing Rule 5810(c)(1) to add an additional type of a deficiency that results in immediate delisting and suspension from trading of the company’s securities. Specifically, Listing Rule 5810(c)(1) will provide that staff's delisting notice will inform the company that its securities are immediately subject to suspension and delisting when a company is non-compliant with one or more of the listing requirements contained in Rule 5450 or Rule 5550 and the company’s Market Value of Listed Securities has failed to maintain a value of at least $5 million for a period of 10 consecutive business days. Listing Rule 5810(c)(2)(A)(i) currently identifies all quantitative deficiencies from standards that do not provide a compliance period as deficiencies for which a company may submit a plan of compliance for staff review. Nasdaq proposes to modify Listing Rule 5810(c)(2)(A)(i) to provide that the company may not submit such a plan when the company’s Market Value of Listed Securities had been less than $5 million for a period of 10 consecutive business days. Further, Listing Rule 5810(c)(3) currently identifies deficiencies for which the rules provide a specified cure or compliance period. Nasdaq proposes to modify Listing Rule 5810(c)(3) to provide that a company will not be entitled to such cure or compliance period if the company’s Market Value of Listed Securities has failed to maintain a value of at least $5 million for a period of 10 consecutive business days. Finally, Nasdaq proposes to modify Listing Rule 5810(c)(1) to provide that staff's delisting notice in these circumstances will inform the company that its securities are immediately subject to suspension from trading on Nasdaq. Nasdaq believes that it is not appropriate for such a company to continue trading on Nasdaq during the pendency of the Hearings Panel review process. Instead, Nasdaq proposes to amend Rule 5815 to remove the stay provision in these situations so that the company’s securities will be suspended from trading on Nasdaq during the pendency of the Hearings Panel’s review.
The proposed accelerated process for suspending and delisting companies with a listings deficiency that also have a market value listed securities below $5.0 million, if implemented, may put immense pressure on our Company to regain compliance should the market value of our listed securities fall below $5.0 million as we may be exposed to the risk of losing our listing status quickly. We may have to monitor the market value of our listed securities closely and take actions timely, such as issuing additional securities and raising additional capital to regain and/or maintain compliance. Any such risk of losing our listing status quickly may harm investors’ confidence, our liquidity and limit our access to additional funding.
Even if we currently meet the other listing requirements and other applicable rules of the Nasdaq Capital Market, and even if we regain compliance with Nasdaq Listing Rule 5550(a)(2), we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.
If we fail to comply with the applicable listing standards and Nasdaq delists our Class A Ordinary Shares, we and our Shareholders could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our Class A Ordinary Shares; |
| ● | reduced liquidity for our Class A Ordinary Shares; |
| ● | a determination that our Class A Ordinary Shares are “penny stock”, which would require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A Ordinary Shares; |
| ● | a limited amount of news about us and analyst coverage of us; and |
| ● | a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future. |
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 Class A Ordinary Shares for return on your investment.
Our board of directors has complete discretion as to whether to distribute dividends. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under the Cayman Islands law, namely that the Company may only pay dividends out of profits or share premium, and provided that under no circumstances may a dividend be paid if this would result in the Company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A Ordinary Shares will likely depend entirely upon any future price appreciation of our Class A Ordinary Shares. We cannot assure you that our Class A Ordinary Shares will appreciate in value or even maintain the price at which you purchased the Class A Ordinary Shares. You may not realize a return on your investment in our Class A Ordinary Shares and you may even lose your entire investment in our Class A Ordinary Shares.
Our board of directors may decline to register transfers of Class A Ordinary Shares in certain circumstances.
Our board of directors may, in its sole discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any share unless (i) the instrument of transfer is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of only one class of shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; (v) the shares conceded are free of any lien in favor of us; or (vi) a fee of such maximum sum as Nasdaq may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to us in respect thereof.
If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, after compliance with any notice requirement of the Nasdaq Stock Market, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.
Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.
The Nasdaq Listing Rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. In addition, the Nasdaq Listing Rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee and an audit committee. We, as a foreign private issuer, are not subject to these requirements. The Nasdaq Listing Rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances.
We currently follow and intend to continue to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the Nasdaq that listed companies must obtain its shareholders’ approval of certain transactions other than public offerings involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares (Nasdaq rule 5635(d)), and Nasdaq rule 5640, which requires that the voting rights of a listed company cannot be disparately reduced or restricted through any corporation action or issuance. To the extent we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.
We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that permit less detailed and less frequent reporting than that of a U.S. corporation.
We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors and principal shareholders purchase or sell our Shares. In addition, foreign private issuers are not required to file their annual report on Form 20-F until one hundred twenty (120) days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within seventy-five (75) days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.
If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, obtaining and maintaining directors’ and officers’ liability insurance would become more difficult and expensive for us, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
We are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of voting power of our Ordinary Shares are directly or indirectly held by residents of the United States and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq rules. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.
The enforcement of foreign civil liabilities in the Cayman Islands and Hong Kong is subject to certain conditions. Therefore, certain judgments obtained against us by our shareholders may be difficult to enforce in such jurisdictions.
We are a company formed under the laws of the Cayman Islands. We conduct our operations outside the United States and substantially all of our assets are located outside the United States. In addition, substantially all of our directors and executive officers reside outside the United States, and most of their assets are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against them in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, Hong Kong, or other relevant jurisdictions may render you unable to enforce a judgment against our assets or the assets of our directors and officers.
There is uncertainty as to whether the courts of the Cayman Islands would (1) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, or (2) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States.
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment in personam obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given by a competent foreign court with jurisdiction to give the judgment, (b) imposes a specific positive obligation on the judgment debtor (such as an obligation to pay a liquidated sum or perform a specified obligation), (c) is final and conclusive, (d) is not in respect of taxes, a fine or a penalty, (e) has not been obtained by fraud; and (f) is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
Judgment of United States courts will not be directly enforced in Hong Kong. There are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the United States. However, the common law permits an action to be brought upon a foreign judgment. That is to say, a foreign judgment itself may form the basis of a cause of action since the judgment may be regarded as creating a debt between the parties to it. In a common law action for enforcement of a foreign judgment in Hong Kong, the enforcement is subject to various conditions, including but not limited to, that the foreign judgment is a final judgment conclusive upon the merits of the claim, the judgment is for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a “competent” court as determined by the private international law rules applied by the Hong Kong courts. The defenses that are available to a defendant in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from the judgment debtor.
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 are a company formed under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association (as amended from time to time), the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under the Cayman Islands laws are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under the Cayman Islands laws are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, the Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
Shareholders of Cayman Islands companies like us have no general rights under the Cayman Islands laws to inspect corporate records, other than the memorandum and articles of association (as amended from time to time) and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies. Our directors have discretion under our amended and restated memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors, or our Controlling Shareholder than they would as public shareholders of a company incorporated in the United States.
As a company incorporated in the Cayman Islands, we are permitted to adopt certain Cayman Islands’ practices in relation to corporate governance matters that differ significantly from the Nasdaq Capital Market listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Capital Market listing standards.
As a Cayman Islands company to be listed on the Nasdaq Capital Market, we are subject to the Nasdaq Capital Market listing standards. However, the Nasdaq Capital Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Capital Market listing standards. We currently follow and intend to continue to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the Nasdaq that listed companies must obtain its shareholders’ approval of certain transactions other than public offerings involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares (Nasdaq rule 5635(d)), and Nasdaq rule 5640, which requires that the voting rights of a listed company cannot be disparately reduced or restricted through any corporation action or issuance. To the extent we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.
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 Class A Ordinary Shares to significant adverse United States income tax consequences.
We will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) 75% or more of our gross income for such year consists of certain types of “passive” income, or (ii) 50% or more of the value of our assets (determined on the basis of a quarterly average) during such year produce or are held for the production of passive income (the “asset test”). Based upon our current and expected income and assets, as well as projections as to the market price of our Class A Ordinary Shares, we do not presently expect to be classified as a PFIC for the current taxable year or the foreseeable future.
While we do not expect to be a PFIC, because the value of our assets, for purposes of the asset test, may be determined by reference to the market price of our Class A Ordinary Shares, fluctuations in the market price of our Class A Ordinary Shares may cause us to become a PFIC classification for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition and classification of our income, including the relative amounts of income generated by and the value of assets of our future strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the U.S. Internal Revenue Service, or IRS, may challenge our classification of certain income and assets as non-passive which may result in our being or becoming a PFIC in the current or subsequent years. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in the initial public offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.
If we are a PFIC in any taxable year, a U.S. Holder (as defined in “Taxation—United States Federal Income Tax Considerations”) may incur significantly increased United States income tax on gain recognized on the sale or other disposition of our Class A Ordinary Shares and on the receipt of distributions on our Class A Ordinary Shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules, and such holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. Holder holds our Class A Ordinary Shares, we will generally continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Class A Ordinary Shares. For more information see “Item 10. Additional Information—10.E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”
We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
As an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements. Such reduced disclosure may make our Class A Ordinary Shares less attractive to investors.
For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Class A Ordinary Shares less attractive as a result, there may be a less active trading market for our Class A Ordinary Shares and our share price may be more volatile.
We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”
We will incur significant legal, accounting and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, Nasdaq Capital Market, impose various requirements on the corporate governance practices of public companies.
Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult or costly for us to find qualified persons to serve on our board of directors or as executive officers as a public company. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
Item 4. Information on the Company
4.A. History and Development of the Company
Top Wealth Group Holding Limited was incorporated as a limited liability company on February 1, 2023 under law of the Cayman Islands. It is a holding company and is not actively engaged in any business. Under its memorandum of association at incorporation, the authorized share capital of Top Wealth Group Holding Limited was US$50,000 divided into 500,000,000 ordinary shares, par value US$0.0001 per share.
Top Wealth (BVI) Holding Limited was incorporated under the law of the British Virgin Islands as the intermediate holding company of Top Wealth Group (International) Limited, on January 18, 2023 as part of the reorganization. Top Wealth (BVI) Holding Limited is wholly-owned by Top Wealth Group Holding Limited.
Top Wealth Group (International) Limited was incorporated on September 22, 2009 under the laws of Hong Kong. Top Wealth Group (International) Limited is our operating entity and is indirectly wholly-owned by Top Wealth Group Holding Limited through Top Wealth (BVI) Holding Limited.
In March, 2023, we carried out a series of transactions to reorganize the legal structure of the Top Wealth group of companies. On March 21, 2023, the Top Wealth Group Holding Limited acquired 100% interest in Top Wealth (BVI) Group Limited, a company incorporated in the British Virgin Islands, at a nominal value of US$10 from the shareholders of Winwin Development Group Limited. On March 24, 2023, Top Wealth Group Holding Limited, through Top Wealth (BVI) Group Limited, acquired 100% interest in the Top Wealth Group (International) Limited (“Top Wealth International”), Hong Kong Operating Subsidiary, at a nominal consideration of US$10 from the shareholders of Winwin Development Group Limited.
On October 12, 2023, in contemplation of the Company’s initial public offering, Top Wealth Group Holding Limited further issued 26,999,250 ordinary shares in aggregate to its shareholders at par value, on a pro rata basis proportional to the shareholders’ existing equity interests (collectively refers as the “Pro Rata Share Issuance”), which has been treated as a share split. After the Pro Rata Share Issuance, 27,000,000 ordinary shares are issued and outstanding. The following table sets forth the breakdown of the Pro Rata Share Issuance to each shareholder:
| Shareholders | Number of ordinary shares Issued |
|||
| Winwin Development Group Limited | 20,159,440 | |||
| Beyond Glory Worldwide Limited | 1,727,952 | |||
| Keen Sky Global Limited | 1,763,951 | |||
| State Wisdom Holdings Limited | 1,763,951 | |||
| Snow Bear Capital Limited | 899,975 | |||
| Mercury Universal Investment Limited | 683,981 | |||
On October 16, 2023, State Wisdom Holdings Limited and Keen Sky Global Limited transferred 432,000 and 432,000 ordinary shares to Greet Harmony Global Limited at the consideration of HK$314,685 (approximately US$40,344) and HK$314,685 (approximately US$40,344), respectively. On the same day, Beyond Global Worldwide Limited transferred 540,000 ordinary shares to Mercury Universal Investment Limited at the consideration of HK$393,356 (approximately US$50,430).
The following table sets forth the breakdown of equity ownership of the Company after the series of transactions in October 16, 2023:
| Shareholders | Number of Ordinary Shares Owned |
|||
| Winwin Development Group Limited | 20,160,000 | |||
| Beyond Glory Worldwide Limited | 1,188,000 | |||
| Keen Sky Global Limited | 1,332,000 | |||
| State Wisdom Holdings Limited | 1,332,000 | |||
| Snow Bear Capital Limited | 900,000 | |||
| Mercury Universal Investment Limited | 1,224,000 | |||
| Greet Harmony Global Limited | 864,000 | |||
Initial Public Offering
On April 18, 2024, the Company completed its initial public offering on the Nasdaq. In this offering, 2,000,000 ordinary shares were issued at a price of US$4.00 per share. The gross proceeds received from the initial public offering totalled US$8 million. The Offering closed on April 18, 2024 and the ordinary shares began trading on April 16, 2024 on the Nasdaq Capital Market under the ticker symbol “TWG.”
Resale Offering
On July 2, 2024, the Company filed the registration statement on Form F-1 with the SEC (File No. 333-280654) (as amended, the “Resale Prospectus”), which was declared effective on July 23, 2024, for 6 existing shareholders of the Company to register their existing shareholding of an aggregate of 6,840,000 ordinary shares to be sold pursuant to the Resale Prospectus. The following table sets forth the breakdown of number of ordinary shares registered for sale in the resale prospectus by the existing shareholders:
| Name of Shareholders | Number of Ordinary Shares Registered for Sale in the Resale Prospectus |
|||
| Beyond Glory Worldwide Limited | 1,188,000 | |||
| Keen Sky Global Limited | 1,332,000 | |||
| State Wisdom Holdings Limited | 1,332,000 | |||
| Snow Bear Capital Limited | 900,000 | |||
| Mercury Universal Investment Limited | 1,224,000 | |||
| Greet Harmony Global Limited | 864,000 | |||
| Total | 6,840,000 | |||
Best Efforts Offerings
On October 14, 2024, the Company closed a best efforts offering which the Company agreed to issue and sell a total of 27,000,000 ordinary shares of par value $0.0001 per share, at the price of $0.40 per Ordinary Share, to several investors, and entered several securities purchase agreements with the purchasers. The securities purchase agreements contain customary representations and warranties and agreements of the Company and the purchasers and customary indemnification rights and obligations of the parties. The gross proceeds received from the offering totaled US$10.8 million. The ordinary shares were offered pursuant to a registration statement on Form F-1, as amended (Registration No. 333-282302) originally filed with the SEC on September 24, 2024. The Form F-1 for the offering was declared effective on September 30, 2024. The final prospectus is filed on October 15, 2024. AC Sunshine Securities LLC acted as the exclusive placement agent in the offering pursuant to a placement agency agreement dated October 10, 2024, by and between the Company and AC Sunshine Securities LLC.
On December 10, 2025, the Company closed a best-efforts offering which our Company issued and sold a total of 720,000 units, consisting of one Class A Ordinary Share, par value $0.009 per share, one Series A Class A Warrant and one Series B Class A Warrant at the price of $7.00 per unit, to several investors, and entered several securities purchase agreements with the purchasers. The securities purchase agreements contain customary representations and warranties and agreements of our Company and the purchasers and customary indemnification rights and obligations of the parties. The gross proceeds received from the offering totaled $5.04 million. The units were offered pursuant to a registration statement on Form F-1, as amended (Registration No. 333-290351) originally filed with the SEC on September 18, 2025. The Form F-1 for the offering was declared effective on December 8, 2025. The final prospectus was filed on December 10, 2025. Univest Securities LLC acted as the exclusive placement agent in the offering pursuant to a placement agency agreement dated December 9, 2025, by and between the Company and Univest Securities LLC.
Reclassification and redesignation of Class A and Class B ordinary Shares
On April 7, 2025, at the 2025 Annual General Meeting of shareholders of the company, our shareholders resolved to, amongst others, approve the adoption of a dual-class share capital structure by taking the following steps to redesignate and reclassify the authorized share capital of the Company from US$50,000 divided into 500,000,000 ordinary shares of par value US$0.0001 each to US$50,000 divided into 450,000,000 Class A Ordinary Shares of US$0.0001 each and 50,000,000 Class B Ordinary Shares of US$0.0001 each:
| ● | re-designating all of the issued and outstanding ordinary shares (except for the 15,000,000 ordinary shares held by Winwin Development Group Limited) into Class A Ordinary Shares, each having one (1) vote per share, on a one for one basis; |
| ● | re-designating 15,000,000 issued and outstanding ordinary shares held by Winwin Development Group Limited into Class B Ordinary Shares, each having 30 votes per share, on a one for one basis; and |
| ● | re-designating the remaining 409,000,000 authorized but unissued ordinary shares into Class A Ordinary Shares on a one for one basis, and the remaining 35,000,000 authorized but unissued ordinary shares into Class B Ordinary Shares on a one for one basis. |
All shares and per share amounts used elsewhere in this Annual Report have been retroactively restated to reflect the reclassification of Class A and Class B Ordinary Shares.
Adoption of the Amended And Restated Memorandum and Articles Of Association
At the 2025 Annual General Meeting of shareholders of the Company, our shareholders also resolved to approve and adopt the Amended And Restated Memorandum and Articles of Association of the Company, in substitution for and to the exclusion of the memorandum and articles of association of the Company currently in effect, to reflect the changes in, among others the quorum for general meetings, the notice period for general meetings, the voting method at general meetings and the authorized share capital and to set out the rights and privileges of Class A Ordinary Shares and Class B Ordinary Shares.
Nasdaq Deficiency
On December 9, 2024, we received a letter from the Listing Qualifications staff of the Nasdaq notifying that the Company is not currently in compliance with the minimum bid price requirement set forth in Nasdaq’s Listing Rules for continued listing on the Nasdaq Capital Market, as the closing bid price for the Company’s shares listed on the Nasdaq Capital Market was below $1.00 per share for 30 consecutive business days. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of one hundred eighty (180) calendar days, or until June 9, 2025 (the “Compliance Period”), to regain compliance with Nasdaq’s minimum bid price requirement. If at any time during the Compliance Period, the closing bid price per share of the Company’s Class A ordinary shares is at least $1.00 for a minimum of ten (10) consecutive business days, Nasdaq will provide the Company a written confirmation of compliance and the matter will be closed.
In the event that the Company does not regain compliance in the compliance period, the Company may be eligible for an additional 180 calendar days, should the Company meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and is able to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
On June 10, 2025, our Company received a letter from Nasdaq, indicating that our Company is granted an additional 180 calendar days, until December 8, 2025, to regain compliance with the minimum bid price requirement of $1 per share, as stipulated by Nasdaq Listing Rule 5550(a)(2). If compliance cannot be demonstrated by December 8, 2025, Nasdaq staff will provide written notification that our Company’s securities will be delisted. At that time, our Company may appeal Nasdaq staff’s determination to a Hearings Panel.
On July 17, 2025, our Company issued a press release announcing the approval of a proposed 1-for-90 share consolidation of our Company’s Class A Ordinary Shares and Class B Ordinary Shares, each with a par value of $0.0001 (the “Share Consolidation”). The Share Consolidation was approved by our Company’s board of directors on June 11, 2025 and by its shareholders at the 2025 Annual General Meeting held on April 8, 2025. At the opening of trading on July 21, 2025, being the market effective date, the Class A Ordinary Shares began trading on a post-Share Consolidation basis on the Nasdaq Capital Market under the same symbol “TWG” but under a new CUSIP number G8945S110. The objective of the Share Consolidation was to enable our Company to regain compliance with Nasdaq Marketplace Rule 5550(a)(2) and maintain our listing on the Nasdaq Capital Market.
Upon effectiveness of the Share Consolidation, every 90 issued and outstanding Ordinary Shares of a par value of $0.0001 each were automatically consolidated into one issued and outstanding Ordinary Share of a par value of $0.009 each. No fractional shares were issued in connection with the Share Consolidation; any fractional shares that would have resulted were rounded up to the next whole number. The Share Consolidation was effected equally for all shareholders and did not alter any shareholder’s percentage ownership interest in the Company’s outstanding Ordinary Shares, except for adjustments resulting from the treatment of fractional shares.
Departure of Directors or Certain Officers and Appointment of Certain Directors and Officers
Hung, CHEUNG
Effective on April 1, 2025, Hung, CHEUNG resigned as a Director of the Company.
Kwok Kuen, YUEN
Effective on January 15, 2025, Kwok Kuen, YUEN (“Mr. Yuen”) resigned as the Chief Financial Officer of the Company.
Kong Wai, WONG
On January 15, 2025, the board of directors of the Company approved the appointment of Kong Wai, WONG (“Mr. Wong”) as the Chief Financial Officer the Company, effective immediately, to fill the vacancy of Mr. Yuen. In connection with Mr. Wong’s appointment as the Chief Financial Officer of the Company, the Company and Mr. Wong entered into an agreement and agreed to receive annual compensation of HK$ 420,000 (approximately US$ 53,950).
Wai Chun, CHIK
Effective on December 31, 2025, Ms. Wai Chun CHIK (“Ms. Chik”) resigned as an independent director, chairwoman of the Compensation Committee, member of the Audit Committee and member of the Nominating Committee of the Company.
Yuen Cheong Carp, LEE
Effective on December 31, 2025, the board of directors of the Company approved the appointment of Mr. Yuen Cheong Carp, LEE (“Mr. Lee”) as an independent director, chairman of the Compensation Committee, member of the Audit Committee and member of the Nominating Committee of the Company, to fill the vacancy of Ms. Chik.
Effective on February 23, 2026, Mr. Lee ceased to hold the above positions and was redesignated as an executive Director of the Company.
Sze Man, CHEUNG
Effective on February 23, 2026, the board of directors of the Company approved the appointment of Ms. Sze Man, CHEUNG as an independent director, chairwoman of the Compensation Committee, member of the Audit Committee and member of the Nominating Committee of the Company, to fill the vacancy of Mr. Lee.
Corporate Structure
The following diagram illustrates the corporate structure of Top Wealth Group Holding Limited and its subsidiaries as of the date of this annual report:
Holding Company Structure
TW Cayman is a holding company incorporated in the Cayman Islands with no material operations of its own. We conduct our operations primarily in Hong Kong through our Operating Subsidiaries in Hong Kong. Investors in our Class A Ordinary Shares are purchasing equity securities of TW Cayman, the Cayman Islands holding company, instead of shares of our Operating Subsidiaries in Hong Kong. Investors in our Class A Ordinary Shares should be aware that they may never directly hold equity interests in our Operating Subsidiaries.
As a holding company, TW Cayman may rely on dividends and other distributions on equity paid by its subsidiaries for its cash and financing requirements. If our existing Operating Subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
Transfers of Cash between Our Company and Our Subsidiaries
Our management monitors the cash position of each entity within our organization regularly and prepare budgets on a monthly basis to ensure each entity has the necessary funds to fulfill its obligation for the foreseeable future and to ensure adequate liquidity. In the event that there is a need for cash or a potential liquidity issue, it will be reported to our Chief Financial Officer and subject to approval by our board of directors, we will enter into an intercompany loan for the subsidiary.
For TW Cayman to transfer cash to its subsidiaries, TW Cayman is permitted under the laws of the Cayman Islands and its memorandum and articles of association to provide funding to our subsidiaries incorporated in the British Virgin Islands and Hong Kong through loans or capital contributions without restrictions on the amount of the funds. TW Cayman’s subsidiary, TW BVI, formed under the laws of the British Virgin Islands is permitted under the laws of the British Virgin Islands to provide funding to its Operating Subsidiary, TW HK, formed in Hong Kong through loans or capital contributions without restrictions on the amount of the funds. For the subsidiaries to transfer cash to TW Cayman, according to the BVI Business Companies Act 2004 (as amended), a British Virgin Islands company may make dividends distribution to the extent that immediately after the distribution, such company’s assets do not exceed its liabilities and that such company is able to pay its debts as they fall due. According to the Companies Ordinance of Hong Kong, a Hong Kong company may only make a distribution out of profits available for distribution. Other than the above, we did not adopt or maintain any cash management policies and procedures as of the date of this annual report.
TW Cayman has not made any dividends or distributions to U.S. investors as of the date of this annual report. During the fiscal years ended December 31, 2025, 2024, and 2024, no dividends or distribution have been made to date by our subsidiaries.
Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. The laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash from TW Cayman to TW HK from TW HK to TW Cayman. There are no restrictions or limitations under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong, nor is there any restriction on any foreign exchange to transfer cash between TW Cayman and its subsidiaries, across borders and to U.S. investors, nor there is any restrictions and limitations to distribute earnings from the subsidiaries, to TW Cayman and U.S. investors and amounts owed.
For TW Cayman to make dividends to its shareholders, subject to the Companies Act (Revised) of the Cayman Islands , which we refer to as the Companies Act below, and our Memorandum and Articles of Association, our board of directors may authorize and declare a dividend to shareholders from time to time out of the profits from the Company, realized or unrealized, or out of the share premium account, provided that the Company will remain solvent, meaning the Company is able to pay its debts as they come due in the ordinary course of business. There is no further Cayman Islands statutory restriction on the amount of funds which may be distributed by us in the form of dividends.
We do not have any present plan to declare or pay any dividends on our Ordinary Shares in the foreseeable future. We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments, in our Memorandum and Articles of Association and in the Companies Act.
Emerging Growth Company Status
As a company with less than US$1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of our IPO; (iii) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Foreign Private Issuer Status
We are incorporated in the Cayman Islands, and more than 50 percent of our outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, we are a “foreign private issuer,” as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Exchange Act. As a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime. In addition, as a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq Stock Market corporate governance requirements. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Stock Market corporate governance requirements.
Implication of the Holding Foreign Companies Accountable Act (the “HFCAA”)
The HFCAA was enacted on December 18, 2020. The HFCAA states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit the company’s shares from being traded on a national securities exchange or in the over the counter trading market in the United States.
On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.
On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which took effect on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.
On December 16, 2021, PCAOB announced the PCAOB HFCA Act determinations (the “PCAOB determinations”) relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.
On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “SOP”) with the China Securities Regulatory Commission and the Ministry of Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreement”), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law.
On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.
We have engaged Assentsure PAC as our current auditor. Assentsure PAC is headquartered in Singapore and registered with the PCAOB. Assentsure PAC is subject to the laws in the United States, which enable the PCAOB to conduct regular inspections to assess the firm’s compliance with the relevant professional standards. Our previous auditor, Onestop Assurance PAC, is a firm headquartered in Singapore and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards. As of the date of this annual report, our current and previous auditors are not subject to the PCAOB determinations]. However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the auditors, then such lack of inspection could cause trading in the Company’s securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company’s securities. See “Item 3. Key Information — 3.D. Risk Factors — Risks Related to Our Ordinary Shares— The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCAA, as amended. If the PCAOB is unable to conduct such inspections for two consecutive years, the SEC will prohibit the trading of our shares. The delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections.” We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us. Such uncertainty could cause the market price of our Class A Ordinary Shares to be materially and adversely affected.
Corporate Information
Our principal executive offices are located at Units 714 & 715, 7F, Hong Kong Plaza, 188 Connaught Road West, Hong Kong. Our telephone number at this address is +852 36158567. Our registered office in the Cayman Islands is located at the office of Ogier Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9009, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is https://www.imperialcristalcaviar.com/ and https://ir.imperialcristalcaviar.com. The information contained on our website is not a part of this annual report.
B. Business Overview
Overview
Our mission is to become a world-renowned supplier of the finest selection of caviar and offer caviar-based gourmet products around the globe with unparalleled gastronomical experience. Capitalizing on this mission, we have been able to utilize the market experience to engage in wine and health products trading in 2025. For wine trading, we had started in 2022 and made significant contribution to our profits in 2025.
Headquartered in Hong Kong, we are a fast-growing supplier of wine and caviar products. We are currently specialized in supplying high-quality sturgeons caviar. Our caviar is endorsed with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”) permits, which certifies that our caviar is legally traded. We are one of the major suppliers of caviar in Hong Kong. In 2025, we have diversified our supplying source to reduce the risk of over-reliance on a single supplier for Caviar. We note a significant reduction of our caviar trading revenue which we believe is a short term nature owing to our changes in supplying side as well as repositioning ourselves in securing stable and high quality suppliers either through upstream long term contract or acquisition in the future.
Since we established our wine and caviar business in August 2021, we had supplied wine and caviar to our customers under their brand labels (i.e. private labeling) or without brand labels. Subsequently in November 2021, we established our own caviar brand, “Imperial Cristal Caviar”, and started selling caviar under our own brand as well. With its exquisite package design, our branded caviar is ideal to be presented as both culinary delights and festive gifts. Imperial Cristal Caviar has continuously achieved tremendous sales growth since its launch in the market.
In March 2023, as the addition to the gastronomical experience of our caviar, we have commenced our wine trading business line, to complement our caviar business. For the fiscal year ended December 31, 2025, 2024, 2023, our wine trading business line contributed revenue of US$6,000,000, Nil and US$4,460,092. The fine wine we distribute include white wine, red wine, and Champagne, from various countries including France, Greek, and Spain, etc. Our wine trading business only involves the distribution of fine wine within Hong Kong on business-to-business (B2B) sales, primarily to our F&B related distributor customers, in particular, the F&B related distributor customers who we supply our caviar product. We do not import or manufacture the wine we distribute, instead, we source the wines from our wine suppliers in Hong Kong on an as-demand per order basis. Therefore, we are not subject to the relevant licensing requirements that apply to sale of alcoholic beverages in Hong Kong.
We take pride in our well-tested, reliable caviar supply chain management module, which helps ensure the palatability and freshness of our products when they reach our customers. We are among one of the few Hong Kong caviar suppliers being able to secure a long-term and exclusive supply of caviar raw products from a PRC sturgeon farm. In April 2022, we entered into an exclusive supply agreement with the agent and sole distributor of a well-established sturgeon farm in Fujian, the PRC, which appointed us as its exclusive distributor in Hong Kong and Macau for conducting overseas distribution and granted us the rights to procure caviar directly from it for a term of 10 years. This sturgeon farm is one of the six existing PRC sturgeon farms which are officially permitted to export locally-bred roe. We have engaged a Hong Kong-based supply chain management company to handle the logistics, warehousing and packaging workflows in our supply chain, so we can strategically focus on brand-building and product quality assurance.
We are dedicated to enhancing our brand awareness. As part of our sales and marketing efforts, we have proactively participated in food expo and set up pop-up stores across the world. We have also collaborated with famous food bloggers and used different online platforms and media coverage to promote and strengthen the publicity of our products. We regularly invite chefs of notable hotels and restaurants to our tasting events. Currently, our caviar are served on the menus of various 5-star and Michelin-star restaurants in Hong Kong.
We generate all of our revenues, through our Operating Subsidiary, from trading of caviar, wine and health products. Our revenues for the years ended December 31, 2025, 2024 and 2023 were US$9.1 million, US$4.7 million and US$16.9 million, , respectively. We have turned around from a loss before tax of approximately US$2.0 million for the year ended December 31, 2024 to a profit before tax of approximately US$3.2 million for the year ended December 31, 2025, and we have maintained a profit before tax of approximately US$2.4 for the year ended December 31, 2023.
Our top five customers accounted for 100.0% and 99.7% of our total revenues for the years ended December 31, 2025 and 2024. Our customers, including our top five customers, primarily include food and beverage (“F&B”) related distributors. We have strategically focused on business-to-business sales (B2B) which would allow us access to our customers’ sales network and consumer base that helps us maximize the reach of our products swiftly and effectively. As our wine and caviar products gain popularity worldwide, our customer base has continuously expanded as a result of customers’ referral and our marketing efforts. Our wine and caviar products are mainly sold to customers based in Hong Kong and a substantial portion are exported overseas by our customers. As our products gradually become more well-known in the international market, we aspire to expand our sales channels from only selling through distributors to selling our products directly to overseas customers.
For the years ended December 31, 2025, 2024 and 2023, our procurement from the single major supplier of caviar amounted to approximately nil, US$3.6 million and US$6.2 million, respectively, representing approximately 0%, 100% and 64.3%, of our total purchases for the corresponding year.
Competitive Strengths
A fast-growing luxury wine and caviar products supplier with a premier brand image
We position ourselves as a luxury wine and caviar products supplier aiming to supply the finest selection of luxury wine and caviar products and offer gourmet products around the globe with unparalleled gastronomical experience. We are currently specialized in supplying high quality sturgeons caviar. In November 2021, we established our own caviar brand, “Imperial Cristal Caviar”. Imperial Cristal Caviar is highly recognized by consumers in terms of its tastiness, texture, palatability, appearance and packaging. Our packaging carries a delicate design that conveys elegance and exclusivity and is ideal to be presented as both culinary delights and festive gifts. Our house caviar products are also well-received by chefs of 5-star and Michelin-star restaurants who serve our caviar products on their menus.
An extensive distribution network which allows us to stay abreast of the latest trend and development of consumers’ taste
We have access to an extensive distribution network which allows us to connect with a broad range of consumers around the world and to stay abreast of the latest trend and development of consumers’ taste. Our caviar products are mainly sold to F&B related distributors in Hong Kong, which then export and resell such goods to downstream customers such as supermarket, retail stores, F&B chain and consumers across the world. Leveraging the sales network and consumer base of our distributors, our caviar products have been exported overseas to different countries. Through sales channels that cover extensive points of sale across countries and regions, we serve a variety of consumer groups with diversified demands, which deepens our market penetration and extends our geographical coverage.
A strict and comprehensive quality control system to effectively control our product safety and quality
Food safety and quality control are of paramount importance to our reputation and business. To ensure food safety and quality, we have established a comprehensive set of standards and requirements covering each facet of our supply chain, ranging from procurement, logistics, warehousing to packaging.
We carefully select the source of caviar supplies. We have reviewed all certifications required from our caviar supplier in the PRC for, among other things, the operation of sturgeon farm in the PRC and exporting caviar products overseas. Our caviar products are endorsed with the CITES permits, which certifies that our caviar is legally traded. We conduct sample inspection on each incoming batch of caviar.
Our food processing factory is operated by the supply chain management company and we require its staff to follow a comprehensive set of operation manual and technical protocols prescribed by us. We provide instruction and regular on-the-job training to the processing staff to ensure their work standard and efficiency. In order to maintain the quality and freshness of our caviar, our food processing factory is equipped with temperature control system that mandates a prescribed temperature range. We implement strict and comprehensive measures in our food processing factory to ensure sanitation and hygiene at the premises, such as mandating the processing staff to wear standardized clothing, conducting regular inspection on the packaging equipment and performing routine maintenance and cleaning.
The supply chain management company has designated a quality control staff at our food processing factory to inspect and monitor the processing procedures. The quality control staff will conduct quality control testing and inspection throughout the packaging process and ensure the taste, size, quality and packaging of our caviar products conform with our quality standards and requirements.
Since the establishment of our caviar business and up to the date of this annual report, we did not encounter any material food safety incidents and we had not experienced any product liability claims.
A stable and exclusive procurement source of caviar
We take pride in our well-tested, reliable caviar supply chain management module, which helps ensure the palatability and freshness of our products when they reach our customers. We are among one of the few Hong Kong caviar suppliers being able to secure long-term and exclusive supply of caviar from sturgeon farm through continuing diversification of supply sources. Not only that we have entered into an exclusive supply agreement with a distributor of a well-established sturgeon farm in the PRC in April 2022, which appointed us as its exclusive distributor in Hong Kong and Macau for conducting overseas distribution and granted us the rights to procure caviar directly from it for a term of 10 years but also our ability to diversify by securing new suppliers as well as constantly evaluating opportunities to engage in upstream acquisition. Our end-to-end supply chain business model not only improves cost efficiency, it also promotes consumers’ confidence in our caviar products as well as facilitate our sales and marketing plans.
Growth Strategies
Expand our global market presence
We strive to strengthen our global market presence in developed markets with a strong consumer base, such as Europe, the United States, Japan, Dubai, Australia and Southeast Asia (collectively, the “Target Regions”). We intend to establish representative offices at each of the Target Regions to access the local consumers. We currently plan to recruit local sales and marketing staff to conduct marketing activities in such regions, ranging from (i) conducting product promotion; (ii) brand building; (iii) maintaining regular communication with local customers; (iv) collecting feedbacks from local consumers on our products; and (v) maintaining regular communication and interaction with different industry players, so we can stay abreast of the latest trend and development of local consumers’ tastes.
As our products gradually become more well-known in the international market, we aspire to expand our sales channels from only selling through distributors to selling our products directly to overseas customers. Material obstacles that we have to overcome include (i) the competition for high-quality sales and distribution partners is intense and we may not be able to offer more favorable arrangement than our competitors; (ii) there may not be suitable distribution channels or overseas customers in the markets that we planned to expand; (iii) we may not be able to hire, train and retain skilled local sales and marketing staffs; and (iv) we may encounter difficulties in adapting our logistics and management systems to an expanded distribution network. However, leveraging our competitive strengths described in the paragraph headed “Competitive Strengths” above, we are confident that we will be able to expand our sales channels to overseas customers.
Strengthen our sales and marketing activities
We plan to strengthen our sales and marketing activities and increase our market exposure and brand awareness by participating in food-expo and collaborating with luxurious restaurants, hotels and private clubs to host tasting events in different countries and regions. Further, we plan to invite the media and chefs from notable restaurants and hotels to visit the sturgeon farm which supplies caviar raw products as well as vineyards that supply French wines to us. We believe we can provide the participants with a better understanding of our procurement source and vineyard visits giving them stronger assurance with respect to our product safety, quality and hygienic conditions, wine tasting in Chateau experience thereby enhancing the brand image of our caviar and wine products.
Expand our procurement source and broaden our product portfolio
We are committed to sourcing top-quality caviar from the best sturgeon farms around the world. We currently plan to expand our procurement source and broaden our product portfolio by exploring potential co-operations with sturgeon farms located in Europe and/or the United States. In identifying suitable caviar suppliers, we will conduct on-site inspection at the selected sturgeon farms and conduct legal and business due diligence on their background and operations. We would also verify that the caviar supplied by the selected sturgeon farms complies with the Convention on International Trade in Endangered Species of Wild Fauna and Flora. We believe that expansion in our product portfolio will provide a wider selection of caviar for our customers in terms of places of origin, as well as species and ages of sturgeon.
Depending on the availability of potential acquisition targets, we also plan to carry out vertical expansion by acquiring non-controlling stakes in suitable sturgeon farms in Europe and/or the United States. We believe that through integration with upstream sturgeon farms, we can guarantee a stable supply of caviar with consistent high quality.
We will continue to expand our wine trading by sourcing appropriate premium and unique wine products to our affluent markets. Capitalizing our marketing efforts of caviar products, we believe wine will be a good pairing for further penetration of our established clientele.
Our Caviar Products and Our Own Brand
Headquartered in Hong Kong, we are a fast-growing supplier of luxury caviar products. We are currently specialized in supplying premium class sturgeons caviar. Our caviar is endorsed with the CITES permits, which certifies that our caviar is legally traded. We are one of the major suppliers of caviar in Hong Kong being able to secure a long-term and exclusive supply of caviar raw products from sturgeon farm.
Since we established our caviar business in August 2021, we had supplied caviar to our customers under their brand labels (i.e. private labelling) or without brand labels. Subsequently in November 2021, we established our own caviar brand, “Imperial Cristal Caviar”, and started selling caviar under our own brand as well. With its exquisite package design, our branded caviar is ideal to be presented as both culinary delights and festive gifts. Imperial Cristal Caviar has continuously achieved tremendous sales growth since its launch in the market.
The table below sets forth details of our own brand caviar products:
| Product Line | : | Imperial | |||
| Sturgeon Species | : | Huso Dauricus |  |
||
| Roe Size | : | 3.2mm – 3.4mm | |||
| Packaging Size | : |
10/30/50/100/250 gram
|
| Product Line | : | Osietra | |||
| Sturgeon Species | : | Acipenser Schrenckii and Huso Dauricus |  |
||
| Roe Size | : | 2.9mm – 3.1mm | |||
| Packaging Size | : |
10/30/50/100/250 gram
|
Our Customers
Our customers primarily and substantially include F&B-related distributors. We have strategically focused on business-to-business sales (B2B) which would allow us access to our customers’ sales network and consumer base that helps us maximize the reach of our products swiftly and effectively. As our caviar products gain popularity worldwide, our customer base has continuously expanded as a result of customers’ referral and our marketing efforts.
Furthermore, to complement our caviar business, in March 2023, we have commenced our wine trading business line.
Our wine trading business only involves the distribution of fine wine within Hong Kong on business-to-business (B2B) sales, primarily to our F&B related distributor customers, in particular, the F&B related distributor customers who we supply our caviar product.
For the year ended December 31, 2023, there were three customers each generated over 10% of our total revenue for the period, and they in aggregate accounted for approximately 75.5% of our sales volume. Our top 3 customers for the year ended December 31, 2023 are, Mother Nature Health (HK) Limited, accounting for 34.5 % of our sales volume in the period, Sunfun (China) Limited, accounting for 25.0% of our sales volume, A One Marketing Limited accounting for 16.5% of our sales volume.
For the year ended December 31, 2024, there were three customers each generated over 10% of our total revenue for the period, and they in aggregate accounted for approximately 94.2% of our sales volume. Our top three customers for the year ended December 31, 2024 are, Sunfun (China) Limited accounting for 57.1% of our sales volume, Mother Nature Health (HK) Limited, accounting for 25.4% of our sales volume and King Health Investment Holdings Limited, accounting for 11.84% of our sales volume.
For the year ended December 31, 2025, there were five customers each generated over 10% of our total revenue for the period, and they in aggregate accounted for 100% of our total revenue
Geographical coverage
Our caviar products are mainly sold to customers based in Hong Kong and a substantial portion are exported overseas by our customers. As our caviar products gradually become more well-known in the international market, we aspire to expand our sales channels from only selling through distributors to selling our products directly to overseas customers.
Substantially all of the fine wine we distributed are sold to customers based in Hong Kong.
Product return
Due to the perishable nature of caviar, we generally do not accept any product return from our customers except under certain limited circumstances, such as when products are defective, poorly packaged or damaged or the quantity delivered was inconsistent with the purchase order. Our customers are normally required to report any quality issue to us within three business days upon their receipt of our products. We have not experienced any material product return so far.
Credit and payment terms
We generally grant our customers a credit period ranging from 30 to 60 days from the invoice date. Our customers generally settle their payments in Hong Kong dollars by telegraphic transfer.
Seasonality
Up to the date of this annual report, we have not experienced any pronounced seasonality, but such fluctuations may have been masked by our rapid growth.
Pricing Strategies
The selling prices of our caviar products are determined on a cost-plus pricing approach with reference to, among other things, cost of sales which mainly represents procurement costs and costs incurred in relation to our supply chain management and a percentage of mark-up over our estimated cost of sales. The percentage of mark-up may vary based on factors such as (i) prevailing market prices for different caviar products; (ii) size of purchase order; (iii) type of customer; (iv) length of relationship with the customer; (v) supply and demand mechanism in our target markets; (vi) consumer preference; and (vii) any positive impact on our brand reputation.
Sales and Marketing
We have strategically focused on business-to-business sales (B2B) which would allow us access to our customers’ sales network and consumer base that helps us maximize the reach of our products swiftly and effectively. As our caviar products gain popularity worldwide, our customer base has gradually expanded as a result of customers’ referral and our marketing efforts.
We are dedicated to enhancing our brand awareness. Our sales and marketing representatives are primarily responsible for conducting business development and marketing activities. They are responsible for (i) enhancing our promotion and sales efforts; (ii) actively approaching and liaising with our existing and potential customers; and (iii) collecting feedbacks and handling any queries on our products from customers.
As part of our sales and marketing efforts, we have proactively participated in food expo and set up pop-up stores across the world. We have also collaborated with famous food bloggers and used different online platforms and media coverage to promote and strengthen the publicity of our products. We regularly invite chefs of notable hotels and restaurants to our tasting events. Currently our caviar products are served on the menus of various 5-star as well as Michelin-star restaurants in Hong Kong.
Our Suppliers
For 2025, the Company has two wine suppliers for over 10% of the total purchases and no caviar supplier for over 10% of the total purchases. These two suppliers together accounted for 62.91% of our total purchases.
For fiscal year ended December 31, 2025, we achieved a significant wine purchase diversification to four wine suppliers which together accounted for 84.62% of the total purchase.
There are no limitations on our business or ability to enter contracts with other caviar producers than the previous single caviar supplier.
As of the date of this annual report, we have not experienced any material dispute with our suppliers and we do not foresee any material circumstances which would result in early termination of the supply agreement with our suppliers.
Quality Control
Food safety and quality control are of paramount importance to our reputation and business. To ensure food safety and quality, we have established a comprehensive set of standards and requirements covering each facet of our supply chain, ranging from procurement, logistics, warehousing to packaging.
We have adopted a stringent policy and procedure on selecting the source of caviar supply. Due to the perishable nature of caviar, we strictly require the caviar processing procedures which involve over 10 works steps covering roe removal from sturgeons, washing and salting of caviar, to be completed over a timeframe of 15 minutes. We have reviewed all certifications required from our caviar supplier in the PRC for, among other things, the operation of sturgeon farm in the PRC and exporting caviar products overseas. Our caviar products are endorsed with the CITES permits, which certifies that our caviar is legally traded. We conduct sample inspection on each incoming batch of caviar.
The supply chain management company has designated a quality control staff at our food processing factory to inspect and monitor the processing procedures. The quality control staff will conduct quality control testing and inspection throughout the packaging process and ensure the taste, size, quality and packaging of our caviar products conform with our quality standards and requirements.
Our caviar products are transported through cold-chain from the PRC sturgeon farm to the places designated by our customers in order to ensure their palatability and freshness.
Since the establishment of our caviar business and up to the date of this annual report, we have not encountered any material food safety incidents and we had not experienced any product liability claims.
Insurance
We maintain employees’ compensation insurance for our directors and employees at our office with AXA General Insurance Hong Kong Limited, which covers the liability to make payment in the case of death, injury or disability of all our employees under the Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) and at common law for injuries sustained at work. We believe that our current insurance policies are sufficient for our operations.
Licenses and Permits
Both the PRC and Hong Kong are parties to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”). Pursuant to the Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”), the importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons are included as regulated species under the PESO. In compliance with the PESO, our caviar is endorsed with the CITES permits, which certifies that our caviar is legally traded.
We do not import or manufacture the wine we distribute, instead, we source the wines from our wine suppliers who are the wine importers in Hong Kong on an as-demand per order basis. Therefore, we are not subject to the relevant licensing requirements that apply to the sale of alcoholic beverages in Hong Kong.
CITES permits
Pursuant to the PESO, the importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons are included as regulated species under the PESO.
Importation from the PRC to Hong Kong
Under the PESO, an importer may import caviar into Hong Kong from any other jurisdiction (including the PRC) only if the importer (i) obtains an import license issued by the Director of Agriculture, Fisheries and Conservation Department of Hong Kong and produces such import license to an authorized officer of the Customs and Excise Department; and (ii) produces and surrenders the CITES permit issued by the relevant authorities of the exporting country to the authorized officer, for retention and cancellation.
In compliance with the PESO, the sturgeon farm or its agent is responsible for applying for CITES permit from the relevant regulatory authority in the PRC, while the supply chain management company is responsible for applying for import license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on behalf of us.
Exportation from Hong Kong to foreign countries
Pursuant to the PESO, prior to the re-exportation of caviar out of Hong Kong, the re-exporter shall, pursuant to the PESO, apply for a re-export license from the Director of Agriculture, Fisheries and Conservation, which may be issued with or without conditions as the director considers appropriate. Any such re-export license obtained by the re-exporter shall be produced to an authorized officer of the Customs and Excise Department before the caviar is re-exported from Hong Kong.
In compliance with the PESO, we have engaged the supply chain management company to apply for re-export license from the Director of Agriculture, Fisheries and Conservation Department of Hong Kong on behalf of us when our caviar products are to be exported to foreign countries.
Food factory license
Pursuant to section 31(1) of the Food Business Regulation (Chapter 132X of the Laws of Hong Kong) (“FBR”), no person shall carry on or cause, permit or suffer to be carried on any food factory business except under and in accordance with a food factory license from the Food and Environmental Hygiene Department of Hong Kong (the “FEHD”), which is required for the food business involving the preparation of food for sale for human consumption off the premises.
The FEHD may grant a provisional food factory license to a new applicant who has fulfilled the basic requirements in accordance with the FBR pending fulfilment of all outstanding requirements for the issue of a full food factory license. A provisional food factory licenses is valid for a period of six months or lesser and a full food factory license is valid generally for a period of one year, both subject to payment of the prescribed license fees and continuous compliance with the requirements under the relevant legislation and regulations. A provisional food factory license is renewable once and a full food factory license is renewable annually.
In compliance with the FBR, the supply chain management company, being the landlord of our food processing factory premises, has obtained a food factory license from the FEHD for the operation of our food processing factory, which is valid for one year from April 17, 2025 to April 17, 2026 and thereafter operating in the same terms, subject to further renewal.
Environmental Protection
Both the PRC and Hong Kong are parties to the CITES. Pursuant to the Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”), the importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons are included as regulated species under the PESO. In compliance with the PESO, our caviar is endorsed with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”) permits, which certifies that our caviar is legally traded. For further details, please refer to the paragraph headed “Licenses and Permits” in this section below.
Due to the nature of our business, our operational activities do not directly generate industrial pollutants. As such, we have not directly incurred any cost of compliance with applicable environmental protection rules and regulations as of the date of this annual report and do not expect that we will directly incur significant costs for such compliance in the future.
As of the date of this annual report, we have not come across any material non-compliance issues in respect of any applicable laws and regulations on environmental protection. We have not been subject to any administrative sanctions or penalties that have a material and adverse effect on our financial condition or business operation.
Regulations
Our business operations are conducted in Hong Kong and are subject to Hong Kong laws and regulations. Below summarize the most significant rules and regulations that affect our business activities in Hong Kong.
Public Health and Municipal Services Ordinance
The legal framework for food safety control in Hong Kong is set out in Part V of the Public Health and Municipal Services Ordinance (Chapter 132 of the Laws of Hong Kong) (the “Public Health Ordinance”) and the relevant sub-legislations thereunder. The Public Health Ordinance requires the manufacturers and sellers of food to ensure that their products are fit for human consumption and comply with the requirements in respect of food safety, food standards and labeling.
As the business of our Group principally involves retail of natural and organic foods in Hong Kong, our Group is subject to the Public Health Ordinance.
Section 50 of the Public Health Ordinance prohibits the manufacturing, advertising and sale in Hong Kong of food or drugs that are injurious to health. Anyone who fails to comply with this section commits an offence which carries a maximum penalty of HK$10,000 and imprisonment for three months.
Section 52 of the Public Health Ordinance provides that, subject to a number of defenses in section 53 of the same ordinance, if a seller sells to the prejudice of a purchaser any food or drug which is not of the nature, substance or quality of the food or drug demanded by the purchaser, the seller shall be guilty of an offence which carries a maximum penalty of HK$10,000 and imprisonment for three months.
According to section 54 of the Public Health Ordinance, any person who sells or offers or exposes for sale or has in his possession for the purpose of sale or preparation for sale or deposits with, or consigns to, any person for the purpose of sale or of preparation for sale, any food intended for, but unfit for, human consumption, or any drug intended for use by human but unfit for that purpose, shall be guilty of an offence. The maximum penalty for contravention of section 54 is a fine of HK$50,000 and imprisonment for six months.
Section 61 of the Public Health Ordinance provides that it shall be an offense for any person to give with any food or drug sold by him/her, or to display with any food or drug offered for sale by him/her, any label which falsely describes the food or drug or which is calculated to mislead as to its nature, substance or quality. Further, it shall also be an offense if any person publishes, or is a party to the publication of, an advertisement falsely describing any food or drug or that is likely to mislead as to the nature, substance or quality of any food or drug. However, the offender can rely on warranty as a defense.
Section 71(2) of the Public Health Ordinance specifies that if a warranty is given by a person resident outside Hong Kong, it shall only be a defense if the company (i) has, not later than three clear days before the date of the hearing, sent to the prosecutor a copy of the warranty with a notice stating that he/she intends to rely on it and specifying the name and address of the person from whom he/she received it; and (ii) has also sent a like notice to that person. In addition, the company has to prove that it had taken reasonable steps to ascertain, and did in fact believe in, the accuracy of the statement contained therein.
Import and Export Ordinance
The Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) provides for the regulation and control of, amongst other things, the import and export of articles into or out of Hong Kong. According to the Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong), a subsidiary legislation of the Import and Export Ordinance, an importer is under an obligation to lodge with the Customs and Excise Department an accurate and complete import declaration through a specified “Government Electronic Trading Services” provider. Further, a similar obligation is imposed on an exporter by the same Regulations.
Food Safety Ordinance
Food Safety Ordinance (Chapter 612 of the Laws of Hong Kong) (the “Food Safety Ordinance”) establishes a registration scheme for food importers and food distributors to require the keeping of records by persons who acquire, capture, import or supply food and to enable food import controls to be imposed.
Registration as food importer or distributor
Sections 4 and 5 of the Food Safety Ordinance require any person who carries on a food importation business or food distribution business to register with the Food and Environmental Hygiene Department as a food importer or food distributor.
Any person who does not register but carries on a food importation or distribution business, without reasonable excuse, commits an offence and is liable to a maximum fine of HK$50,000 and imprisonment for six months.
Record-keeping requirement relating to movement of food
Section 22 of the Food Safety Ordinance provides that a person who, in the course of business, imports food must record the following information about the acquisition of the food:
| ● | the date the food was acquired; |
| ● | the name and contact details of the person from whom the food was acquired; |
| ● | the place from where the food was imported; |
| ● | the total quantity of the food; and |
| ● | a description of the food. |
A record must be made under this section at or before the time the food is imported. Any person who fails to comply with the record-keeping requirement, without reasonable excuse, commits an offence and is liable to a maximum fine of HK$10,000 and imprisonment for three months.
Section 24 of the Food Safety Ordinance provides that a person who, in the course of business, supplies food in Hong Kong by wholesale must record the following information about the supply:
| ● | the date the food was supplied; |
| ● | the name and contact details of the person to whom the food was supplied; |
| ● | the total quantity of the food; and |
| ● | a description of the food. |
A record must be made under this section within 72 hours after the time the supply took place. Any person who fails to comply with the record-keeping requirement, without reasonable excuse, commits an offence and is liable to a maximum fine of HK$10,000 and imprisonment for three months.
Protection of Endangered Species of Animals and Plants Ordinance
Both China and Hong Kong are parties to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”). The Protection of Endangered Species of Animals and Plants Ordinance (Chapter 586 of the Laws of Hong Kong) (the “PESO”) came into effect on 1 December 2006 to give effect to the CITES in Hong Kong. The importation, introduction from the sea, exportation, re-exportation and possession or control of specified endangered species of animals and plants, along with parts and derivatives of those species, are thus regulated under the PESO. Schedule 1 to the PESO sets out a list of species and categorizes them into different appendices which are regulated with varying degrees of control under the PESO. Sturgeons (except the species included in Appendix I) are included as an “Appendix II species”.
Under the PESO, an importer may import into Hong Kong from any other jurisdiction (including the PRC) caviar if (i) the importer produces the CITES permit issued by the relevant authorities of the exporting country to an authorized officer of the Customs and Excise Department; (ii) an authorized officer has inspected the caviar to compare it with the particulars on the CITES permit and is satisfied that the particulars tally; and (iii) the importer surrenders to the authorized officer the CITES permit for retention and cancellation.
Prior to the re-exportation of caviar out of Hong Kong, the re-exporter shall, pursuant to the PESO, apply for a re-export license from the Director of Agriculture, Fisheries and Conservation, which may be issued with or without conditions as the director considers appropriate. Any such re-export license obtained by the re-exporter shall be produced to an authorized officer of the Customs and Excise Department before the caviar is re-exported from Hong Kong.
As stipulated in the PESO, a person commits an offence if he or she imports caviar without an import license or re-exports caviar without a re-export license. A person guilty of an offence above is liable on conviction to a fine and imprisonment. Higher penalties can be imposed by the court if the offence is committed for commercial purposes.
Consumer Goods Safety Ordinance
The Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong) (the “Consumer Goods Safety Ordinance”) imposes a duty on manufacturers, importers and suppliers of certain consumer goods to ensure that the consumer goods they supply are safe and for incidental purposes.
Our products, other than food (which are specifically excluded under the schedule of the Consumer Goods Safety Ordinance), are regulated by the Consumer Goods Safety Ordinance and the Consumer Goods Safety Regulation (Chapter 456A of the Laws of Hong Kong) (the “Consumer Goods Safety Regulation”).
Section 4(1) of the Consumer Goods Safety Ordinance requires consumer goods to be reasonably safe having regard to all of the circumstances including (a) the manner in which, and the purpose for which the products are presented, promoted or marketed; (b) the use of any mark in relation to the consumer goods, instructions or warnings given for the keeping, use or consumption of the consumer goods; (c) reasonable safety standards published by a standards institute or similar bodies for consumer goods of the description which applies to the consumer goods or for matters relating to consumer goods of that description; and (d) the existence of any reasonable means to make the consumer goods safer.
According to section 2(1) of the Consumer Goods Safety Regulation, where consumer goods on their packages are marked with, or where any labels affixed to or any documents enclosed in their packages contain, any warning or caution regarding the safe keeping, use, consumption or disposal, such warning or caution shall be in both the English and the Chinese languages. Such warnings and cautions, as required by section 2(2) of the Consumer Goods Safety Regulation, shall be legible and be placed in a conspicuous position on (a) the consumer goods; (b) any package of the consumer goods; (c) a label securely affixed to the package; or (d) a document enclosed in the package.
Food and Drugs (Composition and Labelling) Regulations
Food and Drugs (Composition and Labelling) Regulations (Chapter 132W of the Laws of Hong Kong) (the “Food and Drugs Regulations”), which are under the Public Health Ordinance, contains provisions governing the advertising and labeling of food.
Regulation 3 of the Food and Drugs Regulations provides that the composition of foods and drugs specified in Schedule 1 shall be up to the standards as specified in that schedule. The applicability of individual standards specified thereunder depends on whether the individual product in question is considered “drug” as defined in the Public Health Ordinance.
Pursuant to Regulation 5 of the Food and Drugs Regulations, any person who advertises for sale, sells or manufactures for sale any food or drug which does not conform to the relevant requirements as to the composition prescribed in Schedule 1 to the Food and Drugs Regulations commits an offence and is liable to a fine of HK$50,000 and imprisonment for six months.
Regulation 4A of the Food and Drugs Regulations requires all pre-packaged food and products sold by our Group (except for those listed in Schedule 4 thereto) to be marked and labeled in the manner prescribed in Schedule 3 to the Food and Drugs Regulations. Schedule 3 contains labeling requirements in respect of stating the product’s name or designation, ingredients, “best before” or “use by” date, special conditions for storage or instructions for use, manufacturer’s or packer’s name and address and count, weight or volume. Additionally, Schedule 3 also includes requirements on the appropriate language or languages for marking or labelling pre-packaged food. Contravention of those requirements may result in a conviction carrying a maximum penalty of HK$50,000 and imprisonment for six months.
In accordance with Regulation 4B of the Food and Drugs Regulations, generally pre-packaged food sold by our Group should be marked or labeled with its energy value and nutrient content in the manner prescribed in Part 1 of Schedule 5, and nutrition claims, if any, made on the label of the product or in any advertisement for the product should comply with Part 2 of Schedule 5. Contravention of those requirements may result in a conviction carrying a maximum penalty of HK$50,000 and imprisonment for six months.
Food Business Regulation
Regulation 31 of the Food Business Regulation (Chapter 132X of the Laws of Hong Kong) (the “Food Business Regulation”) provides that, except under and in accordance with a license granted under the Food Business Regulation, no person shall carry on or cause or permit or suffer to be carried on any food business including a food factory. “Food factory” is defined as any food business which involves the preparation of food for sale for human consumption off the premises.
Trade Descriptions Ordinance
The Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) makes it an offence for any person, in the course of trade or business, to (i) apply for a false trade description to any goods; (ii) supply or offer to supply any goods to which a false trade description is applied; or (iii) has in his possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied. Furthermore, pursuant to the same legislation, it is an offence for a person to import or export any goods to which a false trade description is applied.
Employment Ordinance
The Employment Ordinance (Chapter 57 of the Laws of Hong Kong) (the “EO”) provides for the protection of the wages of employees and regulates the general conditions of employment and employment agencies. Under the EO, an employee is generally entitled to, amongst other things, notice of termination of his or her employment contract; payment in lieu of notice; maternity protection in the case of a pregnant employee; not less than one rest day in every period of seven days; severance payments or long service payments; sickness allowance; statutory holidays or alternative holidays; and paid annual leave of up to 14 days depending on the period of employment.
Employees’ Compensation Ordinance
The Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) (the “ECO”) is provides for the payment of compensation to employees injured in the course of employment. As stipulated by the ECO, an employer is required to take out an insurance policy to insure against the injury risk of his or her employees. Any employer who contravenes this requirement commits a criminal offence and is liable on conviction to a fine and imprisonment. An employer who has taken out an insurance policy under the ECO is required to display a prescribed notice of insurance in a conspicuous place on each of its premises where any employee is employed.
Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong)
The Minimum Wage Ordinance provides for a prescribed minimum hourly wage rate (set at HK$43.1 per hour as at the date of this annual report) during the wage period for every employee engaged under a contract of employment under the Employment Ordinance. Any provision of the employment contract which purports to extinguish or reduce the right, benefit or protection conferred on the employee by the Minimum Wage Ordinance is void.
Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) (“MPF Schemes Ordinance”)
Employers are required to enroll their regular employees (except for certain exempt persons) aged between at least 18 but under 65 years of age and employed for 60 days or more in a Mandatory Provident Fund (“MPF”) scheme within the first 60 days of employment.
For both employees and employers, it is mandatory to make regular contributions into a MPF scheme. For an employee, subject to the maximum and minimum levels of income (set at HK$30,000 and HK$7,100 per month, respectively, as at the date of this annual report), an employer will deduct 5% of the relevant income on behalf of an employee as mandatory contributions to a registered MPF scheme with a ceiling (set at HK$1,500 as at the date of this annual report). Employer will also be required to contribute an amount equivalent to 5% of an employee’s relevant income to the MPF scheme, subject only to the maximum level of income (set at HK$30,000 as at the date of this annual report).
C. Organizational structure.
The following is a list of our subsidiaries as of the date of this annual report.
| Name of Subsidiary | Jurisdiction of Incorporation or Organization | |
| Top Wealth (BVI) Holding Limited | British Virgin Islands | |
| Top Wealth Group (International) Limited | Hong Kong | |
| TWG International Limited | Hong Kong | |
| TWG Group Limited | British Virgin Islands | |
| TWG Capital Limited | British Virgin Islands | |
| Airentity International Limited | British Virgin Islands | |
| Airentity Technology Limited | Hong Kong |
The following diagram illustrates the corporate structure of Top Wealth Group Holding Limited and its subsidiaries as of the date of this annual report:
D. Property, Plant and Equipment
Facilities
As of the date of this annual report. we entered into the following lease agreements:
| Location | Term of Lease | Usage | ||
| Units 714 & 715, 7/F Hong Kong Plaza 188 Connaught Road West Sai Wan, Hong Kong |
September 10, 2025 to September 9, 2027 | Principal executive office | ||
| Flat E, 8/F Golden Bear Industrial Centre 66 Chai Wan Kok Street Tsuen Wan, New Territories Hong Kong |
September 11, 2024 to March 11, 2026 thereafter operating in the same terms until termination | Food processing factory and transportation supplier |
We believe that we will be able to obtain adequate facilities on reasonable terms principally through leasing, to accommodate our future expansion plans.
Intellectual Property
As of the date of this annual report, we have registered the following trademarks:
| Place of registration | Trademark | Status | Trademark Number | Classes | Expiry Date | |||||
| Hong Kong |  |
Registered, August 24, 2022 | 306044355 | 29, 35 | August 23, 2032 | |||||
| The PRC |  |
Registered, October 7, 2022 | 59662676 | 29 | October 6, 2032 | |||||
| Macau |  |
Registered, August 10, 2022 | N/194408 | 29 | August 10, 2029 |
Item 4A. Unresolved Staff Comments
None.
Item 5. Operating and Financial Review and Prospects
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — 3.D. Risk Factors” and elsewhere in this annual report.
Key Factors Affecting Our Business
We believe that our performance is principally affected by the following key factors:
| ● | Demographic and macroeconomic trends. Ever-growing numbers of global high-net-worth individuals and increasing demands for quality lifestyles: The substantial rise in the global economy over the years resulted in an apparent increase in the growth of ultra-high-net-worth individuals worldwide, with the number hitting record highs annually. As caviar turns to be synonymous with luxury in Western culture, it has long been favored by the ultra-wealthy class, which ensures the stability of the demand side. Besides, driven by the popularization of quality lifestyle, the growing number of high-net-worth individuals, who have cultivated full awareness of caviar’s health benefits and skincare functions, are projected to generate more demands for caviar products in the foreseeable future. |
Downstream consumption demands to be extensive and diversified: As caviar is proven to be an excellent source of omega-3 and six fatty acids, and other vitamins and minerals, the nutrition benefits of caviar got highly recognized by the market worldwide. The diversification of downstream consumption demands is expanding the caviar’s application in the nutraceutical, cosmeceutical and pharmaceutical industries.
Currently, except for food garnish and other edible uses, caviar is gradually applied for skin moisturizing, skin texture improvement and obesity treatment, etc. This wide range of benefits for caviar in the cosmetic and pharmaceutical sectors is projected to continue to boost demand in the future years.
| ● | Expansion into major consumer market in Europe and United States. Our ability to expand our global market presence in developed markets with a strong consumer base, such as Europe, the United States, Japan, Dubai, Australia and Southeast Asia (collectively, the “Target Regions”). We intend to establish representative offices at each of the Target Regions to access the local consumers. We currently plan to recruit local sales and marketing staff to conduct marketing activities in such regions, ranging from (i) conducting product promotion; (ii) brand building; (iii) maintaining regular communication with local customers; (iv) collecting feedbacks from local consumers on our products; and (v) maintaining regular communication and interaction with different industry players, so we can stay abreast of the latest trend and development of local consumers’ tastes. |
| ● | Our ability to successfully execute our strategies and implement our initiatives. Our performance will continue to depend on our ability to successfully execute our strategies and to implement our current and future initiatives. The key strategies include pursuing new customers in major markets in Europe and the United States including: |
| ● | maintaining the popularity, attractiveness, diversity and quality of our wine and caviar products; |
| ● | maintaining or improving customers’ satisfaction with the quality of our wine and caviar products; |
| ● | offering and maintaining a wide selection of high-quality wine and caviar products; |
| ● | increasing brand awareness through marketing and brand promotion activities; |
| ● | preserving our reputation and goodwill in the event of any negative publicity, internet and data security, product quality, price authenticity, or other issues affecting us or the wine and caviar industry; |
| ● | our ability to enter into sales distribution agreements in the jurisdictions we planned to expand to and distribute our products to our end-users and strategic partners overseas through a third party logistics company; |
| ● | our ability to launch successful marketing and sales activities to sell our products; |
| ● | our ability to enter into supply agreements with new potential suppliers and maintain relationship with our existing suppliers at competitive prices; |
| ● | our ability to raise additional funds for operations; and |
| ● | our ability to enhance our operational efficiency. |
Results of Operations
Comparison of the Year Ended December 31, 2025 and December 31, 2024
The following financial data are derived from, and should be read in conjunction with, our consolidated financial statements for the year ended December 31, 2025.
A summary of the Company’s operating results for the year ended December 31 2025 and 2024 are as follows:
| Year ended Dec 31 | ||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||
| USD | USD | USD | % | |||||||||||||
| Revenue | 9,129,706 | 4,747,580 | 4,382,126 | 92.30 | ||||||||||||
| Cost of Sales | (2,320,055 | ) | (2,240,867 | ) | 79,188 | 3.54 | ||||||||||
| Gross Profit | 6,809,651 | 2,506,713 | 4,202,938 | 167.67 | ||||||||||||
| Other income | - | 87 | (87 | ) | (100.00 | ) | ||||||||||
| Provision for inventory impairment | - | (1,504,397 | ) | (1,504,397 | ) | (100.00 | ) | |||||||||
| Administrative Expenses | (1,210,350 | ) | (1,602,251 | ) | (391,901 | ) | (24.46 | ) | ||||||||
| Selling Expenses | (2,409,355 | ) | (1,419,667 | ) | 989,689 | 69.71 | ||||||||||
| Profit (loss) before tax | 3,189,946 | (2,019,515 | ) | 6,177,120 | 257.96 | |||||||||||
As of December 31, 2025, the Company operated in Hong Kong through its subsidiaries, which primarily engaged in trading of caviars, wine and health supplement.
Management determined that the Company functions as a single operating segment, and thus reports as a single reportable segment. This determination is based on rules prescribed by GAAP applied to the manner in which management operates the Company. The chief operating decision maker is responsible for allocating resources to its operations and assessing performance and obtains financial information, being the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows, about the Company as a whole.
An analysis is set out below:
| Year ended Dec 31 | ||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||
| USD | USD | USD | % | |||||||||||||
| Revenue from caviar | 1,629,706 | 4,747,580 | (3,117,874 | ) | (65.67 | ) | ||||||||||
| Revenue from wine | 6,000,000 | - | 6,000,000 | 100.00 | ||||||||||||
| Revenue from health supplement | 1,500,000 | - | 1,500,000 | 100.00 | ||||||||||||
| 9,129,706 | 4,747,580 | 4,382,126 | 92.30 | ) | ||||||||||||
Our revenue increased by USD4,382,126, or 92.30%, from USD4,747,580 for the year ended December 31, 2024 to USD9,129,706 for the year ended December 31, 2025, primarily due to new products streams, that is, the trading of wine and food supplements.
The decrease in revenue from caviar decreased by 65.67% or US$3,117,874 was mainly due to the fact that the board is more cautious in the caviar business.
Cost of sales
Our cost of sales mainly comprised of purchase costs for caviar, wine and food supplement. For the year ended December 31 2024, our cost of sales amounted to USD2,320,055, an increase of USD79,188, or 3.53%, from USD2,240,867 for the year ended December 31 2024. Cost of sales increased in less percentage compare to increased in sales as the Company achieved higher gross margin that the Company targeted on more profitable products.
Gross Profit and Gross Margin
| For the Year Ended 31 December |
||||||||||||||||
| 2025 | 2024 | Year on year change | ||||||||||||||
| USD | USD | USD | % | |||||||||||||
| Gross profit of caviar | 1,159,715 | 2,506,713 | (1,346,998 | ) | (53.7 | ) | ||||||||||
| Gross profit of wine | 4,600,000 | - | 4,600,000 | 100.0 | ||||||||||||
| Gross profit of health supplement | 1,049,936 | - | 1,049,936 | 100.0 | ||||||||||||
| Gross Profit | 6,809,651 | 2,506,713 | 4,302,938 | 171.7 | ||||||||||||
| Gross margin of caviar | 71.2 | % | 52.8 | % | - | 18.4 | % | |||||||||
| Gross margin of wine | 76.7 | % | - | - | 76.7 | % | ||||||||||
| Gross margin of health supplement | 70.0 | % | 70.0 | % | ||||||||||||
| Gross Margin | 74.6 | % | 52.8 | % | - | 21.8 | % | |||||||||
Our gross margin for the year ended December 31, 2025 was 73.5% as compared to 52.8% for the year ended December 31, 2024. In 2023, the Company has carried out Christmas quick sale promotion. This diluted the over gross margin of 2023.
Provision for inventory impairment
Since the exit of the sales team, the revenue in the latter half of 2024 drop significantly that there was substantially unsold inventory that expired within 6 months as of December 31, 2024. There were no such expiry of inventory in 2025.
Administrative and Selling Expenses
Our Company’s administrative expenses came in at US1,602,251 and USD1,846,759 for the year ended December 31, 2024 and 2023 respectively, representing approximately 65.4% and 10.9% of our total revenue for the corresponding period.
Our administrative expenses for the year ended December 31, 2024 primarily consist of (i) professional fee; (ii) staff cost; (iii) depreciation; (iv) rental fee; (v) travelling and entertainment; (vi) office supplies and upkeep and (vii) miscellaneous expenses. The following table sets forth the breakdown of our administrative expenses for the year ended December 31, 2024 and 2023.
| Year ended December 31 | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| USD | % | USD | % | |||||||||||||
| Staff cost | 390,686 | 32.3 | 753,367 | 47.0 | ||||||||||||
| NED fees | 40,224 | 3.3 | 41,087 | 2.6 | ||||||||||||
| Depreciation | - | - | 61,879 | 3.9 | ||||||||||||
| Operating lease payment | 92,983 | 7.7 | 71,538 | 4.5 | ||||||||||||
| Office supplies and upkeep expenses | 3,150 | 0.3 | 24,581 | 1.5 | ||||||||||||
| Professional fees | 643,907 | 53.2 | 190,000 | 11.9 | ||||||||||||
| Entertainment | - | - | 333,557 | 20.8 | ||||||||||||
| Travelling expense | 31,741 | 2.6 | 27,262 | 1.7 | ||||||||||||
| Sample and scrap inventory | - | - | 13,110 | 0.8 | ||||||||||||
| Miscellaneous | 7,659 | 0.6 | 85,870 | 5.4 | ||||||||||||
| 1,210,350 | 100.0 | 1,602,251 | 100.0 | |||||||||||||
The decrease in administrative expenses during the year ended December 31, 2025 was primarily due to decrease in staff cost and entertainment. Professional fees in 2025 mainly included legal, audit, and consulting fees of approximately USD643,907 .
Our selling expense in 2025 primarily consists of marketing campaign paid to a marketing agency as follows:
| Year ended December 31 | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| USD | % | USD | % | |||||||||||||
| Marketing expense | 1,255,746 | 93.6 | 976,494 | 68.8 | ||||||||||||
| Promotion fees | 100,000 | 4.2 | 178,846 | 12.6 | ||||||||||||
| Sub-contractor expense | 967,659 | 40.2 | 251,955 | 17.7 | ||||||||||||
Miscellaneous |
85,890 | 3.6 | 12,372 | 0.9 | ||||||||||||
| 2,409,355 | 100.0 | 1,419,667 | 100.0 | |||||||||||||
Marketing expense was mainly the Company engaged an advertising agent to roll out a series of advertising campaigns. The promotional fees and sub-contractors expenses in 2024 were mainly promotional events and booth incurred to promote the Company’s Imperia Caviar brand. The promotion fees were wine distributed to potential customers for pitching new business partners. Sub-contractor expense represents incentive shares issued to curtained advisors for the advising on the Company caviar business and exploring of new regions and line of caviar business for the period from June 6, 2025 to June 5, 2026.
Comparison of the Year Ended December 31, 2024 and December 31, 2023
The following financial data are derived from, and should be read in conjunction with, our consolidate financial statements for the year ended December 31, 2024.
A summary of the Company’s operating results for the year ended December 31 2024 and 2023 are as follows:
| Year ended Dec 31 | ||||||||||||||||
| 2024 | 2023 | Change | ||||||||||||||
| USD | USD | USD | % | |||||||||||||
| Revenue | 4,747,580 | 16,943,287 | (12,195,707 | ) | (72 | ) | ||||||||||
| Cost of Sales | (2,240,867 | ) | (11,556,006 | ) | (9,315,139 | ) | (81 | ) | ||||||||
| Gross Profit | 2,506,713 | 5,387,281 | (2,880,568 | ) | (53 | ) | ||||||||||
| Other income | 87 | 2 | 85 | 4,250 | ||||||||||||
| Provision for inventory impairment | (1,504,397 | ) | - | 1,504,397 | 100 | |||||||||||
| Administrative Expenses | (1,602,251 | ) | (1,846,759 | ) | 244,508 | (13 | ) | |||||||||
| Selling Expenses | (1,419,667 | ) | (495,276 | ) | 924,391 | 187 | ||||||||||
| (Loss)/profit before tax | (2,019,515 | ) | 3,045,248 | (5,064,763 | ) | (166 | ) | |||||||||
As of December 31, 2024, the Company operated in Hong Kong through its subsidiaries, which primarily engaged in trading of caviars.
Management determined that the Company functions as a single operating segment, and thus reports as a single reportable segment. This determination is based on rules prescribed by GAAP applied to the manner in which management operates the Company. The chief operating decision maker is responsible for allocating resources to its operations and assessing performance and obtains financial information, being the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows, about the Company as a whole.
Our revenue decreased by USD12,195,707, or 72%, from USD16,943,287 for the year ended December 31 2023 to USD4,747,580 for the year ended December 31, 2024, primarily due to the resignation of the sales team that they were unsatisfactory with the remuneration package after the IPO of the Comp An analysis is set out below:
| Year ended Dec 31 | ||||||||||||||||
| 2024 | 2023 | Change | ||||||||||||||
| USD | USD | USD | % | |||||||||||||
| Revenue from caviar | 4,747,580 | 12,483,195 | (7,735,615 | ) | (62 | ) | ||||||||||
| Revenue from wine | - | 4,460,092 | (4,460,092 | ) | (100 | ) | ||||||||||
| 4,747,580 | 16,943,287 | (12,195,707 | ) | (72 | ) | |||||||||||
The trading of wine was incidental in year ended December 31, 2023 that was used as part of the Christmas promotional sales bundle. There was no such activities in year ended December 31, 2024.
Cost of sales
Our cost of sales mainly comprised of purchase costs for caviar and wine. For the year ended December 31 2024, our cost of sales amounted to USD2,240,867, a decrease of USD 9,315,139, or 81%, from USD11,556,006 for the year ended December 31 2023. This decrease was in line with the decrease in revenue.
Gross Profit and Gross Margin
| For the Year Ended 31 December |
||||||||||||||||
| 2024 | 2023 | Year on year change | ||||||||||||||
| USD | USD | USD | % | |||||||||||||
| Gross profit of caviar | 2,506,713 | 4,957,157 | (2,450,444 | ) | (49.4 | ) | ||||||||||
| Gross profit of wine | - | 430,124 | (430,124 | ) | 100.0 | |||||||||||
| Gross Profit | 2,506,713 | 5,387,281 | (2,880,568 | ) | (53.5 | ) | ||||||||||
| Gross profit of caviar | 52.8 | % | 39.7 | % | - | 13.1 | % | |||||||||
| Gross profit of wine | - | % | 9.64 | - | ||||||||||||
| Gross Margin | 52.8 | % | 31.8 | % | - | 21.0 | % | |||||||||
Our gross profit margin for the year ended December 31, 2024 was 52.8% as compared to 31.8% for the year ended December 31, 2023. In 2023, the Company has carried out Christmas quick sale promotion. This diluted the over gross margin of 2023.
Provision for inventory impairment
Since the exit of the sales team, the revenue in the latter half of 2024 drop significantly that there was substantially unsold inventory that expired within 6 months from the day of this report.
Administrative and Selling Expenses
Our Company’s administrative expenses came in at US1,602,251 and USD1,846,759 for the year ended December 31, 2024 and 2023 respectively, representing approximately 65.4% and 10.9% of our total revenue for the corresponding period.
Our administrative expenses for the year ended December 31, 2024 primarily consist of (i) professional fee; (ii) staff cost; (iii) depreciation; (iv) rental fee; (v) travelling and entertainment; (vi) office supplies and upkeep and (vii) miscellaneous expenses. The following table sets forth the breakdown of our administrative expenses for the year ended December 31, 2024 and 2023.
| Year ended December 31 | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| USD | % | USD | % | |||||||||||||
| Staff cost | 753,367 | 47.0 | 444,388 | 24.1 | ||||||||||||
| NED fees | 41,087 | 2.6 | - | - | ||||||||||||
| Depreciation | 61,879 | 3.9 | 233,659 | 12.7 | ||||||||||||
| Operating lease payment | 71,538 | 4.5 | 86,038 | 4.7 | ||||||||||||
| Office supplies and upkeep expenses | 24,581 | 1.5 | 9,793 | 0.5 | ||||||||||||
| Professional fees | 190,000 | 11.9 | 921,110 | 49.9 | ||||||||||||
| Entertainment | 333,557 | 20.8 | 76,342 | 4.1 | ||||||||||||
| Travelling expense | 27,262 | 1.7 | 36,545 | 1.9 | ||||||||||||
| Sample and scrap inventory | 13,110 | 0.8 | 14,977 | 0.8 | ||||||||||||
| Miscellaneous | 85,870 | 5.4 | 23,907 | 1.3 | ||||||||||||
| 1,602,251 | 100.0 | 1,846,759 | 100.0 | |||||||||||||
The decrease in administrative expenses during the year ended December 31, 2024 was primarily due to decrease in professional fees. Professional fees in 2024 is mainly audit fee while it included legal, audit, and consulting fees of approximately USD921,110. The increase in staff cost for the year ended December 31 2024 compared to December 31 2023 was mainly due to the increase in pay scale after IPO. The lower depreciation expense was due to the renovation of our office was fully depreciated in 2023.
Our selling expense in 2024 primarily consists of marketing campaign paid to a marketing agency as follows:
| Year ended December 31 | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| USD | % | USD | % | |||||||||||||
| Marketing expense | 976,494 | 68.8 | 495,276 | 100 | ||||||||||||
| Promotion fees | 178,846 | 12.6 | - | - | ||||||||||||
| Sub-contractor expense | 251,955 | 17.7 | - | - | ||||||||||||
| Miscelleneous | 12,372 | 0.9 | - | - | ||||||||||||
| 1,419,667 | 100.0 | 495,276 | 100 | |||||||||||||
The increase in selling expenses for the year ended December 31 2024 compared to the corresponding period in 2023 was mainly due to the Company engaged an advertising agent to roll out a series of advertising campaigns. The promotional fees and sub-contractors expenses in 2024 were mainly promotional events and booth incurred to promote the Company’s Imperia Caviar brand.
Liquidity and Capital Resources
Our liquidity and working capital requirements primarily related to our operating expenses. Historically, we have met our working capital and other liquidity requirements primarily through cash generated from our operations. Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including but not limited to cash generated from our operations, loans from banking facilities, the net proceeds from the securities offering from the listing and other equity and debt financings as and when appropriate.
Cash flows
The following table summarizes our cash flows for the years ended December 31, 2025, 2024 and 2023:
| Year ended December 31 | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| USD | USD | USD | ||||||||||
| Cash and cash equivalents at beginning of the year | 42,380 | 134,350 | 217,384 | |||||||||
| Net cash (used in) provided by operating activities | (6,194,419 | ) | 887,554 | (863,616 | ) | |||||||
| Net cash provided by (used in) investing activities | 4,099,851 | (15,888,928 | ) | — | ||||||||
| Net cash provided by financing activities | 4,439,346 | 14,909,404 | 780,582 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 2,344,778 | (91,970 | ) | (83,034 | ) | |||||||
| Cash and cash equivalents as at end of the year | 2,387,158 | 42,380 | 134,350 | |||||||||
For the year ended December 31, 2025, our net cash used in operating activities was USD6,194,419 and is mainly comprised of increase in accounts receivable of US$7,685,757 due to increase in revenue around the year end and the increase in inventory to cope with increasing sales volume.
For the year ended December 31, 2024, our net cash provided by operating activities was USD887,554 and is mainly comprised of decrease in accounts receivable that the promotional sales in 2023 Christmas were collected during 2024. For the year ended December 31, 2023, our net cash used in operating activities was USD863,616 and is mainly comprised of increase in accounts receivable as there were promotional sales for the Christmas of 2023.
For the year ended December 2025, the cash inflow from investing activities was mainly due to the Company got return of fund for potential acquisition being cancelled.
For the year ended December 2024, the cash outflow from investing activities were mainly due to the Company paid certain long term assets such as the potential acquisition of certain fish farms and media company to promote the Company’s product and image. For the year ended December 31 2023, there was no cash flowa from investing activities
For the year ended December 2025, the cash provided by financing activities were mainly attributable to the net proceeds from the issuance of 720,000 units of Class A ordinary shares and 720,000 units for each of Series A and Series B Warrants for Class A ordinary shares. For the year ended December 2024, the cash provided by financing activities were mainly attributable to the net proceeds from the IPO and second public placement in 2024, totally USD15,687,297. For the year ended December 31 2023, the cash provided by financing activities were attributable to standby bridging loan facilities provided by a third party and also minority shareholder.
Working Capital
We believe that our Company has sufficient working capital for our requirements for at least the next 12 months from the date of this annual report, in the absence of unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents on hand, cash flows from our operations and the estimated net proceeds from the IPO offering.
Capital Expenditures
Historical capital expenditures
Our capital expenditures for the years ended December 31, 2025, 2024 and 2023 were nil, nil and nil respectively. The capital expenditures incurred in the year ended December 31 2022 are related to purchase of office equipment and leasehold improvement. We principally funded our capital expenditures through cash flows from operations.
Off-Balance Sheet Transactions
As of December 31, 2025, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our unaudited interim condensed consolidated financial statements:
Use of Estimates
The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the recorded amounts of assets, liabilities, shareholders’ equity, revenues and expenses during the reporting period, and the disclosure of contingent liabilities at the date of the consolidated financial statements.
On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. The most significant estimates include allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment for property and equipment, valuation allowance for deferred tax assets, accruals for potential liabilities and contingencies. Actual results could vary from the estimates and assumptions that were used.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Update 2014-09, “Revenue from contracts with customers,” (Topic 606). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company’s main revenue stream is from sales of products. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.
The Company has twos major stream of revenues, they are, the sale of wine and caviar products in Hong Kong.
Foreign Currency Translation
The Company’s principal country of operations is Hong Kong. The financial position and results of its operation are determined using Hong Kong Dollars (“HK$”), the local currency, as the functional currency. The Company’s consolidated financial statements are reported using U.S. Dollar (“US$” or “$”).
The following table outlines the currency exchange rates that were used in preparing the accompanying consolidated financial statements:
| December 31, 2025 |
December 31, 2024 |
|||||||
| USD to HK$ /Year End | 7.8 | 7.8 | ||||||
| December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| USD to HK$ Average Rate | 7.8 | 7.8 | 7.8 | |||||||||
Fair Value Measurements — Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are classified using the following hierarchy:
| ● | Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
| ● | Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data. |
| ● | Level 3. Inputs are unobservable for the asset or liability and include situations in which there is little, if any, market activity for the asset or liability. The inputs used in the determination of fair value are based on the best information available under the circumstances and may require significant management judgment or estimation. |
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses reflected as current assets and current liabilities. Due to the short-term nature of these instruments, management considers their carrying value to approximate their fair value.
New accounting standards
On December 14, 2023, the FASB issued ASU 2024-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). In addition, public business entities are required to provide certain qualitative disclosures about the rate reconciliation and the amount of income taxes paid (net of refunds received) disaggregated (1) by federal (national), state, and foreign taxes and (2) by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). For public business entities, the standard is effective for annual periods beginning after December 15, 2024. The amendments in this ASU require a cumulative effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company is evaluating the impact of this standard on the Company’s consolidated financial statements.
We have evaluated all the recently issued, but not yet effective, accounting standards that have been issued or proposed by the Financial Accounting Standards Board or other standards-setting bodies through the date of this report and do not believe the future adoption of any such standards will have a material impact on our consolidated financial statements.
Item 6. Directors, Senior Management and Employees
6.A. Directors and Senior Management
The following table provides information regarding our executive officers and directors as of the date hereof:
| Name | Age | Position(s) | ||
| Kim Kwan Kings, WONG | 55 | Chief Executive Officer, Chairman of the board, and Director | ||
| Kong Wai, WONG | 42 | Chief Financial Officer | ||
| Feiyong, LI | 42 | Independent Director | ||
| Sze Man, CHEUNG | 40 | Independent Director | ||
| Kai Yin, WONG | 44 | Independent Director | ||
| Yuen Cheong Carp, LEE | 56 | Director |
Kim Kwan Kings, WONG is the chief executive officer, Director, and the Chairman of the board of the Company, overseeing the general corporate strategy and brand promotion management and business expansion. Mr. Wong is one of the founders of the Company, and has committed to expanding and promoting the Company’s business and international market for caviar products. Mr. Wong has extensive experience in market promotion, brand promotion, sales channel expansion, business planning in industries including new retail, health supplement, biotechnology, artificial intelligence. In the past five years, Mr. Wong has been the chief executive officer of TW HK.
Kong Wai, Wong has served as our chief financial officer since January 15, 2025. Mr. Wong is a seasoned finance and accounting professional with over 13 years of experience in accounting, auditing, and financial management. He specializes in U.S. GAAP and PCAOB standards, with extensive expertise in financial reporting and compliance for U.S.-listed companies. He has also managed financial teams and oversaw compliance for companies across various industries. Mr. Wong served as the Financial Controller in AlikeAudience Inc. from January 2020 to March 2024, and as the Financial Controller of Oranco, Inc. from January 2018 to March 2022. Propr to his role in Oranco, Inc., Mr. Wong has worked with top-tier accounting firms handling audits and financial reporting for IPO projects in major global stock exchanges including Hong Kong, Australia and U.S. markets. Mr. Wong received a bachelor degree from Edith Cowan University.
Feiyong, LI is our independent director and the chairman of the Nominating committee and the member of the Compensation Committee and Audit Committee. Mr. Li has served as an independent director and the chairman of Nominating and Corporate Governance Committee of Jayud Global Logistics Limited (NASDAQ: JYD) since March 31, 2023. Mr. Li has extensive experience in advising equity investment projects in the Hong Kong and U.S. market and served a number of licensed corporations under the Securities and Futures Ordinance of Hong Kong. Mr. Li has been serving as the investment manager at Koala Securities Limited since 2019. Mr. Li previously served as the general manager of Zen Corporate Consulting Limited from 2012 to 2021, where he focused on providing public relations processing services, listing consulting services, and corporate investment and financing services. From 2013 to 2020, Mr. Li also served as the chief investment officer of CNI Securities Group Limited, where he was responsible for project investment and financing. From 2009 to 2011, Mr. Li consecutively served as the investment consultant of Kingston Securities Limited and Guoyuan Securities Brokerage (Hong Kong) Limited. Mr. Li received an advanced diploma in business studies from the Windsor Management College of Singapore in 2021.
Sze Man, CHEUNG is our independent director, chairwoman of the Compensation Committee, member of the Audit Committee and member of the Nominating Committee. Ms. Cheung has over 10 years of specialized experience in the fine gourmet and luxury goods industry. She has a robust background as a strategic regional manager and high performance retail shop expert. From 2019 to 2025, she was the brand manager of Park Fair, where she was responsible for directing regional sales operations for multiple outlets specializing in fine gourmet and luxury goods, ensuring consistent growth and market expansion. From 2015 to 2019, she was a retail manager holding sales leadership roles at Wanko Limited, a Hong Kong-based fashion brand, and was responsible for leveraging extensive management experience in strategic planning and high-level sales execution to drive brand awareness and profitability. From 2012 to 2015, she was a wealth management manager at FTLife Insurance Company Limited, where she managed a multi-district team of ambassadors, overseeing recruitment, training and strategic scheduling.
Kai Yin, WONG is our independent director, chairman of the Audit Committee, member of the Nominating Committee and member of the Compensation Committee. Mr. Wong has over 19 years of experience in the accounting and audit field. From 2006 to 2016, he was an assistant audit manager at Asiapac CPA & Company, where he led group audit projects and cooperated with component auditors located in various cities in China. From 2016 to 2018, he was an internal control manager at Petrochemicals Group Limited, a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (stock code: 1192), where he developed risk-based audit plan and procedures and reported to the audit committee of the company on internal control weakness. From 2018 to 2024, he was an audit manager at Centurion ZD CPA & Co., where he performed annual audits and component audits for companies listed on Nasdaq and acted as internal control consultant performing overseas fieldwork in Sydney for the initial public offering of a company to be listed in Hong Kong. Since 2024, Mr. Wong has been an audit manager of The Dawn CPA Limited, where he was responsible for overseeing audit works for US initial public offering projects.
Yuen Cheong Carp, LEE is our executive director. Mr. Lee has a robust background in the luxury food and beverage industry. With deep expertise in quality assessment and a specialized understanding of the caviar and wine markets, he brings invaluable insights into global market trends and high-end consumer preferences. From 2009 to 2013, he was a community relations ambassador leader where he managed a multi-district team of ambassadors, overseeing recruitment, training and strategic scheduling. From 2013 to 2015, he was a SHEQ (safety, health, environment and quality) supervisor where he was responsible for safety, health and environmental compliance across diverse large-scale project sites. From 2015 to 2025, he was a works supervisor and supervised and led the R&D initiatives for sustainable health practices. His earlier roles included working as unit manager at CEF Life Assurance and leadership positions in telecommunications and direct sales, totaling over 30 years of management experience.
Family Relationships
None of the directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
6.B. Compensation
Employment Agreements and Indemnification Agreements
We have entered into employment agreements with each of our executive officers. The executive officers are entitled to a fixed salary and other company benefits, each as determined by the Board from time to time. We may terminate an executive officer’s employment under Hong Kong Labor Law and under other applicable laws and regulations. Each executive officer has agreed to hold, both during and after the terms of his or her agreement, in confidence and not to use for the officer’s benefit or the benefit of any third party, any trade secrets, other information of a confidential nature or non-public information of or relating to us in respect of which we owe a duty of confidentiality to a third party. In addition, each executive officer has agreed not to, for a period of one year following the termination of his employment, carry on any business in direct competition with the business of the Top Wealth group of companies, solicit or seek or endeavor to entice away any customers, clients, representative, or agent of the Top Wealth group of companies or in the habit of dealing with the Top Wealth group of companies who is or shall at any time within two years prior to such cessation have been a customer, client, representative, or agent of the Top Wealth group of companies, and use a name including the words used by the Top Wealth group of companies in its name or in the name of any of its products, services or their derivative terms, or Chinese or English equivalent in such a way as to be capable of or likely to be confused with the name of the Top Wealth group of companies.
Compensation of Directors and Executive Officers
For the fiscal year ended December 31, 2025, we paid an aggregate of HK$1,291,750 (US$) as compensation to our directors and executive officers as well as an aggregate of HK$18,000 (US$2,308) contributions to the Mandatory Provident Fund (“MPF”), a statutory retirement scheme introduced after the enactment of the Mandatory Provident Fund Schemes Ordinance in Hong Kong.
For the fiscal year ended December 31, 2024, we paid an aggregate of HK$4,207,981 (US$539,485) as compensation to our directors and executive officers as well as an aggregate of HK$128,500 (US$16,474) contributions to the Mandatory Provident Fund (“MPF”), a statutory retirement scheme introduced after the enactment of the Mandatory Provident Fund Schemes Ordinance in Hong Kong.
For the fiscal year ended December 31, 2023, we paid an aggregate of HK$ 876,000 (US$ 112,308) as compensation to our directors and executive officers as well as an aggregate of HK$36,000 (US$4,615) contributions to the Mandatory Provident Fund (“MPF”), a statutory retirement scheme introduced after the enactment of the Mandatory Provident Fund Schemes Ordinance in Hong Kong.
Except our contribution to the MPF, we have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers. We do not have any equity incentive plan in place as of the date of this annual report.
6.C. Board Practices
Board of Directors
Our board of directors consists of five directors. A director is not required to hold any shares in our company to qualify to serve as a director. Subject to the rules of the relevant stock exchange and disqualification by the chairman of the board of directors, a director may vote with respect to any contract or transaction or proposed contract or transaction in which he or she is materially interested provided the director discloses to his fellow directors the nature and extent of any material interests in respect of any contract or transaction or proposed contract or transaction. A director may exercise all the powers of the company to borrow money, mortgage its business, property and uncalled capital and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of any third party. There are no directors’ service contracts with the Company or its subsidiaries providing for benefits upon termination of employment.
Committees of the Board of Directors
Our board of directors has established an audit committee, a compensation committee, and a nominating committee under the board of directors, and an investment committee under the management. Our board of directors has adopted a charter for the audit committee, the compensation committee, and the nominating committee. Each committee’s members and functions are described below.
Audit Committee. Our audit committee consists of Feiyong, LI, Sze Man, CHEUNG and Kai Yin WONG. Mr. Kai Yin WONG is the chair of our audit committee. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee will be responsible for, among other things:
| ● | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
| ● | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
| ● | discussing the annual audited financial statements with management and the independent auditors; |
| ● | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
| ● | reviewing and approving all proposed related party transactions; |
| ● | meeting separately and periodically with management and the independent auditors; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Compensation Committee. Our compensation committee consists of Feiyong, LI, Sze Man, CHEUNG and Kai Yin WONG. Ms. Sze Man, CHEUNG is the chair of our compensation committee. The compensation committee will be responsible for, among other things:
| ● | reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; |
| ● | reviewing and recommending to the shareholders for determination with respect to the compensation of our directors; |
| ● | reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and |
| ● | selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. |
Nominating Committee. Our nominating committee consists of Feiyong, LI, Sze Man, CHEUNG and Kai Yin WONG. Mr. Feiyong Li is the chair of our nominating committee. We have determined that Feiyong, LI, Sze Man, CHEUNG and Kai Yin WONG satisfy the “independence” requirements under NASDAQ Rule 5605. The nominating committee will assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating committee will be responsible for, among other things:
| ● | selecting and recommending to the board nominees for election by the shareholders or appointment by the board; |
| ● | reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
| ● | making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and |
| ● | advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to us, including a duty of loyalty, a duty to act honestly, in good faith and with a view to our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to act with skill and care. English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association (as may be amended from time to time) and the class rights vested thereunder in the holders of the shares. Our company has a right to seek damages against any director who breaches a duty owed to us. A shareholder may in certain limited exceptional circumstances have the right to seek damages in our name if a duty owed by our directors is breached.
Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:
| ● | convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; |
| ● | declaring dividends and distributions; |
| ● | appointing officers and determining the term of office of the officers; |
| ● | exercising the borrowing powers of our company and mortgaging the property of our company; and |
| ● | approving the transfer of shares in our company, including the registration of such shares in our share register. |
Terms of Directors and Officers
Our officers are elected by and serve at the discretion of the board of directors. Our directors are not subject to a term of office and hold office until their resignation, death or incapacity, or until their respective successors have been elected and qualified or until his or her office is otherwise vacated in accordance with our articles of association as may be amended from time to time.
A director will also be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors, (ii) dies or is found to be or becomes of unsound mind, (iii) resigns his office by notice in writing, (iv) without special leave of absence from our board, is absent from meetings of our board for a continuous period of six months, or (v) is removed from office pursuant to any other provisions of our memorandum and articles of association (as may be amended from time to time).
Limitation on Liability and Other Indemnification Matters
Cayman Islands law allows us to indemnify our directors, officers and auditors acting in relation to any of our affairs against actions, costs, charges, losses, damages and expenses incurred by reason of any act done or omitted in the execution of their duties as our directors, officers and auditors.
Under our amended and restated memorandum and articles of association, we may indemnify our directors and officers, among other persons, from and against all actions, costs, charges, losses, damages and expenses which they or any of them may incur or sustain by reason of any act done, concurred in or omitted in or about the execution of their duty or supposed duty in their respective offices or trusts, except such (if any) as they shall incur or sustain through their own fraud or dishonesty.
6.D. Employees
We had 2 employees as of December 31, 2025. We enter into individual employment contracts with selected employees to cover matters including non-competition and confidentiality arrangements. We generally formulate our employees’ remuneration package to include salary and benefits. We provide our employees with social security benefits in accordance with all applicable regulations and internal policies. None of our employees are represented by labor unions. We believe that we maintain a good working relationship with our employees and we have not experienced any significant labor disputes.
6.E. Share Ownership
Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our Ordinary Shares as of the date of this annual report by:
| ● | each of our directors and executive officers; and |
| ● | each person known to us to beneficially own more than 5% of our Ordinary Shares on an as-converted basis. |
Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person is based on 19,579,883 Class A Ordinary Shares and 3,166,667 Class B Ordinary Shares issued and outstanding as of the date of this annual report.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
| Class A Ordinary Shares |
Class B Ordinary Shares |
Voting Power |
||||||||||||||||||
| Number | % | Number | % | % | ||||||||||||||||
| Directors, Director Nominees and Named Executive Officers: | ||||||||||||||||||||
| Kim Kwan Kings, WONG (1) | 7,845,248 | 40.07 | 3,166,667 | 100 | 89.76 | |||||||||||||||
| Kong Wai, WONG | — | — | — | — | — | |||||||||||||||
| Feiyong, LI | — | — | — | — | — | |||||||||||||||
| Sze Man, CHEUNG | — | — | — | — | — | |||||||||||||||
| Kai Yin, WONG | — | — | — | — | — | |||||||||||||||
| Yuen Cheong Carp, LEE | — | — | — | — | — | |||||||||||||||
| Directors and executive officers as a group | 7,845,248 | 40.07 | 3,166,667 | 100 | 89.76 | |||||||||||||||
| 5% or Greater Shareholders: | ||||||||||||||||||||
| Winwin Development Group Limited (1) | 7,845,248 | 40.07 | 3,166,667 | 100 | 89.76 | |||||||||||||||
| Happy Harbour International Limited (2) | 1,438,388 | 7.35 | — | — | 1.26 | |||||||||||||||
| Dragon Cloud International Limited (3) | 1,402,428 | 7.16 | — | — | 1.22 | |||||||||||||||
| Tang Ekanaya Limited (4) | 1,438,388 | 7.35 | — | — | 1.26 | |||||||||||||||
| Darson Enterprise Limited (5) | 1,438,388 | 7.35 | — | — | 1.26 | |||||||||||||||
| Chung Tat, LO | 1,474,348 | 7.53 | — | — | 1.29 | |||||||||||||||
| (1) |
Kim Kwan Kings, WONG beneficially owns 7,845,248 Class A Ordinary Shares and 3,166,667 Class B Ordinary Shares through Winwin Development Group Limited, a company incorporated under the laws of the British Virgin Islands, which is owned as to 90% by Mr. Kim Kwan Kings, WONG and 10% by Mr. Kin Fai, CHONG. Mr. Kim Kwan Kings, WONG is the sole director of Winwin Development Group Limited. Mr. Wong may be deemed the beneficial owners of the Ordinary Shares held by Winwin Development Group Limited, and Mr. Wong holds the voting and dispositive power over the Ordinary Shares held by Winwin Development Group Limited. The registered address of Winwin Development Group Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands. |
| (2) |
Happy Harbour International Limited is a company incorporated under the laws of the British Virgin Islands. The registered address of Happy Harbour International Limited is Keyway Chambers, 3rd Floor, Ouastisky Building, Road Town, Tortola, British Virgin Islands. |
| (3) |
Dragon Cloud International Limited is a company incorporated under the laws of the British Virgin Islands. The registered address of Dragon Cloud International Limited is Keyway Chambers, 3rd Floor, Ouastisky Building, Road Town, Tortola, British Virgin Islands. |
| (4) |
Tang Ekanaya Limited is a company incorporated under the laws of the British Virgin Islands. The registered address of Tang Ekanaya Limited is OMC Chambers, Wickhams Cay I, Road Town, Tortola, British Virgin Islands. |
| (5) |
Darson Enterprise Limited is a company incorporated under the laws of the British Virgin Islands. The registered address of Darson Enterprise Limited is Keyway Chambers, 3rd Floor, Ouastisky Building, Road Town, Tortola, British Virgin Islands. |
Item 7. Major Shareholders and Related Party Transactions
7.A. Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees — 6.E. Share Ownership.”
7.B. Related Party Transactions
During 2025, the Company had following related party transactions:
| Name | Amount | Relationship | Note | |||||
| Wong Kim Kwan Kings | $ | 621,489 | Director and former controlling shareholder of the Company | Advancement of unsecured interest free loan payable, repayable on demand | ||||
During 2024, the Company had following related party transactions:
| Name | Amount | Relationship | Note | |||||
| Chong Kin Chung | $ | 140,564 | A key management staff of the Company | Advancement of unsecured interest free loan payable, repayable on demand | ||||
| Wong Kim Kwan Kings | $ | 160,089 | Director and former controlling shareholder of the Company | Repayment of unsecured interest free loan payable, repayable on demand | ||||
| Snow Bear Capital Limited | $ | 429,065 | Shareholder of the Company | Repayment of unsecured interest free loan payable, repayable within one year from drawdown. | ||||
During 2023, the Company had following related party transactions:
| Name | Amount | Relationship | Note | |||||
| Chong Kin Fai | $ | 63,735 | A former director and principal owner of the Company | Repayment of unsecured interest free loan payable, repayable on demand | ||||
| Wong Kim Kwan Kings | $ | 57,690 | Director and controlling shareholder of the Company | Repayment of unsecured interest free loan payable, repayable on demand | ||||
| Snow Bear Capital Limited | $ | 429,065 | Shareholder of the Company | Proceeds from unsecured interest free loan payable, repayable within one year from drawdown. | ||||
As of December 31, 2025, the Company had the following balances due with related parties:
| Name | Amount | Relationship | Note | |||||
| Wong Kim Kwan Kings | $ | 480,925 | Shareholder of the Company | Unsecured interest free loan payable, repayable within one year from draw down | ||||
As of December 31, 2024, the Company had the following balances due with related parties:
| Name | Amount | Relationship | Note | |||||
| Wong Kim Kwan Kings | $ | 140,564 | Shareholder of the Company | Unsecured interest free loan payable, repayable within one year from draw down | ||||
Terms of Directors and Officers
See “Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Terms of Directors and Officers.”
Employment Agreements and Indemnification Agreements
See “Item 6. Directors, Senior Management and Employees—6.B. Compensation—Employment Agreements and Indemnification Agreements.”
7.C. Interests of Experts and Counsel Please refer to “Item 18.
Not applicable.
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
Financial Statements.”
Legal and Administrative Proceedings
We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of our business. We are currently not a party to any pending any material legal or administrative proceedings and are not aware of any events that are likely to lead to any such proceedings.
As of the date of this annual report, we are not a party to, and we are not aware of any threat of, any legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition or operations, nor have we experienced any incident of non-compliance which, in the opinion of our directors, is likely to materially and adversely affect our business, financial condition or operations.
Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial costs and diversion of our resources, including our management’s time and attention. For potential impact of legal or administrative proceedings on us, see “Item 3. Key Information — 3.D. Risk Factors—Risks Relating to Our Business and Industry— We are subject to risks relating to litigation and disputes, which could adversely affect our business, prospects, results of operations and financial conditions, and may face significant liabilities as a result.” and “Item 3. Key Information — 3.D. Risk Factors—Risks Relating to Our Business and Industry— We may not be able to adequately protect our intellectual properties, or we may be subject to intellectual property infringement claims or other allegations by third parties, either of which could adversely affect our business and operations.”.
Dividend Policy
TW Cayman has not made any dividends or distributions to U.S. investors as of the date of this Annual Report. During the fiscal years ended December 31, 2025, 2024, and 2023, no dividends or distribution have been made to date by our subsidiaries. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future.
Our board of directors has complete discretion on whether to distribute dividends, subject to applicable laws. In addition, our shareholders may by ordinary resolution declare a dividend. Under Cayman Islands law, a Cayman Islands company may pay a dividend either out of profit or share premium account, provided that in no circumstances may a dividend be paid if the dividend payment would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency, and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors that the board of directors may deem relevant. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.
The laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash from TW Cayman to TW HK from TW HK to TW Cayman. There are no restrictions or limitations under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong, nor is there any restriction on any foreign exchange to transfer cash between TW Cayman and its subsidiaries, across borders and to U.S. investors, nor there is any restrictions and limitations to distribute earnings from the subsidiaries, to TW Cayman and U.S. investors and amounts owed.
8.B. Significant Changes
Except as otherwise disclosed in this report, we have not experienced any significant changes since the date of our audited consolidated financial statements included herein.
Item 9. The Offer and Listing
9.A. Offer and listing details
Our ordinary shares (which have since been reclassified into Class A Ordinary Shares) have been listed on the Nasdaq Capital Market and commenced trading under the ticker symbol “TWG” on April 16, 2024.
9.B. Plan of distribution
Not applicable for annual reports on Form 20-F.
9.C. Markets
Our ordinary shares (which have since been reclassified into Class A Ordinary Shares) have been listed on the Nasdaq Capital Market and commenced trading under the ticker symbol “TWG” on April 16, 2024.
9.D. Selling shareholders
Not applicable for annual reports on Form 20-F.
9.E. Dilution
Not applicable for annual reports on Form 20-F.
9.F. Expenses of the issue
Not applicable for annual reports on Form 20-F.
Item 10. Additional Information
10.A. Share capital
Not applicable for annual reports on Form 20-F.
10.B. Memorandum and articles of association
The following are summaries of the material provisions of our Second Amended and Restated Memorandum and Articles of Association and the Companies Act, insofar as they relate to the material terms of our Ordinary Shares. They do not purport to be complete. Reference is made to our second amended and restated memorandum and articles of association, a copy of which is filed as an exhibit to the annual report.
Objects of our Company. Under our Second Amended and Restated Memorandum and Articles of Association, the objects of our Company are unrestricted and we have the full power and authority to carry out any object not prohibited by the laws of the Cayman Islands.
Ordinary Shares. Our authorized share capital is $19,800,000 divided into 2,200,000,000 Ordinary Shares of par value $0.009 each, comprising of (i) 2,000,000,000 Class A Ordinary Shares of par value of $0.009 each, and (ii) 200,000,000 Class B Ordinary Shares of par value $0.009 each. All of our outstanding Ordinary Shares are fully paid and non-assessable. Certificates representing the Ordinary Shares are issued in registered form.
Conversion. In no event shall Class A Ordinary Shares be convertible into Class B Ordinary Shares. Each Class B Ordinary Share is convertible into one fully paid Class A Ordinary Share at the option of the holder, at any time after issue and without the payment of any additional sum.
Dividends. The holders of our Ordinary Shares are entitled to such dividends as may be declared by our board of directors out of our funds which are lawfully available for that purpose. In addition, our Shareholders may declare dividends by ordinary resolution, but no dividend shall exceed the amount recommended by our directors. Under the laws of the Cayman Islands, our Company may pay a dividend out of either profit or the credit standing in our Company’s share premium account, provided that in no circumstances may a dividend be paid if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business immediately following the date on which the distribution or dividend is paid.
Voting Rights. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall, at all times, vote together as one class on all matters submitted to a vote by the members at any general meeting of our Company.
Holders of our Ordinary Shares may vote on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Subject to any rights or restrictions as to voting attached to any shares, on a poll every shareholder present in person or by proxy (or, if a corporation or other non-natural person, by its duly authorized representative or proxy) shall have one (1) vote for each Class A Ordinary Share and thirty (30) votes for each Class B Ordinary Share of which he or the person represented by proxy is the holder.
Voting at any meeting of shareholders is by a poll. A poll shall be taken in such manner as the chairman of the meeting directs. He may appoint scrutineers (who need not be shareholders) and fix a place and time for declaring the result of the poll. If, through the aid of technology, the meeting is held as a virtual meeting or in more than one place, the chairman may appoint scrutineers virtually and in more than one place; but if he considers that the poll cannot be effectively monitored at that meeting, the chairman shall adjourn the holding of the poll to a date, place and time when that can occur.
Any ordinary resolution is a resolution passed by a simple majority of the votes by the shareholders as, being entitled to do so, vote in person or by proxy at a general meeting of our Company and includes a written resolution signed by the required majority of shareholders according to the Second Amended and Restated Memorandum and Articles of Association. Any special resolution is a resolution of a general meeting or a resolution of a meeting of the holders of any class of Ordinary Shares in a class meeting duly constituted in accordance with the Second Amended and Restated Memorandum and Articles of Association in each case passed by a majority of not less than two-thirds of the votes by the shareholders as being entitled to do so vote in person or by proxy at that meeting. The expression includes a unanimous written resolution signed by all of the shareholders entitled to vote at such meeting.
A special resolution will be required for important matters such as amending our memorandum and articles of association or changing the name of our Company.
There are no limitations on non-residents or foreign shareholders to hold or exercise voting rights on the Ordinary Shares imposed by foreign law or by the Second Amended and Restated Memorandum and Articles of Association or other constituent document of our company. However, no person will be entitled to vote at any general meeting or at any separate meeting of the holders of the Ordinary Shares unless the person is registered as of the record date for such meeting and unless all calls or other sums presently payable by the person in respect of Ordinary Shares in our Company have been paid.
General Meetings of Shareholders. As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our Second Amended and Restated Memorandum and Articles of Association provide that we may (but are not obliged to, unless required by the Nasdaq Listing Rules), in each year hold a general meeting as an annual general meeting, which, if held, shall be convened by the board of directors, in accordance with the Second Amended and Restated Memorandum and Articles of Association. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting.
Advance notice of at least five clear days is required for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our Shareholders. A quorum required for a meeting of shareholders consists of at least one holder of Ordinary Shares holding not less than an aggregate of one-third of the outstanding Ordinary Shares carrying the right to vote at such general meeting.
A majority of our directors may call general meetings and they shall on a shareholders’ requisition forthwith proceed to convene an extraordinary general meeting of our Company. A shareholders’ requisition is a request of one or more shareholders holding as at the date of deposit of the request in aggregate not less than one-third of the rights to vote at such general meeting. The requisition must state the objects of the meeting and must be signed by or on behalf of each requisitioner and delivered in accordance with the notice provisions of our Second Amended and Restated Memorandum and Articles of Association. Such meeting shall be held within two (2) months after the deposit of such requisition. If our directors do not within 21 clear days from the receipt of the requisition duly proceed to convene a general meeting, the requisitioners, or any of them may themselves convene a general meeting, but any meeting so convened must be called no later than three months after the expiration of the said 21 clear day period.
Winding Up; Liquidation. If we are wound up the shareholders may, subject to the Second Amended and Restated Memorandum and Articles of Association and any other sanction required by the Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:
| (a) | to divide in specie among the shareholders the whole or any part of the assets of our Company and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholders; and/or |
| (b) | to vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up. |
Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Subject to the terms of the allotment, our directors may from time to time make calls upon our shareholders in respect of any moneys unpaid on their shares in a notice served to such shareholders at least 14 clear days in advance specifying the time and place for payment. Any Ordinary Shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption, Repurchase and Surrender of Shares. Subject to the terms of the Companies Act and to any rights for the time being conferred on the shareholders holding a particular class of shares, we may by our directors: (i) issue shares that are to be redeemed or liable to be redeemed, at the option of us or the shareholders holding those redeemable shares, on the terms and in the manner our directors determine before the issue of those shares; (ii) with the consent by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at the option of us on the terms and in the manner which the directors determine at the time of such variation; and (iii) purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine at the time of such purchase. Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company’s profits or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our Company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares issued and outstanding or (c) if our Company has commenced liquidation. In addition, our Company may accept the surrender of any fully paid share for no consideration.
Transfer of Ordinary Shares. Provided that such transfer complies with applicable Nasdaq Listing Rules, our shareholders may freely transfer shares to another person by completing an instrument of transfer in a common form or in a form prescribed by the Nasdaq Listing Rules or in any other form approved by our directors, executed where the shares are fully paid, by or on behalf of that shareholder; and where the shares are partly paid, by or on behalf of that shareholder and the transferee.
Where the shares of any class in question are not listed on any stock exchange or subject to the rules of any stock exchange, our directors may in their absolute discretion decline to register any transfer of such shares which are not fully paid up or on which our Company has a lien.
Our board of directors may also decline to register any transfer of any share unless:
| ● | the instrument of transfer is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
| ● | the instrument of transfer is in respect of only one class of shares; |
| ● | the instrument of transfer is properly stamped, if required; |
| ● | the shares transferred are fully paid up and free of any lien in favor of our Company; |
| ● | in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; and |
| ● | a fee of such maximum sum as the Nasdaq Capital Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
If our directors refuse to register a transfer they shall, within one month after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required of Nasdaq and on 14 clear days’ notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine; provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 clear days in any year.
Variations of Rights of Shares. If at any time our share capital is divided into different classes of shares, unless the terms on which a class of shares was issued state otherwise, the rights attached to any such class may only be varied with: (a) the consent in writing of the holders of 50% of the issued shares of that class or (b) with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation, allotment or issue of further shares ranking pari passu with them.
Inspection of Books and Records. Holders of our Ordinary Shares have no general right under our Second Amended and Restated Memorandum and Articles of Association to inspect or obtain copies of our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements.
Issuance of Additional Shares. Our Second Amended and Restated Memorandum and Articles of Association authorize our Board of Directors to issue additional Ordinary Shares from time to time as our Board of Directors shall determine, to the extent of available authorized but unissued shares.
Issuance of additional Ordinary Shares may dilute the voting power of holders of Ordinary Shares.
Anti-Takeover Provisions. Some provisions of our Second Amended and Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable. Our authorized, but unissued Ordinary Shares are available for future issuance without shareholders’ approval and could be utilized for a variety of corporate purposes, including future offerings to raise addition capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved Ordinary Shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
10.C. Material contracts
We have not entered into any material agreements other than in the ordinary course of business.
10.D. Exchange controls
The Cayman Islands, British Virgin Islands and Hong Kong currently have no exchange control regulations or currency restrictions.
10.E. Taxation
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is a party to a double tax treaty entered with the United Kingdom in 2010 but is otherwise not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Class A Ordinary Shares, nor will gains derived from the disposal of our Class A Ordinary Shares be subject to Cayman Islands income or corporation tax.
The Cayman Islands enacted the International Tax Co-operation (Economic Substance) Act (2021 Revision) together with the Guidance Notes published by the Cayman Islands Tax Information Authority from time to time. The Company is required to comply with the economic substance requirements from July 1, 2019 and make an annual report in the Cayman Islands as to whether or not it is carrying on any relevant activities and if it is, it must satisfy an economic substance test.
Hong Kong Taxation
The following summary of certain relevant taxation provisions under the laws of Hong Kong is based on current law and practice and is subject to changes therein. This summary does not purport to address all possible tax consequences relating to purchasing, holding or selling our Class A Ordinary Shares, and does not take into account the specific circumstances of any particular investors, some of whom may be subject to special rules. Accordingly, holders or prospective purchasers (particularly those subject to special tax rules, such as banks, dealers, insurance companies and tax-exempt entities) should consult their own tax advisers regarding the tax consequences of purchasing, holding or selling our Class A Ordinary Shares. Under the current laws of Hong Kong:
| ● | No profit tax is imposed in Hong Kong in respect of capital gains from the sale of the Class A Ordinary Shares. |
| ● | Revenues gains from the sale of our Class A Ordinary Shares by persons carrying on a trade, profession or business in Hong Kong where the gains are derived from or arise in Hong Kong from the trade, profession or business will be chargeable to Hong Kong profits tax, which is currently imposed at the rate of 16.5% on corporations and at a maximum rate of 15% on individuals and unincorporated businesses. |
| ● | Gains arising from the sale of Class A Ordinary Shares, where the purchases and sales of the Class A Ordinary Shares are effected outside of Hong Kong such as, for example, on Cayman Islands, should not be subject to Hong Kong profits tax. |
According to the current tax practice of the Hong Kong Inland Revenue Department, dividends paid on the Class A Ordinary Shares would not be subject to any Hong Kong tax.
No Hong Kong stamp duty is payable on the purchase and sale of the Class A Ordinary Shares.
United States Federal Income Tax Considerations
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our Class A Ordinary Shares by a U.S. Holder (as defined below) that acquires our Class A Ordinary Shares and holds our Class A Ordinary Shares as “capital assets” (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any U.S. federal income tax considerations described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, and alternative minimum tax considerations, the Medicare tax on certain net investment income, information reporting or backup withholding or any state, local, and non-U.S. tax considerations, relating to the ownership or disposition of our Class A Ordinary Shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:
| ● | banks and other financial institutions; |
| ● | insurance companies; |
| ● | pension plans; |
| ● | cooperatives; |
| ● | regulated investment companies; |
| ● | real estate investment trusts; |
| ● | broker-dealers; |
| ● | traders that elect to use a mark-to-market method of accounting; |
| ● | certain former U.S. citizens or long-term residents; |
| ● | tax-exempt entities (including private foundations); |
| ● | individual retirement accounts or other tax-deferred accounts; |
| ● | persons liable for alternative minimum tax; |
| ● | persons who acquire their Class A Ordinary Shares pursuant to any employee share option or otherwise as compensation; |
| ● | investors that will hold their Class A Ordinary Shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; |
| ● | investors that have a functional currency other than the U.S. dollar; |
| ● | persons that actually or constructively own 10% or more of our Class A Ordinary Shares (by vote or value); or |
| ● | partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding the Class A Ordinary Shares through such entities, |
all of whom may be subject to tax rules that differ significantly from those discussed below.
Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and the state, local, non-U.S., and other tax considerations of the ownership and disposition of our Class A Ordinary Shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Class A Ordinary Shares that is, for U.S. federal income tax purposes:
| ● | an individual who is a citizen or resident of the United States; |
| ● | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the laws of the United States or any state thereof or the District of Columbia; |
| ● | an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
| ● | a trust (i) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust, or (ii) that has otherwise validly elected to be treated as a U.S. person under the Code. |
| ● | If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Class A Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Class A Ordinary Shares and their partners are urged to consult their tax advisors regarding an investment in our Class A Ordinary Shares. |
Passive Foreign Investment Company Considerations
A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income, or the asset test. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. Passive assets are those which give rise to passive income, and include assets held for investment, as well as cash, assets readily convertible into cash, and working capital. The company’s goodwill and other unbooked intangibles are taken into account and may be classified as active or passive depending upon the relative amounts of income generated by the company in each category. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.
Based upon our current and projected income and assets and projections as to the market price of our Class A Ordinary Shares, we do not expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a factual determination made annually that will depend, in part, upon the composition and classification of our income and assets, including the relative amounts of income generated by our potential strategic investment business as compared to our other businesses, and the value of the assets held by our potential strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the IRS may challenge our classification of certain income and assets as non-passive, which may result in our being or becoming classified as a PFIC in the current or subsequent years. Furthermore fluctuations in the market price of our Class A Ordinary Shares may cause us to be a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our Class A Ordinary Shares from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our market capitalization. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the current or future taxable years. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in the initial public offering. Under circumstances where our revenues from activities that produce passive income significantly increases relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase.
If we are a PFIC for any year during which a U.S. Holder holds our Class A Ordinary Shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Class A Ordinary Shares unless, in such case, we cease to be treated as a PFIC and such U.S. Holder makes a deemed sole election.
The discussion below under “—Dividends” and “—Sale or Other Disposition” is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as a PFIC are discussed below under “—Passive Foreign Investment Company Rules.”
Dividends
Any cash distributions paid on our Class A Ordinary Shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. Dividends received on our Class A Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations in respect of dividends-received from U.S. corporations.
Individuals and other non-corporate U.S. Holders may be subject to tax on any such dividends at the lower capital gain tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (i) our Class A Ordinary Shares on which the dividends are paid are readily tradable on an established securities market in the United States, (ii) we are neither a PFIC nor treated as such with respect to a U.S. Holder for the taxable year in which the dividend is paid and the preceding taxable year, and (iii) certain holding period requirements are met. We intend to list the Class A Ordinary Shares on Nasdaq Capital Market. Provided that this listing is approved, we believe that the ordinary should generally be considered to be readily tradeable on an established securities market in the United States. There can be no assurance that the Class A Ordinary Shares will continue to be considered readily tradable on an established securities market in later years. U.S. Holders are urged to consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to the Class A Ordinary Shares.
For U.S. foreign tax credit purposes, dividends paid on our Class A Ordinary Shares will generally be treated as income from foreign sources and will generally constitute passive category income. The rules governing the foreign tax credit are complex and U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Sale or Other Disposition
A U.S. Holder will generally recognize gain or loss upon the sale or other disposition of Class A Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such Class A Ordinary Shares. Such gain or loss will generally be capital gain or loss. Any such capital gain or loss will be long term if the Class A Ordinary Shares have been held for more than one year. Non-corporate U.S. Holders (including individuals) generally will be subject to United States federal income tax on long-term capital gain at preferential rates. The deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes, which could limit the availability of foreign tax credits. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences if a foreign tax is imposed on a disposition of our Class A Ordinary Shares, including the applicability of any tax treaty and the availability of the foreign tax credit under its particular circumstances.
Passive Foreign Investment Company Rules
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our Class A Ordinary Shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the Class A Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, Class A Ordinary Shares. Under the PFIC rules:
| ● | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the Class A Ordinary Shares; |
| ● | the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; and |
| ● | the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such taxable year. |
As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to- market election with respect to such stock. If a U.S. Holder makes this election with respect to our Class A Ordinary Shares, the holder will generally(i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Class A Ordinary Shares held at the end of the taxable year over the adjusted tax basis of such Class A Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Class A Ordinary Shares over the fair market value of such Class A Ordinary Shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the Class A Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to- market election in respect of our Class A Ordinary Shares and we cease to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our Class A Ordinary Shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.
The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter, or regularly traded, on a qualified exchange or other market, as defined in applicable United States Treasury regulations. Our Class A Ordinary Shares will be treated as marketable stock upon their listing on Nasdaq Capital Market. We anticipate that our Class A Ordinary Shares should qualify as being regularly traded, but no assurances may be given in this regard.
Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.
If a U.S. Holder owns our Class A Ordinary Shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. You should consult your tax advisor regarding the U.S. federal income tax consequences of owning and disposing of our Class A Ordinary Shares if we are or become a PFIC.
10.F. Dividends and paying agents
Not applicable for annual reports on Form 20-F.
10.G. Statement by experts
Not applicable for annual reports on Form 20-F.
10.H. Documents on display
We are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC.
10.I. Subsidiary Information
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Credit risk
Assets that potentially subject the Company to a significant concentration of credit risk primarily consist of accounts receivable.
We have designed our credit policies with an objective to minimize their exposure to credit risk. Our Company’s “receivables” are generally short term in nature and the associated risk is minimal. We conduct credit evaluations on its customers and generally does not require collateral or other security from such customers. We extended a one-off credit term to 90 days as a 2023 Christmas promotion to our creditworthy customers. We periodically evaluate the creditworthiness of the existing customers in determining an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.
Interest rate risk
We have no signification exposure to interest rate risk.
Foreign currency risk
Our functional currency is Hong Kong dollars that trade primarily in Hong Kong dollar (“HK$”). Our presentation currency is United Sates dollar (“US$”). HK$ is currently pegged to US$, our exposure to foreign exchange fluctuations is minimal.
Liquidity Risk
Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation.
Typically, we ensure that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
Item 12. Description of Securities Other than Equity Securities
12.A. Debt Securities
Not applicable.
12.B. Warrants and Rights
Not applicable.
12.C. Other Securities
Not applicable.
12.D. American Depositary Shares
Not applicable.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
We do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.
Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
14.A. – 14.D. Material Modifications to the Rights of Security Holders
See “Item 10. Additional Information” for a description of the rights of shareholders, which remain unchanged.
14.E. Use of Proceeds
The following “Use of Proceeds” information relates to: (1) registration statement on Form F-1 (File No. 333-275684), as amended, which registered 2,000,000 ordinary shares and was declared effective by the SEC on March 29, 2024, for our initial public offering, which completed on April 18, 2024, at an initial offering price of US$4.00 per ordinary share; (2) registration statement on Form F-1 (File No.333-282302), as amended, which registered a total of 27,000,000 ordinary shares of par value $0.0001 per share, and was declared effective by the SEC on September 24, 2024, for Company’s best effort offering, which completed on October 14, 2024, at the price of $0.40 per ordinary share; and (3) registration on statement on Form F-1 (File No. 333-290351), as amended, which registered 720,000 units, consisting of one Class A Ordinary Share, one Series A Class A Warrant and one Series B Class B Warrant at the price of US$7.00 per unit.
In connection with our initial public offering, our expenses incurred and paid to others totaled approximately US$ 1.55 million, which included US$0.56 million for underwriting discounts and commissions. We received an aggregate net proceeds of approximately US$7.16 million from our initial public offering.
In connection with our first best efforts offering, our expenses incurred and paid to others totaled approximately US$0.94 million, which included US$0.54 million for placement agent commission. We received an aggregate net proceeds of approximately US$$9.86 million from the offering.
In connection with our second best efforts offering, our expenses incurred and paid to others totaled approximately US$0.7 million, which included US$0.38 million for placement agent commission. We received an aggregate net proceeds of approximately US$4.3 million.
We still intend to use the remainder of the proceeds from our above offerings as disclosed in our registration statements on Form F-1.
None of these net proceeds was paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates or others.
Item 15. Controls and Procedures
| (a) | Internal Control Over Financial Reporting |
In connection with the audit of our consolidated financial statements included in this annual report, our independent registered public accounting firm identified one material weakness in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness that has been identified relates to our disclosure controls and procedures were not effective that there were insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
The Company has compensation control that the CFO actively research the latest development of US GAAP by reference to other SEC registrants’ filings, Big 4 accounting firms and other professional parties discussion paper. The CFO would also seek for second opinion and advice from external US GAAP professional for complicated financial reporting issue.
As a company with less than US$1.235 billion in revenue for the fiscal year of 2025, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
| (b) | Evaluation of Disclosure Controls and Procedures |
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report by our independent registered public accounting firm due to a transition period established by rules of the SEC for newly listed public companies.
| (c) | Changes in internal control over financial reporting. |
There has been no change in our internal controls over financial reporting other than the remediation of the material weakness relates to lack of sufficient skilled staff with U.S. GAAP knowledge for the purpose of financial reporting as described above.
Item 16. [Reserved]
Not applicable.
Item 16A. Audit Committee Financial Expert
Our audit committee consists of Feiyong, LI, Sze Man, CHEUNG, and Kai Yin, WONG, and is chaired by Kai Yin, WONG. Feiyong, LI, Sze Man, CHEUNG, and Kai Yin, WONG each satisfies the “independence” requirements of Rule 5605 of the Corporate Governance Rules of Nasdaq Stock Market and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Phei Suan, HO qualifies as an “audit committee financial expert.”
Item 16B. Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to the Company’s directors, officers, employees and advisors. The Code of Business Conduct and Ethics is attached as an exhibit to this annual report. Copy of the Code of Business Conduct and Ethics is also available on our website at https://ir.imperialcristalcaviar.com.
Item 16C. Principal Accountant Fees and Services
The following table sets forth the aggregate fees in connection with certain professional services rendered for the year ended December 31, 2023, 2024 and 2025 by OneStop Assurance, PAC Audit Alliance LLP and Assentsure PAC respectively, our independent registered public accounting firms, during the period indicated.
| Year Ended December 31, | ||||||||||||
| Services | 2023 | 2024 | 2025 | |||||||||
| US$ | US$ | US$ | ||||||||||
| Audit Fees(1) - Onestop Assurance PAC | 210,000 | - | - | |||||||||
| Audit Fees(1) - Audit Alliance LLP | - | 180,000 | - | |||||||||
| Audit Fees(1) - CHI-LLTC | - | - | 150,000 | |||||||||
| Total | 210,000 | 180,000 | 150,000 | |||||||||
Note 1: Audit fees include the aggregate fees billed in each of the fiscal years for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements, review of the interim financial statements and for the audits of our financial statements in connection with our initial public offering, and comfort letter in connection with the underwritten public offering.
The policy of our audit committee is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm, including audit services and audit-related services as described above, other than those for de minimus services which are approved by the audit committee prior to the completion of the audit.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant
On February 19, 2026, the Audit Committee (the “Audit Committee”) of the Company approved the dismissal of Audit Alliance LLP (“Audit Alliance”) as the Company’s independent registered public accounting firm. On February 19, 2026, the Company appointed Assentsure PAC (“ Assentsure”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2025, to be ratified at the next annual general meeting of shareholders of the Company.
The reports of Audit Alliance on the financial statements of the Company for the financial years ended December 31, 2024 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Furthermore, during the financial years ended December 31, 2024, through February 19, 2026, there were no disagreements with Audit Alliance on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of Audit Alliance, would have caused Audit Alliance to make reference to the subject matter of the disagreement in connection with its reports on the Company’s financial statements for such periods. There were no reportable events (as that term is described in Item 304(a)(1)(v) of Regulation S-K) during the two financial years ended December 31, 2024, through February 19, 2026.
The Company engaged Assentsure PAC as its new independent registered public accounting firm. During the Company’s two most recent financial years through April 26, 2026, neither the Company nor anyone acting on the Company’s behalf, consulted Audit Alliance with respect to any other matters or reportable events set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
We have provided Audit Alliance with a copy of the disclosures made by us in response to Item 304(a) of Regulation S-K under the Exchange Act, and have requested that Audit Alliance furnish us with a letter addressed to the SEC stating whether it agrees with the statements made by the registrant in response to this Item 304(a) of Regulation S-K under the Exchange Act and, if not, stating the respects in which it does not agree. A letter from Audit Alliance is filed as Exhibit 16.1 with the current report on Form 6-K on March 2, 2026.
Item 16G. Corporate Governance
As a company listed on the Nasdaq Capital Market, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards.
We currently follow and intend to continue to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the Nasdaq that listed companies must obtain its shareholders’ approval of certain transactions other than public offerings involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares (Nasdaq rule 5635(d)), and Nasdaq rule 5640, which requires that the voting rights of a listed company cannot be disparately reduced or restricted through any corporation action or issuance. To the extent we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. See “Item 3. Key Information — 3.D. Risk Factors —Risks Related to Our Ordinary Shares— Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.”
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 16J. Insider Trading Policies
Our insider trading policy was adopted by our board of directors and is filed as an exhibit to this annual report.
Item 16K. Cybersecurity
Risk Management and Strategy.
We identify and assess material risks from cybersecurity threats to our information systems and the information residing in our information systems by monitoring and evaluating our threat environment on an ongoing basis using a variety of methods, including manual and automated tools, third-party reports and services, threat analysis, scans of the threat environment and risk assessments.
We manage material risks from cybersecurity threats through various processes and procedures, including, depending on the environment, risk assessment, incident detection and response, vulnerability management, disaster recovery and business continuity planning, internal controls within our accounting and financial reporting functions, encryption of data, network security controls, access controls, physical security, asset management, systems monitoring and employee training. We also engage third-party service providers in certain areas of our information systems environment. Depending on the nature and extent of the services provided, the sensitivity and quantity of information processed and the identity of the provider, our processes may include conducting due diligence on the provider’s cybersecurity practices and contractually imposing cybersecurity-related obligations.
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. Our cybersecurity risk management program is aligned with our business strategy and shares common methodologies, reporting channels and governance processes with other areas of enterprise risk, including legal, compliance, strategic, operational and financial risk. Key elements of our cybersecurity risk management program include:
| ● | risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services and broader information technology environment |
| ● | the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls |
| ● | training and awareness programs for team members that include periodic and ongoing assessments to drive adoption and awareness of cybersecurity processes and controls |
| ● | a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents |
| ● | a third-party risk management process for service providers, suppliers and vendors. |
As of the date of this annual report, we have not experienced any material cybersecurity incidents and expenses incurred from cybersecurity incidents were immaterial.
PART III
Item 17. Financial Statements
See “Item 18. Financial Statements.”
Item 18. Financial Statements
Our consolidated financial statements are included at the end of this annual report, beginning with page F-1.
Item 19. Exhibits
| * | Filed herewith |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Top Wealth Group Holding Limited | |||
| By: | /s/ Kim Kwan Kings, WONG | ||
| Name: | Kim Kwan Kings, WONG | ||
| Title: | Chief Executive Officer and Chairman of the Board |
||
Date: May 15, 2026
Top Wealth Group Holding Limited
Reports and Financial Statements
For the years ended December 31, 2025, 2204 and 2023
Top Wealth Group Holding Limited
Reports and Index to Consolidated Financial Information
For the years ended December 31, 2025, 2024 and 2023
F-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Top Wealth Group Holding Limited:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Top Wealth Group Holding Limited and its subsidiaries (collectively, the “Company”) as of December 31, 2025, and the consolidated statements of operation and other comprehensive income/(loss), consolidated statements of changes in equity and cash flows for the year ended December 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ CHI-LLTC
We have served as the Company’s auditor since 2026.
Malaysia, Perak
May 15, 2026
PCAOB ID Number 7320
F-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Shareholders and the Board of Directors of Top Wealth Group Holding Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Top Wealth Group Holding Limited and its subsidiaries (collectively, the “Company”) as of December 31, 2024, and the consolidated statements of operation and other comprehensive income/(loss), consolidated statements of changes in equity and cash flows for the year ended December 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Audit Alliance LLP
We have served as the Company’s auditor since 2025.
Singapore
May 15, 2025
PCAOB ID Number 3487
F-
Top Wealth Group Holding Limited
Consolidated balance sheets
(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 2,387,158 | $ | 42,380 | ||||
| Accounts receivable, net | 9,249,046 | 1,563,289 | ||||||
| Inventories | 3,545,854 | |||||||
| Prepayments | 1,128,826 | 1,567,448 | ||||||
| Amount due from a related party | 480,925 | |||||||
| Deposits paid | 648,661 | 605,981 | ||||||
| 17,440,470 | 3,779,098 | |||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | 72,658 | 72,658 | ||||||
| Right-of-use assets – operating lease | 85,919 | |||||||
| Prepayment of long term assets | 11,789,077 | 15,888,928 | ||||||
| Deferred tax assets | 44,248 | 44,248 | ||||||
| Total non-current assets | 11,991,902 | 16,005,834 | ||||||
| Total assets | $ | 29,432,372 | $ | 19,784,932 | ||||
| Current liabilities | ||||||||
| Accounts payables | 472,255 | |||||||
| Accrued expenses and other payables | 320,954 | 212,593 | ||||||
| Operating lease liabilities - current | 50,688 | |||||||
| Amount due to a related party | 140,564 | |||||||
| Borrowing | 147,179 | |||||||
| Current income tax payable | 644,690 | 811,357 | ||||||
| Total current liabilities | 1,635,766 | 1,164,514 | ||||||
| Non-current liabilities | ||||||||
| Operating lease liabilities - current | 35,231 | |||||||
| Total liabilities | $ | 1,670,997 | $ | 1,164,514 | ||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Class A common stock, $0.009 par value; 2,000,000,000 shares authorized, 1,300,029 shares issued and outstanding at December 31, 2025 and Class B common stock, $0.009 par value; 200,000,000 shares authorized, 166,667 shares issued and outstanding at December 31, 2025. Common stock, $0.0001 par value, 500,000,000 shares authorized, 56,000,000 shares issued and outstanding, at December 31, 2024 | 14,351 | 5,600 | ||||||
| Additional paid-in capital | 22,267,672 | 16,325,412 | ||||||
| Retained earnings | 5,479,352 | 2,289,406 | ||||||
| Total shareholders’ equity | 27,761,375 | 18,620,418 | ||||||
| Total liabilities and equity | $ | 29,432,372 | $ | 19,784,932 | ||||
| * | Giving retroactive effect to all the 27,000,000 shares issued and outstanding after the Pro Rata Share Issuance on October 12, 2023, which has been treated as share split, from the earliest period presented. |
| # | Giving retroactive effect to redesignation of Class A and Class B ordinary shares, from the earliest period presented. |
| ^ | Giving retroactive effect to the 90 to 1 shares consolidation, from the earliest period presented. |
The accompany notes form an integral part of these consolidated financial statements.
F-
Top Wealth Group Holding Limited
Consolidated statements of operation and other comprehensive income/(loss)
(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)
| For the year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Sales | $ | 9,129,706 | $ | 4,747,580 | $ | 16,943,287 | ||||||
| Cost of sales | (2,320,055 | ) | (2,240,867 | ) | (11,556,006 | ) | ||||||
| Gross profit | 6,809,651 | 2,506,713 | 5,387,281 | |||||||||
| Other income | 87 | 2 | ||||||||||
| Selling expenses | (2,409,355 | ) | (1,419,667 | ) | (495,276 | ) | ||||||
| Provision for inventory impairment | (1,504,397 | ) | ||||||||||
| Administrative expense | (1,210,350 | ) | (1,602,251 | ) | (1,846,759 | ) | ||||||
| Profit (loss) before income tax | 3,189,946 | (2,019,515 | ) | 3,045,248 | ||||||||
| Income tax expense | (607,153 | ) | ||||||||||
| Profit (loss) and total comprehensive income (loss) for the year | $ | 3,189,946 | $ | (2,019,515 | ) | $ | 2,438,095 | |||||
| Earnings per share: | ||||||||||||
| Ordinary shares | ||||||||||||
| - basic | $ | 4.35 | $ | (5.31 | ) | $ | 8.13 | |||||
| - diluted | $ | 3.87 | $ | (5.31 | ) | $ | 8.13 | |||||
| Weighted average shares outstanding used in calculating basic and diluted earnings per share | ||||||||||||
| Ordinary shares | ||||||||||||
| - basic ^ | 733,053 | 380,419 | 300,000 | * | ||||||||
| - diluted^ | 823,793 | 380,419 | 300,000 | * | ||||||||
| * | Giving retroactive effect to all the 27,000,000 shares issued and outstanding after the Pro Rata Share Issuance on October 12, 2023, which has been treated as share split, from the earliest period presented. |
| # | Giving retroactive effect to redesignation of Class A and Class B ordinary shares, from the earliest period presented. |
| ^ | Giving retroactive effect to the 90 to 1 shares consolidation, from the earliest period presented. |
The accompany notes form an integral part of these consolidated financial statements.
F-
Top Wealth Group Holding Limited
Consolidated statements of changes in equity
(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)
| Common
stock outstanding* |
Amount | Additional paid-in |
Retained | |||||||||||||||||||||||||
| Class A | Class B | Class A | Class B | capital | earnings | Total | ||||||||||||||||||||||
| Balance as of January 1, 2023 | 133,362 | *#^ | 166,667 | *#^ | $ | 1,200 | # | $ | 1,500 | # | $ | 638,326 | $ | 1,870,826 | $ | 2,511,852 | ||||||||||||
| Pro Rata Share Issuance deemed as share split | - | - | - | - | 2,699 | - | 2,699 | |||||||||||||||||||||
| Deemed capital reduction in reorganization | - | - | - | - | (10 | ) | - | (10 | ) | |||||||||||||||||||
| Profit and total comprehensive income for the year | - | - | - | - | - | 2,438,095 | 2,438,095 | |||||||||||||||||||||
| Balance as of December 31, 2023 | 133,362 | *#^ | 166,667 | *#^ | $ | 1,200 | # | $ | 1,500 | # | $ | 641,015 | $ | 4,308,921 | $ | 4,952,636 | ||||||||||||
| Net proceeds from public offer | 322,223 | - | 2,900 | - | 15,684,397 | - | 15,687,297 | |||||||||||||||||||||
| Loss and total comprehensive expense for the year | - | - | - | - | - | (2,019,515 | ) | (2,019,515 | ) | |||||||||||||||||||
| Balance as of December 31, 2024 | 455,585 | *#^ | 166,667 | *#^ | $ | 4,100 | # | $ | 1,500 | # | $ | 16,325,412 | $ | 2,289,406 | $ | 18,620,418 | ||||||||||||
| Share-based payment | 124,444 | - | 1,120 | - | 1,657,724 | - | 1,658,844 | |||||||||||||||||||||
| Issuance of shares and warrants | 720,000 | - | 7,631 | - | 4,284,536 | - | 4,292,167 | |||||||||||||||||||||
| Profit and total comprehensive income for the year | - | - | - | - | 3,189,946 | 3,189,946 | ||||||||||||||||||||||
| Balance as of December 31, 2025 | 1,300,029 | 166,667 | $ | 12,851 | $ | 1,500 | $ | 22,267,672 | $ | 5,479,352 | $ | 27,761,375 | ||||||||||||||||
| * | Giving retroactive effect to all the 27,000,000 shares issued and outstanding after the Pro Rata Share Issuance on October 12, 2023, which has been treated as share split, from the earliest period presented. |
| # | Giving retroactive effect to redesignation of Class A and Class B ordinary shares, from the earliest period presented. |
| ^ | Giving retroactive effect to the 90 to 1 shares consolidation, from the earliest period presented. |
The accompany notes form an integral part of the consolidated financial statements.
F-
Top Wealth Group Holding Limited
Consolidated statements of cash flows
(Amounts expressed in US dollars (“$”) except for numbers of shares and par value)
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net profit (loss) | $ | 3,189,946 | $ | (2,019,515 | ) | $ | 2,438,095 | |||||
| Adjustments for:- | ||||||||||||
| Depreciation of property, plant and equipment | 61,880 | 233,659 | ||||||||||
| Deferred tax credit | (30,523 | ) | ||||||||||
| Share-based payment | 1,658,844 | |||||||||||
| Provision for inventory impairment | - | 1,504,397 | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (7,685,757 | ) | 4,409,447 | (5,932,488 | ) | |||||||
| Inventories | (3,545,854 | ) | (1,351,188 | ) | 1,918,499 | |||||||
| Prepayments | 438,622 | (1,293,031 | ) | (274,417 | ) | |||||||
| Deposits paid | (42,680 | ) | (10,918 | ) | (8,967 | ) | ||||||
| Accounts payable | 472,255 | (200,608 | ) | |||||||||
| Accrued expenses and other payables | 108,361 | (213,080 | ) | 365,238 | ||||||||
| Amounts due with related parties | (621,489 | ) | (19,525 | ) | 6,045 | |||||||
| Current income tax payable | (166,667 | ) | (180,913 | ) | 621,851 | |||||||
| Net cash (used in) provided by operating activities | (6,194,419 | ) | 887,554 | (863,616 | ) | |||||||
| Cash flows from investing activities | ||||||||||||
| Prepayment for long term assets | 4,099,851 | (15,888,928 | ) | |||||||||
| Net cash used in investing activities | 4,099,851 | (15,888,928 | ) | |||||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds (repayment of) from borrowings | 147,179 | (777,893 | ) | 777,893 | ||||||||
| Deemed capital reduction on reorganization | (10 | ) | ||||||||||
| Proceeds from Pro Rata Share Issuance deemed as share split | 2,699 | |||||||||||
| Net proceeds from public offer | 4,292,167 | 15,687,297 | ||||||||||
| Net cash provided by financing activities | 4,439,346 | 14,909,404 | 780,582 | |||||||||
| Increase (decrease) in cash and cash equivalents | 2,344,778 | (91,970 | ) | (83,034 | ) | |||||||
| Cash and cash equivalents at beginning of year | 42,380 | 134,350 | 217,384 | |||||||||
| Cash and cash equivalents at end of year | $ | 2,387,158 | $ | 42,380 | $ | 134,350 | ||||||
| Analysis of the balance of cash and cash equivalents | ||||||||||||
| Bank balances | $ | 2,387,158 | $ | 42,380 | $ | 134,350 | ||||||
The accompany notes form an integral part of the consolidated financial statements.
F-
Top Wealth Group Holding Limited
Notes to the consolidated financial statements
For the years ended December 31, 2024 and 2023
| 1. | General information and basis of operation |
Top Wealth Group Holding Limited is a limited liability company incorporated in incorporated in the Cayman Islands. Top Wealth Group Holding Limited together with its subsidiaries are defined as the “Company”. As of December 31, 2025, details of the Company and its subsidiaries are as follows:
| Name of entity | Date of incorporation | Holding company | Nature of business | |||
| Top Wealth Group Holding Limited | February 1, 2023 | Winwin Development Group Limited | Investment holding | |||
| Top Wealth (BVI) Group Limited | January 18, 2023 | Top Wealth Group Holding Limited | Investment holding | |||
| Top Wealth Group (International) Limited | September 22, 2009 | Top Wealth (BVI) Group Limited | Trading of caviar | |||
| TWG International Limited | December 11, 2024 | Top Wealth (BVI) Group Limited | Inactive | |||
| TWG Group Limited | December 12, 2024 | Top Wealth Group Holding Limited | Investment holding | |||
| TWG Capital Limited | December 23, 2024 | TWG Group Limited | Trading of premium wine and health supplements |
On March 21, 2023, the Company acquired 100% interest in Top Wealth (BVI) Group Limited (“Top Wealth BVI”), a company incorporated in the British Virgin Islands, at a nominal value of US$10 from the shareholders of Winwin. On March 24, 2023, the Company, through Top Wealth BVI, acquired 100% interest in the Top Wealth Group (International) Limited (“Top Wealth International”), a company incorporated and operating in Hong Kong, at a nominal consideration of US$10 from the shareholders of Winwin.
Top Wealth International have been trading caviar and premium wine. During the periods covered in these consolidated financial statements, the control of the entities has remained consistent, with Top Wealth Group Holding Limited always exercising control. Consequently, the combination has been considered as a corporate restructuring (“Reorganization”) of entities under common control. In compliance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods during which they were under common control. The current capital structure is retroactively reflected in prior periods as if it had existed at that time.
The consolidation of Top Wealth Group Holding Limited and its subsidiaries has been accounted for at historical cost and prepared as if the aforementioned transactions had been effective from the beginning of the first period presented in the accompanying consolidated financial statements.
F-
| 2. | Significant accounting policies |
Basis of Presentation and Consolidation —The consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the regulations of the Securities and Exchange Commission (“SEC”), and include the accounts of the Company and its consolidated and wholly owned subsidiaries. The consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions.
Use of Estimates—The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the recorded amounts of assets, liabilities, shareholders’ equity, revenues and expenses during the reporting period, and the disclosure of contingent liabilities at the date of the consolidated financial statements.
On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. The most significant estimates include allowance for uncollectible accounts receivable, inventory valuation, useful lives and impairment for property and equipment, valuation allowance for deferred tax assets, accruals for potential liabilities and contingencies. Actual results could vary from the estimates and assumptions that were used.
Cash and Cash Equivalents— Cash and cash equivalents consist of the Company’s demand deposit placed with financial institutions, which have original maturities of less than three months and unrestricted as to withdrawal and use. The Hong Kong government provides a guarantee for deposits held in each bank up to HK$800,000 (approximately $102,600).
Property and Equipment, net— Property and equipment included equipment and leasehold improvement and are stated at cost less accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of depreciable assets at the following rate:
| Equipment | 5 to 10 years | |
| Leasehold improvement | Over the lease term |
Cost and accumulated depreciation for property retired or disposed of are removed from the accounts, and any resulting gain or loss is included in earnings. Expenditures for maintenance and repairs are charged to expense as incurred.
Impairment of Long-Lived Assets— We evaluate our long-lived assets, including property, plant and equipment and right-of-use assets – operating lease with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, we evaluate the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, we recognize an impairment loss based on the excess of the carrying amount of the assets over their fair value. There were no impairment recognised for the years ended December 2024 and 2023.
Accounts Receivable, net— Accounts receivable are carried at the original invoiced amount. Accounts receivable are reviewed for impairment on a quarterly basis and are presented net of an allowance for expected credit losses. The allowance for expected credit losses is estimated based on the Company’s analysis of amounts due, historical delinquencies and write-offs, and current economic conditions, together with reasonable and supportable forecasts of short-term economic conditions. The allowance for expected credit losses is recognized in net income (loss) and any adjustment to the allowance for expected credit losses is recognized in the period in which it is determined. Write-offs of accounts receivable, together with associated allowances for expected credit losses, are recognized in the period in which balances are deemed uncollectible. The Company does not have a history of significant write-offs. As of December 31, 2024 and 2023, the total allowance for expected credit losses on the Company’s accounts receivable were Nil and Nil.
F-
Income Taxes— Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss, capital loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Revenue Recognition—The Company recognizes revenue in accordance with Accounting Standards Update 2014-09, “Revenue from contracts with customers,” (Topic 606). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company’s revenue is from sales of products. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied. Generally, the Company’s performance obligations are transfer of products title to customers at a point in time, typically upon delivery.
The Company has two streams of revenue:
| 1. | the sale of caviar products in Hong Kong. |
| 2. | the sale of wine in Hong Kong |
| 3. | the sale of health supplement in Hong Kong |
An analysis of their revenue is set out below:
| Years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Sale of caviar products | $ | 1,629,706 | $ | 4,747,580 | $ | 12,483,195 | ||||||
| Sale of wine | 6,000,000 | 4,460,092 | ||||||||||
| Sale of health supplement | 1,500,000 | |||||||||||
| Total | $ | 9,129,706 | $ | 4,747,580 | $ | 16,943,287 | ||||||
F-
Inventories - The cost of inventories is computed according to the weighted average method. Cost includes the costs of purchases and materials. Inventories are evaluated based on individual inventory items. Reserves are established to reduce the value of inventories to the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period. The Company calculates provisions based on the expiry date. Management provides full provision of for those inventories that would expire within 6 months. There can be no assurance that the amount ultimately realized for inventories will not be materially different than that assumed in the calculation of the provisions. There was provision of US$ 1,504,397 recognised for the year ended December 2024 (2025 and 2023: Nil).
Leases— Under ASC Top 842, “Leases”, the Company determines if an agreement is a lease at inception. Operating leases are included in operating lease – right to use, current portion of operating lease liability, and operating lease liability, less current portion in the Company’s consolidated balance sheets.
As permitted under ASU Topic 842, the Company has made an accounting policy election not to apply the recognition provisions of ASU 2016-02 to short term leases (leases with a lease term of 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term.
Foreign Currency Translation - The Company’s principal country of operations is Hong Kong. The financial position and results of its operation are determined using Hong Kong Dollars (“HK$”), the local currency, as the functional currency. The Company’s consolidated financial statements are reported using U.S. Dollar (“US$” or “$”).
The consolidated statements of income and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of exchange prevailing at the balance sheet date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. As the cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.
The following table outlines the currency exchange rates that were used in preparing the accompanying consolidated financial statements:
| December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| USD to HK$ Year End | 7.8 | 7.8 | 7.8 | |||||||||
| USD to HK$ Average Rate | 7.8 | 7.8 | 7.8 | |||||||||
Pension Obligations - The Company provides for defined contribution plan in accordance with the Mandatory Provident Fund Schemes Ordinance in Hong Kong. A defined contribution plan generally specifies the periodic amount that the employer must contribute to the plan and how that amount will be allocated to the eligible employees who perform services during the same period.
Segment Reporting and Reporting Units - As of December 31, 2025, the Company operated in Hong Kong through its subsidiaries, which primarily engaged in trading of caviars.
Management determined that the Company functions as a single operating segment, and thus reports as a single reportable segment. This determination is based on rules prescribed by GAAP applied to the manner in which management operates the Company. The chief operating decision maker is responsible for allocating resources to its operations and assessing performance and obtains financial information, being the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows, about the Company as a whole.
F-
Fair Value Measurements - Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are classified using the following hierarchy:
| ● | Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
| ● | Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data. |
| ● | Level 3. Inputs are unobservable for the asset or liability and include situations in which there is little, if any, market activity for the asset or liability. The inputs used in the determination of fair value are based on the best information available under the circumstances and may require significant management judgment or estimation. |
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses reflected as current assets and current liabilities. Due to the short-term nature of these instruments, management considers their carrying value to approximate their fair value.
Related parties – We adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of their immediate families and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
New accounting standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13 (Topic 326), Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires an asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance became effective for the Company beginning January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.
On December 14, 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). In addition, public business entities are required to provide certain qualitative disclosures about the rate reconciliation and the amount of income taxes paid (net of refunds received) disaggregated (1) by federal (national), state, and foreign taxes and (2) by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). For public business entities, the standard is effective for annual periods beginning after December 15, 2024. The amendments in this ASU require a cumulative effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company is evaluating the impact of this standard on the Company’s consolidated financial statements.
We have evaluated all the recently issued, but not yet effective, accounting standards that have been issued or proposed by the Financial Accounting Standards Board or other standards-setting bodies through the date of this report and do not believe the future adoption of any such standards will have a material impact on our consolidated financial statements.
F-
| 3. | Accounts receivable, net |
| At December 31, | ||||||||
| 2025 | 2024 | |||||||
| Accounts receivable from third parties | $ | 9,249,046 | $ | 1,563,289 | ||||
| Allowance for expected credit losses | ||||||||
| $ | 9,249,046 | $ | 1,563,289 | |||||
As of December 31, 2025 and 2024, the Company did not record an allowance for doubtful accounts. The accounts receivable balance primarily consists of amounts due from third-party customers.
The Company reviewed the aging and the past repayment history of the accounts receivable. The Company also review the industrys. No allowance was made as they were not over-due and their payment history was satisfactory. Based on this assessment, management determined that no allowance was necessary as of the reporting dates.
The Company applies the current expected credit loss (CECL) model in accordance with ASC 326.
| 4. | Inventories |
| At December 31, | ||||||||
| 2025 | 2024 | |||||||
| Finished products | $ | 3,545,854 | $ | 1,504,397 | ||||
| Impairment loss | (1,504,397 | ) | ||||||
| $ | 3,545,854 | $ | ||||||
Since the exit of the sales team, the revenue in the latter half of 2024 drop significantly that there was substantially unsold inventory that expired within 6 months from the day of this report. Impairment loss was made accordingly as they were not suitable for sale as a matter of food saftely.
| 5. | Deposits paid |
The deposits mainly related to refundable security deposit to supplier of sturgeon farm and lease agreement of officers and processing factory in Hong Kong. Deposits are to be recovered when the Company terminated the supplier agreement and upon the expiry of the leases respectively.
| 6. | Property, plant and equipment |
| At December 31, | ||||||||
| 2025 | 2024 | |||||||
| Equipment | $ | 104,294 | $ | 104,294 | ||||
| Leasehold improvement | 439,602 | 439,602 | ||||||
| Property, plant and equipment | 543,896 | 543,896 | ||||||
| Accumulated depreciation | (471,238 | ) | (471,238 | ) | ||||
| $ | 72,658 | $ | 72,658 | |||||
Depreciation included in:
| Years ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Administrative expense | $ | $ | 61,880 | |||||
F-
The Company evaluates the recoverability of long-lived assets in accordance with ASC 360, Property, Plant, and Equipment. Management assesses whether events or changes in circumstances indicate that the carrying amounts of property, plant, and equipment may not be recoverable. No impairment losses were recognized for the years ended December 31, 2025 and 2024.
| 7. | Prepayments for long term assets |
| At December 31, | ||||||||
| 2024 | 2023 | |||||||
| Deposits for potential acquisition of sturgeon farms (note a) | $ | 11,185,297 | $ | 14,482,753 | ||||
| Deposits for potential joint venture project (note b) | 794,895 | |||||||
| Deposit for marketing expense (note c) | 603,780 | 611,280 | ||||||
| $ | 11,789,077 | $ | 15,888,928 | |||||
| Note a: | The Company seeks to stabilize the caviar supplies and also diversified the product line. The Company entered into memoranda of understanding with the current sturgeon farm that supplies the Company caviar products and a few other sturgeon farms. The Company paid deposits for entering non-disclosure agreement and operational ,financial and legal due diligence work. The Conpany is in the process of due diligence work and negotiations. Management assesses whether events or changes in circumstances indicate that the carrying amounts of property, plant, and equipment may not be recoverable. No impairment losses were recognized for the years ended December 31, 2024 and 2023. |
| Note b: | The Company seeks to tapped in the Greater Bay Area of China market and entered into memoranda of understanding with an independent party to explore setting up joint venture wine business in China. The plan was put on hold and the amount was refunded. |
| Note c: | The Company has entered into agreement with an independent party for a two-year marketing campaign to promote the Company’s products and corporate image. |
| 8. | Accrued expenses and other payables |
Accrued expenses and other payables mainly represents accrued salaries and other payables for professional fees.
| 9. | Borrowings |
During the year ended December 31, 2025, the Company has obtained finance from an acquaintance of the controlling shareholder. The amount was not collateralized, interest free and repayable on demand.
| 10. | Leases |
The Company has operating leases for office and warehouse storage. The Company’s leases have remaining lease terms of 1 to 2 years.
As of December 31, 2025, the Company has no additional material operating leases that have not yet commenced.
The following tables provide information about the Company’s operating leases.
| As of December 31, | ||||||||
| Right-of-use asset – operating lease | 2025 | 2024 | ||||||
| Cost | $ | 102,686 | $ | |||||
| Accumulated amortisation | (16,767 | ) | ||||||
| Total lease cost | $ | 85,919 | $ | |||||
| Years ended December 31, | ||||||||
| Other information | 2024 | 2023 | ||||||
| New right-of-uses asset – operating lease and lease liabilities recognized | $ | 102,686 | $ | |||||
| Cash paid for amounts included in the measurement of operating lease liabilities | 71,538 | |||||||
| Weighted-average remaining lease term - operating leases | 1.7 | |||||||
| Weighted-average discount rate - operating leases | 5.02 | % | % | |||||
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| 11. | Income tax |
The Company and its subsidiaries are subject to income taxes on an entity basis on income derived from the location in which each entity is domiciled.
The Company is domiciled in the Cayman Islands. Top Wealth BVI, TWG Group Limited and TWG Capital Limited are domiciled in the British Virgin Islands. All these companies currently enjoy permanent income tax holidays; accordingly, they do not accrue for income taxes.
The Company’s operating subsidiary, Top Wealth International incorporated in Hong Kong is subject to an income tax rate of 8.25% for first HK$2,000,000 assessable profits and 16.5% for the assessable profits thereafter. As Top Wealth International incurred substantial tax loss in year ended December 2024 there was no income tax provided. In year ended December 31, 2025, assessable profit was fully set off by tax loss brought forward. Accordingly, there was no income tax provided
| Years ended December 31, | ||||||||||||
| Provision for income tax | 2025 | 2024 | 2023 | |||||||||
| Current | ||||||||||||
| Hong Kong | $ | $ | $ | 669,016 | ||||||||
| Over provision in previous years | (31,340 | ) | ||||||||||
| 637,676 | ||||||||||||
| Deferred | ||||||||||||
| Hong Kong | (34,998 | ) | ||||||||||
| Under provision in previous years | 4,475 | |||||||||||
| (30,523 | ) | |||||||||||
| Total | $ | $ | $ | 607,153 | ||||||||
Numerical reconciliation of income tax expenses to prima facie tax payable:
| Years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Profit (loss) before income tax | $ | 3,189,946 | $ | (2,019,515 | ) | $ | 3,045,248 | |||||
| Tax effect at the Hong Kong profits tax rate of 16.5% | 526,341 |
(333,220 | ) | 502,466 | ||||||||
| Tax effect of preferential tax rate | (21,154 | ) | ||||||||||
| Tax effect of income not subject to tax | (931,707 | ) | ||||||||||
| Tax effect of tax loss not recognized | 376,437 |
295,091 | ||||||||||
| Non-deductible expenditure | 28,929 |
38,129 | 153,475 | |||||||||
| Over provision in previous years | (26,865 | ) | ||||||||||
| Tax effect of tax reduction | (769 | ) | ||||||||||
| Total | $ | $ | 607,153 | |||||||||
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Effective income tax rate (%)
| Years ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Effective income tax rate – Hong Kong | % | % | 19.94 | % | ||||||||
The components of deferred tax assets and liabilities and their movements were as follows:
| Tax losses | Depreciation allowance |
Total | ||||||||||
| Balance as of December 31, 2023, 2024 and 2025 | $ | $ | (44,248 | ) | $ | (44,248 | ) | |||||
As of December 31, 2025 and 2024, the Company had unrecognized tax loss of USD 4,069,865 and USD 1,788,429 respectively, as sufficient available future profit against which the tax loss could utilized could not be certain. Other than the tax losses, there was no material unrecogniszed temporary difference.
There was no unsettled position with the tax authorities.
| 12. | Commitments and contingencies |
In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable.
In the opinion of management, there were no pending or threatened claims and litigation as of December 31, 2025 and through the issuance date of these consolidated financial statements.
| 13. | Supplemental Cash Flow Information |
Payments for interest and income taxes were as follows:
| Years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Interest | $ | $ | $ | |||||||||
| Income taxes | $ | 166,667 | $ | 180,913 | $ | 15,825 | ||||||
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| 14. | Related party transactions |
During 2025, the Company had following related party transactions:
| Name | Amount | Relationship | Note | |||||
| Wong Kim Kwan Kings | 621,489 | Director and former controlling shareholder of the Company | Advancement of unsecured interest free loan payable, repayable on demand | |||||
During 2024, the Company had following related party transactions:
| Name | Amount | Relationship | Note | |||||
| Chong Kin Chung | 140,564 | A key management staff of the Company | Advancement of unsecured interest free loan payable, repayable on demand | |||||
| Wong Kim Kwan Kings | 160,089 | Director and former controlling shareholder of the Company | Repayment of unsecured interest free loan payable, repayable on demand | |||||
| Snow Bear Capital Limited | 429,065 | Shareholder of the Company | Repayment of unsecured interest free loan payable, repayable within one year from drawdown. | |||||
During 2023, the Company had following related party transactions:
| Name | Amount | Relationship | Note | |||||
| Chong Kin Fai | 63,735 | A former director and principal owner of the Company | Repayment of unsecured interest free loan payable, repayable on demand | |||||
| Wong Kim Kwan Kings | 57,690 | Director and controlling shareholder of the Company | Repayment of unsecured interest free loan payable, repayable on demand | |||||
| Snow Bear Capital Limited | 429,065 | Shareholder of the Company | Proceeds from unsecured interest free loan payable, repayable within one year from drawdown. | |||||
F-
As of December 31, 2025, the Company had the following balances due with related parties:
| Name | Amount | Relationship | Note | |||||
| Wong Kim Kwan Kings | $ | 480,925 | Shareholder of the Company | Unsecured interest free loan payable, repayable within one year from draw down | ||||
As of December 31, 2024, the Company had the following balances due with related parties:
| Name | Amount | Relationship | Note | |||||
| Wong Kim Kwan Kings | $ | 140,564 | Shareholder of the Company | Unsecured interest free loan payable, repayable within one year from draw down | ||||
| 15. | Concentration and risks |
The Company is not exposed to significant financial risks other than the concentration risk, which is analysed as follows:
Customers
Customers who accounted for 10% or more of the Company’s revenues or with significant outstanding receivables are analysed as follows:
| Revenue for years ended December 31, |
Balance as of December 31, |
|||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | ||||||||||||||||
| Customer A | - | % | 57 | % | 25 | % | - | % | - | % | ||||||||||
| Customer B | - | - | - | - | 28 | |||||||||||||||
| Customer C | - | 25 | 35 | 9 | 50 | |||||||||||||||
| Customer D | 18 | - | 16 | 12 | - | |||||||||||||||
| Customer E | - | - | 8 | 2 | 11 | |||||||||||||||
| Customer F | - | - | 5 | 2 | 11 | |||||||||||||||
| Customer G | 16 | - | 8 | 7 | - | |||||||||||||||
| Customer H | - | 12 | - | - | - | |||||||||||||||
| Customer I | 42 | - | - | 43 | - | |||||||||||||||
| Customer J | 12 | - | - | 13 | - | |||||||||||||||
| Customer K | 12 | - | - | 12 | - | |||||||||||||||
| 100 | % | 94 | % | 97 | % | 100 | % | % | 100 | % | ||||||||||
Major suppliers
Suppliers who accounted for 10% or more of the Company’s purchase or with significant outstanding payable are analysed as follows:
| Purchase for years ended December 31, |
Balance as of December 31, |
|||||||||||||||||||
| 2024 | 2023 | 2022 | 2024 | 2023 | ||||||||||||||||
| Supplier A | - | % | 100 | % | 64 | % | - | % | - | % | ||||||||||
| Supplier B | 13 | - | 36 | - | - | |||||||||||||||
| Supplier C | 60 | - | - | - | ||||||||||||||||
| Supplier D | 5 | - | - | 62 | - | |||||||||||||||
| Supplier E | 5 | - | - | 38 | - | |||||||||||||||
| 83 | % | 100 | % | 100 | % | 100 | % | - | % | |||||||||||
The Company has an exclusive supply agreement with a sturgeon farm and all purchases of caviar were made from the this supplier.
F-
The Company recognizes that its dependence on a single supplier for caviar represents a significant business risk. The Company closely monitors its relationship with the exclusive supplier to ensure that the quality of products received remains high and that the risk of supply disruptions is minimized.
The Company has significant trading in wine, which is currently sourced from a single supplier. However, wine could be sourced from many channels. Also, the trading of wine is not our major business. The management believe the risk to the Company is not significant.
| 16. | Equity |
Ordinary Shares
The Company is authorized to issue one class of ordinary share. The Company was established under the laws of Cayman Islands (the Cayman law) on February 1, 2023 with authorized share of 500,000,000 ordinary shares of par value US$0.0001 each.
Upon incorporation, 1 ordinary share of US$0.0001 was issued a par.
On March 1, 2023, 99 ordinary shares of US$0.0001 each were issued at par. All these ordinary shares rank pari-passu with the exiting share in all respect.
On April 28, 2023, 650 ordinary shares of US$0.0001 each were issued at par. All these ordinary shares rank pari-passu with the exiting shares in all respect.
On October 12, 2023, in contemplation of Company’s initial public offering, the Company further issued 26,999,250 ordinary shares in aggregate to its shareholders at par value, on a pro rata basis proportional to the shareholders’ existing equity interests (collectively refers as the “Pro Rata Share Issuance”). After the Pro Rata Share Issuance, 27,000,000 Ordinary Shares are issued and outstanding. All these ordinary shares rank pari-passu with the exiting shares in all respect. This Pro Rata Share Issuance has treated as share split.
As of the December 31, 2023, 27,000,000 ordinary shares were issued and outstanding.
On April 18, 2024, the Company closed its initial public offering (the “IPO”) of 2,000,000 ordinary shares, par value $0.0001 per ordinary share at the price of US$4 each, totally US$8,000,000. All these share rank pari-passu with the existing shares in all respect.
On October 14, 2024, the Company closed its public offering of 27,000,000 ordinary shares, par value $0.0001 per ordinary share at the price of US$0.40 each, totally US$10,800,000. All these share rank pari-passu with the existing shares in all respect.
As of the December 31, 2024, 56,000,000 ordinary shares were issued and outstanding.
F-
On April 8, 2025, pursuant to shareholder approval at the 2025 Annual General Meeting, the authorized share capital was restructured from $50,000 divided into 500,000,000 ordinary shares of $0.0001 each to $50,000 divided into 450,000,000 Class A Ordinary Shares of $0.0001 each and 50,000,000 Class B Ordinary Shares of $0.0001 each. All the then-issued ordinary shares, except for the 15,000,000 held by Winwin Development Group Limited, were re-designated as Class A Ordinary Shares on a one-for-one basis; the 15,000,000 held by Winwin Development Group Limited were re-designated as Class B Ordinary Shares. All shares rank pari-passu within their class except as to voting rights.
On June 4, 2025, the Company adopted the 2025 Equity Incentive Plan. Up to 11,200,000 Class A ordinary shares are reserved for issuance under the plan. On June 5, 2025, a registration statement was filed for all shares reserved under the plan. The 11,200,000 Class A Ordinary Shares reserved were issued on June 23, 2025.
On July 21, 2025, the Company effected a 1-for-90 share consolidation of all issued and outstanding Class A and Class B Ordinary Shares. After the Share Consolidation, every 90 shares of $0.0001 par value became 1 share of $0.009 par value; fractional shares were rounded up. The Share Consolidation did not alter the proportionate ownership of any shareholder except for adjustments due to rounding.
On August 22, 2025, at the extraordinary general meeting of shareholders of the Company, the shareholders resolved to, amongst others, approve the increase of the authorized share capital of our Company from $50,000 divided into 5,000,000 Class A Ordinary Shares of par value $0.009 each and 555,556 Class B Ordinary Shares of par value $0.009 each to $19,800,000 divided into 2,000,000,000 Class A Ordinary Shares of par value $0.009 each and 200,000,000 Class B Ordinary Shares of par value $0.009 each. On the same day, the shareholders also resolved to adopt a second equity incentive plan (the “2025 Second Equity Incentive Plan” or the “Second Plan”) to attract, retain, and provide incentives to key management employees, directors and consultants of our Company and its affiliates, and to align the interests of such service providers with those of our Company’s shareholders. Pursuant to the Second Plan, 20% of the number of Class A Ordinary Shares issued as of an effective date to be determined by our Company’s board of directors in its sole discretion until December 31, 2026 will be reserved and made available for issuance pursuant to awards granted under the Second Plan.
On December 10, 2025, the Company closed a best-efforts offering which our Company issued and sold a total of 720,000 units, consisting of one Class A Ordinary Share, par value $0.009 per share, one Series A Class A Warrant and one Series B Class A Warrant at the price of $7.00 per unit, to several investors, and entered several securities purchase agreements with the purchasers. The securities purchase agreements contain customary representations and warranties and agreements of the Company and the purchasers and customary indemnification rights and obligations of the parties. On the same day, 127,872 Series A Calss A Warrant were exercised and converted into 127,872 Class A Ordinary Shares.
As of the December 31, 2025, 1,300,029 Class A ordinary shares and 166,667 Class B ordinary shares were issued and outstanding.
On January 5, 2026, the Company and TWG Capital Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with several vendors including Winwin Development Group Limited, pursuant to which TWG Capital Limited shall purchase, and the vendors shall sell, the entire issued shares of Airentity International Limited (the “Target Company”), a company incorporated in the British Virgin Islands, at a consideration of $125,858,978, which shall be satisfied by way of issuance of an aggregate of 14,979,854 Class A Ordinary Shares and 3,000,000 Class B Ordinary Shares (determined based on an offer price of $7.00 per Class A Ordinary Share and Class B Ordinary Share) of the Company to the vendors. The Target Company holds 100% of Airentity Technology Limited (together with the Target Company, the “Target Group”), a company incorporated in Hong Kong. The Target Group is engaged in the development and commercialization of a wine authentication and tracking system (“WATS”) and wine trading businesses in the Asia Pacific Region. WATS was first deployed in 2025 and has since then been widely used by wine distributors having business relationships with Winwin Development Group Limited, our Controlling Shareholder which is wholly-owned by Mr. Kim Kwan Kings, WONG, Chief Executive Officer and Chairman of our Company. The transaction was completed on January 20, 2026.
On January 29, 2026, the Board resolved that the number of Class A Ordinary Shares reserved for issuance and/or re-issuance (as the case may be) under the 2025 Second Equity Incentive Plan shall be 3,250,000 Class A Ordinary Shares. The 3,250,000 Class A Ordinary Shares reserved were issued on January 29, 2026.
As of the date of this report, the authorized share capital is $19,800,000 divided into 2,000,000,000 Class A Ordinary Shares of par value $0.009 each and 200,000,000 Class B Ordinary Shares of par value $0.009 each. 19,579,883 Class A Ordinary Shares and 3,166,667 Class B Ordinary Shares were issued and outstanding.
| 17. | Subsequent event |
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that these consolidated financial statements were available to be issued. Other than those disclosed in Note 16 to the financial statements, there was no other subsequent event that required recognition or disclosure.
F-
Exhibit 2.1
DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (the “Exchange Act”)
Top Wealth Group Holding Limited (“we,” “our,” “our Company,” or “us”) is a Cayman Islands exempted company with limited liability and our affairs are governed by our currently effective second amended and restated memorandum and articles of association (the “Memorandum and Articles”, each the “Memorandum” and the “Articles”) and the Companies Act of the Cayman Islands (Revised) (the “Companies Act”) (each as amended or modified from time to time). As provided in our Memorandum and Articles, subject to the Companies Act, we have and are capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit.
Class A Ordinary Shares, par value $0.009 per share (“Class A Ordinary Shares”), of our Company are listed and traded on the Nasdaq Capital Market and, in connection with our listing, Class B Ordinary Shares, par value $0.009 per share (“Class B Ordinary Shares”), of our Company are not for public trading. Both Class A and Class B Ordinary Shares (collectively, the “Ordinary Shares”) are registered under Section 12(b) of the Exchange Act. This exhibit contains a description of the rights of the holders of our securities.
Description of Class A and Class B Ordinary Shares
The following is a summary of material provisions of the Memorandum and Articles, as well as the Companies Act insofar as they relate
to the material terms of our Ordinary Shares. Notwithstanding this, because it is a summary, it may not contain all the information that
you may otherwise deem important. It is subject to and qualified in its entirety by reference to our Memorandum and Articles, which are
incorporated by reference as an exhibit to the Annual Report on Form 20-F of which this Exhibit 2.1 is a part.
Type and Class of Securities (Item 9.A.5 of Form 20-F)
Each Ordinary Share has US$0.009 par value. The number of our Ordinary Share that have been issued as of the last day of the financial year ended December 31, 2025 is provided on the cover of the Form 20-F filed on May 16, 2025.
Preemptive Rights (Item 9.A.3 of Form 20-F)
Our shareholders do not have preemptive rights.
Limitations or Qualifications (Item 9.A.6 of Form 20-F)
Pursuant to our Articles, Class A Ordinary Shares and Class B Ordinary Shares shall carry equal rights and rank pari passu with one another
in all respects other than as set out below:
Voting Rights:
| (i) | Holders of Class A Ordinary Shares and Class B Ordinary Shares have the right to receive notice of, attend, speak and vote at general meetings of the Company. Holders of shares of Class A Ordinary Shares and Class B Ordinary Shares shall, at all times, vote together as a single class on all matters submitted to a vote for members’ consent. |
| (ii) | Each Class A Ordinary Share shall be entitled to one (1) vote on all matters subject to the vote at general meetings of the Company; whereas, each Class B Ordinary Share shall be entitled to thirty (30) votes on all matters subject to the vote at general meetings of the Company. |
Transfer:
| (i) | Subject to the Articles, and provided that such transfer complies with applicable Nasdaq Listing Rules, Class A Ordinary Shares may be transferred in accordance with the Articles and any applicable laws. |
| (ii) | Class B Ordinary Shares shall under no circumstances be transferrable. |
Dividends and Distribution:
| (i) | Dividends may be declared or paid, and other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up) may be made to a holder of a Class A Ordinary Share in accordance with the Articles. |
| (ii) | No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up) may be made to a holder of a Class B Ordinary Share. |
There are no prohibitions to cumulative voting under the laws of the Cayman Islands, but our Memorandum and Articles do not provide for cumulative voting.
Rights of Other Types of Securities (Item 9.A.7 of Form 20-F)
Not applicable.
Rights of Ordinary Shares (Item 10.B.3 of Form 20-F)
Ordinary Shares
The authorised share capital of the Company is US$19,800,000 divided into 2,000,000,000 Class A Ordinary Shares with a par value of US$0.009 each, and 200,000,000 Class B Ordinary Shares with a par value of US$0.009 each. We have 19,579,883 Class A Ordinary Shares issued and outstanding as of the date of this annual report, and 3,166,667 Class B Ordinary Shares issued and outstanding as of the date of this annual report.
All of our issued Ordinary Shares are fully paid and non-assessable.
Dividends
Our board of directors has complete discretion on whether to distribute dividends, subject to applicable laws. In addition, our shareholders may by ordinary resolution declare a dividend. Under Cayman Islands law, a Cayman Islands company may pay a dividend either out of profit or share premium account, provided that in no circumstances may a dividend be paid if the dividend payment would result in the company being unable to pay its debts as they fall due in the ordinary course of business. No dividend shall bear interest as against the Company and no distribution shall be paid on any treasury shares.
Voting Rights
Pursuant to our Memorandum, each Class A Ordinary Share of our Company confers upon the shareholder of our Company the right to one (1) vote at a meeting of the shareholders or on any resolution of shareholders of our Company; whereas, each Class B Ordinary Share of our Company confers upon the shareholder of our Company the right to thirty (30) votes at a meeting of the shareholders or on any resolution of shareholders of our Company.
There are no prohibitions to cumulative voting under the laws of the Cayman Islands, but our Memorandum and Articles do not provide for cumulative voting.
Cumulative Voting
Delaware law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our Memorandum and Articles do not provide for cumulative voting.
Pre-emptive Rights
There are no pre-emptive rights applicable to the issue by us of Ordinary Shares under our Memorandum and Articles.
Meetings of Shareholders
As a Cayman Islands exempted company, we are not obligated by the Companies Act to call shareholders’ annual general meetings; accordingly, we may, but shall not be obliged to, in each year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general meetings.
The directors may convene a meeting of shareholders whenever they think necessary or desirable. At least 7 clear days’ notice of a general meeting shall be given to shareholders entitled to attend and vote at such meeting. The notice shall specify the place, the day and the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors. Subject to the Companies Act and with the consent of the shareholders who, individually or collectively, hold at least 90 percent of the voting rights of all those who have a right to vote at a general meeting, a general meeting may be convened on shorter notice.
Our board of directors must convene a general meeting upon the written requisition of one or more shareholders entitled to attend and vote at a general meeting of the Company holding not less than one-third of the rights to vote at such general meeting in respect to the matter for which the meeting is requested, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting within 21 clear days’ from the date of receipt of the written requisition, those shareholders who requested the meeting or any of them may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us.
No business may be transacted at any general meeting unless a quorum is present at the time the meeting proceeds to business. A quorum shall consist of the presence (whether in person or represented by proxy) of one shareholder if the Company has one shareholder and if the Company has more than one shareholder, one or more shareholders holding ordinary shares that represent not less than one-third of the outstanding ordinary shares carrying the right to vote at such general meeting. If, within fifteen minutes from the time appointed for the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved. In any other case, it shall stand adjourned to the same time and place seven days hence or to such other time or place as is determined by the directors, and if, at the adjourned meeting, a quorum is not present within fifteen minutes from the time appointed for the meeting, the shareholders present in person or by proxy at the meeting shall be a quorum. Subject to the Articles, at every meeting, the shareholders present in person or by proxy may choose someone of their number to be the chairman.
A corporation that is a shareholder shall be deemed for the purpose of our Memorandum and Articles to be present at a general meeting in person if represented by its duly authorized representative. Where a duly authorized representative is present at a meeting that shareholder who is a corporate is deemed to be present in person; and the acts of the duly authorized representative are personal acts of that shareholder.
At any general meeting a resolution put to the vote of the meeting shall be decided on a poll. A poll shall be taken in such manner as the chairman directs. He may appoint scrutineers (who need not be shareholder) and fix a place and time for declaring the result of the poll. If, through the aid of technology, the meeting is held as a virtual meeting or in more than one place, the chairman may appoint scrutineers virtually and in more than one place; but if he considers that the poll cannot be effectively monitored at that meeting, the chairman shall adjourn the holding of the poll to a date, place and time when that can occur.
In the case of an equality of votes, the chairman of the meeting shall not cast a second or casting vote.
Meetings of Directors
The business of our company is managed by the directors. Our directors are free to meet at such times and in such manner and places within or outside the Cayman Islands as the directors determine to be necessary or desirable. The quorum for the transaction of business at a meeting of directors shall be one unless the directors fix some other number. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented to in writing by all of the directors.
Winding Up
If we are wound up, the shareholders may, subject to the Articles and any other sanction required by the Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:
| ● | to divide in specie among the shareholders the whole or any part of our assets and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholders; and |
| ● | to vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up. |
Calls on Ordinary Shares and forfeiture of Ordinary Shares
Subject to the terms of allotment, the directors may make calls on the shareholders in respect of any monies unpaid on their shares including any premium and each shareholder shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made), pay to us the amount called on his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or if no rate is fixed, at the rate of ten percent per annum. The directors may waive payment of the interest wholly or in part.
We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder’s estate:
| ● | either alone or jointly with any other person, whether or not that other person is a shareholder; and |
| ● | whether or not those monies are presently payable. |
At any time the directors may declare any share to be wholly or partly exempt from the lien on shares provisions of the Articles.
We may sell, in such manner as the directors may determine, any share on which the sum in respect of which the lien exists is presently payable, if due notice that such sum is payable has been given (as prescribed by the Articles) and, within 14 clear days of the date on which the notice is deemed to be given under the Articles, such notice has not been complied with.
Redemption, Repurchase and Surrender of Ordinary Shares
We may issue shares on terms that such shares are subject to redemption, at our option, on such terms and in such manner as may be determined, before the issue of such shares, by our board of directors.
The Companies Act and our Memorandum and Articles permits us to purchase our own shares, subject to certain restrictions and requirements. Subject to the Companies Act and any rights for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:
| ● | issue shares that are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares, on the terms and in the manner our directors determine before the issue of those shares; |
| ● | with the consent by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at our option on the terms and in the manner which the directors determine at the time of such variation; and |
| ● | purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine at the time of such purchase. |
Under the Companies Act, the repurchase of any share may be paid out of our Company’s profits, or out of the share premium account, or out of the proceeds of a fresh issue of shares made for the purpose of such repurchase, or out of capital. If the repurchase proceeds are paid out of our Company’s capital, our Company must, immediately following such payment, be able to pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act, no such share may be repurchased (1) unless it is fully paid up, and (2) if such repurchase would result in there being no shares outstanding other than shares held as treasury shares. The repurchase of shares may be effected in such manner and upon such terms as may be authorized by or pursuant to the Articles. If the Articles do not authorize the manner and terms of the purchase, a company shall not repurchase any of its own shares unless the manner and terms of purchase have first been authorized by a resolution of the company. In addition, under the Companies Act and our Memorandum and Articles, our Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender would result in there being no shares outstanding (other than shares held as treasury shares).
Inspection of Books and Records
Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements
Requirements to Change the Rights of Holders of Ordinary Shares (Item 10.B.4 of Form 20-F)
Variations of Rights of Shares
If at any time, our share capital is divided into different classes of shares, all or any of the rights attached to any class of our shares may (unless otherwise provided by the terms of issue of the shares of that class) be varied with the consent in writing of the holders of two-thirds of the issued shares of that class or with the sanction of a resolution passed by a majority of not less than two-thirds of holders of shares of that class as may be present in person or by proxy at a separate general meeting of the holders of shares of that class.
Unless the terms on which a class of shares was issued state otherwise, the rights conferred on the shareholder holding shares of any class shall not be deemed to be varied by the creation or issue of further shares ranking pari passu with the existing shares of that class.
Limitations on the Rights to Own Ordinary Shares (Item 10.B.6 of Form 20-F)
Rights of Non-Resident or Foreign Shareholders
There are no limitations imposed by our Memorandum and Articles on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles governing the ownership threshold above which shareholder ownership must be disclosed.
Ownership Threshold (Item 10.B.8 of Form 20-F)
There are no provisions under the laws of the Cayman Islands which are applicable to our company or under our Memorandum and Articles that require our company to disclose shareholder ownership above any particular ownership threshold.
Differences Between the Law of Different Jurisdictions (Item 10.B.9 of Form 20-F)
The Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Companies Act and the current Companies Act of England. In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Companies Act applicable to us and the comparable laws applicable to companies incorporated in the State of Delaware in the United States.
| Delaware | Cayman Islands | |||
| Title of Organizational Documents | Certificate of Incorporation and Bylaws | Certificate of Incorporation and Memorandum and Articles of Association | ||
| Duties of Directors | Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of the corporation’s employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the shareholders. | As a matter of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time. We have the right to seek damages if a duty owed by any of our directors is breached.’ | ||
| Limitations on Personal Liability of Directors | Subject to the limitations described below, a certificate of incorporation may provide for the elimination or limitation of the personal liability of a director to the corporation or its shareholders for monetary damages for a breach of fiduciary duty as a director. Such provision cannot limit liability for breach of loyalty, bad faith, intentional misconduct, unlawful payment of dividends or unlawful share purchase or redemption. In addition, the certificate of incorporation cannot limit liability for any act or omission occurring prior to the date when such provision becomes effective. | The Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. |
| Indemnification of Directors, Officers, Agents, and Others | A corporation has the power to indemnify any director, officer, employee, or agent of corporation who was, is, or is threatened to be made a party who acted in good faith and in a manner he believed to be in the best interests of the corporation, and if with respect to a criminal proceeding, had no reasonable cause to believe his conduct would be unlawful, against amounts actually and reasonably incurred. | Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of directors and officers, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against the consequences of committing a crime, or against the indemnified person’s own fraud or dishonesty. | ||
| Our articles of association provide to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against: (a) all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by the existing or former director (including alternate director), secretary or officer in or about the conduct of our business or affairs or in the execution or discharge of the existing or former director (including alternate director), secretary’s or officer’s duties, powers, authorities or discretions; and (b) without limitation to paragraph (a) above, all costs, expenses, losses or liabilities incurred by the existing or former director (including alternate director), secretary or officer in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere. | ||||
| No such existing or former director (including alternate director), secretary or officer, however, shall be indemnified in respect of any matter arising out of his own dishonesty. | ||||
| To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary or officer must repay the amount paid by us to the extent that we are ultimately found not liable to indemnify the director (including alternate director), the secretary or that officer for those legal costs. |
| Interested Directors | Under Delaware law, a transaction in which a director who has an interest in such transaction would not be voidable if (i) the material facts as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum, (ii) such material facts are disclosed or are known to the shareholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the shareholders, or (iii) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, a director could be held liable for any transaction in which such director derived an improper personal benefit. | Interested director transactions are governed by the terms of a company’s memorandum and articles of association. | ||
| Voting Requirements |
The certificate of incorporation may include a provision requiring supermajority approval by the directors or shareholders for any corporate action. In addition, under Delaware law, certain business combinations involving interested shareholders require approval by a supermajority of the non-interested shareholders. |
For the protection of shareholders, certain matters must be approved by special resolution of the shareholders as a matter of Cayman Islands law, including alteration of the memorandum or articles of association, reduction of share capital (subject, in relevant circumstances, to court approval), change of name, authorization of a plan of merger or transfer by way of continuation to another jurisdiction or consolidation or voluntary winding up of the company. | ||
| The Companies Act requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the memorandum and articles of association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting. | ||||
| The Companies Act defines “special resolutions” only. A company’s memorandum and articles of association can therefore tailor the definition of “ordinary resolutions” as a whole, or with respect to specific provisions. | ||||
| Voting for Directors | Under Delaware law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. | Director election is governed by the terms of the memorandum and articles of association of a company. | ||
| Cumulative Voting | No cumulative voting for the election of directors unless so provided in the certificate of incorporation. | There are no prohibitions in relation to cumulative voting under the Companies Act but our articles of association do not provide for cumulative voting. |
| Directors’ Powers Regarding Bylaws | The certificate of incorporation may grant the directors the power to adopt, amend or repeal bylaws. | The memorandum and articles of association may only be amended by a special resolution of the shareholders. | ||
| Nomination and Removal of Directors and Filling Vacancies on Board | Shareholders may generally nominate directors if they comply with advance notice provisions and other procedural requirements in company bylaws. Holders of a majority of the shares may remove a director with or without cause, except in certain cases involving a classified board or if the company uses cumulative voting. Unless otherwise provided for in the certificate of incorporation, directorship vacancies are filled by a majority of the directors elected or then in office. | Nomination and removal of directors and filling of board vacancies are governed by the terms of the memorandum and articles of association. | ||
| Mergers and Similar Arrangements |
Under Delaware law, with certain exceptions, a merger, consolidation, exchange or sale of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration such shareholder would otherwise receive in the transaction.
Delaware law also provides that a parent corporation, by resolution of its board of directors, may merge with any subsidiary, of which it owns at least 90% of each class of capital stock without a vote by shareholders of such subsidiary. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights. |
The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies provided that the laws of the foreign jurisdiction permit such merger or consolidation. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a subsidiary is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company. |
|
The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands. Except in certain limited circumstances, a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful. |
||||
| In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by seventy-five percent (75%) in value of the shareholders or class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that: (a) the statutory provisions as to the required majority vote have been met; (b) the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; (c) the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and (d) the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
| Delaware | Cayman Islands | |||
|
When a takeover offer is made and accepted by holders of 90% of the shares affected within four months the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, or if a takeover offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares. |
||||
| Shareholder Suits | Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action. | In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge: (a) an act which is illegal or ultra vires with respect to the company and is therefore incapable of ratification by the shareholders; (b) an act which, although not ultra vires, requires authorization by a qualified (or special) majority (that is, more than a simple majority) which has not been obtained; and (c) an act which constitutes a “fraud on the minority” where the wrongdoers are themselves in control of the company. | ||
| Inspection of Corporate Records | Under Delaware law, shareholders of a Delaware corporation have the right during normal business hours to inspect for any proper purpose, and to obtain copies of list(s) of shareholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation. | Shareholders of a Cayman Islands exempted company have no general right under Cayman Islands law to inspect or obtain copies of a list of shareholders or other corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies) of the company. However, these rights may be provided in the company’s memorandum and articles of association. |
| Shareholder Proposals | Unless provided in the corporation’s certificate of incorporation or bylaws, Delaware law does not include a provision restricting the manner in which shareholders may bring business before a meeting. | The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our articles of association provide that general meetings shall be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than one-third of the rights to vote at such general meeting in accordance with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting within twenty-one clear days’ from the date of receipt of the requisition, those shareholders who requested the meeting or any of them may convene the general meeting themselves within three months after the end of such period of twenty-one clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us. Our articles of association provide no other right to put any proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obligated by law to call shareholders’ annual general meetings. However, our corporate governance guidelines require us to call such meetings every year. | ||
| Approval of Corporate Matters by Written Consent | Delaware law permits shareholders to take action by written consent signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting of shareholders. | The Companies Act allows a special resolution to be passed in writing if signed by all the voting shareholders (if authorized by the memorandum and articles of association). | ||
| Calling of Special Shareholders Meetings | Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bylaws to call a special meeting of shareholders. | The Companies Act does not have provisions governing the proceedings of shareholders meetings which are usually provided in the memorandum and articles of association. | ||
| Dissolution; Winding Up | Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors. | Under the Companies Act, the Company may be wound up by a special resolution of our shareholders, or if the winding up is initiated by our board of directors, by either a special resolution of our members or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so. |
Changes in Capital (Item 10.B.10 of Form 20-F)
We may from time to time by an ordinary resolution of our shareholders:
| ● | increase our share capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges set out in that ordinary resolution; |
| ● | consolidate and divide all or any of our share capital into shares of larger amount than our existing shares; |
| ● | convert all or any of our paid-up shares into stock, and reconvert that stock into paid up shares of any denomination; |
| ● | subdivide our existing shares, or any of them, into shares of a smaller amount than that fixed by the memorandum, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; and |
| ● | cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled, or, in the case of shares without nominal par value, diminish the number of shares into which our capital is divided. |
Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for an order confirming such reduction, reduce its share capital in any manner authorized by the Companies Act.
Debt Securities (Item 12.A of Form 20-F)
Not applicable.
Warrants and Rights (Item 12.B of Form 20-F)
Not applicable.
Other Securities (Item 12.C of Form 20-F)
Not applicable.
Description of American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
Not applicable.
Exhibit 8.1
Subsidiaries of Top Wealth Group Holding Limited
| Name of Subsidiary | Jurisdiction of Incorporation or Organization | |
|
Top Wealth (BVI) Holding Limited |
British Virgin Islands | |
| Top Wealth Group (International) Limited | Hong Kong | |
|
TWG International Limited |
Hong Kong | |
|
TWG Group Limited |
British Virgin Islands | |
|
TWG Capital Limited |
British Virgin Islands | |
|
Airentity International Limited |
British Virgin Islands | |
| Airentity Technology Limited | Hong Kong |
Exhibit 12.1
Certification of Principal Executive Officer
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)
Under the Securities Exchange Act of 1934, as Amended
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Kim Kwan Kings, WONG, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F for the fiscal year ended December 31, 2025 of Top Wealth Group Holding Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2026 | /s/ Kim Kwan Kings, WONG |
| Kim Kwan Kings, WONG | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 12.2
Certification of Principal Financial and Accounting Officer
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)
Under the Securities Exchange Act of 1934, as Amended
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Kong Wai, WONG, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F for the fiscal year ended December 31, 2025 of Top Wealth Group Holding Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2026 | /s/ Kong Wai, WONG |
| Kong Wai, WONG | |
| Chief Financial Officer | |
| (Principal Accounting and Financial Officer) |
Exhibit 13.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Kim Kwan Kings, WONG, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 20-F of Top Wealth Group Holding Limited for the fiscal year ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of Top Wealth Group Holding Limited.
| Date: May 15, 2026 | /s/ Kim Kwan Kings, WONG |
| Kim Kwan Kings, WONG | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
I, Kong Wai, WONG, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 20-F of Top Wealth Group Holding Limited for the fiscal year ended December 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 20-F fairly presents, in all material respects, the financial condition and results of operations of Top Wealth Group Holding Limited.
| Date: May 15, 2026 | /s/ Kong Wai, WONG |
| Kong Wai, WONG | |
| Chief Financial Officer | |
| (Principal Executive Officer) |
The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), and are not to be incorporated by reference into any filing of Prestige Wealth Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference of our report dated May 15, 2025, with respect to the consolidated financial statements of Top Wealth Group Holding Limited and its subsidiaries, appearing in its Annual Report on Form 20-F for the year ended December 31, 2025.
/s/ Audit Alliance LLP
Singapore
May 15, 2026