CGTL Creative Global Technology Holdings Ltd

As filed with the U.S. Securities and Exchange Commission on February 10, 2025

Registration No. 333-273329

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

POST-EFFECTIVE AMENDMENT No. 1

TO

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Creative Global Technology Holdings Limited
(Exact name of Registrant as specified in its charter)

 

 

Not Applicable
(Translation of Registrant’s name into English)

 

 

Cayman Islands		5045		Not Applicable
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification number)

 

Unit 03, 22/F, Westin Centre,
26 Hung To Road, Kwun Tong,
Kowloon, Hong Kong
Tel: +852 2690 9121
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

  

Cogency Global Inc.
122 East 42^nd Street, 18^th Floor
New York, New York 10016
(212) 947-7200
(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Lan Lou, Esq.
Jun He Law Offices LLC
Suite 1919, 630 Fifth Avenue
New York, NY 10111
(917) 661-8175

 

 

Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

 

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 7(a)(2)(B) of the Securities Act. ☐

 

†

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

  

 

EXPLANATORY NOTE

 

Creative Global Technology Holdings Limited is filing this Post-Effective Amendment No. 1 (this “Post-Effective Amendment No.1”) to its registration statement on Form F-1 (File No. 333-273329) (the “Registration Statement”), as originally declared effective by the Securities and Exchange Commission (the “SEC”) on November 18, 2024. This Post-Effective Amendment No. 1 is being filed to update the prospectus used for the resale by a selling shareholder of 3,000,000 Ordinary Shares of the Registrant (the “Resale Prospectus”) only, and amend and restate Part II of the Registration Statement. The prospectus used for the public offering by the Registrant of 1,250,000 Ordinary Shares of the Registrant (the “Public Offering Prospectus”) through the underwriters named on the cover page of the Public Offering Prospectus remains unchanged and has therefore been omitted.

 

This Post-Effective Amendment is being filed to include information contained in the registrant’s Annual Report on Form 20-F for the fiscal year ended September 30, 2024, which was filed with the Securities and Exchange Commission on January 30, 2025, and to update certain other information in the Registration Statement.

 

The information included in this filing amends the Registration Statement and the prospectus contained therein. No additional securities are being registered under this Post-Effective Amendment No. 1. All applicable registration fees were paid at the time of the original filing of the Registration Statement. No additional securities are registered hereby.

 

 

The information in this preliminary prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

 

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED FEBRUARY 10, 2025

 

 

Creative Global Technology Holdings Limited

 

3,000,000 Ordinary Shares

 

This prospectus relates to the resale of 3,000,000 shares of CGT Holdings’ ordinary shares, par value $0.001 per share (“Ordinary Shares”) (the “Resale Offering”), by CHSZ Holdings Limited (the “Selling Shareholder”). CGT Holdings will not receive any of the proceeds from the sale of the Ordinary Shares by the Selling Shareholder. The Selling Shareholder is identified in the table commencing on page 59 of this prospectus.

 

CGT Holdings’ Ordinary Shares are currently listed and traded on Nasdaq Capital Market (“Nasdaq”) under the symbol “CGTL.” The Selling Shareholder may sell the resale shares from time to time at the market price prevailing on Nasdaq at the time of offer and sale, or at prices related to such prevailing market prices or in negotiated transactions or a combination of such methods of sale directly or through brokers. On February 7, 2025, the last reported sale price of CGT Holding’s Ordinary Shares on Nasdaq was  $5.20.

 

Each of CGT Holdings’ Ordinary Shares is entitled to one vote per share. See “Description of Share Capital” commencing on page 74. CGT Holdings has registered its Ordinary Shares under the Securities Exchange Act of 1934, as amended.

 

CGT Holdings is an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act of 2012 and will be subject to reduced public company reporting requirements.

 

After the completion of the Resale Offering, Mr. Shangzhao (Cizar) Hong, CGT Holdings’ Chief Executive Officer, will continue to hold up to approximately 79.30% of CGT Holdings’ Ordinary Shares and approximately 79.30% of CGT Holdings’ voting power. Mr. Hong will have the ability to determine all matters requiring approval by shareholders. CGT Holdings expects to be a “Controlled Company” within the meaning of the corporate governance standards of Nasdaq, because, and as long as, Mr. Shangzhao (Cizar) Hong holds more than 50% of CGT Holdings’ voting power and has the ability to determine all matters requiring approval by shareholders. For so long as CGT Holdings remains a Controlled Company under that definition, CGT Holdings is permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules of Nasdaq, including:

 

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an exemption from the rule that a majority of CGT Holdings’ board of directors must be independent directors;

 

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an exemption from the rule that the compensation of CGT Holdings’ chief executive officer must be determined or recommended solely by independent directors;

 

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an exemption from the rule that CGT Holdings’ director nominees must be selected or recommended solely by independent directors.

 

Investing in CGT Holdings’ Ordinary Shares is highly speculative and involves a significant degree of risk. See “Risk Factors” commencing on page 14 of this prospectus for a discussion of information that should be considered before making a decision to purchase CGT Holdings’ Ordinary Shares.

 

CGT Holdings is not an operating company but is a Cayman Islands holding company with operations conducted by its wholly owned subsidiary, Creative Global Technology Limited, a Hong Kong company (“CGTHK”), and this structure involves unique risks to investors. Investors in CGT Holdings’ Ordinary Shares are not purchasing equity interests in CGT Holdings’ Hong Kong operating entity but instead are purchasing equity interests in a Cayman Islands holding company. See “Risks Related to Doing Business in Hong Kong — The Hong Kong legal system embodies uncertainties which could negatively affect our listing on Nasdaq and limit the legal protections available to you and us.” commencing on page 39.

 

 

CGT Holdings conducts substantially all of its operations in Hong Kong through CGTHK. CGT Holdings currently does not have nor intends to set up any other subsidiaries or enter into any contractual arrangements to establish a variable interest entity (“VIE”) with any entity in the mainland of China. Hong Kong is a special administrative region of the People’s Republic of China (“PRC”) and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (the “Basic Law”), namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. Accordingly, we believe the laws and regulations of the PRC do not currently have any material impact on our business, financial condition or results of operations. However, there is no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong in the future. If there is significant change to current political arrangements between PRC and Hong Kong, companies operated in Hong Kong may face similar regulatory risks as those operated in the mainland of China, including its ability to offer securities to investors, list its securities on a U.S. or other foreign exchange, conduct its business or accept foreign investment. In light of PRC’s recent expansion of authority in Hong Kong, there are risks and uncertainties which we cannot foresee, and rules and regulations in the PRC can change quickly with little or no advance notice. The PRC government may intervene or influence our current and future operations in Hong Kong at any time, or may exert more control over offerings conducted overseas and/or foreign investment in issuers likes ourselves. If the PRC government intervenes or influences our current and future operations in Hong Kong, the Chinese regulatory authorities could disallow the holding company structure of us, which would likely result in a material change in our operations and a material change in the value of the ordinary shares we are registering for sale, including that it could cause the value of such ordinary shares to significantly decline or become worthless. See “Risk Factors — Risks Related to Doing Business in Hong Kong” commencing on page 39.

 

According to the legal opinion of Lawrence Chan & Co., our counsel to Hong Kong law, there are currently no such restrictions on foreign exchange and our ability to transfer cash or assets between CGT Holdings and CGTHK. While there are currently no such restrictions on foreign exchange and our ability to transfer cash or assets between CGT Holdings and CGTHK, if certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to us, and to the extent our cash or assets are in Hong Kong or a Hong Kong entity (such as our operating subsidiary, CGTHK), such funds or assets may not be available to fund operations or for other use outside of Hong Kong due to interventions in or the imposition of restrictions and limitations on our ability to transfer funds or assets by the PRC government. Furthermore, we cannot assure you that the PRC government will not intervene or impose restrictions on CGT Holdings or CGTHK to transfer or distribute cash within the organization, which could result in an inability of or prohibition on making transfers or distributions to entities outside of Hong Kong. Any limitation on the ability of CGTHK to pay dividends or make other distributions to its holding company could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. In addition, if CGTHK incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends. See “Risk Factors — Risks Relating to Doing Business in Hong Kong — CGT Holdings is an offshore holding company incorporated in the Cayman Islands. As a holding company with no material operations, CGT Holdings’ operations are conducted in Hong Kong by one of CGT Holdings’ subsidiaries” commencing on page 39.

 

We are aware that the PRC government recently initiated a series of statements and regulatory developments to regulate business operations in the mainland of 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 VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Because we conduct substantially all of our businesses in Hong Kong and have no operations in the mainland of China, we do not believe these statements and regulatory developments would apply to us. However, should these statements or regulatory actions apply to us, including our Hong Kong operations, in the future, or if we expand our business operations into the mainland of China in some ways such that we become subject to them to a greater extent, our ability to conduct our business, invest into the mainland of China as foreign investments or accept foreign investments, or list on a U.S. or other overseas exchange may be restricted. The failure to comply with these PRC regulations could result in penalties and other regulatory actions against us and may materially and adversely affect our business and results of operations. In addition, the PRC government has significant authority to intervene or influence the mainland of China or Hong Kong operations of an offshore holding company, such as ours, at any time. These risks, together with uncertainties in the PRC legal system and the interpretation and enforcement of PRC laws, regulations, and policies, could hinder our ability to offer or continue to offer CGT Holdings’ Ordinary Shares, result in a material adverse change to our business operations, and damage our reputation, which could cause CGT Holdings’ Ordinary Shares to significantly decline in value or become worthless. For a detailed description of risks relating to doing business in China, see “Risk Factors — Risks Relating to Doing Business in Hong Kong” commencing on page 39.

 

 

Lawrence Chan & Co., our counsel with respect to Hong Kong law, has advised us that judgments 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 U.S. However, an action can be brought upon a foreign judgment in Hong Kong courts. 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 an 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 an action in Hong Kong 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.

 

We operate in a competitive industry and a highly competitive market. We may be subject to a variety of laws and other obligations regarding competition laws in Hong Kong, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations. We face significant competition in the market due to the presence of a large amount of goods and service providers. We may be subject to the Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (“Competition Ordinance”), which came into force on December 14, 2015, laying down three forms of behaviors and imposing three rules intended to prevent and discourage anti-competitive conducts: (i) the first conduct rule prohibits agreements between undertakings that have the object or effect of preventing, restricting and distorting competition in Hong Kong; (ii) the second conduct rule prohibits undertakings with a substantial degree of market power in a market from abusing that power by engaging in conduct that has the object or effect of preventing, restricting and distorting competition in Hong Kong; and (iii) the merger rule prohibits mergers that have or are likely to have the effect of substantially lessening competition in Hong Kong. Currently, the merger rule only applies where an undertaking that directly or indirectly holders a “carrier license” within the meaning of the Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong) is involved in a merger, and is therefore not applicable to our business.

 

The Competition Commission is a statutory body in Hong Kong established to investigate any contravention against and enforce on the provisions of the Competition Ordinance, and the Competition Tribunal is a tribunal set up under the Competition Ordinance, as part of the Hong Kong judiciary, to hear and decide cases relating to competition law in Hong Kong. Under the guidelines and policies published by the Competition Commission, possible outcomes of investigation of contravention of the Competition Ordinance may include the acceptance of commitment given by the infringer, the issuing of warning notice or infringement notice, commencement of proceedings in the Competition Tribunal, applying for consent order, referral of complaint to a government agency and the conduct of a market study. The Competition Tribunal may order remedies including pecuniary penalty, disqualification order, or other orders under the Competition Ordinance. The guidelines and policies published by the Competition Commission in Hong Kong did not mention any remedies which may affect an entity’s ability to accept foreign investment or list on a U.S./foreign exchange as a result of the non-compliance of the Competition Ordinance. See “Risk Factors — Risks Relating to Doing Business in Hong Kong — Failure to comply with Hong Kong Competition Law may result in material and adverse effect on our business, financial condition and results of operations” commencing on page 47.

 

Operating our business in Hong Kong, we are subject to the Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (the “PDPO”) which sets out the principles that a person who, either alone or jointly with other persons, controls the collection, holding, processing or use of personal data (“Data User”) must follow in any acts concerning information, existing in a form which access to or processing of is practicable, which relates to the Personal Data that can be used to identify a living individual. Alleged failure to comply with applicable laws and regulations regarding data security or failure to protect user privacy, regardless of their validity, may result in negative news or media coverage of our business which may in turn damage our reputation, erosion of customer faith in us and material negative impact on our business, results of operations, and financial condition. Contravention with the PDPO may entitle the Privacy Commissioner for Personal Data to issue a written enforcement notice directing such Data User to remedy and prevent recurrence of contravention. Contravention with the above enforcement notice issued by the Privacy Commissioner for Personal Data is an offence and the offender is liable to a maximum fine of HK$50,000 and imprisonment for 2 years, with a daily penalty of HK$1,000. Subsequent convictions can result in a maximum fine of HK$100,000 and imprisonment for 2 years, with a daily penalty of HK$2,000. The PDPO does not prescribe any express remedies regarding an entity’s ability to accept foreign investment or list on a U.S./foreign exchange as a result of the non-compliance of the PDPO. See “Risk Factors — Risks Relating to Doing Business in Hong Kong — 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” commencing on page 21.

 

 

Furthermore, as more stringent criteria have been imposed by the Securities and Exchange Commission (the “SEC”) and the Public Company Accounting Oversight Board (the “PCAOB”) recently, CGT Holdings’ Ordinary Shares may be prohibited from trading if our auditor cannot be fully inspected. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determinations that it was unable to inspect or investigate completely registered public accounting firms headquartered in the mainland of China and Hong Kong, respectively, and identified the registered public accounting firms in the mainland of China and Hong Kong that were subject to such determinations. On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Statement of Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of China. The terms of the Statement of Protocol would grant the PCAOB complete access to audit work papers and other information so that it may inspect and investigate PCAOB-registered accounting firms headquartered in the mainland of China and Hong Kong. According to the PCAOB, its December 2021 determinations under the Holding Foreign Companies Accountable Act (“HFCAA”) remain in effect. The PCAOB was required to reassess these determinations by the end of 2022. Under the PCAOB’s rules, a reassessment of a determination under the HFCAA may result in the PCAOB reaffirming, modifying or vacating the determination. On December 15, 2022, the PCAOB issued a Determination Report determining that the PCAOB secured complete access to inspect and investigate registered public accounting firms headquartered in the mainland of China and Hong Kong and vacating the 2021 Determinations the contrary. But the PCAOB further noted that it would act immediately to consider the need to issue a new determination if the PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access. On December 29, 2022, the Consolidated Appropriations Act, 2023 was signed into law, which, among other things, amended the HFCAA to reduce the number of consecutive years an issuer can be identified as a Commission-Identified Issuer before the Securities and Exchange Commission (“SEC”) must impose an initial trading prohibition on the issuer’s securities from three years to two years. Therefore, once an issuer is identified as a Commission-Identified Issuer for two consecutive years, the SEC is required under the HCFAA to prohibit the trading of the issuer’s securities on a national securities exchange and in the over-the-counter market. As of the date of this prospectus, Wei, Wei & Co., LLP, our auditor, is not identified in the 2021 PCAOB Report as a firm subject to the PCAOB’s determination. While our auditor is based in the U.S. and is registered with PCAOB and subject to PCAOB inspection, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause CGT Holdings’ Ordinary Shares to be delisted from Nasdaq. See “Risk Factors — Risks Related to CGT Holdings’ Ordinary Shares and the Resale Offering — CGT Holdings’ Ordinary Shares may be delisted and prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for two consecutive years. The delisting and the cessation of trading of CGT Holdings’ Ordinary Shares, or the threat of their being delisted and prohibited from being traded, may materially and adversely affect the value of your investment” commencing on page 48.

 

“We,” “us,” and “the Group” refer to CGT Holdings and its subsidiaries. We currently conduct our business through CGTHK, the Hong Kong subsidiary 100% owned by CGT Holdings.

 

We mainly conduct our marketing and sales activities through our wholly owned subsidiary in Hong Kong, CGTHK. As a result, almost all of our sales revenues are received by CGTHK. Under the current laws of Hong Kong, except for the requirement of maintaining sufficient fund for CGTHK to remain solvent as a going concern and meet its contractual obligations owed to third parties prohibiting or restricting dividend distributions, CGTHK is not subject to restrictions of distributing funds out of distributable profits to its holding company. Transfers of funds from CGTHK to CGT Holdings are free of restrictions. As of the date of this prospectus, none of CGT Holdings’ subsidiaries has made any dividend payment or distribution to CGT Holdings and CGT Holdings has not made any dividends or distributions to its shareholders. The cash transfer among CGT Holdings and its subsidiaries is typically transferred through inter-company loans. As of the date of this prospectus, no cash generated from one subsidiary is used to fund another subsidiary’s operations and we do not anticipate any difficulties or limitations on our ability to transfer cash between subsidiaries. Other than discussed above, we don’t have any cash management policies that dictate the amount of such funding among our subsidiaries.

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus 10, 2025

 

 

TABLE OF CONTENTS

 

	Page
PROSPECTUS SUMMARY	1
RISK FACTORS	14
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	56
USE OF PROCEEDS	57
DIVIDEND POLICY	58
SELLING SHAREHOLDER	59
EXCHANGE RATE INFORMATION	60
ENFORCEABILITY OF CIVIL LIABILITIES	61
CORPORATE HISTORY AND STRUCTURE	63
PRINCIPAL SHAREHOLDERS	72
RELATED PARTY TRANSACTIONS	73
DESCRIPTION OF SHARE CAPITAL	74
SHARES ELIGIBLE FOR FUTURE SALE	82
SELLING SHAREHOLDER PLAN OF DISTRIBUTION	83
LEGAL MATTERS	85
EXPERTS	85
WHERE YOU CAN FIND ADDITIONAL INFORMATION	85
INCORPORATION BY REFERENCE	86

 

 

ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form F-1 that we filed with the SEC. As permitted by the rules and regulations of the SEC, the registration statement filed by us includes additional information not contained in this prospectus. You may read the registration statement and the other reports we file with the SEC at the SEC’s website described below under the heading “Where You Can Find Additional Information.”

 

You should rely only on the information contained in this prospectus, incorporated by reference into this prospectus, or in any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or any free writing prospectus. We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you and which we have filed with the U.S. Securities and Exchange Commission (the “SEC”). We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Ordinary Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated herein by reference as exhibits to the registration statement, and you may obtain copies of those documents as described below under the section entitled “Where You Can Find Additional Information.”

 

All references to the “Company,” “Registrant” or similar terms used in this prospectus refer to Creative Global Technology Holdings Limited, a company incorporated under the laws of the Cayman Islands (“CGT Holdings”). “We,” “us,” “the Group” refer to CGT Holdings and its consolidated subsidiaries, unless the context otherwise indicates. We currently conduct our business through Creative Global Technology Limited, a company incorporated under the laws of Hong Kong (“CGTHK” or “Hong Kong Subsidiary”).

 

Unless otherwise indicated, all numbers and financial information are presented in U.S. Dollars.

 

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“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.

 

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“Hong Kong” or “HK” refers to the Hong Kong Special Administrative Region of the People’s Republic of China.

 

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“HKD,” “HK$” or “H.K. Dollars” refers to the official legal currency of Hong Kong.

 

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“PRC” or “China” refers to the People’s Republic of China, including Hong Kong Special Administrative Region (“Hong Kong”), Macau Special Administrative Region (“Macau”) and Taiwan, for purposes of this prospectus only; and in the future filings of the Company’s registration statements under the Securities Act of 1933, as amended, or its periodic reports under the Securities Exchange Act of 1934, as amended, the definition of China or PRC will include Hong Kong, Macau or Taiwan. And only in the context of describing PRC laws, the PRC laws do not include any law, regulation, statute, rule, order, decree, notice, and supreme court’s judicial interpretation or other legislation of the Hong Kong Special Administrative Region, the Macau Special Administrative Region or Taiwan.

 

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“Securities Act” refers to the Securities Act of 1933, as amended.

 

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Selling Shareholder” refers to CHSZ Holdings Limited, a British Virgin Islands company.

 

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“$,” “USD,” “US$” or “U.S. Dollars” refers to the official legal currency of the United States.

 

 

RISK FACTORS

 

An investment in CGT Holdings’ Ordinary Shares involves significant risks. You should carefully consider all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in CGT Holdings’ Ordinary Shares. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price of CGT Holdings’ Ordinary Shares could decline, and you may lose all or part of your investment.

 

Risks Related to Our Business

 

Our industry is rapidly evolving and our business model may not continue to be successful or achieve wide acceptance as we anticipated.

 

The pre-owned consumer electronic devices industry is developing quickly. There are not many well-established wholesalers or retailers for pre-owned consumer electronic devices, nor are there any established industry standards for pre-owned consumer electronic devices market in general. We have been experimenting with several business strategies since the start of our business operations in 2016 to determine the most successful business model for our operations. We think our business model is unique, and we have a limited operating history on which investors can evaluate our business and prospects. Specifically, we only began operating our online retail business in 2021 and our device rental business in 2022. There is no assurance that our business model will remain effective or gain widespread acceptance as quickly or at the extent we predict. We have to explore different business practices, formulate pricing strategies, set up procedures and standards by ourselves and learn from our own experience. Given our limited history in operating online marketplaces, we cannot assure you that we will be able to successfully anticipate and respond to industry trends and customer behaviors, especially as we continue to broaden our customer base and diversify our product offerings. A potential investor in CGT Holdings’ Ordinary Shares should carefully assess the risks we face as a result of our involvement in a new and rapidly evolving industry, and our attempt to execute on a new and untested business model. Our business model may not be successful, or we may not successfully manage the risks associated with this business model.

 

If we fail to attract and engage consumers, find suitable suppliers or involve other participants in the pre-owned consumer electronic devices value chain, our business and reputation may be materially and adversely affected.

 

Our capacity to engage customers, identify relevant suppliers, involve other players in the pre-owned consumer electronic devices value chain, and deliver a superior experience to them, which in turn depends on a number of criteria, are critical to the success of our business. These factors include our ability to:

 

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continue to expand our office/store networks;

 

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leverage technology and data to improve our services;

 

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maintain the reliability of our process of testing, repairing, grading, and pricing;

 

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diversify into new product categories and offer more value-added services promptly to meet changing consumer demand;

 

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keep offering pre-owned consumer electronic devices/goods at competitive prices;

 

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keep working with current suppliers or seek out new suppliers;

 

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continue to innovate and improve the functionality, performance, reliability, design, security, and scalability of our service system;

 

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attract and manage consumers on our brick-and-mortar and online marketplaces;

 

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uphold and enhance our offline network’s and employees’ operational effectiveness, dependability, and customer experience for online transactions,

 

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deliver to consumers products of quality that meet their expectations; and

 

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provide superior after-sales service.

 

 

As our business develops, we cannot guarantee you that we will always be able to provide a superior experience to consumers. Failure to do so could materially and adversely affect our business, financial condition and results of operations.

 

If we are unable to maintain our existing customer base and attract new customers, our business, financial condition and results of operations may be materially and adversely affected.

 

Future growth will depend on our ability to maintain our existing customer base and attract new customers. To expand our customer base, we have established online and, are planning to establish offline channels to maximize our access to potential consumers who intend to buy pre-owned consumer electronic devices. However, we cannot guarantee you that we will be successful in maintaining our existing customer base and attracting new customers. The pre-owned consumer electronic devices industry may evolve rapidly in Hong Kong and the Southeast Asia region. Therefore, we may not be able to effectively maintain and grow our customer base, which would result in a lower volume of pre-owned consumer electronic devices sold by us and thus materially and adversely affect our business, financial condition and results of operations. Furthermore, there is public perception that pre-owned consumer electronic devices may be counterfeit or defective, and this perception could damage our reputation and have a negative impact on our ability to attract new customers or retain existing customers. If we are unable to maintain or increase positive awareness of our services, it may be difficult for us to maintain and grow our customer base, and our business, growth prospects, results of operations and financial condition may be materially and adversely affected.

 

If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected.

 

Our business has continued to develop over the past several years, and we expect continued growth in our business and revenues. We plan to further expand our sources of supply and customer base. For example, we plan to further expand our network into more countries in Southeast Asia to increase the circulation of pre-owned devices from developed economies like the U.S. to developing economies. In addition, we plan to upgrade our technology capabilities to improve the accuracy, speed, and cost-effectiveness of our proprietary process of testing, grading, and pricing for pre-owned devices. The strategies include upgrading our Hong Kong office with new technologies and further optimizing our pricing algorithm by continuing to leverage the database we developed and maintained. All these efforts will require significant managerial, financial and human resources. We cannot guarantee you that we will be able to effectively manage our growth or to implement all these systems, procedures and control measures successfully or that our new business initiatives will be successful. If we are not able to manage our growth or execute our strategies effectively, our expansion may not be successful and our business and prospects may be materially and adversely affected.

 

The growth and profitability of our business depend on the level of consumer demand and discretionary spending. A severe or prolonged economic downturn in Southeast Asia or around the world could materially and adversely affect consumer discretionary spending and therefore adversely affect our business, financial condition and results of operations.

 

The success of our business is highly dependent on the level of consumer demand and discretionary spending both in the markets where we operate. Many factors beyond our control may affect the level of consumer demand and discretionary spending on merchandise that we offer, including, among other things:

 

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general economic and industry conditions;

 

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consumer disposable income;

 

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discounts, promotions and merchandise offered by our competitors;

 

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negative reports and publicity about the pre-owned consumer electronic devices industry;

 

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outbreak of viruses or widespread illness, including COVID-19 caused by the novel coronavirus;

 

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unemployment rate;

 

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minimum wages and personal debt levels of consumers;

 

 

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access to consumption loans by consumers;

 

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consumer confidence in future economic conditions;

 

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fluctuations in the financial markets; and

 

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natural disasters, war, terrorism and other hostilities.

 

Declining consumer confidence and spending cutbacks may result in reduced demand for pre-owned consumer electronic devices. Declining demand also may require increased selling and advertising expenses. A deterioration in economic conditions and any related decrease in consumer demand for pre-owned consumer electronic devices could have a material adverse effect on our business, financial condition and results of operations. COVID-19 pandemic has also resulted in a severe and negative impact on the Hong Kong and the global economy. Negative economic conditions related to this outbreak may limit the consumer confidence and the amount of disposable income available to consumers, which may impact our consumer demand.

 

The outbreak of COVID-19 has adversely affected our business. The extent to which COVID-19 will continue to impact our results is subject to future developments, which are highly uncertain and cannot be predicted. Even before the outbreak of COVID-19, the global macroeconomic environment was facing numerous challenges. Chinese economy’s growth rate has been slowing down. Even before, central banks and financial authorities of some of the world’s major economies, including the United States and China, had adopted expansionary monetary and fiscal policies, the long-term effects of which have considerable uncertainties. Unrest, terrorist threats, the Russian invasion of Ukraine, the potential war in the Middle East and potential war elsewhere may increase market volatility across the globe. There have also been concerns about the relationship between China and other countries, including but not limited to the surrounding Asian countries, which may potentially have an economic impact. In particular, there is great uncertainty about the future relationship between the United States and China related to trade policies, treaties, government regulations and tariffs. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition.

 

In addition, a lot of the above-mentioned factors also have an impact on things like commodity prices, transportation costs, interest rates, costs of labor, insurance and healthcare, lease costs, policies that create barriers to or increase the costs associated with international trade, changes in other laws and regulations and other economic factors. These things could all have an effect on our cost of sales, our selling and distribution expenses, and general and administrative expenses, which could have a significant adverse effect on our business, financial condition and results of operations.

 

We may not be able to effectively and accurately inspect, grade and price pre-owned goods, in particular, consumer electronic devices.

 

We inspect, grade and price pre-owned consumer electronic devices we source from our supplier network before selling them to wholesalers or retailers. As there are no uniform or established standards or practices for inspecting, grading and pricing pre-owned consumer electronic devices, we have developed our own inspection procedures, grading system and pricing mechanism over years of our business operations. We cannot assure you that our business practices represent the best practice in the pre-owned consumer electronic devices industry or that they will yield maximum commercial benefits. We may not be able to identify all potential defects of pre-owned consumer electronic devices and grade them accurately. Even if we are able to do so, we cannot guarantee you that the prices we assign to those pre-owned consumer electronic devices reflect the actual or fair value of those pre-owned consumer electronic devices. If consumers believe that the prices determined or suggested by us do not reflect the fair value or their deemed value of the pre-owned consumer electronic devices, they may choose other providers or merchants over us, which in turn would result in our losing of customer base and a decline in sales revenue, either of which could significantly and adversely affect our business, financial condition and results of operations.

 

 

The price margin between our collection and resale of pre-owned consumer electronic devices may fluctuate or decline in the future. Any material decrease in such price margin would harm our business, financial condition and results of operations.

 

We generate revenues primarily by earning the price differences between our collection and resale of pre-owned consumer electronic devices. Maintaining and growing our revenue depends on a number of factors, including:

 

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our ability to expand sources of supply for pre-owned consumer electronic devices;

 

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our ability to attract consumers and other participants in the pre-owned consumer electronic devices value chain;

 

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the average unit price of pre-owned consumer electronic devices sold by us, which may decrease as a result of, among other things, rolling-out of new generations of consumer electronic devices;

 

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our ability to deliver excellent services;

 

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our ability to maximize the price differences between the acquisition prices and resale prices;

 

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our ability to reach the end-consumers with the pre-owned consumer electronic devices sold by us; and

 

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fluctuation in other macro-economic changes.

 

Any failure to adequately and promptly address any of these risks and uncertainties would significantly and adversely affect our business and results of operations.

 

We may incur liability or become subject to claims or administrative penalties for stolen products sold by us or counterfeit, infringing, illegal or unauthorized products sold by us.

 

We purchase the used consumer electronic devices we sell from a variety of suppliers and distribution methods. We have taken steps to prevent potential violation of third parties’ intellectual property rights while sourcing and selling products, as well as to confirm the authenticity and authorization of used consumer electronic devices sold by us and we reject items we believe to be counterfeit. However, we cannot assure you that we are able to identify any and all unauthorized, counterfeit or illegal products, especially components and parts or accessories of the pre-owned consumer electronic devices, that infringe third parties’ intellectual property rights given the large number of pre-owned consumer electronic devices being inspected. As the sophistication of counterfeiters increases, it may be increasingly difficult to identify counterfeit pre-owned consumer electronic devices and their components, parts and accessories. In the event that counterfeit, unauthorized or infringing products are sold by us or infringing content is posted by us, we could face claims that may subject us to liabilities. If we fail to identify any infringing pre-owned consumer electronic devices including components and parts or accessories and such products are sold to purchasers, we risk facing infringement claims, which would also be bad for our reputation. Regardless of the truth of such accusations, we could have to spend a lot of money and time defending ourselves or settling them. We can be forced to pay significant damages if the lawsuit against us is found to be valid or stop marketing the relevant items. Potential liabilities we may be subject to under Hong Kong law if we negligently participated or assisted in infringement activities associated with counterfeit products include injunctions to cease infringing activities, rectification, compensation, administrative penalties and even criminal liability. Moreover, such third-party claims or administrative penalties could result in negative publicity and our reputation could be severely damaged.

 

In addition, stolen products were and may continue to be sold by us, which could also result in negative publicity, and thus damage our reputation. Pursuant to the Hong Kong laws, we would be subject to criminal liability if we knowingly engage in any sale of stolen pre-owned consumer electronic product that we sourced from other parties. We have been keeping records of the information of the pre-owned consumer electronic products sourced by us and have implemented an internal policy to report to the Hong Kong enforcement authorities when there are suspicious circumstances relating to the source of the purchased goods. However, third-party sellers’ actions are beyond our control and we cannot guarantee you that our online marketplaces will not be used as a channel by certain sellers to dispose of illegal products. Any of these events could have a material and adverse effect on our business, results of operations or financial condition.

 

 

Our business currently focuses on the devices of a certain brand, any disruption in the production or quality control may materially and adversely affect our business and results of operations.

 

For the fiscal years ended September 30, 2024 and 2023, approximately 98.9% and 99.5% of our revenues were derived from the sales of pre-owned Apple products, including iPhones, iPads, MacBooks, Apple Watches, etc. Such concentration exposes us to heightened risks relating to the Apple products. If Apple experiences disruptions in its production or supply chain, or major product quality problems, our business and results of operations will be adversely affected.

 

Our expansion into new product categories may expose us to new challenges and more risks.

 

Our business focused mostly on cellphones and tablets. For the fiscal years ended September 30, 2024 and 2023, CGTHK derived 81.1% and 89.1% of its revenue from the sale of cellphones and tablets respectively. Our business has grown recently to include additional pre-owned consumer devices, including laptops, and wireless Bluetooth earbuds. In the future, we might diversify our pre-owned product offerings to include unmanned aerial vehicles, gaming consoles, cameras, and lenses. Increased risks and difficulties come with diversifying into new product and service offerings. It might be more challenging for us to predict client demand and preferences due to our lack of knowledge with these items and services and our lack of pertinent customer data pertaining to these products and services.

 

We may also be unable to effectively inspect and control the quality of these pre-owned goods appropriately or we may misjudge customer demand on our new offerings. We may also face costly product liability claims, which would harm our brand and reputation as well as our financial performance. If competition in the new product and service categories intensifies, we may have to price aggressively and invest heavily to gain market share or remain competitive, which may adversely affect our profitability. As a result of various uncertainties and risks, it may be difficult for us to achieve profitability in the new product and service categories and our profit margin in these categories, if any, may be lower than we anticipate, which would adversely affect our overall profitability and results of operations. We are unable to guarantee that our investments in launching these new product categories will be able to pay for itself.

 

If we are unable to establish our store network successfully, our business or results of operations would be adversely affected.

 

We plan to open offline retail stores as part of our expansion strategy. However, we may not be able to set up our store network as planned. To set up a store network will require substantial investments and commitment of resources. The number and timing of the stores actually opened during any given period depend on a number of risks and uncertainties, including but not limited to our ability to:

 

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identify locations with large customer traffic and commercial potential;

 

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obtain leases on commercially reasonable terms;

 

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efficiently manage our time and cost in relation to the design, decoration and pre-opening processes for stores;

 

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successfully operate our stores, including offering excellent customer experience;

 

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maintain a positive image of our stores;

 

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obtain adequate funding covering development and expansion costs;

 

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obtain the required licenses, permits and approvals; and

 

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recruit and retain talents with sufficient experience in the pre-owned consumer electronic devices industry.

 

Any factors listed above, either individually or in aggregate, might delay or ruin our plan to increase the number of stores in desirable locations at manageable cost levels.

 

 

The successful operations of our business depend on our ability to maintain and attract more consumers to our online website.

 

Consumers play an important role in the successful operations of our business. As a result, attracting and maintaining our relationship with consumers to our online website or future brick-and-mortar stores are critical to our business and results of operations. However, we may not be able to do so due to a number of factors, some of which are beyond our control. For example, we may not be able to attract or maintain our existing customer base, which could result in a decline in the transaction volumes and thus negatively affect our business and results of operations.

 

Privacy concerns relating to pre-owned consumer electronic devices and the collection, storage and mishandling of personal information could incur claims brought by owners of pre-owned consumer electronic devices, damage our reputation, impede our business growth and thus negatively impact our business.

 

Even if unfounded, worries about the security of personal information or other sensitive data stored in previously owned consumer electronic devices or a general lack of trust in that security could discourage current and potential customers from using our services, harm our reputation, drive away customers, and negatively impact our operating results. In order to offer better services, we also collect, store, and use personal information associated with pre-owned electronics from our customers, suppliers to provide better services. Despite our best efforts, we may not always be in compliance with all applicable data protection laws and regulations, our own privacy policies, and other duties we may have with regard to privacy and data protection, and in some cases the failure of compliance has led to customer complaints, and may also lead to inquiries, other proceedings, or actions against us by government agencies or others, as well as unfavorable publicity, damage to our reputation, and loss of our brand. Each of these things could lead to us losing users, customers, and have a negative impact on our business. Additionally, any system failure or security breach that permits unauthorized access to or disclosure of our customers’ data may severely restrict the use of our products and services, damage our reputation and brand, and, ultimately, hurt our business. To prevent the leakage of customer information and other security breaches, we strictly restrict third parties’ access to customer privacy data. However, given its high commercial worth, customer data may still be compromised and utilized inappropriately by outside parties, putting us at risk for legal and regulatory issues and seriously jeopardizing our company. Nonetheless, given its great commercial value, customer data may still be hacked and misused by third parties, which could expose us to legal and regulatory risks and seriously harm our business.

 

If we fail to adopt new technologies or adapt our websites to changing user or customer requirements or emerging industry standards, or if our efforts to invest in the development of new technologies are unsuccessful or ineffective, our business may be materially and adversely affected.

 

We must keep enhancing and improving the responsiveness, functionality, and features of our websites and company operation platforms in order to stay competitive. Rapid technological change, shifting user or customer needs and preferences, regular introductions of new goods and services incorporating new technologies, and the emergence of new industry standards and practices are all characteristics of the industries we work in and any one of them could make our current systems and technologies obsolete. Our success will depend, in part, on our ability to identify, develop, acquire or license leading technologies useful in our business, and respond to technological advances and emerging industry standards and practices, such as mobile internet, in a cost-effective and timely way. There are considerable technical and commercial risks associated with the creation of websites and other proprietary technology. We are unable to guarantee that we will be successful in creating or using new technologies, that we will be able to recoup the costs associated with creating new technologies, or that we will be able to upgrade our websites, proprietary technologies, and systems to meet user or customer requirements or emerging industry standards. Our business, prospects, financial condition, and operational results could be significantly and negatively impacted if we are unable to successfully develop technologies or adapt in a timely and cost-effective manner in response to changing market conditions or customer requirements.

 

 

We may not be able to sustain our historical growth rates in the future.

 

Since we began operating in 2016, we have seen rapid growth. However, we cannot guarantee that we will be able to continue our past growth rates in the future. Our revenue growth may slow, or our revenues may decline for any number of possible reasons, such as decreased consumer spending, increased competition, slowdown in the growth or contraction of the pre-owned consumer electronic devices industry in Hong Kong and Southeast Asia, emergence of alternative business models, changes in government policies or general economic conditions, and natural disasters or virus outbreaks. If our growth rate slows, investors’ opinions of our company and its future prospects could be negatively impacted, which could lead to a drop in the market value of CGT Holdings’ Ordinary Shares.

 

If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected.

 

Although CGTHK usually places orders with the suppliers only after its wholesale clients confirm the purchase, and CGTHK has been able to keep a lean inventory. However, clients may from time to time cancel such orders, resulting in backlog inventory and increase inventory management costs. Additionally, CGTHK may increase its inventory because of the plan to expand the retail business. Demand for pre-owned consumer electronic devices can change significantly between the time inventory is ordered and the date by which they are sold. Demand may be affected by seasonality, new product launches, changes in product cycles and pricing, product defects, and changes in consumer spending patterns, among other factors, and consumers may not order pre-owned consumer electronic devices in the quantities that we expect. Each of the preceding factors may result in CGTHK’s increase costs in inventory management.

 

Our net inventories were approximately US$3.8 million as of September 30, 2024, and approximately US$5.6 million as of September 30, 2023. As we plan to continue expanding our product offerings, we expect to include more types of pre-owned consumer electronic devices in our inventory, which will make it more challenging for us to manage our inventory effectively and will put more pressure on our warehousing system.

 

If we don’t successfully manage our inventory, we will run a higher risk of obsolescence, declining inventory value, and substantial inventory write-downs or write-offs. In order to minimize our inventory level, we might also have to lower our sale prices, which could result in a decline in operating revenue. High inventory levels could also force us to invest a significant amount of capital, prohibiting us from utilizing that capital for other crucial goals. Any of the aforementioned factors could have a significant negative impact on our financial situation and operational results.

 

On the other hand, if we underestimate demand for certain pre-owned consumer electronic devices, or if we are unable to obtain sufficient amount of pre-owned consumer electronic devices in a timely manner, we may experience inventory shortages, which might result in missed sales, diminished brand loyalty and lost revenues, any of which could harm our business and reputation.

 

Though we have not experienced an incident or disruption of the supply chain of pre-owned consumer electronic devices, we cannot assure you there will be no incident or disruption of the supply chain of the pre-owned consumer electronic devices in the future. If such an incident or disruption of the supply chain of pre-owned consumer electronic devices occurs in the future, the lean inventory structure will subject us to difficulties in delivering specific types of pre-owned consumer devices already ordered by our customers. Though we usually do not have liquidated damage provisions in the orders or contracts entered into by and between our customers and us, the impact caused by the supply chain disruption will lead to a decrease of our sales and revenues and thus negatively affect our business and results of operations.

 

 

Disruptions of our information technology system could harm our business and reduce our profitability.

 

CGTHK replies on its information technology systems, for its daily operations including sourcing, inventory management, sales, and accounting and financial management. Especially with our planned expansion into online retail sales and auction systems, the proper functioning of our information technology systems is instrumental to our future growth. Any disruption caused by failures in our information technology infrastructure equipment or communication networks could delay or otherwise adversely affect our business process, relationship with our customers, and results of operations.

 

Data security breaches and attempts thereof could negatively affect our reputation, credibility, and business.

 

We collect certain personal information for online retail sales, and may engage third parties for the various social media tools and websites as part of our sales and marketing strategy. Customers are increasingly concerned over the security of personal information transmitted over the Internet (or through other mechanisms), consumer identity theft, and user privacy. If we or any of the third-parties engaged by us experience any perceived, attempted, or actual unauthorized disclosure of personally identifiable information, our reputation and credibility could be materially adversely affected, resulting in reduction of our sales, our ability to attract website visitors, our ability to attract and retain customers, and litigation against us or the imposition of significant fines or penalties. We cannot assure you that any of our third-party service providers with access to such personally identifiable information will maintain policies and practices regarding data privacy and security in compliance with all applicable laws, or that they will not experience data security breaches or attempts thereof which could have a corresponding adverse effect on our business.

 

Recently, data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting new foreign, national, provincial or state, and local laws and legislative proposals addressing data privacy and security, as well as increased data protection obligations imposed on merchants by credit card issuers. As a result, we may become subject to more extensive requirements to protect the customer information that they process in connection with the purchase of their products, resulting in increased compliance costs.

 

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 apply to transfers of information within our organization. These laws and regulations may restrict our business activities and require us to incur increased costs and efforts to comply, and any breach or noncompliance 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 condition, and results of operations.

 

In some jurisdictions, including the mainland of China where we do not have material operations, cybersecurity, data privacy, data protection, or other data-related laws and regulations are relatively new and evolving, and their interpretation and application may be uncertain.

 

 

The following summarizes some of the key recent legislative initiatives in China on matters of data security and privacy.

 

Data Security

 

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In June 2021, the Standing Committee of the National People’s Congress (the “NPC”) promulgated the Data Security Law, which took effect in September 2021. The Data Security Law, among other things, provides for security review procedures for data-related activities that may affect national security. In July 2021, the state council promulgated the Regulations on Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Critical information infrastructure encompasses, under this regulation, key network facilities or information systems of critical industries or sectors, such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, the damage, malfunction or data leakage of which may endanger national security, people’s livelihoods and the public interest. In December 2021, the Cyberspace Administration of China (“the CAC”), together with other authorities, jointly promulgated the Cybersecurity Review Measures (“CRM”), which became effective on February 15, 2022 and replaces its predecessor regulation. Pursuant to the CRM, critical information infrastructure operators that procure internet products and services must be subject to the cybersecurity review if their activities affect or may affect national security. The CRM further stipulates that critical information infrastructure operators or network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. As of the date of this prospectus, no detailed rules or implementation rules have been issued by any authority. Furthermore, the exact scope of “critical information infrastructure operators” under the current regulatory regime remains unclear, and the PRC government authorities may have wide discretion in the interpretation and enforcement of the applicable laws. As of the date of this prospectus, we have not been informed that we are a critical information infrastructure operator by any government authorities and we do not have any material operation or maintain any office or personnel in the mainland of China. We have not collected, stored, or managed any personal information in the mainland of China. In addition, we plan to emphasize Southeast Asia as our core future area of growth. As such, we currently do not expect the foregoing measures will have an impact on our business, results of operations, or this Resale Offering, and we believe that we are compliant with these measures to date. However, we still face uncertainties regarding the interpretation and implementation of these laws and regulations in the future. Cybersecurity review could result in disruption in our operations, negative publicity with respect to our company, and diversion of our managerial and financial resources. Furthermore, if we were found to be in violation of applicable laws and regulations in China during such review, we could be subject to fines or other government sanctions and reputation damages. Therefore, potential cybersecurity review, if applicable to us, could materially and adversely affect our business, financial condition, and results of operations.

 

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In November 2021, the CAC released the Regulations on the Network Data Security (Draft for Comments), or the Draft Regulations. The Draft Regulations provide that data processors refer to individuals or organizations that, during their data processing activities such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the manner of data processing. In accordance with the Draft Regulations, data processors shall apply for a cybersecurity review for certain activities, including, among other things, (i) the listing abroad of data processors that process the personal information of more than one million users and (ii) any data processing activity that affects or may affect national security. However, there have been no clarifications from the relevant authorities as of the date of this prospectus as to the standards for determining whether an activity is one that “affects or may affect national security.” In addition, the Draft Regulations stipulates that data processors that process “important data” or are listed overseas must conduct an annual data security assessment by itself or commission a data security service provider to do so, and submit the assessment report of a given year to the municipal cybersecurity department by the end of January in the following year. The enacted version of the Regulations on the Network Data Security was promulgated in September 2024 and came into force as from January 1, 2025. The enacted version required that if a network data processor carries out network data processing activities that affects or may affect national security, it shall conduct a national security review in accordance with relevant state regulations, and emphasized special protection of important data. Important data refers to data in a specific field, a specific group, a specific region, or of a certain precision and scale, which, once tampered with, damaged, leaked, or illegally accessed or illegally utilized, may directly jeopardize national security, economic operation, social stability, public health and safety.

 

 

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On December 28, 2021, 13 governmental departments of the PRC, including CAC issued the CRM, which became effective on February 15, 2022. The CRM provides that an online platform operator, which possesses personal information of at least one million users, must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. Because the current operations of CGTHK do not possess personal information from more than one million users, we do not believe that we are subject to the cybersecurity review by the CAC. In addition, as of the date of this prospectus, we have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have we received any inquiry, notice, or sanction related to cybersecurity review under the CRM. However, we cannot assure you that we will be able to comply or remain compliant with such new regulations in all respects, and we may be ordered to rectify and terminate any actions that are deemed illegal by the government authorities and become subject to fines and other government sanctions, which may materially and adversely affect our business, financial condition, and results of operations.

 

Personal Information and Privacy

 

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The Anti-monopoly Guidelines for the Platform Economy Sector published by the Anti-monopoly Committee of the State Council, effective on February 7, 2021, prohibits collection of user information through coercive means by online platforms operators.

 

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In August 2021, the Standing Committee of the NPC promulgated the Personal Information Protection Law (the “PIPL”), which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. The PIPL steps up the protection for personal information and imposes additional requirements in terms of its processing. Nonetheless, many provisions under this law remain to be clarified by the CAC, other regulatory authorities, and courts in practice. We may be required to make further adjustments to our business practices to comply with the personal information protection laws and regulations. Although as of the date of this prospectus, we have not collected, stored, or managed any personal information in the mainland of China, given that there remain uncertainties regarding the further interpretation and implementation of the relevant laws and regulations, if they are deemed to be applicable to companies operating in Hong Kong like us, we cannot assure you that we will be able to comply or remain compliant with such new regulations in all respects, and we may be ordered to rectify and terminate any actions that are deemed illegal by the government authorities and become subject to fines and other government sanctions, which may materially and adversely affect our business, financial condition, and results of operations.

 

 

Personal Data and Privacy Law in Hong Kong

 

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The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (the “PDPO”) provides the principles that a person who, either alone or jointly with other persons, controls the collection, holding, processing or use of personal data (a “Data User”) must follow in any acts concerning information, existing in a form which access to or processing of is practicable, which relates to a living individual and can be used to identify that individual (the “Personal Data”). Contravention with the PDPO may entitle the Privacy Commissioner for Personal Data to issue a written enforcement notice directing such Data User to remedy and prevent recurrence of contravention. Contravention with the above enforcement notice issued by the Privacy Commissioner for Personal Data is an offence and the offender is liable to a maximum fine of HK$50,000 and imprisonment for 2 years, with a daily penalty of HK$1,000. Subsequent convictions can result in a maximum fine of HK$100,000 and imprisonment for 2 years, with a daily penalty of HK$2,000. However, if a Data User has taken all the necessary measures to prevent a data leakage, then such Data User will not be liable for such punishments.

 

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For all pre-owned consumer electronic devices collected by us, we use proprietary data erasing software to sanitize sensitive information, ensure data security and avoid data leakage. We collect data that are related to our business, all with consent from owners of such information. We are committed to protecting the privacy and security of such data, and have established and implemented policy on data collection, processing and usage. To ensure the confidentiality and integrity of our data, we have established internal protocols under which we grant classified access to confidential personal data only to limited employees with defined and layered access authority. We back up our data on a regular basis in multiple secured data storage systems to minimize the risk of data loss, and have engaged external IT consultants to protect our systems from unauthorized access and malicious attacks, and safeguard the integrity and security of our user data. As such, the Company considers that it is in full compliance with the PDPO of Hong Kong.

 

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Concerns about mishandling personal information or other private and sensitive information stored in pre-owned consumer electronics, even if unfounded, or a general lack of confidence in the security of privacy in connection with pre-owned consumer electronics could deter current and potential consumers from using our services, damage our reputation, cause us to lose consumers or third-party merchants and adversely affect our operating results. In addition, we collect, store and use personal information of our consumers to provide better services. While we strive to comply with applicable data protection laws and regulations, as well as our own privacy policies and other obligations we may have with respect to privacy and data protection, failure or perceived failure to comply may result, and in some cases has resulted, in customer complaints, and may also result in inquiries and other proceedings or actions against us by government agencies or others, as well as negative publicity and damage to our reputation and brand, each of which could cause us to lose consumers, and have an adverse effect on our business. In addition, any systems failure or compromise of our security that results in the unauthorized access to or release of our customers’ data could significantly limit the adoption of our products and services, as well as harm our reputation and brand and, therefore, our business. We put in place authorization requirements to customer privacy data, and we expend resources on technology and our daily operations to protect against leakage of customer information and other security breaches. Nonetheless, given its great commercial value, customer data may still be hacked and misused by third parties, which could expose us to legal and regulatory risks and seriously harm our business.

 

 

Any harm to our brands or reputation may materially and adversely affect our business and results of operations.

 

We believe that the recognition and reputation of our brands among consumers and suppliers have contributed significantly to the growth and success of our business. For our business and competitiveness, maintaining and enhancing the recognition and reputation of our brands is critical. Many factors, some of which are beyond our control, are important to maintaining and enhancing our brand. These factors include our ability to:

 

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provide a superior experience to consumers and suppliers, and enhance their trust in us;

 

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maintain the popularity, attractiveness, diversity and quality of the products and services we offer;

 

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maintain the reliability of our testing, grading, and pricing process;

 

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continue to offer competitive prices for pre-owned consumer electronic devices/goods;

 

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maintain or improve the satisfaction of consumers with our after-sales services;

 

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increase brand awareness through marketing and brand promotion activities; and

 

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preserve our reputation and goodwill in the event of any negative publicity, including those on customer service, customer and supplier relationships, product quality, or other issues affecting us or other pre-owned consumer electronic devices businesses.

 

Although we have not received communications or complaints alleging that pre-owned consumer electronic devices sold by us are counterfeit, defective, inconsistent with the information provided, or the services provided by us are unsatisfactory to our consumers in the past, we may receive such communications or complaints in the future. The information we provide to consumers is collected and maintained by us, which may not be accurate or complete due to human error, technological issues or willful misconduct. If we are unable to maintain our reputation, enhance our brand recognition or increase positive awareness of our products or services, our business, growth prospects, financial condition and results of the operations could be materially and adversely affected.

 

Additionally, negative news or media coverage of our business, our employees, our third-party service providers and business partners, our suppliers, our directors and management or our shareholders, including, without limitation, alleged failure to comply with applicable laws and regulations, alleged misrepresentation by our sales consultants or third-party agents, breach of data security, failure to protect user privacy, inappropriate business practices, disclosure of inaccurate operating data, negative information on blogs and social media websites, regardless of their validity, could damage our reputation. Customer faith in us may be eroded if we don’t address inaccurate or damaging information about us, including information distributed through social media or traditional media channels. This would have a materially negative impact on our business, results of operations, and financial condition.

 

 

If we fail to compete effectively, we may not be able to maintain or may lose market share and our business and results of operations would be materially and adversely affected.

 

The competition in the pre-owned consumer electronic devices industry is intense. We compete for consumers, orders, and pre-owned consumer electronic devices suppliers. Our competitors may have significantly more resources than we do, including financial, technological, marketing resources, and may be able to devote greater resources to the development and promotion of their platforms and services. They may also have stronger relationships with consumer electronic devices suppliers, online marketplaces selling consumer electronic devices and other third-party service providers than we do. This could allow them to develop new services, adapt more quickly to changes in technology and to undertake more extensive marketing campaigns, which may render us less attractive to consumers and businesses and cause us to lose market share. Those smaller companies or new entrants may be acquired by, receive investment from or enter into strategic relationships with well-established and well-financed companies or investors which would help enhance their competitive positions. Moreover, intense competition in the markets we operate in may result in a decline in our profit margin and revenue, increase our operating expenses and capital expenditures, and lead to departures of our qualified employees. Additionally, the pre-owned consumer electronic devices industry may see increased competition as a result of new and enhanced technologies. Our business and reputation may suffer as a result of the unfair competition we have experienced and could experience in the future from our competitors. Our business, financial situation, and operational outcomes could be seriously harmed if we don’t compete with our current and potential competitors.

 

Failure to effectively deal with any misappropriation of our business opportunities, fictitious transactions or other fraudulent conduct would materially and adversely affect our business, financial condition and results of operations.

 

We may face risks with respect to fraudulent activities by our employees. Moreover, illegal, fraudulent or collusive activities by our employees, such as fraud, bribery or corruption, could also subject us to liability or negative publicity or cause losses. Although we have internal controls and policies with regard to the review and approval of sales activities and other relevant matters, our employees’ actions are beyond our control. Our internal control procedures and rules do not guarantee that our employees will not commit fraud or other wrong doings. Negative publicity and user sentiment generated as a result of actual or alleged fraudulent or deceptive conduct by our employees could also severely diminish consumer confidence in us, reduce our ability to attract new or retain current consumers, damage our reputation and diminish the value of our brand names, and materially and adversely affect our business, financial condition and results of operations.

 

We rely on third-party payment service providers to conduct payment processing in the retail transactions we conduct. If those services are limited, restricted, curtailed or degraded in any way or become unavailable to us or our users for any reason, our business may be materially and adversely affected.

 

Our retail customers make payments through a variety of methods, including payment on our website by credit cards processed by our third-party online payment service partner, Payment Asia. These services are critical to our retail business. We rely on the convenience and ease of use that these service providers provide to our customers. The attractiveness of our product offerings could be materially and adversely affected if the quality, utility, convenience, or attractiveness of these service providers’ offerings declines for any reason.

 

 

Business involving online payment services is subject to a number of risks that could materially and adversely affect third-party online payment service providers’ ability to provide payment processing and escrow services to us, including:

 

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dissatisfaction with these online payment services or decreased use of their services by customers;

 

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increasing competition, including from other established Hong Kong internet companies, payment service providers and companies engaged in other financial technology services;

 

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changes to rules or practices applicable to payment systems that link to third-party online payment service providers;

 

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breach of users’ personal information and concerns over the use and security of information collected from buyers;

 

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service outages, system failures or failures to effectively scale the system to handle large and growing transaction volumes;

 

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increasing costs to third-party online payment service providers, including fees charged by banks to process transactions through online payment channels, which would also increase our costs of revenues; and

 

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failure to manage funds accurately or loss of funds, whether due to employee fraud, security breaches, technical errors or otherwise.

 

In addition, certain commercial banks in Hong Kong impose limits on the amounts that may be transferred by automated payment from customers’ bank accounts to their linked accounts with third-party payment services. Although we believe the impact of these restrictions has not been and will not be significant in terms of the overall volume of payments processed by us, and automated payment services linked to bank accounts represent only one of many payment mechanisms that consumers may use to settle transactions, we cannot predict whether these and any additional restrictions that could be put in place would have a material adverse effect on our transactions.

 

In addition, we cannot assure you that we will be successful to enter into and maintain amicable relationships with online payment service providers. Identifying, negotiating and maintaining relationships with these providers require significant time and resources. They could choose to terminate their relationships with us or propose terms that we cannot accept. In addition, these service providers may not perform as expected under our agreements with them, and we may have disagreements or disputes with such payment service providers, any of which could adversely affect our brand and reputation as well as our business operations.

 

We are subject to certain risks relating to third-party logistics services and our storage space.

 

We rely on third-party logistics service providers to deliver pre-owned consumer electronic devices to our storage space and from our storage space to buyers. Since the products being shipped generally are high-value goods, reliable services from third-party logistics service providers are of great importance to us. The efficient operation of our business also depends on the timely delivery of pre-owned consumer electronic devices. However, third-party service providers may not be able to consistently provide timely and proper delivery of pre-owned consumer electronic devices. Although we did not experience product damage and product loss incidences and had disputes with certain logistics service providers, we may experience such incidents or disputes in the future. In addition, logistics services could also be suspended and thereby interrupt the supply of pre-owned consumer electronic devices if unforeseen events that are beyond our control occur, such as inclement weather, natural disasters, health epidemics, transportation disruptions or labor unrest. For example, the shipment and delivery of pre-owned consumer electronic devices were negatively affected by COVID-19. Additionally, the delivery of pre-owned consumer electronic devices may be considerably and unfavorably impacted if our third-party logistics service providers violate Hong Kong’s applicable laws and regulations. It’s possible that we will not be able to locate trustworthy substitute third-party logistics firms to offer delivery services on time or at all. The merger, acquisition, bankruptcy, or closure of the delivery companies we hire to make deliveries, especially those local businesses with relatively small business scales, could also impair or interrupt delivery of pre-owned consumer electronic devices. If pre-owned consumer electronic devices are not delivered in proper conditions or on a timely basis, buyers may refuse to accept products purchased from us and lose confidence in us, and our business and reputation could suffer. Furthermore, delivery personnel of contracted third-party logistics service providers act on our behalf and directly interact with consumers. We need to effectively manage these third-party logistics service providers to ensure the quality of customer services. We may receive user complaints from time to time regarding our delivery and return and exchange services. Any failure to provide high-quality delivery services to consumers or third-party merchants may negatively impact their experience with us, damage our reputation and business operations.

 

 

As of September 30, 2024, we had one location used as storage space in Hong Kong. Before being sold to customers, the vast majority of the pre-owned consumer electronic devices we sell are first sent to our storage space for inspection, grading, and pricing. Our ability to provide services like inspection, grading, and pricing services could be materially and adversely affected, and the shipment of pre-owned consumer electronic devices could be delayed, if any business interruptions or accidents, such as health pandemics and fires, were to occur and harm pre-owned consumer electronic devices or our storage space. We cannot assure you that operation interruptions or service suspensions would not occur in the future. Any interruption or suspension of operation could have a material adverse effect on our market reputation, business, financial condition and results of operations.

 

Our product delivery, return, exchange and warranty policies may materially and adversely affect our results of operations.

 

We have shipping policies that do not necessarily pass the full cost of shipping on to consumers. We also have customer-friendly return and exchange policies that make it convenient and easy for consumers to change their minds after completing purchases. We may also be required by law to adopt new or amend existing return and exchange or warranty policies from time to time. These policies improve customers’ experience with us and promote customer loyalty, both of which aid in client acquisition and retention. However, these policies also subject us to additional costs and expenses which we may not recoup through increased revenue. Our ability to handle a large volume of returns is unproven. Our costs may increase significantly and our results of operations may be materially and adversely affected, if our return and exchange policy is misused by a significant number of consumers. If we revise these policies to reduce our costs and expenses, consumers may be dissatisfied, which may result in loss of existing consumers or failure to acquire new consumers at a desirable pace, which may materially and adversely affect our results of operations. In addition, any negative publicity related to the quality of pre-owned consumer electronic devices sold by us, with or without merits, could damage our brand image, decrease customer demand, and thus materially and adversely affect our business, operating results and financial condition.

 

We may be subject to product liability claims.

 

The pre-owned consumer electronic devices sold by us may be defective. As a result, sales of such products could expose us to product liability claims relating to personal injury or property damage and may require product recalls or other actions. Third parties subject to such injury or damage may bring claims or legal proceedings against us as the seller of the product. Although CGTHK would have legal recourse against the manufacturer of such products under Hong Kong law, attempting to enforce our rights against the manufacturer may be expensive, time-consuming and ultimately futile. In addition, we do not currently maintain any third-party liability insurance or product liability insurance in relation to products we sell. As a result, any material product liability claim or litigation could have a material and adverse effect on our business, financial condition and results of operations. Even unsuccessful claims could result in the expenditure of funds and managerial efforts in defending them and could have a negative impact on our reputation.

 

Our business, results of operations and reputation could be negatively affected by services provided by third-party cloud service providers.

 

We use third-party cloud service providers to provide us with cloud services to support our business operations. With the expansion of our business, we may be required to upgrade our technology and infrastructure or those of cloud service providers to keep up with the increasing traffic to our store or website. If the services provided are unable to meet our demand, or are disrupted, restricted, curtailed or degraded in any way or become unavailable to us, our business may be materially and adversely affected. In addition, we cannot assure you that we will be able to maintain amicable relationships with our cloud service providers. Our cloud service providers could choose to terminate their relationships with us or propose terms that we cannot accept. If we have to engage other cloud service providers and have to migrate our business operation data to new service providers, we cannot guarantee a smooth transition. We may suffer from unexpected incidents in the transition such as data loss, service interruptions, or loss of certain functionalities. As a result, we may need to spend more money in order to reduce the potentially significant losses brought on by these incidents. Most significantly, these unanticipated events could result in business interruptions, which would have a negative impact on our operations and could materially and adversely affect our results of operations. Besides, we have no control over the costs of the services provided by cloud service providers. If the prices we pay for those services rise significantly, our results of operations may be materially and adversely affected.

 

 

Our results of operations may be subject to seasonal fluctuations.

 

We experience a moderate level of seasonality in our business primarily as a result of new product launches by consumer electronic devices manufacturers and promotional campaigns by e-commerce platforms in Hong Kong. In addition, new product launches by major cell phone brands such as Apple each year also boost our customer traffic and purchase orders. All of these activities can affect our results for those quarters. Overall, the historical seasonality of our business has been relatively mild since we are in cooperation with multiple consumer electronic devices manufacturers which historically had product launches generally throughout a year. Our financial condition and results of operations for future periods may continue to fluctuate. As a result, the trading price of CGT Holdings’ Ordinary Shares may fluctuate from time to time due to seasonality.

 

If we expand our operations outside Hong Kong, we will be subject to a variety of costs and legal, regulatory, political and economic risks.

 

International expansion is a significant component of our growth strategy and may require significant capital investment, which could strain our resources and adversely impact current performance, while adding complexity to our current operations. Our overseas operations are subject to the laws of the countries in which we operate. We could face sanctions or other penalties if any of our overseas operations, associates, or agents violate these laws, which could harm our reputation, our business, and our operational performance.

 

In addition, we may face operational issues that could have a material adverse effect on our reputation, business and results of operations. These issues include, without limitation:

 

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difficulties in developing, staffing and simultaneously managing a foreign operation as a result of distance, language and cultural differences;

 

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challenges in formulating effective local sales and marketing strategies targeting users from various jurisdictions and cultures, who have a diverse range of preferences and demands;

 

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challenges in identifying appropriate local business partners and establishing and maintaining good working relationships with them;

 

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dependence on local platforms in marketing our products and services overseas;

 

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challenges in selecting suitable geographical regions for international business;

 

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longer customer payment cycles;

 

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currency exchange rate fluctuations;

 

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political or social unrest or economic instability;

 

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protectionist or national security policies that restrict our ability to invest in or acquire companies; develop, import or export certain technologies, such as the national AI initiative proposed by the United States government; or utilize technologies that are deemed by local governmental regulators to pose a threat to their national security;

 

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compliance with applicable foreign laws and regulations and unexpected changes in laws or regulations, including compliance with privacy laws and data security laws, including the European Union General Data Protection Regulation, or GDPR, and compliance costs across different legal systems;

 

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differing, complex and potentially adverse customs, import/export laws, tax rules and regulations or other trade barriers or restrictions which may be applicable to transactions conducted through our international and cross-border platform, related compliance obligations and consequences of non-compliance, and any new developments in these areas; and

 

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increased costs associated with doing business in foreign jurisdictions.

 

One or more of these factors could harm our overseas operations and consequently, could harm our overall results of operations.

 

 

Our international operations require us to comply with trade restrictions, such as economic sanctions and export controls.

 

Our international operations require us to comply with trade restrictions, including export controls and economic sanctions, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the U.N. Security Council and other relevant authorities. Our international trade operations may expose us to violations, or being accused of violations of such laws and regulations. We do not believe our business is subject to controls or licensing requirements because our business covers consumer electronic devices, goods classified as EAR 99 for the purposes of exporting by the U.S. Department of Commerce (the “DOC”). However, dependent upon changes enforced in export regulations, in the future, we could be controlled, similar to other self-defense device manufacturers, as a “crime control” product by the DOC, for export directly from the United States. Our inability to obtain DOC export licenses, if required, for sales of our device to international customers could significantly and adversely affect our business. In addition, despite our compliance efforts and activities, we cannot assure that such efforts and activities are effective nor the compliance by our employees or representatives for which we may be held responsible. Our failure to comply with such laws and regulations may expose us to harms in reputation and material penalties, including civil fines, criminal fines, imprisonment, disgorgement of profits, injunctions, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive. Any such violation could materially adversely affect our reputation, business, financial condition and results of operations.

 

If we are unable to conduct our marketing activities cost-effectively, our results of operations and financial condition in retail business may be materially and adversely affected.

 

We have incurred and will incur material expenses on online marketing to expand our retail customer base, increase our transaction volume and enhance our brand recognition. Marketing approaches and tools in the pre-owned consumer electronic devices market in Hong Kong are evolving. This further requires us to enhance our marketing approaches and experiment with new marketing methods to keep pace with industry developments and customer preferences. Failure to refine our existing marketing approaches or to introduce new marketing approaches in a cost-effective manner could reduce our market share, cause our net revenues to decline and negatively impact our profitability.

 

Our success depends on the continuing and collaborative efforts of our management team, and our business may be severely disrupted if we lose their services.

 

Our success heavily depends upon the continued services of our management. In particular, we rely on the expertise and experience of Mr. Shangzhao (Cizar) Hong, the chairman and chief executive officer of CGT Holdings, and other executive officers. If one or more of our senior management were unable or unwilling to continue in their present positions, we might not be able to replace them easily or at all, and our business, financial condition and results of operations may be materially and adversely affected. If any of our senior management joins a competitor or forms a competing business, we may lose consumers, suppliers, know-how and key professionals and staff members. Our senior management has entered into employment agreements and confidentiality and non-competition agreements with us. However, if any dispute arises between our officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in Hong Kong or we may be unable to enforce them at all. In addition, we do not have key-man insurance for any of our executive officers or other key personnel. Events or activities attributed to our executive officers or other key personnel, and related publicity, whether or not justified, may affect their ability or willingness to continue to serve our company or dedicate their full time and efforts to our company and negatively affect our brand and reputation, resulting in an adverse effect on our business, operating results and financial condition.

 

 

If we are unable to recruit, train and retain qualified personnel or sufficient workforce while controlling our labor costs, our business may be materially and adversely affected.

 

To support our business operations and planned expansion, we intend to hire additional qualified employees. Our future success depends, to a significant extent, on our ability to recruit, train and retain qualified personnel, particularly technical, marketing and other operational personnel with experience in the pre-owned consumer electronic devices industry. Our experienced mid-level managers play a crucial role in putting our company strategy and plans into action as well as supporting our operations and expansion. The effective operation of our managerial and operating systems, storage space, customer service center and other back office functions also depends on the hard work and quality performance of our management and employees. Since our industry is characterized by high demand and intense competition for talent and labor, we can provide no assurance that we will be able to attract or retain qualified staff or other highly skilled employees that we will need to achieve our strategic objectives. Labor costs in Hong Kong have increased with Hong Kong’s economic development. We might not be able to offer steady and committed operational staff and other labor support enough incentives if our remuneration plan is not competitive in the market. Any failure to address these risks and uncertainties could materially and adversely affect our results of operations and financial performance. In addition, our ability to train and integrate new employees into our operations may also be limited and may not meet the demand for our business growth on a timely fashion, or at all, and rapid expansion may impair our ability to maintain our corporate culture.

 

Failure to obtain certain filings, approvals, licenses, permits and certificates required for our business operations may materially and adversely affect our business, financial condition and results of operations.

 

In accordance with the relevant Hong Kong laws and regulations, we are required to maintain various approvals, licenses, permits and filings to operate our business, including but not limited to business license and radio dealers license. The obtaining of these approvals, licenses, permits and filings are subject to satisfactory compliance with, among other things, licensing conditions and the applicable laws and regulations. Such licenses are valid for specified periods and subject to renewals on expiry. Although we currently possess the required licenses and are not aware of any legal impediment to renew the licenses, any failure to renew such licenses may materially and adversely affect our business, financial condition and results of operations.

 

Our leased property interest may be defective and such defects may negatively affect CGTHK’s right to such leases.

 

Title defects of leased properties may subject CGTHK to challenges by third parties, such that CGTHK’s leases may be deemed invalid or unenforceable and CGTHK may be forced to vacate from these leased properties. As a tenant, CGTHK is not liable for the title defects but our use of these properties may be affected upon third parties’ claims or challenges against the lease. If CGTHK is forced to move out and vacate from the leased properties, CGTHK may have to temporarily close the offices and incur additional costs in relocating its offices to another suitable locations, adversely affecting its business operations and financial condition.

 

Any breaches to our security measures, including unauthorized access, computer viruses and “hacking” may adversely affect our database and reduce use of our services and damage our reputation and brand names.

 

We process and store data during our ordinary course of business, which makes us or third-party service providers who host our servers targets and potentially vulnerable to cyber-attacks, computer viruses, physical or electronic break-ins, or similar disruptions. Inadvertent disclosure of sensitive or confidential information, disruptions in access to our website, and other significant negative effects on our operations may result from breaches to our security measures, including computer viruses and hacking. These breaches may occur during the transfer of data or at any time, and result in people gaining unauthorized access to our systems and data. Our systems may be subject to infiltration as a result of third-party action, employee error, malfeasance or otherwise. While we have taken steps to protect the confidential information that we have access to, techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any accidental or willful security breaches or other unauthorized access to our website could cause confidential customer and investor information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of any third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with customers and investors could be severely damaged, we could incur significant liability and our business and operations could be adversely affected.

 

 

The proper functioning of our technology platform is essential to our business. Any failure to maintain the satisfactory performance of our websites and systems could materially and adversely affect our business and reputation.

 

The satisfactory performance, reliability and availability of our technology platform are critical to our success and our ability to attract and retain consumers and provide quality customer service. Not only our online transactions require stable technology platform, the operations of offline transactions also rely on our proprietary business management systems and other technology systems. Any system interruptions caused by telecommunications failures, computer viruses, hacking or other attempts to harm our systems that result in the unavailability or slowdown of our websites or reduced order fulfillment performance could reduce the volume of products sold and the attractiveness of product offerings on our websites. Our servers may also be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to system interruptions, website slowdown or unavailability, delays or errors in transaction processing, loss of data or the inability to accept and fulfill customer orders. Security breaches, computer viruses and hacking attacks have become more prevalent in our industry. Because of our brand recognition in the pre-owned consumer electronic devices industry in Hong Kong, we believe we are a particularly attractive target for such attacks. Although we did not experience such attack in the past, we may experience such attacks and unexpected interruptions in the future.

 

We can provide no assurance that our current security mechanisms will be sufficient to protect our IT systems from any third-party intrusions, viruses or hacker attacks, information or data theft or other similar activities. Any such future occurrences could reduce customer satisfaction, damage our reputation and result in a material decrease in our revenue.

 

Additionally, we must continue to upgrade and improve our technology platform to support our business growth, and failure to do so could impede our growth. However, we cannot assure you that we will be successful in executing these system upgrades and improvement strategies or when the execution of these system upgrades and improvement strategies will be effective. In particular, our systems may experience interruptions during upgrades, and the new technologies or infrastructures may not be fully integrated with the existing systems on a timely basis, or at all. If our existing or future technology platform does not function properly, it could cause system disruptions and slow response times, affecting data transmission, which in turn could materially and adversely affect our business, financial condition and results of operations.

 

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.

 

We regard our trademarks, domain names, know-how, proprietary technologies, and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality, invention assignment and non-compete agreements with our employees and others, to protect our proprietary rights. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. In addition, there can be no assurance that our patent applications will be approved, that any issued patents will adequately protect our intellectual property, or that such patents will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Further, because of the rapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.

 

Enforcing intellectual property rights in Hong Kong can be difficult, time-consuming or costly. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in Hong Kong. Policing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the infringement or misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources, and could put our intellectual property at risk of being invalidated or narrowed in scope. We can provide no assurance that we will prevail in such litigation, and even if we do prevail, we may not obtain a meaningful recovery. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in maintaining, protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

 

 

We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

 

We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate patents, copyrights or other intellectual property rights held by third parties. Future legal actions and claims pertaining to third parties’ intellectual property rights may be made against us. Additionally, various parts of our business operations or the goods or services we provide on our marketplaces may violate other third parties’ intellectual property. There could also be existing patents of which we are not aware that our products or other aspects of our business may inadvertently infringe. We cannot assure you that holders of patents purportedly relating to some aspect of our technology platform or business, if any such holders exist, would not seek to enforce such patents against us in Hong Kong, the United States or any other jurisdictions. If we are found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may incur significant expenses, and may be forced to divert management’s attention and other resources from our business and operations to defend against these third-party infringement claims, regardless of their merits. Successful infringement or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question.

 

Moreover, we may use open-source software in connection with our products and services in the future. Companies that incorporate open-source software into their products and services have, from time to time, faced claims challenging the ownership of open-source software and compliance with open-source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open-source software or noncompliance with open-source licensing terms. Some open-source software licenses require users who distribute open-source software as part of their software to publicly disclose all or part of the source code to such software and make available any derivative works of the open-source code on unfavorable terms or at no cost. Any requirement to disclose our source code or pay damages for breach of contract could be harmful to our business, results of operations and financial condition.

 

If we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud.

 

Prior to CGT Holdings’ initial public offering, CGT Holdings was a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting (“ICFR”). In connection with the audit of our consolidated financial statements as of and for the fiscal years ended September 30, 2024 and 2023, we and 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 PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

 

The material weakness identified is our company’s lack of sufficient skilled staff with U.S. GAAP knowledge for the purpose of financial reporting, and lack of formal accounting policies, and procedures manual to ensure proper financial reporting to comply with U.S. GAAP and SEC requirement. The material weakness, if not remediated timely, may lead to material misstatements in our consolidated financial statements in the future. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control for purposes of identifying and reporting material weaknesses and other control deficiencies in our ICFR. Had we performed a formal assessment of our ICFR or had our independent registered public accounting firm performed an audit of our ICFR, additional deficiencies may have been identified.

 

 

Following the identification of the material weakness, we have taken measures and plan to continue to take measures to remediate these deficiencies. However, the implementation of these measures may not fully address these deficiencies in our ICFR, and we cannot conclude that they have been fully remediated. Our failure to correct these deficiencies or our failure to discover and address any other deficiencies could result in inaccuracies in our financial statements and impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective ICFR could significantly hinder our ability to prevent fraud.

 

We are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, requires that we include a report from management on the effectiveness of our ICFR in our annual report on Form 20-F beginning with our annual report in our second annual report on Form 20-F after becoming a public company. In addition, our independent registered public accounting firm must attest to and report on the effectiveness of our ICFR after we become not qualified as an emerging growth company. Our management may conclude that our ICFR is not effective. Moreover, even if our management concludes that our ICFR is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue an adverse report if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, once we have become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

 

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our ICFR. If we fail to maintain the adequacy of our ICFR, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective ICFR in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, it could result in material misstatements in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our businesses, financial condition, results of operations and prospects, as well as the trading price of the Ordinary Shares, may be materially and adversely affected.

 

Additionally, ineffective ICFR could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

 

We have limited insurance coverage, which could expose us to significant costs and business disruption.

 

CGTHK provides work-related injury insurance for its employees. However, CGTHK does not maintain key-man or product liability insurance. We cannot assure you that our insurance coverage is sufficient to prevent us from any loss or that we will be able to successfully claim our losses under our current insurance policy on a timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected.

 

 

We may, from time to time, be subject to legal proceedings or administrative penalties during the course of our business operations.

 

We may be subject to legal proceedings or administrative penalties from time to time in the ordinary course of our business, which could have a material adverse effect on our business, results of operations and financial condition. Claims arising out of actual or alleged violations of law could be asserted against us by consumers and businesses that utilize our services, by competitors, or by governmental entities in civil or criminal investigations and proceedings or by other entities. These claims could be asserted under a variety of laws, including but not limited to those related to product liability, consumer protection, intellectual property, unfair competition, privacy, labor and employment, securities, real estate, tort, contract, property and employee benefit. There is no guarantee that we will prevail in defending ourselves in legal and administrative procedures or in enforcing our rights under various laws, and we may still be involved in several legal or administrative proceedings. Enforcing our rights against the different parties involved may be costly, time-consuming, and ultimately fruitless even if we are successful in our attempt to protect ourselves in legal and administrative processes or to claim our rights under various laws. These actions could expose us to negative publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation of licenses to conduct business.

 

We may need additional capital, and financing may not be available on terms acceptable to us, or at all.

 

We believe that our current cash and equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the next 12 months. We may, however, require additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to improve our brand awareness, build and maintain our offline network, develop new products or services or further improve existing products and services, and acquire complementary businesses and technologies. We might try to get a credit facility or sell more equity or debt securities if our current resources aren’t enough to cover our financial needs. Existing shareholder dilution could occur as a result of the selling of additional equity securities. Increased debt payment costs and possible operating and financial covenants would follow the incurrence of debt, which would limit our ability to operate. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

 

Our ability to retain our existing financial resources and obtain additional financing on acceptable terms is subject to a variety of uncertainties, including but not limited to:

 

●

economic, political and other conditions in Hong Kong or other jurisdictions where we plan to raise funds in;

 

●

Hong Kong governmental policies relating to bank loans and other credit facilities;

 

●

Hong Kong governmental regulations of foreign investment and the pre-owned electronics industry in Hong Kong;

 

●

conditions of capital markets in which we may seek to raise funds; and

 

●

our future results of operations, financial condition and cash flows.

 

If we are unable to obtain adequate financing or financing on satisfactory terms, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, results of operations, financial condition and prospects could be adversely affected.

 

 

The global coronavirus COVID-19 outbreak has caused significant disruptions to our business, which we expect will continue to materially and adversely affect our results of operations and financial condition.

 

The outbreak of COVID-19 spread throughout the world, especially in China, the U.S. and Europe. On March 11, 2020, the World Health Organization declared the outbreak a global pandemic. Many businesses and social activities in Hong Kong, the U.S. and other countries and regions have been severely disrupted, including those of our suppliers, customers and distributors. Such disruption and the potential slowdown of the world’s economy could have a material adverse effect on our results of operations and financial condition. Due to quarantine measures to stop the pandemic from spreading, our suppliers and customers have experienced significant business disruptions and a suspension of operations. This has had and may continue to have a negative impact on our business and operations, including a shortage in the supply of raw materials, a suspension or reduction in our production capacity, a lack of transportation or logistic services, a delay in the delivery of our products, and a delay or cancellation of orders. Our customers or end-users of our products that are negatively impacted by the outbreak of COVID-19 may reduce their budgets to purchase our products, which may materially adversely impact our revenue and results of operations. Our business operations could also be disrupted if any of our employees are suspected of being or is infected by COVID-19, since it could require other employees to be quarantined or our offices and production site to be closed down and disinfected.

 

The COVID-19 pandemic continued to affect global logistics. In 2022, there have been outbreaks of the Omicron variant of COVID-19 in Hong Kong where CGTHK’s headquarters are located, and travel restrictions, mandatory COVID-19 tests, quarantine requirements and/or temporary closure of office buildings and facilities have been imposed by Hong Kong government. Although the Hong Kong government has relaxed the control measures, it may issue new orders of office closure, travel and transportation restrictions due to the resurgence of the COVID-19 and outbreak of new variants, which will have material negative impact to our business and financial conditions.

 

The growth of our business depends on our ability to accurately predict consumer trends and demand and successfully introduce new products and product line extensions and improve existing products.

 

Our ability to successfully introduce new products, and enhance and reposition our current products to satisfy the needs of customers will play an important role in how quickly we grow. Our capacity to foresee and adapt to changing consumer trends, wants, and tastes is what ultimately determines this. Innovative new product development and line extensions come at a significant financial expense. Any new product or product line extension may not generate sufficient customer interest and sales to become a profitable product or to cover the costs of its development and promotion and may negatively affect our operating results and damage our reputation. If we are not able to anticipate, identify or develop and market products to respond to the changes in the requirements and preferences of customers, or if our new product introductions or repositioned products fail to gain consumer acceptance, we may not grow our business as anticipated, our sales may decline and our business, financial condition and results of operations may be materially adversely affected.

 

The relative lack of public company experience of our management team may put us at a competitive disadvantage.

 

Our board of directors and management team lack public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act. Our board of directors and senior management do not have much experience managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our board of directors and senior management may be unable to implement programs and policies in an effective and timely manner or that adequately respond to the increased legal, regulatory and reporting requirements associated with being a publicly traded company. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties, distract our management from attending to the management and growth of our business, result in a loss of investor confidence in our financial reports and have an adverse effect on our business and share price.

 

 

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of CGT Holdings’ Ordinary Shares may be materially and adversely affected.

 

We are subject to the reporting requirements of the Exchange Act of 1934 (the “Exchange Act”), the Sarbanes-Oxley Act of and the rules and regulations of Nasdaq. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting, as we are not required to provide a report of management’s assessment on our internal control over financial reporting due to a transition period established by the rules of the SEC for newly public companies. However, in the course of auditing our consolidated financial statements for the financial statements included elsewhere in this prospectus, we and our independent registered public accounting firm identified one material weakness in our internal control over financial reporting. As defined in standards established by the PCAOB, 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 our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified relates to our lack of sufficient skilled staff with U.S. GAAP knowledge for the purpose of financial reporting, and lack of formal accounting policies, and procedures manual to ensure proper financial reporting to comply with U.S. GAAP and SEC requirement.

 

In response to the material weakness identified prior to the CGT Holdings’ initial public offering, we are in the process of implementing a number of measures to address the material weakness identified, including but not limited to (i) hiring additional qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP accounting and SEC reporting; and (ii) organizing regular training for our accounting staff, especially training related to U.S. GAAP and SEC reporting requirements. We also plan to adopt additional measures to improve our internal control over financial reporting, including, among others, creating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the latest U.S. GAAP accounting standards, and establishing an audit committee and strengthening corporate governance.

 

However, we cannot assure you that we will not identify additional material weaknesses or significant deficiencies in the future. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, our Ordinary Shares may not be able to remain listed on Nasdaq.

 

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report beginning with our second annual report on Form 20-F. In addition, once we cease to be an “emerging growth company” as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as we are a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

 

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of CGT Holdings’ Ordinary Shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

 

 

We may be held liable for information or content displayed on or linked to our website, which may materially and adversely affect our reputation, business and results of operations.

 

If information on our website or other product categories, including pre-owned products listings, is inaccurate or incomplete, we may be held liable. The information we collect and use for pre-owned product listings may be inaccurate or incomplete due to errors or on the part of our employees or third-party information providers, or frauds. Failure to ensure the accuracy and integrity of such information, regardless of its source, could undermine customer trust, result in further administrative penalties and adversely affect our reputation, business and results of operations.

 

We may not be able to successfully halt the operations of websites that aggregate our data as well as data from other companies, or “copycat” websites that misappropriate our data.

 

Due to the lack of widely accepted industry standards and practices, competitors could misappropriate data and information displayed on our website, such as pricing information for pre-owned consumer electronic devices. As of the date of this prospectus, we are not aware of any copycat websites that attempt to cause confusion or diversion of traffic from us. We cannot assure you that we will be able to successfully halt the operations of these websites or third parties. Failure to do so could damage our reputation, divert customer traffic or supply of pre-owned consumer electronic devices from us and thus maternally and negatively affect our business operations, results of operations and financial condition.

 

Our operations may be subject to the effects of a rising rate of inflation which may adversely impact our financial condition and results of operations.

 

Worldwide economies have experienced inflationary pressures since January 2022. Indicatively, in December 2024, the Consumer Price Index for All Urban Consumers rose 0.4 percent, seasonally adjusted, and rose 2.9 percent over the last 12 months, not seasonally adjusted. The inflation level remains and is expected to remain at a relatively high level for a certain time. Global inflationary pressures are attributable to causes such as trading pattern disruptions due to the armed conflict in Ukraine, supply chain and transportation problems, as well as added volatility and rising energy, food and commodity prices. Because CGTHK sources pre-owned electronic goods from the U.S. and several other countries and regions, continued inflationary pressure can materially and adversely affect our results of operations and financial condition.

 

Negative economic conditions, including as a result of commodity price inflation or supply chain constraints, the COVID-19 pandemic and the war in Ukraine, may adversely impact our results of operations.

 

Although we have no business in Russia or Ukraine, nor in the Middle East, our business may suffer from the supply chain disruption and other impacts resulting from the military conflict between Russia and Ukraine, the wars in the Middle East, widespread health crises, such as the COVID-19 pandemic, and other worldwide economic and political turbulences that may affect the manufacturing capabilities of consumer electronic devices and international transportation. For example, CGTHK’s supply chain may be disrupted, limiting its ability to purchase or receive on time the pre-owned consumer electronic goods, or CGTHK’s cost base may be increased. Furthermore, economic growth is expected to slow, including due to supply chain disruption, the continued inflation pressure, and related actions by central banks and geopolitical conditions, with a significant risk of recession in many parts of the worlds in the near term. This may also prolong tight credit markets and potentially cause such conditions to become more severe, thereby causing consumers to reduce their discretionary spending, and consequently, our business. These issues, along with the re-pricing of credit risk and the difficulties currently experienced by financial institutions, may make it difficult to obtain financing.

 

 

CGTHK’s suppliers or couriers may fail to deliver ordered goods according to schedules, prices, quality and volumes that are acceptable to CGTHK. CGTHK may also fail to deliver goods pursuant to the terms agreed-upon with its customers. Unexpected changes in business conditions, materials pricing, including inflation of raw material costs, labor issues, wars, trade policies, natural disasters, health epidemics such as the global COVID-19 pandemic, trade and shipping disruptions, port congestions and other factors beyond our or CGTHK’s suppliers’ control could also affect these suppliers’ ability to deliver components to CGTHK or to remain solvent and operational. For example, a global shortage of semiconductors has been reported since early 2021 and has caused challenges in the manufacturing industry and impacted the market of electronic goods. Although CGTHK has been building a supplier network to secure additional or alternate sources, there is no assurance that CGTHK will be able to do so quickly or at all.

 

Additionally, because a substantial portion of CGTHK’s orders is placed after CGTHK getting orders from its customers, CGTHK will suffer from hardship in meeting customers’ needs, increased costs in inventory management, and other complexities in the supply chain management process. Our results of operations and financial conditions can be materially and adversely affected.

 

Risks Related to Doing Business in Hong Kong

 

CGT Holdings is an offshore holding company incorporated in the Cayman Islands. As a holding company with no material operations, CGT Holdings’ operations are conducted in Hong Kong by one of CGT Holdings’ subsidiaries.

 

CGT Holdings is a Cayman Islands holding company with no material operations of its own. Substantially all of CGT Holdings’ business operations are conducted through its operating subsidiary, CGTHK. The ability of CGTHK to make dividend and other payments to CGT Holdings may be restricted by factors that include changes in applicable foreign exchange and other laws and regulations. While there are currently no restrictions on foreign exchange and our ability to transfer cash or assets between CGT Holdings and CGTHK, if certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to us, and to the extent our cash or assets are in Hong Kong or a Hong Kong entity (such as our operating subsidiary, CGTHK), such funds or assets may not be available to fund operations or for other use outside of Hong Kong due to interventions in or the imposition of restrictions and limitations on our ability to transfer funds or assets by the PRC government. Furthermore, we cannot assure you that the PRC government will not intervene or impose restrictions on CGT Holdings or CGTHK to transfer or distribute cash within the organization, which could result in an inability of or prohibition on making transfers or distributions to entities outside of Hong Kong. Any limitation on the ability of CGTHK to pay dividends or make other distributions to its holding company could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. In addition, if CGTHK incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends.

 

The Hong Kong legal system embodies uncertainties which could negatively affect our ability to remain listed on Nasdaq and limit the legal protections available to you and us.

 

The Hong Kong legal system embodies uncertainties which could negatively affect our listing on Nasdaq and limit the legal protections available to you and us. As one of the conditions for the handover of the sovereignty of Hong Kong to China, China had to accept some conditions such as Hong Kong’s Basic Law before its return. The Basic Law ensured Hong Kong will retain its own currency (the Hong Kong Dollar), legal system, parliamentary system and people’s rights and freedom for 50 years from 1997. This agreement has given Hong Kong the freedom to function in a high degree of autonomy. The Special Administrative Region of Hong Kong is responsible for its own domestic affairs including, but not limited to, the judiciary and courts of last resort, immigration and customs, public finance, currencies and extradition. Hong Kong continues using the English common law system. However, if the PRC reneges on its agreement to allow Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system, and may in turn bring about uncertainty in, for example, keeping CGT Holdings’ Ordinary Shares listed on Nasdaq. This also could materially and adversely affect our business and operations. Additionally, intellectual property rights and confidentiality protections in Hong Kong may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us, including our ability to enforce our agreements with our customers.

 

 

We operate principally in Hong Kong, and adverse economic or other events affecting the region or any significant worsening to the present global financial condition could significantly impact our business.

 

The operation of our business is concentrated principally in a narrow geographic region of Hong Kong. Changes in demand, economic and political developments and regulatory changes in the region will have a significant effect on our business, results of operations and financial condition. In addition, adverse weather conditions, earthquakes, fires, power loss, telecommunications failures, breakage of land or submarine transmission cables, military or terrorist activity or similar events within Hong Kong may cause significant disruption to our business operations. The outbreak of any severe contagious disease or pandemic within Hong Kong could also have a material adverse effect on our business, results of operations and financial performance. Any significant and protracted worsening to the present global financial and economic climate could result in a change to the spending or usage behavior of our customers which could have an adverse impact on our business, results of operations and financial performance.

 

Our business is dependent on the government’s policy on the Hong Kong mobile telecom industry.

 

Our business is sensitive to consumer spending on mobile telecom services. We cannot assure you that it will grow in the future. Development of Hong Kong mobile telecom industry could be negatively affected by factors such as unfavorable government policies and changes of consumer preferences which may decrease spending on mobile telecom services. If Hong Kong mobile telecom industry does not develop as we anticipated, our business may be adversely affected and we may need to adjust our growth strategy and our results of operation may be adversely affected.

 

Hong Kong’s position and reputation is dependent on the high degree of autonomy.

 

Hong Kong is a special administrative region of the PRC with its own government. Hong Kong enjoys a high degree of autonomy from the PRC under the principle of “one country, two systems”. However, there can be no assurance that our financial condition and results of operations will not be adversely affected as a consequence of the exercise of PRC sovereignty over Hong Kong. On July 14, 2020, the President of U.S. signed an executive order to end the special status enjoyed by Hong Kong under the U.S.-Hong Kong Policy Act of 1992. Hong Kong’s position and reputation as an international financial and trade center may be further damaged, and our business may be materially and adversely affected.

 

We may be affected by the currency peg system in Hong Kong.

 

Since 1983, Hong Kong dollars have been pegged to the U.S. dollars at approximately HK$7.80 to US$1.00. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and Hong Kong dollars suffer devaluation, the Hong Kong dollar cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.

 

 

It will be difficult to acquire jurisdiction and enforce liabilities against us, our officers, directors and assets based in Hong Kong.

 

Almost all of our assets are located in Hong Kong. Our officers and directors currently reside outside of the U.S. and are residents of Hong Kong, except for Jingeng Chen, who is a resident of the mainland of China. 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 U.S. However, an action can be brought upon a foreign judgment in Hong Kong courts. 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 an 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 an action in Hong Kong 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. As a result, it may be difficult or not possible for U.S. investors to enforce their legal rights, to effect service of process upon us, our directors or officers or to enforce judgments of U.S. courts predicated upon civil liabilities and criminal penalties of us, our directors and officers under federal securities laws.

 

Potential political and economic instability in Hong Kong may adversely impact our results of operations. We may also face the risk that changes in the policies of the PRC government could have a significant impact upon the business we conduct in Hong Kong and the profitability of such business.

 

Our operational activities are primarily conducted in Hong Kong. Accordingly, political and economic conditions in Hong Kong and the surrounding region may directly affect our business. Since early 2019, a number of political protests and conflicts have occurred in Hong Kong in connection with proposed legislation that would allow local authorities to detain and extradite people who are wanted in territories that Hong Kong does not have extradition agreements with, including the mainland of China and Taiwan. The economy of Hong Kong has been negatively impacted, including our retail market, property market, securities market, and tourism, from such protests.

 

Under the Basic Law, Hong Kong is exclusively in charge of its internal affairs and external relations, while the government of the PRC is responsible for its foreign affairs and defense. As a separate customs territory, Hong Kong maintains and develops relations with foreign states and regions. We cannot assure you that the Hong Kong protests will not affect Hong Kong’s status as a Special Administrative Region of the People’s Republic of China and thereby affecting its current relations with foreign states and regions.

 

Our revenue is susceptible to Hong Kong protests as well as any other incidents or factors which affect the stability of the social, economic and political conditions in Hong Kong. It is unclear whether there will be other political or social unrest in the near future or that there will not be other events that could lead to the disruption of the economic, political and social conditions in Hong Kong. If such events persist for a prolonged period of time or that the economic, political and social conditions in Hong Kong are to be disrupted, our overall business and results of operations may be adversely affected.

 

 

In addition, economic, political and legal developments and social conditions in the PRC may significantly affect our business, financial condition, results of operations and prospects. Policies of the PRC government can have significant effects on economic conditions in the mainland of China and Hong Kong. While we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and that business development in the PRC will continue to follow market forces, we cannot assure you that this will be the case. Our business operations and prospects, financial condition, and results of operations may be adversely affected by changes in policies by the PRC government, including:

 

●

changes in laws, regulations or their interpretation;

 

●

confiscatory taxation;

 

●

restrictions on currency conversion, imports or sources of suppliers, or ability to continue as a for-profit enterprise;

 

●

expropriation or nationalization of private enterprises; and

 

●

the allocation of resources.

 

Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we conduct in Hong Kong and accordingly on the results of our operations and financial condition.

 

Our business operations may be adversely affected by the current and future political environment in the PRC. The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The interpretations of many laws, regulations and rules may not always be uniform and the enforcement of these laws, regulations and rules may involve uncertainties for you and us. Our ability to operate in Hong Kong, conduct overseas offerings and continue to investment in Hong Kong based issuers may be harmed by these changes in its laws and regulations, including those relating to taxation, import and export tariffs, healthcare regulations, environmental regulations, land use and property ownership rights, and other matters. Accordingly, government actions in the future could have a significant effect on economic conditions in Hong Kong or particular regions thereof, and could limit or completely hinder our ability to offer or continue to offer securities to investors or require us to divest ourselves of any interest we then hold in Hong Kong properties or joint ventures. Any such actions (including divesture or similar actions) could result in a material adverse effect on us and on your investment in us and could render CGT Holdings’ Ordinary Shares and your investment in CGT Holdings’ Ordinary Shares worthless.

 

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations. Since 1970s, the PRC government has begun to promulgate a comprehensive system of laws that regulates economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourages foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 40 years to keep up with the rapidly changing society and economy in China. Because government agencies and courts that provide interpretations of laws and regulations and decide contractual disputes and issues may change their interpretation or enforcement very rapidly with little advance notice at any time, we cannot predict the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, may cause possible problems to foreign investors.

 

 

Although the PRC government has been pursuing economic reform policies for more than four decades, the PRC government continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways. We cannot assure you that the PRC government will continue to pursue policies favoring a market-oriented economy or that existing policies will not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting, political, economic and social life in the PRC.

 

The future development of national security laws and regulations in Hong Kong could materially impact our business by possibly triggering sanctions and other measures which can cause economic harm to our business.

 

On May 28, 2020, the NPC of the PRC approved a proposal to impose a new national security law for Hong Kong and authorized the Standing Committee of the National People’s Congress to proceed to work out details of the legislation to be implemented in Hong Kong (the “Decision”). The Decision states that the new law will target secession, subversion of state power, terrorism activities and foreign interference. The stated objective of the Decision is to protect the national security of China as a whole (including Hong Kong and Macau) and is not intended to have a direct commercial bearing on commercial and economic activities. The government believes the new law may bring about more stability to Hong Kong, which in turn may lay the foundation for commercial and economic activities to flourish. On June 30, 2020, China’s National People’s Congress Standing Committee passed the national security law for the Hong Kong Special Administrative Region (HKSAR). Hong Kong’s Chief Executive promulgated it in Hong Kong later the same day. Among other things, it criminalizes separatism, subversion, terrorism and foreign interference in Hong Kong. We cannot rule out the possibility that the Decision and the implementation of the national security law may trigger sanctions or other forms of penalties by foreign governments, which may cause economic and other hardships for Hong Kong, including companies like us that do business in Hong Kong. It is difficult for us to predict the impact, in any, the implementation of the national security law will have on our business, as such impact will depend on future developments, which are highly uncertain and cannot be predicted.

 

Our Hong Kong subsidiary may be subject to restrictions on paying dividends or making other payments to us, which may restrict its ability to satisfy liquidity requirements, conduct business and pay dividends to holders of CGT Holdings’ Ordinary Shares. Dividends payable to our foreign investors and gains on the sale of CGT Holdings’ Ordinary Shares of Ordinary Shares by our foreign investors may become subject to tax by the PRC.

 

CGT Holdings is a holding company incorporated in the Cayman Islands with its operating subsidiary located in Hong Kong. Accordingly, most of our cash is maintained in Hong Kong Dollars. We conduct no other business and, as a result, we depend entirely upon our Hong Kong operating subsidiary’s earnings and cash flow. If we decide in the future to pay dividends, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary. There are currently no restrictions of transferring funds between our Cayman Islands holding company and our operating subsidiary in Hong Kong or limitations on the ability of our Hong Kong subsidiary to issue dividends or other distributions to its overseas shareholders. However, we cannot assure you that the oversight of the PRC government will not be extended to companies operating in Hong Kong, like our Hong Kong operating subsidiary. There is a possibility that the PRC government could prevent our cash maintained in Hong Kong from leaving or the PRC could restrict the deployment of the cash into our business or for the payment of dividends. Any such controls or restrictions may adversely affect our ability to finance our cash requirements, service debt or make dividend or other distributions to our shareholders and could result in a material adverse change to our business operations, our prospects, financial condition, and results of operations, and could cause CGT Holdings’ Ordinary Shares to significantly decline in value or become worthless.

 

 

 

The market price for CGT Holdings’ Ordinary Shares could be adversely affected by increased tensions between the United States and China.

 

Recently there have been heightened tensions in the economic and political relations between the U.S. and China. On June 30, 2020, the Standing Committee of the PRC National People’s Congress issued the Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region. This law defines the duties and government bodies of Hong Kong for safeguarding national security and four categories of offences — secession, subversion, terrorist activities and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, then U.S. President Donald Trump signed the Hong Kong Autonomy Act, or HKAA, into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on 11 individuals, including then Hong Kong chief executive Carrie Lam. The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions such as those provided in the HKAA is in practice discretionary and highly political, especially in a relationship as extensive and complex as that between the U.S. and China. It is difficult to predict the full impact of the HKAA on Hong Kong and companies like us. Furthermore, legislative or administrative actions in respect of Sino-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of CGT Holdings’ Ordinary Shares could be adversely affected.

 

Our business, financial condition and results of operations, and/or the value of CGT Holdings’ Ordinary Shares or our ability to offer or continue to offer securities to investors may be materially and adversely affected to the extent the laws and regulations of the PRC become applicable to a company such as us.

 

We currently do not have any operations in the mainland of China. As a result, the laws and regulations of the PRC do not currently have any material impact on our business, financial condition, or results of operations. However, as we operate in Hong Kong, a special administrative region of China, there is no guarantee that if certain existing or future laws of the PRC become applicable to a company such as us, it will not have a material adverse impact on our business, financial condition and results of operations and/or our ability to offer or continue to offer securities to investors, any of which may cause the value of such securities to significantly decline or be worthless.

 

Except for the Basic Law, national laws of the PRC 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.

 

The laws and regulations in the PRC are evolving, and their enactment timetable, interpretation and implementation involve significant uncertainties. To the extent any PRC laws and regulations become applicable to us, we may be subject to the risks and uncertainties associated with the legal system in the PRC, 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 laws and regulations of the PRC to the extent we commence business and customer facing operations in the mainland of China as a result of any future acquisition, expansion or organic growth.

 

The PRC government exerts substantial influence and discretion over the manner in which companies incorporated under the laws of the PRC must conduct their business activities. CGTHK, our operating entity, is a Hong Kong-based company with no substantive operations in the mainland of China. However, if we were to become subject to such direct influence or discretion, it may result in a material change in our operations and/or the value of CGT Holdings’ Ordinary Shares, which would materially affect the interest of the investors.

 

We currently do not have any operations in the mainland of China. We primarily operate in Hong Kong, a special administrative region of China. The PRC government currently does not exert direct influence and discretion over the manner in which we conduct our business activities outside of the mainland of 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 the mainland of China.

 

 

The PRC legal system 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 has exercised and continues to exercise substantial control over many sectors of the PRC economy through regulation and/or state ownership. Government actions have had, and may continue to have, a significant effect on economic conditions in the PRC and businesses which are subject to such government actions.

 

If we became 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 the PRC, it may require a material change in our 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. In addition, the market prices of CGT Holdings’ Ordinary Shares could be adversely affected as a result of anticipated negative impacts of any such government actions, as well as negative investor sentiment towards Hong Kong-based companies subject to direct PRC government oversight and regulation, regardless of our actual operating performance. There can be no assurance that the PRC government would not intervene in or influence our operations at any time.

 

We are not currently required to obtain permission from the PRC government for the trading of CGT Holdings’ Ordinary Shares on Nasdaq, however there is no guarantee that this will continue to be the case in the future, or even when such permission is obtained, it will not be subsequently denied or rescinded. 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 CGT Holdings’ Ordinary Shares to significantly decline or be worthless.

 

If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations and our reputation and could result in a loss of your investment in CGT Holdings’ Ordinary Shares, especially if such matter cannot be addressed and resolved favorably.

 

U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities, a lack of effective internal controls over financial accounting and reporting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on our company and our business. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we may have to expend significant resources to investigate such allegations and/or defend the Company. This situation may be a major distraction to our management. If such allegations are not proven to be groundless, our Company and business operations will be severely hampered and your investment in CGT Holdings’ Ordinary Shares could be rendered worthless. In addition, major issues with other U.S. listed Chinese companies in the future, could have a negative effect on the value of your investment, even though CGT Holdings is not involved.

 

Because our operations are based in Hong Kong, we are subject to the regulations and rules of the Hong Kong government as well as the influence of the PRC government. The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in Hong Kong may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

 

 

As such, the Group could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. The Group may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Group’s operation could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry. Given that the PRC government may intervene or influence our operations at any time with little to no advanced notice, it could result in a material change in our operation and the value of CGT Holdings’ Ordinary Shares. Given recent statements by the PRC government indicating an intent to exert more oversight and control over offerings that are conducted overseas, any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

 

Although the Group is currently not required to obtain permission from any PRC regulatory authorities and has not received any denial to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry. As a result, CGT Holdings’ Ordinary Shares may decline in value dramatically or even become worthless should we become subject to new requirement to obtain permission from the PRC government to trade on a U.S. exchange in the future.

 

Although we do not believe we are required to file with the China Securities Regulatory Commission for the Resale Offering under the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises promulgated in February 2023, if we are required to do so, we cannot assure you that we will be able to timely make such filing, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to timely filing for the Resale Offering.

 

On February 17, 2023, the CSRC issued the Trial Measures, which became effective on March 31, 2023. The CSRC also circulated Supporting Guidance Rules No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers to Reporter Questions, or collectively, the Guidance Rules and Notice, on CSRC’s official website, on the same day. The Trial Measures, together with the Guidance Rules and Notice (collectively, the “New Overseas Listing Rules”), reiterate the basic principles of the Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) and impose substantially the same requirements for the overseas securities offering and listing by domestic enterprises. Under the New Overseas Listing Rules, domestic enterprises conducting overseas securities offering and listing, either directly or indirectly, shall complete filings with the CSRC pursuant to the New Overseas Listing Rules’ requirements within three business days following the submission of application for an initial public offering or listing. On February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China jointly issued the Strengthening the Confidentiality and Archive Management Work Relating to the Overseas Securities Offering and Listing by Domestic Enterprises (“Confidentiality and Archives Administration Provisions”), which came into effectiveness on March 31, 2023. The Confidentiality and Archives Administration Provisions require, among others, that PRC domestic enterprises seeking to offer and list securities in overseas markets, either directly or indirectly, shall establish the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. It further stipulates that providing or publicly disclosing documents and materials which may adversely affect national security or public interests, and accounting files or copies of important preservation value to the state and society shall be subject to corresponding procedures in accordance with relevant laws and regulations. According to the legal opinion provided by Yuan Tai Law Offices, our PRC counsel, we do not believe we are subject to the filing and approval requirements because we have no business operation in or material connection with the mainland of China, and the Resale Offering of CGT Holdings’ Ordinary Shares will likely not be regarded as an indirect overseas offering by PRC domestic enterprises.

 

Although we do not believe we are subject to the filing and approval requirements because we have no business operation in nor material connection with the mainland of China, there are uncertainties regarding the interpretation and implementation of the New Overseas Listing Rules. If we become subject to the New Overseas Listing Rules in the future, we cannot assure you that we will be able to timely make such filing, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to timely filing for such future offerings.

 

 

Although we do not believe we are subject to the review by the CAC or other PRC cybersecurity authorities because we have no operations in the mainland of China nor do we possess or process personal information from more than one million users, in light of recent events indicating greater oversight by the CAC over data security, we may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on our business, our listing on Nasdaq, financial condition, results of operations, and our listing.

 

From 2021, the CAC along with other PRC regulatory authorities, has promulgated a series of regulations requiring data processors and businesses with access to a large amount of personal data to become subject to regulatory reviews and other administrative measures. For example, on July 7, 2022, the CAC promulgated the Measures on Security Assessment of Cross-border Data Transfer, which became effective on September 1, 2022. The data export measures require that any data processor, who processes or exports personal information exceeding a certain volume threshold pursuant to the measures, shall apply for a security assessment by the CAC before transferring any personal information abroad, including the following circumstances: (i) important data will be provided overseas by any data processor; (ii) personal information will be provided overseas by any operator of critical information infrastructure or any data processor who processes the personal information of more than 1,000,000 individuals; (iii) personal information will be provided overseas by any data processor who has provided the personal information of more than 100,000 individuals in the aggregate or has provided the sensitive personal information of more than 10,000 individuals in the aggregate since January 1 of last year; and (iv) other circumstances where the security assessment is required as prescribed by the CAC. A data processor shall, before applying for the security assessment of an outbound data transfer, conduct a self-assessment of the risks involved in the outbound data transfer. The security assessment of a cross-border data transfer shall focus on assessing the risks that may be brought about by the cross-border data transfer concerning national security, public interests, or the lawful rights and interests of individuals or organizations. Although we do not believe we are subject to such requirements because we do not have any business operations in the mainland of China, nor do we possess or process a large amount of personal information. However, we may become subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on our business and our listing.

 

Failure to comply with Hong Kong Competition Law may result in material and adverse effect on our business, financial condition and results of operations.

 

We operate in a competitive industry and a highly competitive market. We may be subject to a variety of laws and other obligations regarding competition law in Hong Kong, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations. We face significant competition in the market due to a large amount of goods and service providers. We may be subject to the Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (“Competition Ordinance”), which came into force on December 14, 2015, which laid down three forms of behavior and imposes three rules which are intended to prevent and discourage anti-competitive conduct: (i) the first conduct rule prohibits agreements between undertakings that have the object or effect of preventing, restricting and distorting competition in Hong Kong; (ii) the second conduct rule prohibits undertakings with a substantial degree of market power in a market from abusing that power by engaging in conduct that has the object or effect of preventing, restricting and distorting competition in Hong Kong; and (iii) the merger rule prohibits mergers that have or are likely to have the effect of substantially lessening competition in Hong Kong. Currently, the merger rule only applies where an undertaking that directly or indirectly holders a “carrier license” within the meaning of the Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong) is involved in a merger, and is therefore not applicable to our business.

 

The Competition Commission is a statutory body in Hong Kong established to investigate any contravention against and enforce on the provisions of the Competition Ordinance, and the Competition Tribunal is a tribunal set up under the Competition Ordinance, as part of Hong Kong judiciary, to hear and decide cases connected with competition law in Hong Kong. Under the guidelines and policies published by the Competition Commission, possible outcomes of investigation of contravention of the Competition Ordinance may include the acceptance of commitment given by infringer, the issuing of warning notice or infringement notice, commencement of proceedings in the Competition Tribunal, applying for consent order, referral of complaint to a government agency and the conduct of a market study. The Competition Tribunal may order remedies including pecuniary penalty, disqualification or other order under the Competition Ordinance. The guidelines and policies published by the Competition Commission in Hong Kong did not mention any remedies which may impact on the Company’s ability to accept foreign investment or list on a U.S./foreign exchange as a result of the non-compliance of the Competition Ordinance.

 

 

The Company confirms that we have not adopted any anti-competitive conduct described in the Competition Ordinance and will continue to act in compliance with the Competition Ordinance. However, there may be uncertainties on the full effect of the rules in respect of compliance, infringement, and its effect on our business in particular when tendering is involved in securing contracts. We may face difficulties and may need to incur legal costs in ensuring our compliance with the rules. If we face any complaints of infringement of the Competition Ordinance, we may incur substantial legal costs and may result in business disruption and/or negative media coverage, which could adversely affect our business, results of operations and reputation.

 

Risks Related to CGT Holdings’ Ordinary Shares and THE Trading market

 

CGT Holdings’ Ordinary Shares may be delisted and prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for two consecutive years. The delisting and the cessation of trading of CGT Holdings’ Ordinary Shares, or the threat of their being delisted and prohibited from being traded, may materially and adversely affect the value of your investment.

 

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 such shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

 

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. A company will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above.

 

On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non inspection years required for triggering the prohibitions under the HFCAA from three years to two.

 

On November 5, 2021, the SEC approved Rule 6100 adopted by the PCAOB to establish a framework for the PCAOB’s determinations under the HFCAA that the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction.

 

On December 2, 2021, the SEC issued amendments to finalize the interim final rules previously adopted in March 2021 to implement the submission and disclosure requirements in the HFCAA, which requires a company to identify in its annual report, (1) the auditors that provided opinions to the financial statements presented in the annual report, (2) the location where the auditors’ report was issued, and (3) the PCAOB ID number of the audit firm or branch that performed the audit work. After we become a public company, if the SEC determines have three consecutive non-inspection years, the SEC will issue a stop order to prohibit the trading of CGT Holdings’ Ordinary Shares.

 

On December 16, 2021, the PCAOB issued a Determination Report which reported the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) the mainland of China of the PRC, because of a position taken by one or more authorities in the mainland of China; and (2) Hong Kong, a Special Administrative Region of the PRC, because of a position taken by one or more authorities in Hong Kong.

 

On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in the mainland of China and Hong Kong. Uncertainties still exist as to whether and how this new Statement of Protocol will be implemented. The PCAOB is required to reassess its determinations by the end of 2022 and there are uncertainties whether the PCAOB will determine it is still unable to inspect or investigate completely registered public accounting firms in the mainland of China and Hong Kong.

 

On December 15, 2022, the PCAOB issued a Determination Report determining that the PCAOB secured complete access to inspect and investigate registered public accounting firms headquartered in the mainland of China and Hong Kong, and vacating the 2021 Determinations the contrary. However, the PCAOB further noted that it will act immediately to consider the need to issue a new determination if the PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access.

 

 

On December 29, 2022, the Consolidated Appropriations Act, 2023 was signed into law, which, among other things, amended the HFCAA to reduce the number of consecutive years an issuer can be identified as a Commission-Identified Issuer before the SEC must impose an initial trading prohibition on the issuer’s securities from three years to two years. Therefore, once an issuer is identified as a Commission-Identified Issuer for two consecutive years, the SEC is required under the HCFAA to prohibit the trading of the issuer’s securities on a national securities exchange and in the over-the-counter market.

 

Our current auditor, Wei, Wei & Co., LLP, as an auditor of companies traded publicly in the U.S. and a firm registered with the PCAOB, is subject to laws in the U.S. pursuant to which the PCAOB conducts inspections to assess its compliance with applicable professional standards. Wei, Wei & Co., LLP is not a PCAOB-registered public accounting firm in the mainland of China or Hong Kong that is subject to the PCAOB’s determination on December 16, 2021 of having been unable to inspect or investigate completely. We are not aware of any reasons to believe or conclude that Wei, Wei & Co., LLP would not permit an inspection by the PCAOB or that it is not subject to such inspection. However, given the recent developments, we cannot assure you whether PCAOB or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. CGT Holdings’ Ordinary Shares could still be delisted and prohibited from being traded over-the-counter under the HFCAA if the PCAOB determines in the future that it is unable to fully inspect or investigate our auditor which has a presence in China. Furthermore, there is no guarantee that future audit reports will be prepared by auditors that are completely inspected by the PCAOB, and, as such, future investors may be deprived of such inspections, which could result in limitations or restrictions to our access of the U.S. capital markets.

 

The market price for CGT Holdings’ Ordinary Shares may be volatile.

 

The market price for CGT Holdings’ Ordinary Shares may be volatile and subject to wide fluctuations due to factors such as:

 

●

the perception of U.S. investors and regulators of U.S. listed Hong Kong companies;

 

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negative publicity, studies or reports;

 

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changes in financial estimates by securities research analysts;

 

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conditions in the pre-owned consumer electronic devices markets;

 

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our capability to catch up with the technology innovations in the industry;

 

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actual or anticipated fluctuations in our operating results;

 

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changes in the economic performance or market valuations of other competitor companies;

 

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announcements by us or our competitors of acquisitions, strategic partnerships, joint ventures or capital commitments;

 

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addition or departure of key personnel;

 

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fluctuations of exchange rates between HK dollar and the U.S. dollar; and

 

●

general economic, health or political conditions in Hong Kong, China and worldwide.

 

 

In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of CGT Holdings’ Ordinary Shares.

 

If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding CGT Holdings’ Ordinary Shares, the price of CGT Holdings’ Ordinary Shares and trading volume could decline.

 

The trading market for CGT Holdings’ Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of CGT Holdings’ Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of CGT Holdings’ Ordinary Shares and the trading volume to decline.

 

Our estimates of market opportunity, forecasts of market growth included in this prospectus may prove to be inaccurate, and any real or perceived inaccuracies may harm our reputation and negatively affect our business. Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

 

Market opportunity estimates and growth forecasts included in this prospectus are subject to significant uncertainties and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunities are subject to change over time, and there is no guarantee that any particular number or percentage of addressable companies covered by our market opportunities estimates will purchase our products and solutions at all or generate any particular level of revenues for us. Even if the market in which we compete meets the size estimates and growth forecasted in this prospectus, our business could fail to grow for a variety of reasons, including reasons outside of our control, such as competition in our industry.

 

Certain companies with public floats comparable to CGT Holdings’ public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. CGT Holdings may experience similar volatility, which may make it difficult for prospective investors to assess the value of its Ordinary Shares.

 

In addition to the risks addressed above in “— The market price for CGT Holdings’ Ordinary Shares may be volatile”, CGT Holdings’ Ordinary Shares may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. Recently, companies with comparable public floats and initial public offering sizes have experienced instances of extreme share price run-ups followed by rapid price declines, and such share price volatility was seemingly unrelated to the respective company’s underlying performance. As of the date of this prospectus, CGT Holdings has a relatively small public float due to the relatively small size of its initial public offering, the ownership percentage of its executive officers and directors, and greater than 5% shareholders. As a result of its small public float, CGT Holdings’ Ordinary Shares may be less liquid and have greater share price volatility than the shares of companies with broader public ownership. The rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of CGT Holdings’ Ordinary Shares. This volatility may prevent you from being able to sell your securities at or above the price you paid for your securities. In addition, you may experience losses, which may be material, if you purchase CGT Holdings’ Ordinary Shares prior to any price decline.

 

We have adopted a share incentive plan, and may grant options or other types of awards under our share incentive plan, which may result in increased share-based compensation expenses.

 

On January 17, 2025, CGT Holdings’ board of directors approved the 2024 Stock Incentive Plan, for the purpose of attracting and retaining the best available personnel, providing additional incentives to employees, directors and consultants, and promoting the success of our business. Under the 2024 Stock Incentive Plan, we are authorized to grant options. The maximum aggregate number of ordinary shares that may be issued pursuant to all awards under the 2024 Stock Incentive Plan is 4,287,500.

 

We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and employees. Although we have not granted any shares or other awards under the 2024 Stock Incentive Plan as of the date of this prospectus, we may grant share-based compensation to employees in the future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations.

 

Furthermore, perspective candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. Thus, our ability to attract or retain highly skilled employees may be adversely affected by declines in the perceived value of our equity or equity awards. Furthermore, there are no assurances that the number of shares reserved for issuance under our share incentive plans will be sufficient to grant equity awards adequate to recruit new employees and to compensate existing employees.

 

Our issuance of additional share capital in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other shareholders.

 

We expect to grant equity awards to key employees under our equity incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in companies, solutions or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership interests and the value of CGT Holdings’ Ordinary Shares to decline.

 

 

 

You may face difficulties in protecting your interests as a shareholder, as Cayman Islands law provides substantially less protection when compared to the laws of the United States and it may be difficult for a shareholder of CGT Holdings to effect service of process or to enforce judgements obtained in the United States courts.

 

CGT Holdings’ corporate affairs are governed by its amended and restated memorandum and articles of association and by the Cayman Islands Companies Act (2022 Revision) (the “Companies Act”) and common law of the Cayman Islands. The rights of shareholders to take legal action against CGT Holdings’ directors and CGT Holdings, actions by minority shareholders and the fiduciary responsibilities of CGT Holdings’ directors to CGT Holdings under Cayman Islands law 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 English common law. Decisions of the Privy Council (which is the final court of appeal for British Overseas Territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court of the United Kingdom and the Court of Appeal are generally of persuasive authority but are not binding on the courts of the Cayman Islands. The rights of CGT Holdings’ shareholders and the fiduciary responsibilities of the directors of CGT Holdings under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the U.S. In particular, the Cayman Islands has a less developed body of securities laws as compared to the U.S., and provide significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the U.S. federal courts. The Cayman Islands courts are also unlikely to impose liabilities against us in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws.

 

Currently, all of our operations are conducted outside the U.S., and substantially all of our assets are located outside the U.S. All of our directors and officers are nationals or residents of jurisdictions other than the U.S. and a substantial portion of their assets are located outside the U.S. As a result, it may be difficult for a shareholder to effect service of process within the U.S. upon these persons, or to enforce against us or them judgments obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the securities laws of the U.S. or any state in the U.S.

 

As a result of all of the above, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the U.S.

 

You may be unable to present proposals before general meetings or extraordinary general meetings not called by shareholders.

 

The Companies Act does not provide shareholders with any right to requisition a general meeting or to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. CGT Holdings’ currently in-effect amended and restated memorandum and articles of association provide that upon the requisition of any one or more of its shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding shares of CGT Holdings entitled to vote at general meetings, its board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our amended and restated memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.

 

CGT Holdings’ Ordinary Shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

 

CGT Holdings’ Ordinary Shares may be “thinly-traded,” meaning that the number of persons interested in purchasing CGT Holdings’ Ordinary Shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be caused by 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 came 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 CGT Holdings’ Ordinary 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 CGT Holdings’ Ordinary 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 CGT Holdings’ Ordinary Shares may not develop or be sustained.

 

Volatility in CGT Holdings’ Ordinary Shares price may subject us to securities litigation.

 

When compared to seasoned issuers, the market for CGT Holdings’ Ordinary Shares may experience significant price volatility, and we anticipate that our share price may be more volatile than a seasoned issuer for the foreseeable future. Following times of volatility in the market price of a company’s ordinary shares, plaintiffs have frequently started securities class action litigation against that company in the past. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

 

 

In order to raise sufficient funds to enhance operations, CGT Holdings may have to issue additional securities at prices which may result in substantial dilution to CGT Holdings’ shareholders.

 

If CGT Holdings raises additional funds through the sale of equity or convertible debt, the current shareholders’ percentage ownership will be reduced. In addition, these transactions may dilute the value of Ordinary Shares outstanding. CGT Holdings may have to issue securities that may have rights, preferences, and privileges senior to CGT Holdings’ Ordinary Shares. We cannot provide assurance that we will be able to raise additional funds on terms acceptable to us, if at all. If future financing is not available or is not available on acceptable terms, we may not be able to fund our future needs, which would have a material adverse effect on our business plans, prospects, results of operations and financial condition.

 

CGT Holdings is not likely to pay cash dividends in the foreseeable future.

 

CGT Holdings currently intends to retain any future earnings for use in the operation and expansion of the business of itself and its subsidiaries. Accordingly, CGT Holdings does not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should CGT Holdings determine to pay dividends in the future, its ability to do so will depend upon the receipt of dividends or other payments from its subsidiaries.

 

CGT Holdings is a foreign private issuer within the meaning of the rules under the Exchange Act, and as such it is exempt from certain provisions applicable to United States domestic public companies.

 

CGT Holdings is a foreign private issuer within the meaning of the rules under the Exchange Act. As such, it is exempt from certain provisions applicable to United States domestic public companies. For example:

 

●

CGT Holdings is not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

 

●

for interim reporting, CGT Holdings is permitted to comply solely with its home country requirements, which are less rigorous than the rules that apply to domestic public companies;

 

●

CGT Holdings is not required to provide the same level of disclosure on certain issues, such as executive compensation;

 

●

CGT Holdings is exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;

 

●

CGT Holdings is not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and

 

●

CGT Holdings is not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.

 

CGT Holdings is required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, CGT Holdings intends to file reports on Form 6-K as a foreign private issuer. However, the information CGT Holdings is required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

 

 

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 accounting standards used.

 

As an “emerging growth company” under applicable law, we are subject to reduced disclosure requirements. Such reduced disclosure may make CGT Holdings’ Ordinary Shares less attractive to investors.

 

For as long as we remain an “emerging growth company”, as defined in the JOBS Act, we will 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 CGT Holdings’ Ordinary Shares less attractive as a result, there may be a less active trading market for CGT Holdings’ 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 incurred 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 and Nasdaq, imposes various requirements on the corporate governance practices of public companies. We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of CGT Holdings’ initial public offering, (b) in which we have total annual gross revenue of at least US$1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of CGT Holdings’ Ordinary Shares that is held by non-affiliates exceeds US$700 million, the last business day of the CGT Holdings’ most recently completed fiscal year, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. 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 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private 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 CGT Holdings’ 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 will be required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We will incur 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 for us to find qualified persons to serve on our board of directors or as executive officers. 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.

 

 

CGT Holdings is a “controlled company” under the Nasdaq Rules, and CGT Holdings, as a result, can rely on exemptions from certain corporate governance requirements that could adversely affect CGT Holdings’ public shareholders.

 

As of the date of this prospectus, Mr. Shangzhao (Cizar) Hong, the chairman and chief executive officer of CGT Holdings, holds a majority of the voting power of CGT Holdings. Therefore, CGT Holdings will qualify as a “controlled company” under the Nasdaq Rules. Under these 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 may elect not to comply with certain corporate governance requirements, including the requirement that a majority of CGT Holdings’ directors be independent, as defined in the Nasdaq Rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of independent directors. CGT Holdings may elect to rely on any of such exemptions so long as it remains a controlled company and during any transition period following the time when CGT Holdings is no longer a controlled company. Should CGT Holdings choose to do so, you would not have the same protections afforded to shareholders of companies that are subject to all of Nasdaq corporate governance requirements.

 

If our financial condition deteriorates, we may not meet continued listing standards on Nasdaq.

 

Nasdaq also requires companies to fulfill specific requirements in order for their shares to continue to be listed. In order to qualify for continued listing on Nasdaq, CGT Holdings must meet the following criteria:

 

●

CGT Holdings’ shareholders’ equity must be at least $2,500,000; or the market value of our listed securities must be at least $35,000,000; or our net income from continuing operations in our last fiscal year (or two of the last three fiscal years) must have been at least $500,000;

 

●

The market value of CGT Holdings’ publicly held ordinary shares must be at least $1,000,000;

●

The minimum bid price for CGT Holdings’ ordinary shares must be at least $1.00 per share;

●

CGT Holdings must have at least 300 shareholders;

●

CGT Holdings must have at least 500,000 publicly held shares; and

●

CGT Holdings must have at least 2 market makers.

 

 

If CGT Holdings’ Ordinary Shares are listed on Nasdaq but are delisted from Nasdaq at some later date, CGT Holdings’ shareholders could find it difficult to sell CGT Holdings’ shares. In addition, if CGT Holdings’ Ordinary Shares are delisted from Nasdaq at some later date, we may apply to have CGT Holdings’ Ordinary Shares quoted on the Bulletin Board or in the “pink sheets” maintained by the National Quotation Bureau, Inc. The Bulletin Board and the “pink sheets” are generally considered to be less efficient markets than Nasdaq. In addition, if CGT Holdings’ Ordinary Shares are not so listed or are delisted at some later date, CGT Holdings’ Ordinary Shares may be subject to the “penny stock” regulations. These rules impose additional sales practice requirements on broker-dealers that sell low-priced securities to persons other than established customers and institutional accredited investors and require the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. As a result, the ability or willingness of broker-dealers to sell or make a market in CGT Holdings’ Ordinary Shares might decline. If CGT Holdings’ Ordinary Shares are not so listed or are delisted from Nasdaq at some later date or become subject to the penny stock regulations, it is likely that the price of CGT Holdings’ Ordinary Shares would decline and that CGT Holdings’ shareholders would find it difficult to sell their Ordinary Shares.

 

Cayman Islands economic substance requirements may have an effect on our business and operations.

 

Pursuant to the International Tax Cooperation (Economic Substance) Law, 2018 of the Cayman Islands, or the ES Law, that came into force on January 1, 2019, a “relevant entity” is required to satisfy the economic substance test set out in the ES Law. A “relevant entity” includes an exempted company incorporated in the Cayman Islands as is our Company. Based on the current interpretation of the ES Law, we believe that our Company, Creative Global Technology Holdings Limited, is a pure equity holding company since it only holds equity participation in other entities and only earns dividends and capital gains. Accordingly, for so long as our Company, Creative Global Technology Holdings Limited, is a “pure equity holding company”, it is only subject to the minimum substance requirements, which require us to (i) comply with all applicable filing requirements under the Companies Act; and (ii) has adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities. However, there can be no assurance that we will not be subject to more requirements under the ES Law. Uncertainties over the interpretation and implementation of the ES Law may have an adverse impact on our business and operations.

 

Because our business is conducted in Hong Kong dollars and the price of CGT Holdings’ Ordinary Shares are quoted in United States Dollars, changes in currency conversion rates may affect the value of your investments.

 

Our business is conducted in Hong Kong, our books and records are maintained in Hong Kong dollars, which is the currency of Hong Kong, and the financial statements that we file with the SEC and provide to our shareholders are presented in USD. Changes in the exchange rate between the Hong Kong dollar and USD affect the value of our assets and the results of our operations in United States dollars. The value of the Hong Kong dollar against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes in Hong Kong’s political and economic conditions and perceived changes in the economy of Hong Kong and the U.S. Any significant revaluation of the Hong Kong dollar may materially and adversely affect our cash flows, revenue and financial condition. Further, although CGT Holdings’ Ordinary Shares offered by this prospectus are denominated in USD, we will need to convert the net proceeds we receive into Hong Kong dollars in order to use the funds for our business. Changes in the conversion rate between the USD and the Hong Kong dollar will affect that amount of proceeds we will have available for our business.

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” and “Risk Factors.” Known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

 

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

 

●

our goals and strategies;

●

our future business development, financial conditions and results of operations;

●

fluctuations in interest rates;

●

our expectations regarding demand for and market acceptance of our products and services;

●

projections of revenue, earnings, capital structure and other financial items;

●

competition in our industry;

●

relevant government policies and regulations relating to our industry; and

●

general economic and business conditions in the markets in which we operate.

 

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Regulations” and other sections in this prospectus. You should thoroughly read this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of CGT Holdings’ Ordinary Shares. In addition, the rapidly changing nature of pre-owned consumer electronic devices industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

 

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

 

 

USE OF PROCEEDS

 

CGT Holdings will not receive any of the proceeds from the sale of its Ordinary Shares by the Selling Shareholder. The Selling Shareholder will receive all of the net proceeds from the sales of Ordinary Shares offered by it under this prospectus. CGT Holdings has agreed to bear the expenses relating to the registration of the Ordinary Shares for the Selling Shareholder.

 

 

DIVIDEND POLICY

 

CGT Holdings has never declared or paid any cash dividend on its Ordinary Shares. CGT Holdings does not anticipate paying any cash dividends in the foreseeable future and it intends to retain all of its earnings, if any, to finance its growth and operations and to fund the expansion of its business. Payment of any dividends will be made in the discretion of the board of directors of CGT Holdings, after taking into account various factors, including its financial condition, operating results, current and anticipated cash needs and plans for expansion. Under the current Hong Kong laws, CGTHK is permitted to provide funding to its direct registered shareholder or holding company through dividend distribution without restrictions on the amount of the funds, subject to availability of distributable profits and sufficient cash to maintain going concern and solvency of CGTHK and any contractual obligations owed to third parties prohibiting or restricting dividend distributions.

 

 

SELLING SHAREHOLDER

 

The Ordinary Shares being offered for resale by the Selling Shareholder consist of a total of 3,000,000 Ordinary Shares. The following table sets forth the name of the Selling Shareholder, the number and percentage of Ordinary Shares beneficially owned by the Selling Shareholder, the number of Ordinary Shares that may be sold in this Resale Offering and the number and percentage of Ordinary Shares the Selling Shareholder will own after this Resale Offering. The information appearing in the table below is based on information provided by or on behalf of the named Selling Shareholder. CGT Holdings will not receive any proceeds from the sale of the Ordinary Shares by the Selling Shareholder.

 

Name of Selling Shareholder		Ordinary Shares Beneficially Owned Prior to Resale Offering				Percentage Ownership Prior to Resale Offering(1)				Number of Ordinary Shares to be Sold				Number of Ordinary Shares Owned After Resale Offering				Percentage Ownership After Resale Offering(2)
CHSZ Holdings Limited(1)(2)(3)			3,000,000				13.99	%			3,000,000				0				0	%

  

(1)

Based on 21,437,500 Ordinary Shares issued and outstanding as of the date of this prospectus.

 

(2)

The Selling Shareholder is under no obligation to sell any shares pursuant to this prospectus. However, for the purpose of calculating the Ordinary Shares beneficially owned by the Selling Shareholder, we assume that the Selling Shareholder will sell all of the Ordinary Shares offered for sale pursuant to this prospectus.

 

(3)

On December 27, 2023, HSZ Holdings Limited transferred 2,000,000 ordinary shares to CHSZ Holdings Limited; on February 27, 2024, HSZ Holdings Limited transferred another 1,000,000 ordinary shares to CHSZ Holdings Limited.

 

 

EXCHANGE RATE INFORMATION

 

Our business is primarily conducted in Hong Kong. All of our revenues are received and denominated in HK$ or US$. All our production costs and general administration costs are paid and denominated in HK$. Capital accounts of our condensed financial statements are translated into US$ from HK$ at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. The HK$ and US$ exchange rate is linked and freely convertible.

 

For the purpose in this prospectus, unless it indicates otherwise, the translation of US$ amounts from HK$ has been made at the following exchange rates:

 

Translation of amounts from HK$ into US$ has been made at the following exchange rates:

 

Balance sheet items, except for equity accounts:
September 30, 2024			HKD7.7863 to $1
September 30, 2023			HKD7.8302 to $1
Statement of operations and cash flow items:
Year Ended September 30, 2024			HKD7.8130 to $1
Year Ended September 30, 2023			HKD7.8330 to $1
Year Ended September 30, 2022			HKD7.8217 to $1

 

Balance sheet items, except for equity accounts:
September 30, 2024			HKD7.7863 to $1
September 30, 2023			HKD7.8302 to $1
Statement of operations and cash flow items:
Year Ended September 30, 2024			HKD7.8130 to $1
Year Ended September 30, 2023			HKD7.8330 to $1
Year Ended September 30, 2022			HKD7.8217 to $1

 

 

ENFORCEABILITY OF CIVIL LIABILITIES

 

CGT Holdings was incorporated in the Cayman Islands in order to enjoy the following benefits:

 

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political and economic stability;

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an effective judicial system;

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a favorable tax system;

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the absence of exchange control or currency restrictions; and

●

the availability of professional and support services.

 

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:

 

●

The Cayman Islands has a less developed body of securities laws as compared to the United States and these securities laws provide significantly less protection to investors; and

●

Cayman Islands companies may not have standing to sue before the federal courts of the United States.

 

CGT Holdings’ constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the U.S., between CGT Holdings, CGT Holdings’ officers, directors and shareholders, be arbitrated. Currently, all of our operations are conducted in Hong Kong, and substantially all of our assets are located in Hong Kong. All of our officers are nationals or residents of jurisdictions in Hong Kong and a substantial portion of their assets are located in Hong Kong. All of our directors except for Jingeng Chen are nationals or residents of jurisdictions in Hong Kong. Jingeng Chen is a PRC resident. As a result, it may make it more difficult for a shareholder or an investor to effect service of process within the U.S. upon these persons, or to enforce against us or our officers or directors with the judgments obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the securities laws of the U.S. or any state in the U.S.

 

CGT Holdings has appointed Cogency Global Inc., which is located at 122 East 42^nd Street, 18^th Floor, New York, NY 10168, as its agent to receive service of process with respect to any action brought against it in the U.S. in connection with the Resale Offering under the federal securities laws of the U.S. or of any State in the U.S.

 

Ogier, our counsel as to Cayman Islands law, and Lawrence Chan & Co., our counsel as to Hong Kong law have advised us, respectively, that there is uncertainty as to whether the courts of the Cayman Islands and Hong Kong, respectively, would:

 

●

recognize or enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the U.S. or any state in the U.S.; or

●

entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the U.S. or any state in the U.S.

  

 

Cayman Islands

 

We have been advised by Ogier, our counsel as to Cayman Islands law, that it is uncertain whether the courts of the Cayman Islands would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

 

Ogier has further advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in a federal or state court of the United States, the courts of the Cayman Islands would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the United States courts against us under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, in personam judgment for non-monetary relief, and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from United States 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.

 

Hong Kong

 

Lawrence Chan & Co., our counsel with respect to Hong Kong law, has advised us that judgments 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 U.S. However, an action can be brought upon a foreign judgment in Hong Kong courts. 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 an 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 an action in Hong Kong 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.

 

 

Corporate History and Structure

 

Creative Global Technology Holdings Limited is a Cayman exempted company formed on January 11, 2023. In March, 2023, CGT Holdings completed a reorganization of its corporate structure. CGT Holdings owns 100% equity interest in Creative Global Technology (BVI) Limited (“CGT BVI”), a BVI holding company formed on January 12, 2023. On March 9, 2023, CGT BVI became the 100% owner of CGTHK.

 

CGTHK, the operating entity conducting substantially all of our business operations, was founded under the laws of Hong Kong in 2016. Since its formation, CGTHK has been engaged in the business of sourcing pre-owned consumer electronic devices (mainly smartphones, tablets, and laptops) from suppliers in the U.S., Japan, and some other developed countries, pursuant to the orders placed by wholesalers that will sell these goods in Southeast Asia and other areas. Although CGTHK has been expanding into the retail and leasing of consumer electronic devices business since 2021, the traditional wholesale of pre-owned consumer electronic devices business still accounted for over 90% of CGTHK’s revenue in 2023.

 

The following diagram illustrates our corporate structure, including our subsidiaries. Unless otherwise indicated, equity interests depicted in this diagram are held 100%.

 

 

The IPO

 

On November 27, 2023, the Company completed its initial public offering of 1,437,500 ordinary shares at a price of $4.00 per share (including the full exercise of the underwriters’ over-allotment option to purchase 187,500 ordinary shares at a price of $4.00). The total gross proceeds received from the initial public offering, including proceeds from the exercise of the over-allotment option, was US$5.75 million.

 

The Stock Incentive Plan

 

On January 17, 2025, the Company’s board of directors approved the 2024 Stock Incentive Plan, which was subsequently registered through Form S-8 filed on January 22, 2025. Under this equity incentive program, the Company has authorized the issuance of up to 4,287,500 Ordinary Shares for awards under the 2024 Stock Incentive Plan.

 

 

Regulations

 

Hong Kong Regulations

 

As we conduct business in Hong Kong through our wholly-owned subsidiary, CGTHK, our business operations are subject to various regulations and rules promulgated by the Hong Kong government. The following is a brief summary of the Hong Kong laws and regulations that currently and materially affect our business. This section does not purport to be a comprehensive summary of all present and proposed regulations and legislation relating to the industries in which we operate.

 

Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) (the “BRO”)

 

As we carry on businesses in Hong Kong, we are subject to the BRO, which requires every person (a company or an individual) carrying on a business in Hong Kong to register with the Inland Revenue Department and obtain a business registration certificate within one month of the commencement of the business. Business registration is a process based on application and does not involve government approval. Once the requisite criteria are met, a business registration certificate will be granted. Business registration serves to notify the Inland Revenue Department of the establishment of a business in Hong Kong and facilitate the collection of tax from businesses in Hong Kong.

 

Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) (the “IRO”)

 

The IRO is an ordinance for the purposes of imposing taxes on property, earnings and profits in Hong Kong. The IRO provides, among others, that persons, which include corporations, partnerships, trustees and bodies of persons, carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. The standard profits tax rate for corporations is at 16.5%. Under the two-tiered profits tax rates regime, commencing from the year of assessment 2018/2019, the first two million of profits in Hong Kong dollars earned by a Hong Kong entity (except those with a connected entity which is nominated to be chargeable at the two-tiered rates) will be taxed at half the current tax rate (i.e., 8.25%) while the remaining profits will continue to be taxed at the existing 16.5% tax rate. The IRO also contains provisions relating to, among others, permissible deductions for outgoings and expenses, set-offs for losses and allowances for depreciation. As our Group carries out business in Hong Kong, we are subject to the profits tax regime under the IRO.

 

As we may carry on business through subsidiaries in Hong Kong and other jurisdictions, the provisions relating to transfer pricing for intra-group transactions in the IRO may apply to us. The IRO contains provisions which require the adoption of the arm’s length principle for pricing in related party transactions. Section 20A of the IRO gives the Inland Revenue Department (the “IRD”) wide powers to collect tax due from non-residents. The IRD may also make transfer pricing adjustments by disallowing expenses incurred by the Hong Kong resident under sections 16(1), 17(1)(b) and 17(1)(c) of the IRO and challenging the entire arrangement under general anti-avoidance provisions, such as sections 61 and 61A of the IRO.

 

Hong Kong Laws and Regulations Relating to Trade Descriptions

 

Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) (the “TDO”), which came into full effect in Hong Kong on April 1, 1981, aims to prohibit false or misleading trade description and statements to goods and services provided to the customers during or after a commercial transaction. Pursuant to the TDO, any person in the course of any trade or business applies a false trade description to any goods or supply or offers to supply them commits an offence and a person also commits the same offence if he/she is in possession for sale or for any purpose of trade or manufacture of any goods with a false description. The TDO also provides that traders may commit an offence if they engage in a commercial practice that has a misleading omission of material information of the goods, an aggressive commercial practice, involves bait advertising, bait and switch or wrong acceptance of payment. It is also an offence for any person to have in his possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied. To amount to a false trade description, the falsity of the trade descriptions has to be to a material degree. Trivial errors or discrepancies in trade descriptions would not constitute an offence. What constitutes a material degree will vary with the facts.

 

 

Contravention of the prohibitions in the TDO is an offence, with a maximum penalty of up to HK$500,000 and five years’ imprisonment. However, the TDO also provides regulators with the ability to accept (and publish) written undertakings from businesses and individuals not to continue, repeat or engage in unfair trade practices in return of which regulator will not commence or continue investigations or proceedings relating to that matter. Regulators will also be empowered to seek an injunction against businesses and persons engaging in unfair trade practices or who have breached an undertaking.

 

Hong Kong Laws and Regulations Relating to Sale of Goods

 

Pursuant to Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) (the “SOGO”), which came into full effect in Hong Kong on August 1, 1896, in every contract of sale, there is an implied warranty that the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the buyer before the contract is made and that the buyer will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known. The SOGO provides that there is an implied condition that the goods shall correspond with the description where there is a contract for the sale of goods by description, and there is any implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition (i) as regards defects specifically drawn to the buyer’s attention before the contract is made; or (ii) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal; or (iii) if the contract is a contract for sale by sample, as regards defects which would have been apparent on a reasonable examination of the sample. Where there is a contract for sale by sample, there are implied conditions that (i) the bulk shall correspond with the sample in quality, (ii) the buyer shall have a reasonable opportunity of comparing the bulk with the sample, and (iii) the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. Under SOGO, where any right, duty or liability would arise under a contract of sale of goods by implication of law, it may (subject to the Control of Exemption Clauses Ordinance (Chapter 71 of the Laws of Hong Kong)) be negatived or varied by express agreement, or by the course of dealing between the parties, or by usage if the usage is such as to bind both parties to the contract.

 

Supply of Services (Implied Terms) Ordinance (Chapter 457 of the Laws of Hong Kong) (the “SSO”)

 

The SSO, which aims to consolidate and amend the laws with respect to the terms to be implied in contracts for the supply of services (including a contract for the supply of a service whether or not goods are also transferred or to be transferred, or bailed or to be bailed by way of hire), provides that: (a) where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill; and (b) where the supplier is acting in the course of a business, the time for the service to be carried out is not fixed by the contract, is not left to be fixed in a manner agreed by the contract or is not determined by the course of dealing between the parties, there is an implied term that the supplier will carry out the service within a reasonable time. As against a party to a contract for the supply of a service who deals as consumer, the other party cannot, by reference to any contract term, exclude or restrict any liability of his arising under the contract by virtue of the SSO. Except as provided in the SSO, where a right, duty or liability would arise under a contract for the supply of a service by virtue of the SSO, it may (subject to the Control of Exemption Clauses Ordinance (Chapter 71 of the Laws of Hong Kong)) be negatived or varied by express agreement, or by the course of dealing between the parties, or by such usage as binds both parties to the contract.

 

Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong) (the “TO’’)

 

Under the TO, a license, namely Radio Dealers License (Unrestricted), is required for dealing in the course of trade or business in apparatus or material for radio communications or in any component part of any such apparatus or in apparatus of any kind that generates and emits radio waves whether or not the apparatus is intended, or capable of being used, for radio communications. However, the above requirement does not apply to licensed exempted radio communications apparatus (e.g., mobile phones, short-range walkie-talkies, cordless phones) meeting prescribed specifications. Under the Radio Dealers License (Unrestricted), the licensee is permitted to deal in radio communications apparatus pursuant to section 9 of the TO. A Radio Dealers License (Unrestricted) is generally valid for a period of 12 months, and is renewable on payment of the prescribed fee, at the discretion of Office of the Communications Authority (“OFCA”).

 

 

We are licensees of the Radio Dealers Licenses (Unrestricted). The material licensing conditions are: (a) to store the licensed apparatus at a specified address, (b) to display the license at the licensed premises, (c) to keep and maintain complete and accurate registers for the last twelve months, of the licensed apparatus and of the licensee’s dealings and transactions therewith, except those apparatus which have been exempted, (d) not to deal locally in radio apparatus which is not of a type approved by the Communications Authority or not licensable in Hong Kong; and to only deliver radio apparatus to a customer if (i) they have been exempted by statute, (ii) the customer is not a tourist and is licensed to possess or use the apparatus, or (iii) the customer is a tourist who intends to export the apparatus after purchase.

 

Radio Dealers Licenses have different dates of grant and are valid for a period of 12 months. CGTHK’s radio dealers license will expire on April 30, 2025, and will be renewed upon expiry (subject to the discretion of OFCA). We will renew the Radio Dealers Licenses in accordance with the Telecommunications Regulations (Chapter 106A of the Laws of Hong Kong) by paying the required renewal fee to OFCA. We are not aware of any legal impediment to renew the Radio Dealers Licenses subject to the conditions below: (I) We have to pay to OFCA the required renewal fee as may from time to time be determined and required by OFCA on or before the respective date of expiry of the Radio Dealers Licenses; and (II) We have to comply with the “General Conditions to be observed by Licensee of Radio Dealers License (Unrestricted)” and the “Conditions” set out in the Radio Dealers Licenses.

 

Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong) (the “CGSO”) and Consumer Goods Safety Regulation (Chapter 456A of the Laws of Hong Kong) (the “CGSR”)

 

The CGSO is enacted to impose a duty on manufacturers, importers and suppliers of certain consumer goods to ensure that the consumer goods they supply are safe. Electrical products and any other goods the safety of which is controlled by specific legislation are not covered by the CGSO.

 

The CGSO prohibits a person from supplying, manufacturing, or importing into Hong Kong consumer goods unless the consumer goods comply with the general safety requirement or an approved standard for consumer goods. Currently there is no approved standard which has been approved in any regulation to the CGSO. Contravention with the above requirement is an offence and the offender is liable on first conviction to a fine at HK$100,000 and to imprisonment for one year, and on subsequent conviction to a fine of HK$500,000 and to imprisonment for two years.

 

It is a defense to the above offence if the commission of the offence was due to (a) the act or default of another person or reliance on information given by another, and (b) that it was reasonable in all the circumstances for him to have relied on the information, having regard in particular (i) to the steps which he took, and those which might reasonably have been taken, for the purpose of verifying the information; and (ii) to whether he had any reason to disbelieve the information. A court may take into consideration the existence of a certificate from an approved laboratory showing that the samples of consumer goods which are the subject of the prosecution had been tested before being sold and had complied with the safety standard or safety specification set out in the certificate.

 

The CGSR requires any warning or caution affixed on any consumer goods or their packages to be in both the English and the Chinese languages. The warning or caution 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. Any person who supplies consumer goods which do not comply with the above requirements commits an offence and is liable (a) on first conviction to a fine at HK$100,000 and to imprisonment for one year; and (b) on subsequent conviction to a fine of HK$500,000 and to imprisonment for two years.

 

Electricity Ordinance (Chapter 406 of the Laws of Hong Kong) (the “EO”) and Electrical Products (Safety) Regulation (Chapter 406G of the Laws of Hong Kong) (the “EPSR”)

 

The EO was enacted, amongst others, to provide safety requirements for electrical products. It defines “electrical product” to mean any current-using equipment, lighting fitting or accessory, that uses low voltage or high voltage electricity. The EO empowers the Chief Executive in Council to make regulations for the general purpose of the EO.

 

 

The EPSR applies to an electrical product which is designed for household use and supplied in Hong Kong. It does not apply, amongst other exceptions, to an electrical product which is a travel adaptor, or supplied in a place other than Hong Kong under a sale agreement entered into in Hong Kong.

 

The EPSR provides for the safety requirements for different electrical products, and prohibits any person from supplying an electrical product without a certificate of safety compliance being issued in respect of the product and the product complies with the applicable safety requirements. Any person who supplies an electrical product which fails to comply with the applicable safety requirements commits and offence and is liable on first conviction to a fine at HK$100,000 and to imprisonment for one year, and on subsequent conviction to a fine of HK$500,000 and to imprisonment for two years, unless he shows that he took all reasonable steps and exercised all due diligence to avoid committing the offence.

 

It is a defense to the above offence if the commission of the offence was due to (a) the act or default of another person or reliance on information given by another, and (b) that it was reasonable in all the circumstances for him to have relied on the information, having regard in particular (i) to the steps which he took, and those which might reasonably have been taken, for the purpose of verifying the information; and (ii) to whether he had any reason to disbelieve the information.

 

Tortious Liabilities under Common Law

 

The common law provides for different duties of care a wholesaler or retailer needs to exercise in respect of their customers. Generally, a wholesaler must take reasonable steps to check the safety of what he distributes. For products which cannot practically be examined in his hands, his duty is then limited to taking reasonable steps to deal with reputable suppliers. A retailer may be liable in tort, if it sells goods it has reason to know may be defective, or if it disregards instructions issued by manufacturers or distributors, or if it sells goods with reason to know they are likely to be used to harm others, at least where it does not make it clear to the buyer.

 

Control of Exemption Clauses Ordinance (Chapter 71 of the Laws of Hong Kong) (the “CECO”)

 

The CECO regulates and limits the scope of clauses intending to limit or restrict a party’s liability in relation to breach of contract, negligence or other breach of duty. The CECO provides that as against a person who deals as a consumer (such as the retail customers of our Group), our Group cannot by reference to any contract term exclude or restrict liability of breach of obligations arising under sections 14 to 17 of the SOGO (i.e., implied undertakings as to title, conformity with description, merchantable quality, reasonable fitness for purpose and conformity with sample). As against a person who does not deal as a customer, our Group may exclude or restrict its liability if the exclusion or restriction is reasonable.

 

Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) (the “I&EO”), Import and Export (General) Regulations (Chapter 60A of the Laws of Hong Kong) (the “I&EGR”), and Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong) (the “I&ERR”)

 

The I&EO regulates and controls, inter alia, the import of articles into and the export of articles from Hong Kong. Except under and in accordance with a license, import and export of the articles listed in Schedules 1 and 2 (respectively) of the I&EGR are prohibited. Our Group does not import or export any such prohibited articles. Any person who imports and exports any prohibited article without a license commits an offence and is liable on summary conviction to a fine of HK$500,000 and to imprisonment for two years.

 

The I&ERR requires, inter alia, every person who imports or exports any article other than an exempted article to lodge with the Commissioner of Customs and Excise an accurate and complete import declaration within 14 days relating to such article using services provided by a specified body, in accordance with the requirements that the Commissioner may specify. Articles exempted from the declaration requirement include, amongst others, (i) any postal packet the contents of which are valued at less than HK$4,000, (ii) any article consisting solely of and marked clearly as a sample of a product intended to be distributed free of charge for the purpose of advertising the product, and (iii) any article consisting solely of and marked clearly as a sample, valued at less than HK$1,000, of a product intended to be used for advertising the product. Any person who fails or neglects, without reasonable excuse, to file the declaration using services provided by a specified body within 14 days, or, where he has such excuse, fails or neglects to lodge such declaration in such manner as soon as is practicable after the cessation of such excuse, commits an offence and is liable on summary conviction to a fine at HK$2,000 and, commencing on the day following the date of conviction, to a fine of HK$100 in respect of every day during which his failure or neglect to lodge the declaration in that manner continues.

 

 

In addition to any fines imposed, a penalty would also be payable for late declaration in accordance with a prescribed scale. Different penalties are prescribed depending on whether the declaration is lodged 14 days, one month plus 14 days, or two months plus 14 days after the articles specified in the declaration have been imported or exported.

 

Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong Kong) (the “OPO”)

 

The OPO regulates the obligations of a person occupying or having control of premises on injury resulting to persons or damage caused to goods or other property lawfully on the land. The Occupiers Liability Ordinance imposes a common duty of care on an occupier of premises to take such care as in all the circumstances of the case is reasonable to see that the visitors will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there.

 

Hong Kong Laws and Regulations Relating to Intellectual Properties Rights

 

Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) (“TMO”), which came into full effect in Hong Kong on April 4, 2003 provides the framework for the Hong Kong’s system of registration of trademarks and sets out the rights attached to a registered trade mark, including logo and a brand name. The TMO restricts unauthorized use of a sign which is identical or similar to the registered mark for identical and/or similar goods and/or services for which the mark was registered, where such use is likely to cause confusion on the part of the public. The TMO provides that a person may also commit a criminal offence if that person fraudulently uses a trademark, including selling and importing goods bearing a forged trade mar, or possessing or using equipment for the purpose of forging a trademark. However, pursuant to section 20 of the TMO, a registered trade mark is not infringed by the use of trade mark in relation to goods which have been put on the market anywhere in the world under that trade mark by the owner or with his consent (whether express or implied or conditional or unconditional), unless the condition of the goods has been changed or impaired after they have been put on the market, and the use of the registered trade mark in relation to those goods is detrimental to the distinctive character or repute of the trade mark.

 

Patents Ordinance (Chapter 514 of the Laws of Hong Kong), which came into full effect in Hong Kong on June 27, 1997 provides the framework for “re-registration” system of Chinese, UK and European patents in Hong Kong. Pursuant to Patents (Amendment) Ordinance 2016, which came into full effect in Hong Kong on December 19, 2019 provide a new framework for a new patent system — an “original grant patent” system, running in parallel with the “re-registration” system.

 

Copyright Ordinance (Chapter 528 of the Laws of Hong Kong) (“CO”), which came into full effect in Hong Kong on June 27, 1997 provides comprehensive protection for recognized categories of underlying works such as literary, dramatic, musical and artistic works. The CO restricts unauthorized acts such as copying and/or making available copies to the public of a copy right work. The CO provides that a person commits an offence if he, without the license of the copyright owner of a copyright work imports an infringing copy of the work into Hong Kong, at any time within 15 months beginning on the first day of publication of the work in Hong Kong or elsewhere, otherwise than for his private and domestic use.

 

Hong Kong Laws and Regulations Relating to Competition

 

Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (“Competition Ordinance”), which came into full effect in Hong Kong on December 14, 2015 prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting or distorting competition in Hong Kong. The key prohibitions include (i) prohibition of agreements between businesses which have the object or effect of preventing, restricting or distorting competition in Hong Kong; and (ii) prohibiting companies with a substantial degree of market power from abusing their power by engaging in conduct that has the object or effect of preventing, restricting or distorting competition in Hong Kong. The penalties for breaches of the Competition Ordinance include, but are not limited to, financial penalties of up to 10% of the total gross revenues obtained in Hong Kong for each year of infringement, up to a maximum of three years in which the contravention occurs.

 

 

Hong Kong Laws and Regulations Relating to Employment

 

Pursuant to Employment Ordinance (Chapter 57 of the Laws of Hong Kong) (“EO”), which came into full effect in Hong Kong on September 27, 1968, all employees covered by the EO, irrespective of their hours of work, are entitled to basic protection under the EO including but not limited to payment of wages, restrictions on wages deductions and the granting of statutory holidays. According to the Employment Ordinance, an employer who willfully and without reasonable excuse fails to pay wages to an employee when it becomes due is liable to a fine of HK$350,000 and imprisonment for three years. Employees who are employed under a continuous contract are further entitled to such benefits as rest days, paid annual leave, sickness allowance, severance payment and long service payment, etc.

 

Pursuant to Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) (“MPFSO”), which came into full effect in Hong Kong on December 1, 2000, every employer must take all practicable steps to ensure that the employee becomes a member of a Mandatory Provident Fund (MPF) scheme. Section 7A of the MPFSO requires an employer who is employing a relevant employee to, for each contribution period occurring after that commencement (i) from the employer’s own funds, contribute to the relevant registered scheme the amount determined in accordance with MPFSO; and (ii) deduct from the employee’s relevant income for that period as a contribution by the employee to that scheme the amount determined in accordance with MPFSO. Under the MPF Scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant income, subject to the minimum and maximum relevant income levels. For monthly-paid employees, the minimum and maximum relevant income levels are HK$7,100 and HK$30,000 respectively. An employer who fails to comply with such a requirement may face a fine and imprisonment.

 

Pursuant to Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) (“ECO”), which came into full effect in Hong Kong on December 1, 1953, all employers are required to take out insurance policies to cover their liabilities under the ECO and at common law for injuries or death at work in respect of all of their employees. Under the ECO, if an employee sustains injuries or dies as a result of an accident arising out of and in the course of employment, the employer is generally liable to pay compensation even if the employee might have committed acts of faults or negligence when the accident occurred. An employer failing to do so may be liable to a fine and imprisonment.

 

Pursuant to Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) (“MWO”), which came into full effect in Hong Kong on May 1, 2011, an employee is entitled to be paid wages no less than the statutory minimum wage rate during the wage period. With effect from May 1, 2023, the statutory minimum wage rate was increased from HK$37 to HK$40 per hour. Failure to comply with MWO constitutes an offence under EO.

 

Pursuant to Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong) (the “OSHO”), employers must as far as reasonably practicably ensure the safety and health of their employees in workplace. An employer who fails to ensure the safety and health of employees in a workplace is liable on conviction to a maximum fine of HK$10,000,000. An employer who fails to do so intentionally, knowingly or recklessly commits an offence and is liable on conviction to a maximum fine of HK$10,000,000 and to imprisonment for up to two (2) years.

 

Cayman Islands Data Protection

 

We have certain duties under the Data Protection Act (as revised) of the Cayman Islands, or the DPA, based on internationally accepted principles of data privacy.

 

Privacy Notice

 

This privacy notice puts our shareholders on notice that through your investment into us you will provide us with certain personal information which constitutes personal data within the meaning of the DPA, or personal data.

 

 

Investor Data

 

We will collect, use, disclose, retain and secure personal data to the extent reasonably required only and within the parameters that could be reasonably expected during the normal course of business. We will only process, disclose, transfer or retain personal data to the extent legitimately required to conduct our activities of on an ongoing basis or to comply with legal and regulatory obligations to which we are subject. We will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction or damage to the personal data.

 

In our use of this personal data, we will be characterized as a “data controller” for the purposes of the DPA, while our affiliates and service providers who may receive this personal data from us in the conduct of our activities may either act as our “data processors” for the purposes of the DPA or may process personal information for their own lawful purposes in connection with services provided to us.

 

We may also obtain personal data from other public sources. Personal data includes, without limitation, the following information relating to a shareholder and/or any individuals connected with a shareholder as an investor: name, residential address, email address, contact details, corporate contact information, signature, nationality, place of birth, date of birth, tax identification, credit history, correspondence records, passport number, bank account details, source of funds details and details relating to the shareholder’s investment activity.

 

Who this Affects

 

If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation your investment in us, this will be relevant for those individuals and you should transit the content of this Privacy Notice to such individuals or otherwise advise them of its content.

 

How We May Use a Shareholder’s Personal Data

 

We may, as the data controller, collect, store and use personal data for lawful purposes, including, in particular: (i) where this is necessary for the performance of our rights and obligations under any agreements; (ii) where this is necessary for compliance with a legal and regulatory obligation to which we are or may be subject (such as compliance with anti-money laundering and FATCA/CRS requirements); and/or (iii) where this is necessary for the purposes of our legitimate interests and such interests are not overridden by your interests, fundamental rights or freedoms.

 

Should we wish to use personal data for other specific purposes (including, if applicable, any purpose that requires your consent), we will contact you.

 

Why We May Transfer Your Personal Data

 

In certain circumstances we may be legally obliged to share personal data and other information with respect to your shareholding with the relevant regulatory authorities such as the Cayman Islands Monetary Authority or the Tax Information Authority. They, in turn, may exchange this information with foreign authorities, including tax authorities.

 

We anticipate disclosing personal data to persons who provide services to us and their respective affiliates (which may include certain entities located outside the U.S., the Cayman Islands or the European Economic Area), who will process your personal data on our behalf.

 

The Data Protection Measures We Take

 

Any transfer of personal data by us or our duly authorized affiliates and/or delegates outside of the Cayman Islands shall be in accordance with the requirements of the DPA.

 

We and our duly authorized affiliates and/or delegates shall apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of personal data, and against accidental loss or destruction of, or damage to, personal data.

 

  

We shall notify you of any personal data breach that is reasonably likely to result in a risk to your interests, fundamental rights or freedoms or those data subjects to whom the relevant personal data relates.

 

Contacting the Company

 

For further information on the collection, use, disclosure, transfer or processing of your personal data or the exercise of any of the rights listed above, please contact us through our websites at www.cgt-electronics.com and https://cgt-recycle.com.

 

British Virgin Islands Laws and Regulations Relating to Foreign Exchange Control

 

Under the laws of the British Virgin Islands, a BVI business company is free to acquire, hold and sell foreign currency and securities without restriction. There is no exchange control legislation under British Virgin Islands law and accordingly there are no exchange control regulations imposed under British Virgin Islands law that would prevent the BVI business company from paying dividends to shareholders in US$ or any other currencies, and all such dividends may be freely transferred out of the British Virgin Islands, clear of any income or other tax of the British Virgin Islands imposed by withholding or otherwise without the necessity of obtaining any consent of any government or authority of the British Virgin Islands.

 

United States laws and regulations relating to export control and international trade

 

United States Export Regulation

 

Consumer electronic devices are classified as EAR 99, relatively unrestricted by the DOC. Accordingly, our business of pre-owned consumer electronics purchase and resale will be regulated under export administration regulations and subject to export bans established by DOC to a limited set of restricted countries. We believe we are not required to obtain licenses for our business. However, dependent upon changes enforced in export regulations, in the future, we could be controlled, similar to other self-defense device manufacturers, as a “crime control” product by the DOC, for export directly from the United States. Our inability to obtain DOC export licenses, if required, for sales of our device to international customers could significantly and adversely affect our business. The need to obtain these licenses may cause a delay in our shipments if we develop an international sales program.

 

 

PRINCIPAL SHAREHOLDERS

 

The following table sets forth information regarding the beneficial ownership of CGT Holdings’ Ordinary Shares as of the date of this prospectus by CGT Holdings’ officers, directors, and 5% or greater beneficial owners of Ordinary Shares. There is no other person or group of affiliated persons known by us to beneficially own more than 5% of CGT Holdings’ Ordinary Shares.

 

CGT Holdings determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the person identified in this table has sole voting and investment power with respect to all shares shown as beneficially owned by him, subject to applicable community property laws.

 

The calculations in the table below are based on 21,437,500 Ordinary Shares issued and outstanding as of the date of this prospectus.

 

Except as otherwise indicated in the table below, addresses of CGT Holdings’ directors, executive officers and named beneficial owners are in care of Creative Global Technology Limited, Unit 03, 22/F, Westin Centre, 26 Hung To Road, Kwun Tong, Kowloon, Hong Kong, Tel: + (852) 2690 9121.

 

		Ordinary Shares Beneficially Owned Prior to the Resale Offering								Ordinary Shares Beneficially Owned after the Resale Offering(14)
		Number of shares				Percentage of shares(1)				Number of Shares				Percentage of Shares(1)
Directors and Executive Officers:
Shangzhao (Cizar) Hong(2)(3)			20,000,000				93.29	%			17,000,000				79.30	%
Hei Tung (Angel) Siu(4)			—				—	%			—				—	%
Hung Leung (Alan) Tsang(5)			—				—	%			—				—	%
Jingeng Chen(6)			—				—				—				—	%
Wai Leung (Alfred) Lau(7)			—				—				—				—	%
Michael Osofsky(8)			—				—				—				—	%
5% or Greater Shareholders:
Shangzhao (Cizar) Hong			20,000,000				93.29	%			17,000,000				79.30	%
HSZ Holdings Limited(9)			17,000,000				79.30	%			17,000,000				79.30	%
CHSZ Holdings Limited(10)(11)			3,000,000				13.99	%			—				—	%
All directors and executive officers as a group (six individuals)			20,000,000				93.29	%			17,000,000				79.30	%

 

—

Less than 1 %

(1)

Percentage is calculated based on 21,437,500 ordinary shares issued and outstanding as of February 10, 2025.

(2)

The address of Mr. Shangzhao (Cizar) Hong is Flat E, 6/F, Tower 1, Corinthia By The Sea, 23 Tong Yin Street, Tseung Kwan O, N.T., Hong Kong.

(3)

Includes 17,000,000 shares owned by HSZ Holdings Limited, and 3,000,000 shares owned by CHSZ Holdings Limited, each an entity controlled by Mr. Shangzhao (Cizar) Hong.

(4)

The address of Hei Tung (Angel) Siu is Flat 30A, 30/F, Block 2, High Prosperity Terrace, 188 Kwai Shing Circuit, Kwai Chung, N.T., Hong Kong.

(5)

The address of Hung Leung (Alan) Tsang is Room 902, Block C, Mt. Parker Lodge, 10 Hong Pak Path, Quarry Bay, Hong Kong.

(6)

The address of Jingeng Chen is Room 2605, Building A, Meiliyuan, No. 1018 Hongling Middle Road, Luohu District, Shenzhen, Guangdong Province, China.

(7)

The address of Wai Leung (Alfred) Lau is Flat A, 10/F, Block 1, Scenecliff, 33 Conduit Road, Mid-levels, Hong Kong.

(8)

The address of Michael Osofsky is Block 35, Flat D, 8/F, Ana Capri, 8 Pak Lai Road, Park Island, Ma Wan, Hong Kong.

(9)

The address of HSZ Holdings Limited is Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, VG1110, British Virgin Islands.

(10)

The address of CHSZ Holdings Limited is Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands VG1110.

(11)

On December 22, 2023, HSZ Holdings Limited transferred 2,000,000 ordinary shares to CHSZ Holdings Limited; on February 27, 2024, HSZ Holdings Limited transferred another 1,000,000 ordinary shares to CHSZ Holdings Limited.

(12)

The Selling Shareholder is under no obligation to sell any shares pursuant to this prospectus. However, for the purpose of calculating the Ordinary Shares beneficially owned by the Selling Shareholder and Mr. Shangzhao (Cizar) Hong, we assume that the Selling Shareholder will sell all of the Ordinary Shares offered for sale pursuant to this prospectus.

 

 

RELATED PARTY TRANSACTIONS

 

Other than the amount due to Mr. Shangzhao (Cizar) Hong, as described below, we had no other related party transactions during the fiscal years ended September 30, 2024, 2023, and 2022.

 

The short-term loans due to Mr. Hong were to provide the company’s working capital needs, and they were interest-free, unsecured and repayable on demand.

 

As of September 30, 2024, 2023 and 2022, the outstanding balances due to Mr. Hong were as follows:

 

Nature

Sep 30, 2024

Sep 30, 2023

Sep 30, 2022

US$

US$

US$

Shangzhao (Cizar) Hong

To meet company’s working capital needs

0

0

989,373

 

As of September 30, 2024, there is no outstanding balance due to Mr. Hong.

 

 

DESCRIPTION OF SHARE CAPITAL

 

CGT Holdings is a Cayman Islands exempted company and its affairs are governed by its memorandum and articles of association, as amended from time to time, and the Companies Act (As Revised) of the Cayman Islands, which we refer to as the Companies Act below, and the common law of Cayman Islands.

 

As of the date of this prospectus, CGT Holdings’ authorized share capital is US$500,000 divided into 500,000,000 shares, par value of US$0.001 each, comprising of 500,000,000 Ordinary Shares of a par value of US$0.001 each.

 

As of the date of this prospectus, CGT Holdings has 21,437,500 Ordinary Shares issued and outstanding. All of CGT Holdings’ Ordinary Shares issued and outstanding are fully paid.

 

CGT Holdings’ Amended and Restated Memorandum and Articles of Association

 

CGT Holdings adopted an amended and restated memorandum and articles of association, which became effective and replaced CGT Holdings’ previous memorandum and articles of association in its entirety immediately prior to the completion of its initial public offering. The following are summaries of material provisions of the amended and restated memorandum and articles of association and of the Companies Act, insofar as they relate to the material terms of CGT Holdings’ Ordinary Shares.

 

Objects of CGT Holdings.    Under CGT Holdings’ amended and restated memorandum and articles of association, the objects of CGT Holdings are unrestricted, and CGT Holdings is capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided by section 27(2) of the Companies Act.

 

Ordinary Shares.    CGT Holdings’ Ordinary Shares are issued in registered form and are issued when registered in its register of members. CGT Holdings may not issue shares to bearer. CGT Holdings’ shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.

 

Dividends.    The holders of CGT Holdings’ Ordinary Shares are entitled to such dividends as may be declared by CGT Holdings’ board of directors. CGT Holdings’ amended and restated memorandum and articles of association provide that dividends may be declared and paid out of the funds of CGT Holdings lawfully available therefor. Under the laws of the Cayman Islands, CGT Holdings may pay a dividend out of either profit or share premium account; provided that in no circumstances may a dividend be paid out of CGT Holdings’ share premium if this would result in CGT Holdings being unable to pay its debts as they fall due in the ordinary course of business.

 

Voting Rights.    Voting at any meeting of shareholders is by way of a poll save that in the case of a physical meeting, the chairman of the meeting may decide that a vote be on a show of hands unless a poll is demanded by:

 

●

at least three shareholders present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorised representative for the time being entitled to vote at the meeting;

●

shareholder(s) present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorised representative representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; and

●

shareholder(s) present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorised representative and holding shares in us conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

 

An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the issued and outstanding ordinary shares at a meeting. A special resolution will be required for important matters such as a change of name, making changes to CGT Holdings’ amended and restated memorandum and articles of association, a reduction of CGT Holdings’ share capital and the winding up of CGT Holdings. CGT Holdings’ shareholders may, among other things, divide or combine their shares by ordinary resolution.

 

 

General Meetings of Shareholders.    As a Cayman Islands exempted company, CGT Holdings is not obliged by the Companies Act to call shareholders’ annual general meetings. CGT Holdings’ amended and restated memorandum and articles of association provide that CGT Holdings shall, if required by the Companies Act, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by CGT Holdings’ directors. All general meetings (including an annual general meeting, any adjourned general meeting or postponed meeting) may be held as a physical meeting at such times and in any part of the world and at one or more locations, as a hybrid meeting or as an electronic meeting, as may be determined by CGT Holdings’ board of directors in its absolute discretion.

 

Shareholders’ general meetings may be convened by the chairperson of CGT Holdings’ board of directors or by a majority of CGT Holdings’ board of directors. Advance notice of not less than ten clear days is required for the convening of CGT Holdings’ annual general shareholders’ meeting (if any) and any other general meeting of CGT Holdings’ shareholders. A quorum required for any general meeting of shareholders consists of, at the time when the meeting proceeds to business, two shareholders holding shares which carry in aggregate (or representing by proxy) not less than one-third of all votes attaching to issued and outstanding shares in CGT Holdings entitled to vote at such general meeting.

 

The Companies Act does not provide shareholders with any right to requisition a general meeting or to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. CGT Holdings’ amended and restated memorandum and articles of association provide that upon the requisition of any one or more of CGT Holdings’ shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding shares of CGT Holdings entitled to vote at general meetings, CGT Holdings’ board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, CGT Holdings’ amended and restated memorandum and articles of association do not provide CGT Holdings’ shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.

 

Transfer of Ordinary Shares.    Subject to the restrictions set out below, any of CGT Holdings’ shareholders may transfer all or any of his or her Ordinary Shares by an instrument of transfer in the usual or common form or in a form designated by the relevant stock exchange or any other form approved by CGT Holdings’ board of directors. Notwithstanding the foregoing, Ordinary Shares may also be transferred in accordance with the applicable rules and regulations of the relevant stock exchange.

 

CGT Holdings’ board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which CGT Holdings has a lien. CGT Holdings’ board of directors may also decline to register any transfer of any ordinary share unless:

 

●

the instrument of transfer is lodged with us, accompanied by the certificate for the Ordinary Shares to which it relates and such other evidence as CGT Holdings’ 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 Ordinary Shares;

 

●

the instrument of transfer is properly stamped, if required;

 

●

in the case of a transfer to joint holders, the number of joint holders to whom the Ordinary Share is to be transferred does not exceed four; and

 

●

a fee of such maximum sum as the relevant stock exchange may determine to be payable or such lesser sum as CGT Holdings’ directors may from time to time require is paid to us in respect thereof.

 

If CGT Holdings’ directors refuse to register a transfer they shall, within two 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 required in accordance with the rules of the relevant stock exchange, be suspended and the register closed at such times and for such periods as CGT Holdings’ 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 as CGT Holdings’ board may determine.

 

 

Liquidation.    On the winding up of CGT Holdings, if the assets available for distribution amongst CGT Holdings’ shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst CGT Holdings’ shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to CGT Holdings for unpaid calls or otherwise. If CGT Holdings’ assets available for distribution are insufficient to repay all of the paid-up capital, such assets will be distributed so that, as nearly as may be, the losses are borne by CGT Holdings’ shareholders in proportion to the par value of the shares held by them.

 

Calls on Shares and Forfeiture of Shares.    CGT Holdings’ board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 clear days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

 

Redemption, Repurchase and Surrender of Shares.    CGT Holdings may issue shares on terms that such shares are subject to redemption, at CGT Holdings’ option or at the option of the holders of these shares, on such terms and in such manner as may be determined by its board of directors. CGT Holdings may also repurchase any of its shares on such terms and in such manner as have been approved by its board of directors. Under the Companies Act, the redemption or repurchase of any share may be paid out of CGT Holdings’ profits, share premium account or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital if CGT Holdings 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 outstanding or (c) if the company has commenced liquidation. In addition, CGT Holdings may accept the surrender of any fully paid share for no consideration.

 

Variations of Rights of Shares.    Whenever the capital of CGT Holdings is divided into different classes the rights attached to any such class may, subject to any rights or restrictions for the time being attached to any class, only be varied with the sanction of a resolution passed by a majority of two-thirds of the votes cast 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 with preferred or other rights 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 such existing class of shares.

 

Issuance of Additional Shares.    CGT Holdings’ amended and restated memorandum and articles of association authorizes its board of directors to issue additional ordinary shares from time to time as its board of directors shall determine, to the extent of available authorized but unissued shares.

 

CGT Holdings’ amended and restated memorandum and articles of association also authorizes its board of directors to establish from time to time one or more series of preference shares and to determine, with respect to any series of preference shares, the terms and rights of that series, including, among other things:

 

●

the designation of the series;

 

●

the number of shares of the series;

 

●

the dividend rights, dividend rates, conversion rights and voting rights; and

 

●

the rights and terms of redemption and liquidation preferences.

 

CGT Holdings’ board of directors may issue preference shares without action by CGT Holdings’ shareholders to the extent of available authorized but unissued shares. Issuance of these shares may dilute the voting power of holders of ordinary shares.

 

Inspection of Books and Records.    Holders of CGT Holdings’ Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of CGT Holdings’ list of shareholders or its corporate records. However, CGT Holdings’ amended and restated memorandum and articles of association have provisions that provide CGT Holdings’ shareholders the right to inspect CGT Holdings’ register of shareholders without charge, and to receive its annual audited financial statements. See “Where You Can Find Additional Information.”

 

 

Anti-Takeover Provisions.    Some provisions of CGT Holdings’ amended and restated memorandum and articles of association may discourage, delay or prevent a change of control of CGT Holdings or management that shareholders may consider favorable, including provisions that:

 

●

authorize CGT Holdings’ board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by CGT Holdings’ shareholders; and

 

●

limit the ability of shareholders to requisition and convene general meetings of shareholders.

 

However, under Cayman Islands law, CGT Holdings’ directors may only exercise the rights and powers granted to them under its amended and restated memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of CGT Holdings.

 

Exempted Company.    CGT Holdings is an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

 

●

does not have to file an annual return of its shareholders with the Registrar of Companies;

 

●

is not required to open its register of members for inspection;

 

●

does not have to hold an annual general meeting;

 

●

may issue negotiable or bearer shares or shares with no par value;

 

●

may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

 

●

may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

 

●

may register as an exempted limited duration company; and

 

●

may register as a segregated portfolio company.

 

“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

 

Differences in Corporate Law

 

The Companies Act is derived, to a large extent, from the older Companies Acts of England but does not follow recent English 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 U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.

 

Mergers and Similar Arrangements.    The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. 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 of the Cayman Islands 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 members 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 parent company and its Cayman 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 company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.

 

The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

 

Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provided the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of 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, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

 

Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by seventy-five per cent in value of the members or class of members, as the case may be, with whom the arrangement is to be made and a majority in number of each class of creditors with whom the arrangement is to be made, and who must in addition represent seventy-five per cent in value of each such class of 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:

 

●

the statutory provisions as to the required majority vote have been met;

 

●

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;

 

●

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

 

●

the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.

 

The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of a dissentient minority shareholder upon a tender offer. When a tender 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 to the offeror 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 by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make, 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.

 

 

The Companies Act also contains statutory provisions which provide that a company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that the company (a) is or is likely to become unable to pay its debts within the meaning of section 93 of the Companies Act; and (b) intends to present a compromise or arrangement to its creditors (or classes thereof) either, pursuant to the Companies Act, the law of a foreign country or by way of a consensual restructuring. The petition may be presented by a company acting by its directors, without a resolution of its members or an express power in its articles of association. On hearing such a petition, the Cayman Islands court may, among other things, make an order appointing a restructuring officer or make any other order as the court thinks fit.

 

Shareholders’ Suits.    In principle, CGT Holdings 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 actions where:

 

●

a company acts or proposes to act illegally or ultra vires;

 

●

the act complained of, although not ultra vires, could only be effected duly if authorized by more than the number of votes which have actually been obtained; and

 

●

those who control the company are perpetrating a “fraud on the minority.”

 

A shareholder may have a direct right of action against us where the individual rights of that shareholder have been infringed or are about to be infringed.

 

Indemnification of Directors and Executive Officers and Limitation of Liability.    Cayman Islands law does not limit the extent to which a company’s memorandum and 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. CGT Holdings’ amended and restated memorandum and articles of association provide that that CGT Holdings shall indemnify its directors and officers, and their personal representatives, against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such persons, other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of CGT Holdings’ business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning CGT Holdings or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.

 

In addition, CGT Holdings has entered into indemnification agreements with CGT Holdings’ directors and executive officers that provide such persons with additional indemnification beyond that provided in CGT Holdings’ amended and restated memorandum and articles of association.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to CGT Holdings’ directors, officers or persons controlling us under the foregoing provisions, CGT Holdings has been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

Directors’ Fiduciary Duties.    Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

 

 

As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company — a duty to act in good faith in the best interests of the company, a duty not to make a personal profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, 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.

 

Shareholder Action by Written Consent. Under the Delaware General Corporation Law (“DGCL”), a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law permits us to eliminate the right of shareholders to act by written consent and CGT Holdings’ amended and restated memorandum and articles of association provide that any action required or permitted to be taken at any general meetings may be taken upon the vote of shareholders at a general meeting duly noticed and convened in accordance with CGT Holdings’ amended and restated memorandum and articles of association and may not be taken by written consent of the shareholders without a meeting.

 

Shareholder Proposals.    Under the DGCL, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

 

The Cayman Islands laws provide shareholders with only limited rights to requisition a general meeting and do 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. CGT Holdings’ amended and restated memorandum and articles of association allow CGT Holdings’ shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding shares of CGT Holdings’ entitled to vote at general meetings to requisition an extraordinary general meeting of CGT Holdings’ CGT Holdings’ shareholders, in which case CGT Holdings’ board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders’ meeting, CGT Holdings’ amended and restated memorandum and articles of association do not provide CGT Holdings’ shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands company, CGT Holdings is not obliged by law to call shareholders’ annual general meetings.

 

Cumulative Voting. Under the DGCL, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but CGT Holdings’ amended and restated memorandum and articles of association do not provide for cumulative voting. As a result, CGT Holdings’ shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

 

 

Removal of Directors.    Under the DGCL, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under CGT Holdings’ amended and restated memorandum and articles of association, subject to certain restrictions as contained therein, directors may be removed with or without cause, by an ordinary resolution of CGT Holdings’ shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) upon any specified event or after any specified period in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision. Under CGT Holdings’ amended and restated memorandum and articles of association, a director’s office shall be vacated if the director (i) becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to the company; (iv) without special leave of absence from CGT Holdings’ board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law from being a director or; (vi) is removed from office pursuant to the laws of the Cayman Islands or any other provisions of CGT Holdings’ amended and restated memorandum and articles of association.

 

Transactions with Interested Shareholders.    The DGCL contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

 

Cayman Islands law has no comparable statute. As a result, CGT Holdings cannot avail itself of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.

 

Dissolution; Winding up.    Under the DGCL, 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.

 

Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts, by an ordinary resolution of its members. 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.

 

Variation of Rights of Shares.    Under the DGCL, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under CGT Holdings’ amended and restated memorandum articles of association, if CGT Holdings’ share capital is divided into more than one class of shares, the rights attached to any such class may only be varied with the sanction of a resolution passed by a majority of two-thirds of the votes cast at a separate meeting of the holders of the shares of that class.

 

Amendment of Governing Documents.    Under the DGCL, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under Cayman Islands law, CGT Holdings’ amended and restated memorandum and articles of association may only be amended with a special resolution of CGT Holdings’ shareholders.

 

Rights of Non-resident or Foreign Shareholders.    There are no limitations imposed by CGT Holdings’ amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on CGT Holdings’ shares. In addition, there are no provisions in CGT Holdings’ amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for CGT Holdings’ Ordinary Shares is Vstock Transfer, LLC. The transfer agent and registrar’s address is 18 Lafayette Place, Woodmere, New York 11598.

 

 

SHARES ELIGIBLE FOR FUTURE SALE

 

CGT Holdings’ Ordinary Shares are currently traded on Nasdaq. On February 7, 2025, the last reported sale price of CGT Holding’s Ordinary Shares on Nasdaq was  $5.20. We cannot assure you that a liquid trading market for CGT Holdings’ Ordinary Shares will be sustained on Nasdaq. Future sales of substantial amounts of Ordinary Shares in the public market, or the perception that such sales may occur, could adversely affect the market price of CGT Holdings’ Ordinary Shares. Further, since a large number of CGT Holdings’ Ordinary Shares are currently not be available for sale because of the contractual and legal restrictions on resale described below, sales of substantial amounts of CGT Holdings’ Ordinary Shares in the public market after these restrictions lapse, or the perception that such sales may occur, could adversely affect the prevailing market price and our ability to raise equity capital in the future.

 

As of the date of this prospectus, CGT Holdings has an aggregate of 21,437,500 Ordinary Shares issued and outstanding. The 1,437,500 Ordinary Shares sold in the initial public offering are freely tradable without restriction or further registration under the Securities Act.

 

As of the date of this prospectus, 17,000,000 Ordinary Shares held by existing shareholders are deemed “restricted securities” as that term is defined in Rule 144 and may not be resold except pursuant to an effective registration statement or an applicable exemption from registration, including Rule 144. A total of 17,000,000, or approximately 79.30%, of CGT Holdings’ currently outstanding Ordinary Shares are subject to “lock-up” agreements described below. Upon expiration of the lock-up period of 180 days after the closing of the initial public offering, such outstanding shares will become eligible for sale, subject in most cases to the limitations of Rule 144.

 

Rule 144

 

In general, under Rule 144, beginning 90 days after the effective date of the initial public offering prospectus, a person who is not our affiliate and has not been our affiliate at any time during the preceding three months will be entitled to sell any shares of our share capital that such person has held for at least six months, including the holding period of any prior owner other than one of our affiliates, without regard to volume limitations. Sales of our share capital by any such person would be subject to the availability of current public information about us if the shares to be sold were held by such person for less than one year.

 

Beginning 90 days after the date of effective date of the initial public offering prospectus, our affiliates who have beneficially owned shares of our share capital for at least six months, including the holding period of any prior owner other than another of our affiliates, would be entitled to sell within any three-month period those shares and any other shares they have acquired that are not restricted securities, provided that the aggregate number of shares sold does not exceed the greater of:

 

●

1% of the number of shares of CGT Holdings’ authorized share capital then outstanding, which will equal approximately 214,375 Ordinary Shares immediately after the initial public offering; or

 

●

the average weekly trading volume in CGT Holdings’ Ordinary Shares on the listing exchange during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

 

Sales under Rule 144 by our affiliates are generally subject to the availability of current public information about us, as well as certain “manner of sale” and notice requirements.

 

Lock-up Agreements

 

Each of CGT Holdings, its officers, directors and holders of more than five percent (5%) of CGT Holdings’ outstanding Ordinary Shares, except for the Selling Shareholder with respect to its ordinary shares sold in the Resale Offering only has agreed, not to, directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, or enter into any swap or other transaction that is designed to, or could be expected to, result in the disposition of any of CGT Holdings’ Ordinary Shares or other securities convertible into or exchangeable or exercisable for CGT Holdings’ Ordinary Shares or derivatives of CGT Holdings’ Ordinary Shares (whether any such swap or transaction is to be settled by delivery of securities, in cash, or otherwise), owned by these persons prior to the initial public offering or acquired in the initial public offering or Ordinary Shares issuable upon exercise of options or warrants held by these persons until after 180 days from the closing of the initial public offering. The lock-up by CGT Holdings may be waived or released by the Representative in the initial public offering.

 

 

SELLING SHAREHOLDER PLAN OF DISTRIBUTION

 

The Selling Shareholder may sell the Resale Shares from time to time at the market price prevailing on Nasdaq at the time of offer and sale, or at prices related to such prevailing market prices or in negotiated transactions or a combination of such methods of sale directly or through brokers.

 

The Selling Shareholder and any of its pledgees, donees, assignees and successors-in-interest may use any one or more of the following methods when disposing of shares or interests therein:

 

●

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

●

block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

 

●

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

●

an exchange distribution in accordance with the rules of the applicable exchange;

 

●

privately negotiated transactions;

 

●

short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the SEC;

 

●

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

●

broker-dealers may agree with the selling shareholder to sell a specified number of such shares at a stipulated price per share;

 

●

a combination of any such methods of sale; and

 

●

any other method permitted pursuant to applicable law.

 

We will file a post-effective amendment to the registration statement of which this prospectus is a part to include any material information (including but not limited to the retention of an underwriter by the Selling Shareholder) with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. The Selling Shareholder may, from time to time, pledge or grant a security interest in some or all of the Ordinary Shares owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the Ordinary Shares, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholder under this prospectus. The Selling Shareholder also may transfer the securities in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

In connection with the sale of CGT Holdings’ Ordinary Shares or interests therein, the Selling Shareholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Ordinary Shares in the course of hedging the positions it assumes. The Selling Shareholder may also sell CGT Holdings’ Ordinary Shares short and deliver its securities to close out its short positions, or loan or pledge the Ordinary Shares to broker-dealers that in turn may sell these securities. The Selling Shareholder may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

 

The aggregate proceeds to the Selling Shareholder from the sale of the Ordinary Shares offered by it will be the purchase price of the Ordinary Shares less discounts or commissions, if any. The Selling Shareholder reserves the right to accept and, together with its agents from time to time, to reject, in whole or in part, any proposed purchase of Ordinary Shares to be made directly or through agents. CGT Holdings will not receive any of the proceeds from this Resale Offering.

 

Broker-dealers engaged by the Selling Shareholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholder (or, if any broker-dealer acts as agent for the purchase of shares, from the purchaser) in amounts to be negotiated. The Selling Shareholder does not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

 

The Selling Shareholder also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that it meets the criteria and conform to the requirements of that rule.

 

Any underwriters, agents, or broker-dealers, and Selling Shareholder who is affiliate of broker-dealers, that participate in the sale of the Ordinary Shares or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling Shareholder who is an “underwriter” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. We know of no existing arrangements between the Selling Shareholder and any other shareholder, broker, dealer, underwriter, or agent relating to the sale or distribution of the shares, nor can we presently estimate the amount, if any, of such compensation. See “Selling Shareholder” for description of any material relationship that a shareholder has with CGT Holdings and the description of such relationship.

 

To the extent required, CGT Holdings’ Ordinary Shares to be sold, the name of the Selling Shareholder, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the Ordinary Shares may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the Ordinary Shares may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

 

We have advised the Selling Shareholder that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the Selling Shareholder and its affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the Selling Shareholder for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The Selling Shareholder may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

 

 

LEGAL MATTERS

 

The Company is being represented by Jun He Law Offices LLC, with respect to legal matters of United States federal securities law. The validity of the Ordinary Shares offered by this prospectus and legal matters as to Cayman Islands law will be passed upon for us by Ogier. The Company is being represented by Lawrence Chan & Co. with regard to Hong Kong law. The Company is being represented by Yuan Tai Law Offices with regard to PRC law. Jun He Law Offices LLC may rely upon Ogier with respect to all matters governed by Cayman Islands law, and may rely upon Lawrence Chan & Co. with respect to matters governed by Hong Kong law, and may rely upon Yuan Tai Law Offices with respect to matters governed by PRC law.

 

EXPERTS

 

The consolidated financial statements as of September 30, 2024, 2023 and 2022 and for the years then ended included in this registration statement have been so included in reliance on the report of Wei, Wei & Co., LLP, an independent registered public accounting firm, given on the authority of said firm as experts in accounting and auditing.

 

The office of Wei, Wei & Co., LLP is located at 133-10 39^th Avenue Flushing, New York 11354.

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

We have filed with the SEC a registration statement on Form F-1 under the Securities Act with respect to the Ordinary Shares described herein. This prospectus, which constitutes part of the registration statement, does not include all of the information contained in the registration statement. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. We anticipate making these documents publicly available, free of charge, on our website at www.cgt-recycle.com and https://cgt-electronics.com as soon as reasonably practicable after filing such documents with the SEC. The information on our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. We have included our website address as an inactive textual reference only. Immediately upon the effectiveness of the registration statement on Form F-1 to which this prospectus is a part, we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC.

 

You can read the registration statement and our future filings with the SEC, over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any document that we file with the SEC at its public reference room at 100 F Street, N.E., Washington, DC 20549.

 

You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room.

 

 

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

We are allowed to incorporate by reference the information we file with the SEC, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be part of this prospectus. We incorporate by reference in this prospectus the documents listed below:

 

●

Our Annual Report on Form 20-F for the year ended September 30, 2024 filed with the SEC on January 30, 2025; and

 

●

Our Current Report on Form 6-K filed with the SEC on January 30, 2025 (to the extent expressly incorporated by reference into our effective registration statements filed by us under the Securities Act).

 

The information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus.

 

As you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies between the documents and this prospectus, you should rely on the statements made in the most recent document. All information appearing in this prospectus is qualified in its entirety by the information and financial statements, including the notes thereto, contained in the documents incorporated by reference herein.

 

We will provide without charge to any person (including any beneficial owner) to whom this prospectus is delivered, upon oral or written request, a copy of any document incorporated by reference in this prospectus but not delivered with the prospectus (except for exhibits to those documents unless a documents states that one of its exhibits is incorporated into the document itself). Such request should be directed to: Creative Global Technology Holdings Limited, Unit 03, 22/F, Westin Centre, 26 Hung To Road, Kwun Tong, Kowloon, Hong Kong.

 

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, or such earlier date, that is indicated in this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 

 

3,000,000 Ordinary Shares

 

 

CREATIVE GLOBAL TECHNOLOGY HOLDINGS LIMITED

 

 

PROSPECTUS

 

 

February 10, 2025

 

 

 

 

 

 

 

 

 

PART II

 

Information Not Required in Prospectus

 

ITEM 6. Indemnification of Directors and Officers

 

CGT Holdings is a Cayman Islands exempted company. 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. CGT Holdings’ Amended and Restated Memorandum of Association provides for indemnification of its officers and directors for any liability incurred in their capacities as such, except through their own dishonesty, willful default or fraud, against all actions, proceedings, costs, charges, losses, damages and expenses incurred or sustained by him by reason of any act done or omitted in or about the execution of their duty in their respective offices or trusts. Pursuant to the indemnification agreements, CGT Holdings agrees to indemnify its directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

ITEM 7. Recent Sales of Unregistered Securities

 

During the past three years, CGT Holdings has issued the following shares. We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering. No underwriters were involved in these issuances of shares.

 

Securities/Purchaser

Date of Issuance

Number of Securities*

Total Consideration

Ordinary Shares

Charlotte Cloete (subsequently transferred to HSZ Holdings Limited)

11 January 2023

1,000

US$

1.00

HSZ Holdings Limited

11 April 2023

19,999,000

US$

19,999

 

*

Representing the number of shares after the 1:1,000 share subdivision of CGT Holdings’ issued and unissued ordinary shares effected on April 11, 2023.

 

 

ITEM 8. Exhibits and Financial Statement Schedules

 

(a)     Exhibits

 

The following exhibits are filed as part of this registration statement:

 

Exhibit No.		Description
3.1***		Amended and Restated Memorandum and Articles of Association of the Registrant, as currently in effect (incorporated herein by reference to Exhibit 4.1 to the Company’s Form S-8 filed on January 22, 2025)
4.1***		Form of Registrant’s Specimen Ordinary Shares
5.1*		Opinion of Ogier as to the legality of the Ordinary Shares being registered
8.1*		Opinion of Ogier regarding certain Cayman Island tax matters (included in Exhibit 5.1)
8.2***		Opinion of Lawrence Chan & Co. regarding certain Hong Kong law matters and certain Hong Kong tax matters
10.1***		Employment Agreement by and between the Registrant and Shangzhao (“Cizar”) Hong dated January 11, 2023
10.2***		Employment Agreement by and between the Registrant and Hei Tung (“Angel”) Siu dated January 11, 2023
10.3***		Employment Agreement by and between the Registrant and Hung Leung (“Alan”) Tsang dated January 11, 2023
10.4***		Form Purchase Order between CGTHK and Its Suppliers
10.5***		Form Sales Contract between CGTHK and Its Customers
10.10***		Form of Indemnification Agreement by and between the Registrant and executive officers and directors of the Registrant
10.11***		Form Director Service Agreement
21.1***		List of Subsidiaries of the Registrant
23.1*		Consent of Wei Wei & Co. LLP
23.2***		Consent of Ogier (included in Exhibit 5.1)
23.3***		Consent of Lawrence Chan & Co. (included in Exhibit 8.2)
23.4***		Consent of Frost & Sullivan
23.5***		Consent of Yuan Tai Law Offices
24.1*		Power of Attorney (included on the signature page of this Registration Statement)
99.1***		Code of Business Conduct and Ethics
99.2***		Audit Committee Charter
99.3***		Compensation Committee Charter
99.4***		Nominating and Corporate Governance Committee Charter
99.5***		Consent of Wai Leung Lau
99.6***		Consent of Michael Osofsky
99.7***		Consent of Jingeng Chen
107***		Filing Fee Table

 

*

Filed herewith

***	Previously filed

 

 

ITEM 9. Undertakings

 

(a)

The undersigned registrant hereby undertakes:

 

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i)

To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

 

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

 

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(5)

That, for the purpose of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

 

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

 

 

(6)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

(b)

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(c)

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

(d)

For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

(e)

For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Hong Kong SAR, on February 10, 2025.

 

	CREATIVE GLOBAL TECHNOLOGY HOLDINGS LIMITED
	By:	/s/ Shangzhao (Cizar) Hong
	Name:	Shangzhao (Cizar) Hong
	Title:	Chief Executive Officer and Chairman of the Board

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS that each of the undersigned officers and directors of Creative Global Technology Holdings Limited hereby constitutes and appoints Shangzhao (“Cizar”) Hong, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for and in such person’s name, place and stead, in the capacities indicated below, to sign this Registration Statement on Form F-1 of Creative Global Technology Holdings Limited and any and all amendments (including post-effective amendments) thereto, and to file or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might, or could, do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:

 

Signature		Title		Date
/s/ Shangzhao (Cizar) Hong		Chief Executive Officer, Director and Chairman of the Board		February 10, 2025
Shangzhao (Cizar) Hong		(principal executive officer)
/s/ Hei Tung (Angel) Siu		Chief Operation Officer		February 10, 2025
Hei Tung (Angel) Siu
/s/ Hung Leung (Alan) Tsang		Chief Financial Officer		February 10, 2025
Hung Leung (Alan) Tsang		(principal financial and accounting officer)
/s/ Jingeng Chen
Jingeng Chen		Director		February 10, 2025
/s/ Michael Osofsky
Michael Osofsky		Director		February 10, 2025
/s/ Wai Leung (Alfred) Lau
Wai Leung (Alfred) Lau		Director		February 10, 2025

 

 

SIGNATURE OF AUTHORIZED UNITED STATES REPRESENTATIVE OF THE REGISTRANT

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of Creative Global Technology Holdings Limited has signed this registration statement on February 10, 2025.

 

	Authorized U.S. Representative
	Cogency Global Inc.
	/s/ Colleen A. De Vries
	Name:	Colleen A. De Vries
	Title:	Senior Vice President on behalf of Cogency Global Inc.

 

 

II-6

 

Exhibit 5.1

 

 

 

Creative Global Technology Holdings Limited		D  +852 3656 6054
		E  nathan.powell@ogier.com
		Reference: NMP/JTC/512299.00001

 

February 10, 2025

 

Dear Sirs

 

Creative Global Technology Holdings Limited (the Company)

 

We have acted as Cayman Islands counsel to the Company in connection with the filing of the Company’s prospectus (the Prospectus) with the United States Securities and Exchange Commission (the Commission) under the United States Securities Act of 1933, as amended (the Securities Act), forming part of the registration statement on Form F-1 (File No.333-273329) which was declared effective on 18 November 2024, including all the amendments or supplements thereto (including its exhibits, the Registration Statement). The Registration Statement relates to the resale (the Resale) of 3,000,000 Ordinary Shares (as defined in below) by the Selling Shareholder as identified in Registration Statement (the Resale Shares).

 

We are furnishing this opinion as Exhibit 5.1, 8.1 and 23.2 to the Registration Statement.

 

Unless a contrary intention appears, all capitalised terms used in this opinion have the respective meanings set forth in the Documents.

 

1

Documents examined

 

For the purposes of giving this opinion, we have examined originals, copies, or drafts of the following documents: (the Documents):

 

(a)

the certificate of incorporation of the Company dated 11 January 2023 issued by the Registrar of Companies of the Cayman Islands (the Registrar);

 

(b)

the memorandum and articles of association of the Company as filed with the Registrar on 11 January 2023;

 

(c)

the amended and restated articles of association of the Company conditionally adopted by way of a special resolution passed on 15 July 2024 and to become effective immediately prior to the completion of the initial public offering of the Company’s ordinary shares with effect from 27 November 2024 (respectively, the Memorandum and the Articles);

 

Ogier Providing advice on British Virgin Islands, Cayman Islands and Guernsey laws   Floor 11 Central Tower 28 Queen’s Road Central Central Hong Kong   T +852 3656 6000 F +852 3656 6001 ogier.com

Partners Nicholas Plowman Nathan Powell Anthony Oakes Oliver Payne Kate Hodson David Nelson Justin Davis Joanne Collett Dennis Li

Cecilia Li** Rachel Huang** Yuki Yan** Florence Chan*‡  Richard Bennett**‡ James Bergstrom‡ Marcus Leese‡

* admitted in New Zealand ** admitted in England and Wales ‡ not ordinarily resident in Hong Kong

 

 

Page 2 of 5

 

(d)

a certificate of good standing dated 17 January 2025 (the Good Standing Certificate) issued by the Registrar in respect of the Company;

  

(e)

the register of directors of the Company as provided to us on 16 January 2025 (the ROD);

 

(f)

the listed register of members of the Company as provided to us on 16 January 2025 showing the total issued shares of the Company as at 16 January 2025 (the ROM, and together with the ROD, the Registers);

 

(g)

a copy of written resolutions of the directors of the Company dated 15 July 2024 approving the Company’s filing of the Registration Statement and the Resale (the Board Resolutions);

 

(h)

a certificate from a director of the Company dated the date of this opinion as to certain matters of facts (the Director’s Certificate); and

 

(i)

the Registration Statement.

 

2

Assumptions

 

In giving this opinion we have relied upon the assumptions set forth in this paragraph 2 without having carried out any independent investigation or verification in respect of those assumptions:

 

(a)

all original documents examined by us are authentic and complete;

 

(b)

all copy documents examined by us (whether in facsimile, electronic or other form) conform to the originals and those originals are authentic and complete;

 

(c)

all signatures, seals, dates, stamps and markings (whether on original or copy documents) are genuine;

 

(d)

each of the Good Standing Certificate, the Registers and the Director’s Certificate is accurate and complete as at the date of this opinion;

 

(e)

the Memorandum and Articles provided to us are in full force and effect and have not been amended, varied, supplemented or revoked in any respect;

 

(f)

all copies of the Registration Statement are true and correct copies and the Registration Statement conform in every material respect to the latest drafts of the same produced to us and, where the Registration Statement has been provided to us in successive drafts marked-up to indicate changes to such documents, all such changes have been so indicated;

 

(g)

the Board Resolutions remain in full force and effect, have not been, and will not be rescinded or amended, and each of the directors of the Company has acted in good faith with a view to the best interests of the Company and has exercised the standard of care, diligence and skill that is required of him or her in approving the Resale and the transactions set out in the Board Resolutions and no director has a financial interest in or other relationship to a party of the transactions contemplated by the Resale and the Board Resolutions which has not been properly disclosed in the Board Resolutions;

 

 

Page 3 of 5

 

(h)

no invitation has been or will be made by or on behalf of the Company to the public in the Cayman Islands to subscribe for any Ordinary Shares and none of the Ordinary Shares have been offered or issued to residents of the Cayman Islands;

 

(i)

the Company is, and after the allotment and issuance of the Resale Shares, be able to pay its liabilities as they fall due; and

 

(j)

there is no provision of the law of any jurisdiction, other than the Cayman Islands, which would have any implication in relation to the opinions expressed herein.

 

3

Opinions

 

On the basis of the examinations and assumptions referred to above and subject to the limitations and qualifications set forth in paragraph 4 below, we are of the opinion that:

 

Corporate status

 

(a)

The Company has been duly incorporated as an exempted company with limited liability on 11 January 2023 and is validly existing and in good standing under the laws of the Cayman Islands.

 

Authorised Share capital

 

(b)

The authorised share capital of the Company is US$500,000 divided into 500,000,000 shares of a nominal or par value of US$0.001 each (the Ordinary Shares).

 

Corporate Authorisation

 

(c)

The Company has taken all requisite corporate action to authorise the issuance and sale of the Resale Shares under the Registration Statement.

 

Valid Issuance of the Resale Shares

 

(d)

The Resale Shares being proposed for resale by the Selling Shareholder have been validly issued, fully paid and non-assessable.

 

The Registration Statement

 

(e)

The statements contained in the Registration Statement which pertain to Cayman Islands law, including without limitation, in the sections headed “Taxation - Cayman Islands Taxation”, “Description of Share Capital” and “Enforceability of Civil Liabilities”, in so far as they purport to summarise the laws or regulations of the Cayman Islands, are accurate in all material respects and that such statements constitute our opinion.

 

 

Page 4 of 5

 

4

Limitations and Qualifications

 

4.1

We offer no opinion:

 

(a)

as to any laws other than the laws of the Cayman Islands, and we have not, for the purposes of this opinion, made any investigation of the laws of any other jurisdiction, and we express no opinion as to the meaning, validity, or effect of references in the Documents to statutes, rules, regulations, codes or judicial authority of any jurisdiction other than the Cayman Islands; or

 

(b)

except to the extent that this opinion expressly provides otherwise, as to the commercial terms of, or the validity, enforceability or effect of the Registration Statement, the accuracy of representations, the fulfilment of warranties or conditions, the occurrence of events of default or terminating events or the existence of any conflicts or inconsistencies among the Registration Statement and any other agreements into which the Company may have entered or any other documents.

 

4.2

Under the Companies Act (Revised) (Companies Act) of the Cayman Islands annual returns in respect of the Company must be filed with the Registrar of Companies in the Cayman Islands, together with payment of annual filing fees. A failure to file annual returns and pay annual filing fees may result in the Company being struck off the Register of Companies, following which its assets will vest in the Financial Secretary of the Cayman Islands and will be subject to disposition or retention for the benefit of the public of the Cayman Islands.

 

4.3

In good standing means only that as of the date of this opinion the Company is up-to-date with the filing of its annual returns and payment of annual fees with the Registrar of Companies. We have made no enquiries into the Company’s good standing with respect to any filings or payment of fees, or both, that it may be required to make under the laws of the Cayman Islands other than the Companies Act.

 

5

Governing law of this opinion

 

5.1

This opinion is:

 

(a)

governed by, and shall be construed in accordance with, the laws of the Cayman Islands;

 

(b)

limited to the matters expressly stated in it; and

 

(c)

confined to, and given on the basis of, the laws and practice in the Cayman Islands at the date of this opinion.

 

5.2

Unless otherwise indicated, a reference to any specific Cayman Islands legislation is a reference to that legislation as amended to, and as in force at, the date of this opinion.

 

 

Page 5 of 5

 

6

Reliance

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the headings “Risk Factors”, “Enforceability of Civil Liabilities” and “Legal Matters” of the Registration Statement. In giving such consent, we do not believe that we are “experts” within the meaning of such term used in the Securities Act or the rules and regulations of the Commission issued thereunder with respect to any part of the Registration Statement, including this opinion as an exhibit or otherwise.

 

This opinion may be used only in connection with the offer and sale of the Resale Shares and while the Registration Statement is effective.

 

Yours faithfully

 

/s/ Ogier

 

Ogier

 

 

 

 

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   We consent to the use in this Registration Statements on Form 20-F (File No. 001-42412) dated January 30, 2025, relating to the consolidated financial statements of Creative Global Technology Holdings Limited and Subsidiaries as of and for the year ended September 30, 2024, which appears in this Registration Statement.   We also consent to the reference to us under the heading “Experts” in such Registration Statement.   /s/ Wei, Wei & Co., LLP   Flushing, New York February 10, 2025

 

 

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