Prestige Wealth (PWM) - 2023 Q4 - Annual Report

Financial Reporting and Internal Controls - As of September 30, 2023, the company has engaged a qualified financial and accounting advisory team to strengthen its financial reporting function and address material weaknesses in internal controls [147]. - The company is subject to requirements for maintaining internal controls, and failure to do so may adversely affect its business, financial condition, and stock price [148]. - The company did not perform an evaluation of its internal control over financial reporting for the years 2021, 2022, and 2023, which raises concerns about potential undiscovered material weaknesses [149]. Nasdaq Listing and Compliance - The company is exempt from certain Nasdaq corporate governance standards, which may afford less protection to investors compared to U.S. domestic issuers [150]. - To maintain its Nasdaq listing, the company must comply with rules regarding minimum stockholders' equity and share price, among other requirements [154]. - If the company fails to satisfy Nasdaq's listing criteria, it risks delisting, which could negatively impact the trading price of its Ordinary Shares [153]. - The company may face delisting risks if the PCAOB cannot inspect its audit documentation located in mainland China, which could adversely affect the value of investments [177]. - The SEC may prohibit the company's securities from trading on U.S. exchanges if its auditor is not subject to PCAOB inspections for two consecutive years, potentially leading to delisting [187]. - The company may face significant material adverse consequences if it fails to meet Nasdaq's continued listing standards, including reduced liquidity and increased regulatory scrutiny [190]. - The company’s shares may be classified as "penny stock" if delisted from Nasdaq, leading to stricter trading rules and reduced trading activity [190]. Shareholder Structure and Control - Chi Tak Sze owns 5,135,788.8 Class B Ordinary Shares, representing 96.24% of the voting power, allowing control over major corporate decisions [200]. - The dual-class share structure allows Class B shareholders 20 votes per share compared to 1 vote for Class A, potentially limiting influence on corporate matters [198]. - The potential conversion of Class B shares into Class A shares could dilute existing Class A shareholders, impacting market prices [201]. Financial Position and Risks - The company has prepared its financial statements on a "going concern" basis, indicating reliance on the successful commercialization of its services for future operations [197]. - The company has raised gross proceeds of US$5.75 million from its initial public offering, with allocations including approximately US$0.5 million for brand promotion and US$0.6 million for product and service expansion [611]. - The company limits credit risk by transacting with high-rated broker-dealers and banks, ensuring a secure financial environment [607]. - Liquidity risk is managed by maintaining adequate cash and bank balances to finance operations effectively [608]. - Interest rate risk is considered minimal as the company's cash held with banks is short-term, with terms less than one month [609]. Market Conditions and Share Price Volatility - The market price of the company's Class A Ordinary Shares may be volatile, influenced by various factors including investor perception and economic conditions in Hong Kong and mainland China [194]. - The company may be subject to securities litigation due to significant price volatility in its Class A Ordinary Shares, which could divert management's attention and resources [196]. - The company is at risk of losing visibility in financial markets if analysts cease coverage or downgrade its stock, which could lead to a decline in share price [193]. - The PCAOB has determined it can secure access to inspect audit firms in mainland China and Hong Kong, but future obstructions could lead to new determinations affecting the company [185]. Future Plans and Costs - The company expects to incur significant legal, accounting, and compliance costs as it transitions from being an emerging growth company [170]. - The company does not intend to pay dividends for the foreseeable future, opting to retain earnings for business operations and expansion [192]. - The company may require additional financing to support ongoing operations and its business plan [197].