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Epsium Enterprise Ltd. – ‘F-1/A’ on 2/23/24

On:  Friday, 2/23/24, at 10:34am ET   ·   Accession #:  1213900-24-16338   ·   File #:  333-276313

Previous ‘F-1’:  ‘F-1/A’ on 1/22/24   ·   Latest ‘F-1’:  This Filing   ·   2 References:   To:  Epsium Enterprise Ltd. – Previous ‘F-1/A’ on 1/22/24 To:  Epsium Enterprise Ltd. – ‘F-1’ on 12/29/23 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/23/24  Epsium Enterprise Ltd.            F-1/A                 12:4.5M                                   EdgarAgents LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1/A       Amendment No. 2 to Form F-1                         HTML   2.08M 
 2: EX-3.1      Amended and Restated Memorandum and Articles of     HTML    233K 
                Association, as Currently in Effect                              
 3: EX-4.1      Specimen Certificate Evidencing Ordinary Shares     HTML      6K 
 4: EX-5.1      Opinion of Ogier Regarding the Validity of the      HTML     62K 
                Ordinary Shares Being Registered                                 
 5: EX-5.2      Opinion of King & Wood Mallesons, U.S. Counsel to   HTML     17K 
                the Company, as to the Enforceability of the                     
                Underwriter's Warrants                                           
 6: EX-10.1     Form of Officer and Director Agreement, by and      HTML     91K 
                Between Son I Tam and the Registrant                             
 7: EX-10.2     Form of Director Agreement, by and Between Chi      HTML     92K 
                Seng Lou and the Registrant                                      
 8: EX-10.3     Form of Independent Director Agreement, by and      HTML     86K 
                Between Siu Keung Yeung and the Registrant                       
 9: EX-10.4     Form of Independent Director Agreement, by and      HTML     87K 
                Between Ut Ha Lei and the Registrant                             
10: EX-10.5     Form of Independent Director Agreement, by and      HTML     88K 
                Between Kewei Joshua Cui and the Registrant                      
11: EX-23.1     Consent of Taad, LLP                                HTML      7K 
12: EX-99.5     Opinion of Vong Hin Fai Lawyers & Private Notary    HTML     20K 
                Regarding Certain Macau, SAR China, Legal Matters                

As filed with the Securities and Exchange Commission on February 23, 2024.

Registration No. 333-276313

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 2 to
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

EPSIUM ENTERPRISE LIMITED

(Exact name of registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

c/o Companhia de Comércio Luz Limitada

Alameda Dr. Carlos D’assumpcao

Edf China Civil Plaza 235-243, 14 Andar P

Macau, SAR China

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this Registration Statement.

If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, 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, 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 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 Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

[●] Ordinary Shares

EPSIUM ENTERPRISE LIMITED

This is an initial public offering of the ordinary shares (each, an “Ordinary Share”, collectively, “Ordinary Shares”) of EPSIUM ENTERPRISE LIMITED, a British Virgin Islands company. Prior to the completion of this offering, there has been no public market for our Ordinary Shares. We are offering on a firm commitment basis [●] Ordinary Shares, par value US$0.00002 per Ordinary Share. We expect the initial public offering price will be between $ “4” and $ “5” per Ordinary Share. This offering is contingent upon us listing our Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”) (or another national exchange). There is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq (or another national exchange). We have reserved the symbol “EPSM” for purposes of listing the Ordinary Shares on Nasdaq and we plan to apply to list the Ordinary Shares on Nasdaq. We cannot assure you that our application will be approved; however, if it is not approved, we will not complete this offering.

Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 15 to read about factors you should consider before buying our Ordinary Shares.

EPSIUM ENTERPRISE LIMITED was incorporated as a company limited by shares under the laws of the British Virgin Islands, formerly known as Shengtao Investment Development Limited. As a holding company with no material operations of our own, we conduct our operations through Companhia de Comercio Luz Limitada, our indirectly owned subsidiary incorporated under the laws of Macau Special Administrative Region of the People’s Republic of China (“Macau,” “Macao,” “Macau SAR,” or “Macao SAR”). The Company controls and receives the economic benefits of Luz’s business operations through equity ownership. The Ordinary Shares offered in this offering are shares of the holding company that is incorporated in the British Virgin Islands. Investors of our Ordinary Shares should be aware that they may never directly hold equity interests in our subsidiaries.

Epsium Enterprise Limited is a company organized under the laws of the Hong Kong Special Administration Region of the People’s Republic of China (“Hong Kong”) and an 80%-owned subsidiary of Epsium BVI. Epsium HK is a holding company and does not conduct any substantive operations in Hong Kong except for facilitating inventory procurement in Hong Kong for our only operating subsidiary, which is in Macau. Epsium HK does not maintain any office facility or personnel. Epsium HK has no revenue or expenses other than those associated with inventory procurement in Hong Kong from a few Hong Kong beverage distributors. All of Epsium’s operations are conducted in Macau by Luz, our Macau operating subsidiary. As a Hong Kong registered entity, Epsium HK is subject to Hong Kong laws generally applicable to Hong Kong entities. We believe Epsium HK is compliant with the laws and regulations governing its existence and business operations in Hong Kong, including without limitation, laws and regulations relating to data privacy and anti-monopoly, to the extent such laws and regulations are applicable to Epsium HK. Due to the wholesale nature and limited scale of our overall business and our lack of substantive operations in Hong Kong (except for facilitating inventory procurement), we do not believe laws and regulations relating to data privacy and anti-monopoly in Hong Kong currently have any impact on our ability to conduct business, accept foreign investment, or list on a U.S. or foreign exchange.

Luz is an import trading and wholesaler of primarily alcoholic beverages in Macau. As a Macau registered entity, Luz is subject to Macau laws generally applicable to Macau entities. We believe Luz is compliant with the laws and regulations governing its existence and business operations in Macau, including without limitation, laws and regulations relating to data privacy and unfair competition and anti-monopoly, to the extent such laws and regulations are applicable to Luz. Due to the predominantly wholesale nature and limited scale of our operations solely via Luz in Macau, it is not part of Luz’s business activities, nor does it have any access, to gather private data from the ultimate retail consumers of our downstream distributors such as supermarkets, restaurants, hotel casinos and other retailers in Macau. As such, we do not believe laws and regulations relating to data privacy and anti-monopoly in Macau currently have any impact on our ability to conduct business, accept foreign investment, or list on a U.S. or foreign exchange.

For more details, please see “Prospectus Summary – Summary of Risk Factors – Risks Related to Doing Business in Macau and Risks Related to the PRC” on page 4, “Risk Factors — Risks Related to the PRC” beginning on page 26 and “Risk Factors — Risks Related to Doing Business in Macau” beginning on page 24 and “Regulation” beginning on page 89.

Luz is 80% owned by Epsium HK and 20% owned by Mr. Son I Tam, our founder, CEO, CFO, Chairman, and principal shareholder. Luz operates only in Macau and is subject to Macau laws and regulations, including the Basic Law of the Macao Special Administrative Regions of the People’s Republic of China (the “Basic Law”). Although we and our subsidiaries are not based in China and we have no operations in China, we may be subject to legal and operational risks indirectly by virtue of doing business with parties in China or even directly if we decide to operate in China in the future. We do not have any variable interest entity (“VIE”) and we currently do not have any intention of establishing any VIEs in the future. 

Unless otherwise indicated or the context otherwise requires, references in this prospectus to “Company”, “Epsium,” or “Epsium BVI” are to EPSIUM ENTERPRISE LIMITED, the ultimate holding company organized as a company limited by shares under the laws of the British Virgin Islands; references in this prospectus to “Epsium HK” are to Epsium Enterprise Limited, a company organized under the laws of the Hong Kong Special Administration Region of the People’s Republic of China (“Hong Kong”) and an 80%-owned subsidiary of Epsium BVI; and references in this prospectus to “Luz”, the “Operating Entity” or the “Macau Subsidiary” are to Companhia de Comercio Luz Limitada, a limited liability company organized under Macau laws and an 80%-owned operating subsidiary of Epsium HK. For more details regarding the risks regarding the Company’s holding company structure, please refer to “Prospectus Summary — Corporate History and Structure” on page 1 and “Risk Factors — Risks Related to our Ordinary Shares and This Offering — We may not be able to pay any dividends on our Ordinary Shares in the future due to BVI law.” on page 36 of the prospectus.

Our company structure is comprised of (i) a British Virgin Island holding entity, Epsium BVI, (ii) a Hong Kong holding entity, Epsium HK, which is majority-owned by Epsium BVI, and (iii) a Macau operating entity, Luz, which is majority-owned by Epsium HK. Each of Macau and Hong Kong is a Special Administrative Region of the People’s Republic of China with its own legal system under the Chinese policy of “one-country, two-systems,” which accords a special legal status to each of them within the People’s Republic of China through their respective local laws. However, because Hong Kong and Macau are constituent parts of the People’s Republic of China, our company structure, which is comprised of entities in Hong Kong and Macau, involves unique risks to our investors. If there is a significant change to current political and legal arrangements in Macau or Hong Kong, or between China and Macau, or China and Hong Kong, or if there is a duly declared state of war or state of emergency endangering national unity or security under the existing respective Basic Law of Hong Kong and Macau, however unlikely, it could potentially impact Macau and Hong Kong companies. Companies operated in Macau or Hong Kong may face the same or similar regulatory risks as those faced by companies operated in the PRC, such as risks relating to the ability to offer securities to investors, list securities on a U.S. or other foreign exchange, or accept foreign investment. Additionally, as a result of the foregoing scenarios, the PRC regulatory authorities could disallow our company structure, which would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale in this offering, including that it could cause the value of such securities to significantly decline or become worthless.

We operate only in Macau through our Macau operating entity, Luz. Although we believe that the laws and regulations of the PRC do not currently directly apply to us nor have any direct material negative impact on our business, financial condition or results of operations, and our corporate structure is stable without any interference from current applicable laws in PRC, Hong Kong, or Macau, we face risks and uncertainties associated with the complex and evolving PRC laws and regulations and the economic conditions of the PRC because our business operations rely on the economic growth of the PRC and the smooth functioning of the PRC commercial participants in our industry, including manufacturers, exporters, and PRC tourists to Macau. Additionally, if there is a duly declared state of war or state of emergency endangering national unity or security under the existing Basic Law or that the Basic Law is fundamentally amended by the National People’s Congress of the People’s Republic of China by virtue of Macau being a constituent part of the People’s Republic of China, however unlikely, it could potentially impact Macau’s legal system and may create uncertainty in whether existing PRC laws would be made applicable in Macau. If so, and if the existing PRC laws, such as recent statements and regulatory actions by China’s government related to data security or anti-monopoly concerns, are made applicable in Macau and are negatively applied to our Macau operating entity, or the PRC government exercises its sovereign power by adopting new laws, regulations, or policies to exert more oversight and control over offerings conducted overseas and/or foreign investment in Macau-based issuers and to intervene or influence operations in Macau of Macau entities such as our Macau operating entity, however unlikely in each instance, it may negatively impact our ability to maintain our current corporate structure, conduct business, accept foreign investments, list on a U.S. or other foreign exchange. Various legal and operational risks associated with operations in China, should they become applicable to our operations, and other uncertainties could result in a material change in our operations and/or the value of the securities we are registering for sale or 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. If such circumstances arise, relevant risks may arise and the same legal and operational risks associated with operations in China also apply to operations in Macau and/or Hong Kong, as applicable. These risks will become even more prominent and direct if we expand our operations into or develop a physical presence in China.

For more details, please see “Risk Factors — Risks Related to the PRC” beginning on page 26 and “Risk Factors — Risks Related to Doing Business in Macau” beginning on page 24. Please see also “Regulation – The Basic Law of the Macau SAR promulgated by the National People’s Congress of the PRC (“NPC”), the highest body of the PRC legislature, as Macau’s Constitution” on page 89 for more details regarding the Basic Law and the potential application of the PRC national law in Macau.

The PRC government recently Initiated a series of statements, regulatory actions and new policies to regulate business operations in China, including cracking down on illegal activities in securities markets, enhancing supervision over China-based companies listed overseas using a VIE structure, exerting more oversight and control over offerings conducted overseas and/or foreign investment in China-based issuers, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On February 17, 2023, China Securities Regulatory Commission (the “CSRC”) promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five guidelines, which became effective on March 31, 2023, and requires PRC companies that seek to offer securities or list on overseas markets, either directly or indirectly, to fulfill the filing procedure with the CSRC. See “Risk Factors — Risks Related to the PRC — There is no assurance that Macau will not enact local laws like the Trial Measures promulgated by the CSRC, which could subject us to additional compliance requirements in the future.” on page 31 for more details.

Our Macau counsel, Vong Hin Fai Lawyers & Private Notary, has advised that, as of the date of this prospectus, the Company and its Macau subsidiary, (1) are not required to obtain permissions or approvals from any PRC national authorities to operate their businesses or to issue the Ordinary Shares to foreign investors; and (2) are not subject to operational approval from the Cyberspace Administration of China (the “CAC”) or the CSRC, including the Overseas Listing Trial Measures. Specifically, under the currently effective PRC laws and regulations, we are not required to seek approval from the CSRC or any other PRC governmental authorities for our overseas listing plan, nor have we received any inquiry, notice, warning, or sanctions regarding our planned overseas listing from the CSRC or any other PRC governmental authorities. This conclusion is based on the fact that, as of the date of this prospectus: (1) our Company’s operating subsidiary is located in Macau, (2) we and our subsidiaries have no direct operations in the PRC, and (3) pursuant to the Basic Law of the Macao Special Administrative Regions of the People’s Republic of China (the “Basic Law”), national laws of the PRC shall not be applied in Macau, except for those specified in Annex III of the Basic Law. However, the evolving legal systems of Macau and China, operating under the “One Country, Two Systems” principle, may introduce uncertainties that could potentially impact and cause uncertainties in our business, indirectly through their direct impact on our PRC suppliers and customers, and directly should we expand our business operations into the PRC. Additionally, with respect to the recent statements and regulatory actions by the PRC government, the promulgation of regulations prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly concerns, should there be fundamental changes to the Basic Law that make such laws and regulations applicable in Macau, although unlikely, we may be subject to these laws and regulations and risks of the uncertainty of any future actions of the PRC government in this regard. If it is determined in the future, however, that the approval of the CSRC, the CAC or any other regulatory authority is required for this offering, the offering will be delayed until we have obtained the relevant approvals. There is also the possibility that we may not be able to obtain or maintain such approval or that we erred in our conclusion that such approval was not required. If the approval was required while we mistakenly concluded that such approval was not required or if applicable laws and regulations or the interpretation of such were modified to require us to obtain approval in the future, we may face sanctions by the CSRC, the CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations, limit our ability to pay dividends, limit our operations, or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities. For additional information, please see “Risk Factors — Risks Related to the PRC — Recent greater oversight by the Cyberspace Administration of China (the “CAC”) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business should we start an online retail business platform directly targeting our sales at mainland consumers.” on page 30.

Pursuant to the Holding Foreign Companies Accountable Act (the “HFCAA”), if the Public Company Accounting Oversight Board (the “PCAOB”), is unable to inspect an issuer’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a U.S. stock exchange. The PCAOB issued a Determination Report on December 16, 2021 (the “Determination Report”) which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. Furthermore, the Determination Report identified the specific registered public accounting firms which are subject to these determinations (“PCAOB Identified Firms”). On June 22, 2021, United States Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which, if enacted, would decrease the number of “non-inspection years” from three years to two years, and thus, would reduce the time before our securities may be prohibited from trading or delisted if the PCAOB determines that it cannot inspect or investigate completely our auditor.

Our current auditor, TAAD, LLP, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. TAAD, LLP, whose audit report is included in this prospectus, is headquartered in Diamond Bar, California, and, as of the date of this prospectus, was not included in the list of PCAOB Identified Firms in the Determination Report.

On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission (the “CSRC”) and the Ministry of Finance (“MOF”) of the People’s Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong. Pursuant to the Protocol, the PCAOB conducted inspections on select registered public accounting firms subject to the Determination Report in Hong Kong between September and November 2022.

On December 15, 2022, the PCAOB announced that it has completed the inspections, determined that it had complete access to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, and voted to vacate the Determination Report.

On December 29, 2022, the Consolidated Appropriations Act, 2023 (the “CAA”) was signed into law by President Biden. The CAA contained, among other things, an identical provision to the AHFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

Notwithstanding the foregoing, to our knowledge, Macau has not been subject to PCAOB investigations that are conducted in a similar manner to those conducted upon China and Hong Kong, and the PCAOB’s ability to exercise oversight authority over Macau based accounting firms has not been called into questions likely due to the fact there are only limited numbers of Macau based companies listed in the United States, there is no assurance that the designation of Macau would not become an issue in the future. In addition, the above rules and amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require significant expense and management time.  See “Risk Factors — Risks Related to the PRC — The newly enacted Holding Foreign Companies Accountable Act and the Accelerating Holding Foreign Companies Accountable Act passed by the U.S. Senate, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the Public Company Accounting Oversight Board. These developments could add uncertainties to our offering and listing on the Nasdaq Capital Market, and Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect or fully investigate our auditor.” on page 28.

As of the date of this prospectus, there has been no distribution of dividends or assets among Epsium BVI (the holding company), Epsium HK (the interim holding company), or the Luz (the Operating Entity) and no transfers, dividends, or distributions to our shareholders. Epsium BVI is permitted under the BVI laws to provide funding to our subsidiaries in Hong Kong and Macau through loans or capital contributions without restrictions on the amount of the funds and such funding is not subject to government registration or filing requirements under BVI laws. Epsium HK is permitted under the Hong Kong laws to provide funding to Luz, subject to the compliance and satisfaction of applicable government registration, approval and/or filing requirements.

Epsium BVI is a holding company with no operations of its own and may rely on dividends to be paid by our Macau operating subsidiary to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses (if any). If our Macau subsidiary incurs debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. As a British Virgin Islands company, our board of directors has discretion as to whether to pay a dividend on its shares subject to certain restrictions under British Virgin Islands law, namely that we may only pay dividends if it is solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business; and the value of assets of our company will not be less than the sum of our total liabilities. Even if our board of directors decides to pay dividends, the form, frequency, and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors that the board of directors may deem relevant.

If the Company determines to pay dividends on any of the Ordinary Shares in the future, as a holding company, the Company will be dependent on receipt of funds from Epsium HK. Epsium HK, in turn, will be dependent on the receipt of funds from the Operating Entity. Payments of dividends by Epsium HK are subject to Hong Kong regulations and Epsium HK is permitted under the relevant laws of Hong Kong to provide funding through dividend distribution without restrictions on the amount of the funds. There are currently no restrictions on dividends transfers from Hong Kong to the British Virgin Islands and to U.S. investors.

Current Macau regulations permit the Operating Entity to pay dividends to Epsium HK. According to Macau law, income received in Macau is subject to taxation under Macau’s Complementary Tax provisions, regardless of whether the recipient is an individual or a corporation, their specific industry, or domiciliation. However, taxpayers may be eligible for particular deductions and allowances. Any dividends received by either individuals or corporate shareholders are considered as income and thus are subject to complementary tax as stated above. Non-residents and companies not incorporated in Macau that do not conduct business activities in Macau, are normally not registered with the Macau Financial Services Bureau as taxpayers, and therefore are not required to submit their income tax returns in Macau. However, the Macau taxation authorities may challenge the accuracy of income statements and may calculate the amounts due based on prior results or estimations. In such an event, appeals are available for unsatisfied parties. In addition, in accordance with the Basic Law of Macau, no foreign exchange control policies shall be applied within Macau, allowing for the free flow of capital within, into and out of Macau.

As the Company and Epsium HK are holding companies without substantive operations (except for facilitating inventory procurement for the Operating Entity by Epsium HK as described below), and neither of them generates any income, their respective payment obligations such as fees owned to professional service providers or government administrative fees are met by utilizing cash transfers from the Operating Entity.

In 2023, Epsium HK facilitated the Operating Entity in procuring inventory in Hong Kong from Hong Kong-based alcoholic beverage suppliers. To help Epsium HK pay for these inventories, the Operating Entity transferred an aggregate of $8,637,886 to Epsium HK with amounts ranging between $12,782 and $1,822,700. In 2023, the Operating Entity also transferred to, or paid on behalf of, Epsium BVI a total of $609,809 to pay for professional service fees and other fees in connection with this offering, with amounts ranging between $10 and $77,123. For example, on January 9, 2023, the Operating Entity transferred $40,170 to Epsium BVI to pay for our annual audit fee. On January 11, 2023, the Operating Entity transferred $50,000 to Epsium BVI to pay for professional legal service fees. In 2022, the Operating Entity transferred a total of $12,500 to Epsium BVI for professional service fees payable to our auditor and legal counsel. We previously had no specific cash management policies and procedures in place that dictate how funds are transferred through our organization.

We adopted a cash management policy on September 27, 2023, to improve our cash management in general, and cash transfers between the Company and its affiliates, in particular. Under our cash management policy, to the extent a cash transfer is a part of a related party transaction, such cash transfer is further subject to our Code of Business Conduct and Ethics governing related party transactions. Please see “Prospectus Summary – Cash Transfers between the Company and Our Subsidiaries and Dividend Distribution” on page 5, “Related Party Transactions - Cash Transfers Between the Company and Our Subsidiaries” on page 100 and “Consolidated Financial Statements - Notes to the Financial Statements – Note 11. Related Party Transactions” on page F-16 for more details.

We are, and will be, a “controlled company” as defined under the Nasdaq Stock Market Rules as long as Mr. Son I Tam, our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), chairman of the Board of Directors, (“Chairman”), and principal shareholder, and his affiliates own and hold more than 50% of our outstanding Ordinary Shares. As of the date of this prospectus, Mr. Tam, as the controlling shareholder of the Company, can decide on all matters requiring shareholder approval or matters which may be approved by shareholders under the Company’s Memorandum and Articles of Association by virtue of his controlling ownership in the Company based on his direct and indirect ownership (through Epsium HK) of the Company’s outstanding Ordinary Shares, including the election of directors, amendment of memorandum and articles of association, and approval or disapproval of major corporate transactions, such as a change in control, a transaction with take-over effect, merger, consolidation, or sale of assets. The Company has adopted a Code of Business Conduct and Ethics to impose certain review procedures that require independent director review and approval of conflict of interests and related party transactions, which applies to all directors, officers, and employees of the Company, including Mr. Tam. Additionally, the Company plans to adopt an Audit Committee Charter effective upon the completion of this offering and the listing of our Ordinary Shares on Nasdaq to include additional internal control and risk management procedures to further address conflicts of interest issues.

For so long as we are a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including, among others:

As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Although we do not intend to rely on the “controlled company” exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future. If we elected to rely on the “controlled company” exemption, a majority of the members of our board of directors might not be independent directors and our nominating and compensation committees might not consist entirely of independent directors upon closing of this offering.

We are both an “emerging growth company” and a “foreign private issuer” under applicable U.S. Securities and Exchange Commission rules and will be eligible for reduced public company disclosure requirements. As such, in this prospectus we have taken advantage of certain reduced public company reporting requirements that apply to emerging growth companies regarding selected financial data and executive compensation arrangements. See sections titled “Prospectus Summary — Implications of Our Being an ‘Emerging Growth Company’” on page 8 and “Prospectus Summary — Implications of Our Being a ‘Foreign Private Issuer’” beginning on page 8 for additional information.

Unless otherwise specified, in the context of describing business and operations, we are referring to the business and operations conducted by Luz. Although we do not currently have cash or assets in the PRC and our Hong Kong subsidiary, Epsium HK, does not have substantive operations other than facilitating inventory procurement in Hong Kong, to the extent cash or assets in the business is in the PRC, Hong Kong or a PRC or Hong Kong entity in the future, the funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the Company or our subsidiary by the PRC government to transfer cash or assets. See “Prospectus Summary – Summary of Risk Factors – Risks Related to Doing Business in Macau and Risks Related to the PRC” on page 4 and “Risk Factors – Risks Related to the PRC – Any restrictions of cash flows among Epsium BVI, Epsium Hong Kong, and our Operating Entity in Macau may adversely affect our ability to meet our financial requirements or make dividend or other shareholder distributions to our shareholders.” on page 26. Cash is also transferred through our organization by way of intra-group transactions such as the cash transfers between the Company, Epsium HK, and the Operating Entity during 2023 and the fiscal year ended 2022. See “Prospectus Summary — Cash Transfers Between the Company and Our Subsidiaries and Dividend Distribution” beginning on page 5. If Luz realizes accumulated after-tax profits, they may, upon satisfaction of relevant statutory conditions and procedures, pay dividends or distribute earnings to Epsium HK. Epsium HK, in turn, may transfer cash to Epsium through dividends or other distributions. With necessary funds, the Epsium may pay dividends or make other distributions to U.S. investors and service any debt it may have incurred. We previously had no specific cash management policies and procedures in place that dictate how funds are transferred through our organization. We adopted a cash management policy on September 27, 2023 to improve our cash management in general, and cash transfers between the Company and its affiliates, in particular. Under our cash management policy, to the extent a cash transfer is a part of a related party transaction, such cash transfer is further subject to our Code of Business Conduct and Ethics governing related party transactions.

As of the date of this prospectus, the Company and its Operating Entity have not distributed any earnings, nor do they have any plan to distribute earnings in the foreseeable future. As of the date of this prospectus, the Operating Entity has not made any dividends or distributions to the Company and the Company has not made any dividends or distributions to the Company’s shareholders or U.S. investors. The Company intends to keep any future earnings to finance business operations and does not anticipate that any cash dividends will be paid in the foreseeable future. If the Company decides to pay dividends on any of the Ordinary Shares in the future, as a holding company, the Company will be dependent on receipt of funds from Epsium HK, which in turn will rely on payments made from the Operating Entity. There were numerous cash transfers among the Company, Epsium HK, and the Operating Entity during 2023 and the fiscal year ended 2022. See “Prospectus Summary — Cash Transfers Between the Company and Our Subsidiaries and Dividend Distribution” beginning on page 5,

Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We expect our total cash expenses for this offering (including cash expenses payable to our underwriter for its out-of-pocket expenses) not to exceed $[●], exclusive of the above discounts. For a detailed description of the compensation to be received by the underwriter, see “Underwriting” beginning on page 118 of this prospectus.

This offering is being conducted on a firm commitment basis. The Underwriter is obligated to take and pay for all of the Ordinary Shares if any such Ordinary Shares are taken. We have granted the underwriter an option for a period of 45 days after the effective date of this registration statement to purchase up to 15% of the total number of the Ordinary Shares to be offered by us pursuant to this offering (excluding Ordinary Shares subject to this option), solely for the purpose of covering over-allotments, if any, at the public offering price less the underwriting discounts. If the underwriter exercises the option in full, and assuming an offering price of $4.5 per Ordinary Share, which is the midpoint of the range set forth on the cover page of this prospectus, the total gross proceeds to us, before underwriting discounts and expenses, will be $[●].

The Underwriter expects to deliver the Ordinary Shares against payment as set forth under “Underwriting”, on or about [●], 2024.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read this entire prospectus and any amendments or supplements carefully before you make your investment decision. 

Prospectus dated [●], 2024. 

TABLE OF CONTENTS

You should rely only on the information contained in 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 in any related free-writing prospectus. We are offering to sell, and seeking offers to buy, the Ordinary Shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Ordinary Shares. We have not taken any action to permit a public offering of the Ordinary Shares outside the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the Ordinary Shares and the distribution of this prospectus or any filed free writing prospectus outside the United States.

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information.

Until [●], 2024 (the [●]th day after the date of this prospectus), all dealers that buy, sell or trade Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

About this Prospectus

We and the Underwriter 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. 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 an offer or sale. For the avoidance of doubt, no offer or invitation to subscribe for Ordinary Shares is made to the public in the British Virgin Islands. 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.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

On February 8, 2024, pursuant to the written resolutions signed by all the directors of the Company, the Company accepted the surrender of shares by each shareholder of the Company (the “Share Surrender”) and approved the cancellation of the surrendered shares (the “Share Cancellation”) such that following the Share Surrender and Share Cancellation, the total number of issued shares held by each shareholder of the Company will be reduced to 20% (or 1/5) of such shareholder’s shareholding before the Share Surrender. As a result of the Share Surrender and the Share Cancellation, the total number of issued shares of the Company reduced from 60,002,670 ordinary shares to 12,000,534 ordinary shares, with a par value of US$0.00002 per share. The maximum number of shares which the Company is authorized to issue and the par value of each share both remain unchanged following the Share Surrender and the Share Cancellation.

All share numbers, warrant numbers, and exercise prices appearing in this registration statement will be adjusted to give effect to the Share Surrender and Share Cancellation, unless otherwise indicated or unless the context suggests otherwise.

RISK FACTORS

An investment in our Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Ordinary Shares, you should carefully consider the risks described below, together with all the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. If any of these risks actually occur, our business, financial condition, results of operations, or cash flow could be materially and adversely affected, which could cause the trading price of our Ordinary Shares to decline. Consequently, you may lose all or part of the money you have paid to buy our Ordinary Shares. The risks described below and discussed in other parts of this prospectus are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in our Ordinary Shares if you can bear the risk of losing your entire investment.

Risks Related to Our Business and Industry

Our historical operating and financial performance and growth rate may not be indicative of our future performance. If we fail to manage our growth or implement our future business strategies effectively, the success of our business may be compromised.

For the six months ended June 30, 2023, and June 30, 2022, our revenue was $18,403,610 and $1,019,951, respectively, representing a growth rate of 1,704.36%. For the same time periods, our net income was $3,524,222 and ($58,810), respectively, representing a growth rate of 6,092.56%. In the fiscal years ending on December 31, 2022, and December 31, 2021, our revenue was $11,173,092 and $18,203,802, respectively, representing a decline rate of 38.6%. For the same fiscal years, our net income was $1,130,946 and $1,052,021, respectively, representing a growth rate of 7.5%. However, our historical growth rate may not be indicative of our future performance. We cannot assure you we will be able to achieve similar results or grow at the same rate as we did in the past. Growth may slow and net revenues or net income may decline for several possible reasons, some of which are beyond our control, including decreasing consumer spending, increasing competition, changing consumer preferences, slowing growth of our overall market, and changes in government policies or general economic conditions.

We will continue to expand our sales network and product offerings to attract customers and to increase our customer base, number of transactions, and sales volume. However, the execution of our expansion plan is subject to uncertainty. For example, the total number of transacting customers and items sold may not grow at the rate we expect for the reasons stated above. If our growth rates decline, investors’ perceptions of our business and prospects may be adversely affected and the market price of our shares could decline. Even if we achieve growth of our business, if we do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, satisfy consumer requirements, or maintain high-quality products and services, any of which could adversely affect our business, financial condition, results of operations and prospects. To accommodate our growth, we anticipate that we will need to implement a variety of new and upgraded operational management systems, procedures, and controls, including the improvement of our accounting and other internal management systems. We will also need to continue to expand, train, manage and motivate our workforce and manage our relationships with our distributors, dealers, and suppliers. As we selectively increase our product and service offerings, we will need to work with different groups of new distributors, dealers, and other suppliers efficiently and establish and maintain mutually beneficial relationships with our existing distributors, dealers, and supplier. All of these endeavors involve risks and will require substantial managerial effort and significant additional expenditure. We cannot assure you that we will be able to manage our growth or execute our strategies effectively, and any failure to do so may have a material adverse effect on our business and prospects.

Our company structure is comprised of a holding company that holds directly or indirectly subsidiary entities in Hong Kong and Macau. The government of the People’s Republic of China may intervene or influence our company and our company structure, which presents unique risks and uncertainties that may negatively impact our business, growth, our ability to offer or continue to offer securities to investors and the value of such securities.

We face risks and uncertainties that may impede our growth because of our company structure. Our company is comprised of entities in Hong Kong and Macau. Hong Kong and Macau are Special Administrative Regions of the People’s Republic of China with their own legal systems and special legal status within the People’s Republic of China, respectively, under the Chinese policy of “one-country, two-systems” but they are nevertheless subject to the sovereign power of the People’s Republic of China and therefore its ability to have significant oversight and discretion over the conduct and operations of our business. This structure involves unique risks for our investors.

Although we believe that the laws and regulations of the PRC do not currently directly apply to us nor have any direct material negative impact on our business, financial condition or results of operations, and our corporate structure is stable without any interference from current applicable laws in PRC, Hong Kong, or Macau, we face risks and uncertainties associated with the complex and evolving PRC laws and regulations and the economic conditions of the PRC because our business operations rely on the economic growth of the PRC and the smooth functioning of the PRC commercial participants in our industry, including manufacturers, exporters, and PRC tourists to Macau. We are subject to uncertainty about any future actions of the government of the People’s Republic of China or authorities in Macau or Hong Kong, and all the material legal and operational risks associated with being based in and having operations in the PRC also may apply to operations in Macau or Hong Kong. Additionally, if there is a duly declared state of war or state of emergency endangering national unity or security under the existing Basic Law or that the Basic Law is fundamentally amended by the National People’s Congress of the People’s Republic of China by virtue of Macau being a constituent part of the People’s Republic of China, however unlikely, it could potentially impact Macau’s legal system and may create uncertainty in whether existing PRC laws would be made applicable in Macau. As a result of the foregoing, the Chinese government may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our securities, and/or may exert more oversight and control over offerings conducted overseas and/or foreign investment in China-based issuers and such risk 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. For more details, please see “Regulation – The Basic Law of the Macau SAR promulgated by the National People’s Congress of the PRC (“NPC”), the highest body of the PRC legislature, as Macau’s Constitution” on page 89, “Risk Factors — Risks Related to the PRC” beginning on page 26 and “Risk Factors — Risks Related to Doing Business in Macau” beginning on page 24.

Any significant disruption or interruption in the supply chain may adversely affect the Operating Entity’s business.

The Operating Entity may be negatively impacted by significant disruptions or interruptions in the supply chain caused by events such as abnormal weather, changes in import/export restrictions, or global pandemics like COVID-19. The occurrence of such events may lead to a shortage of imported alcoholic beverages, price volatility, and operational inefficiencies.

For instance, during 2022, the COVID-19 pandemic had an unprecedented impact on international and local economic activities, transportation, and everyday lives of ordinary people. Governments worldwide, including the PRC and Macau SAR, imposed restrictive measures such as travel ban, quarantine, temporary locking-down of business and public facilities to curtail the spread of the pandemic. Although the Operating Entity did not experience any significant shortage of supply, such restrictive measures caused disruptions to supply chain operations locally, regionally, and even globally. As the Operating Entity primarily procure its products in bulk on an ad hoc basis from the market without formal long-term supply and distribution arrangements with the manufacturer or distributors, a prolonged disruption in the alcoholic beverage supply chain may lead to our inability to fulfill customer orders or maintain inventory levels. Price volatility can occur due to exchange rate fluctuations or sudden changes in demand and supply, forcing the Operating Entity to pass on price increases to customers, which could result in decreased sales volume. The Operating Entity imports and sells Chinese and Western liquors with prestigious and popular brands. Although it is rare for all or most of these products to experience a general supply shortage at the same time in the general market purely due to supply chain disruptions (except sporadically during Covid-19 pandemic outbreak) because these products are imported from different regions, a product may experience supply shortage from time to time. In such a case, the Operating Entity may need to switch to alternative suppliers or lesser known products. Macau regulates the import and export of alcoholic beverages with licensing, quantity, and other requirements. Almost all the alcoholic beverage products the Operating Entity sells are imported to Macau. Enhanced regulatory restrictions could increase the costs of imported goods, difficulties in product procurement, and our regulatory compliance costs. The Operating Entity may also face operational inefficiencies, such as delays in receiving and processing orders or increased lead times, which may occur during supply chain disruptions. All the above could bring customer dissatisfaction, decreased sales, increased costs, and reputational damage, which may have a material adverse effect on our business and prospects.

Uncertain economic or social conditions, natural catastrophic events, and public health crises may adversely impact the Operating Entity’s business.

The Operating Entity’s business may be negatively affected by various economic and social disruptions, including but not limited to a slowdown, recession, or inflationary pressures in the general economy, reduced market growth rates, tighter credit markets for suppliers, vendors, or customers, significant shifts in government policies related to alcoholic beverages and gaming, significant social unrest, deterioration of economic relations between countries or regions, and changes in societal perception of alcoholic beverages. These disruptions could result in reduced demand for the Operating Entity’s products and may cause financial or operational difficulties for third-party partners, which could have an impact on the Operating Entity’s ability to receive needed materials and services.

In addition, fluctuations in general economic conditions, particularly those affecting the gaming, tourism and hospitality industries, could result in business volume decreases and negatively impact the growth potential of the Operating Entity’s short-term revenue. Economic disruptions could result in economic downturns impacting the regions in which the Operating Entity conducts its business, and could lead to a decline in our customer’s demands for our products, and could negatively affect the collectability of accounts receivable or early termination of agreements. The occurrence of any of the foregoing could materially and adversely impact our business and results of operations.

Further, because the raw materials used to make alcoholic beverages are agriculture products such as yeast, grains, and fruits, the Operating Entity is also susceptible to the impact of natural catastrophes, such as earthquakes, floods, power outages, and other factors that impact the supply or manufacturing of these products.

Political crises, such as terrorism or war, and public health crises, such as disease outbreaks, epidemics, or pandemics (including and in addition to COVID-19) as demonstrated by recent events in China, could negatively impact our business, financial condition, and operating results. Two-thirds of our sales came from the sale of Chinese liquor manufactured in China and, we believe, a big portion of the products we sell are ultimately sold to Chinese tourists, thus we are especially susceptible to risks relating to China. Please see “Risk Factors — Risks Related to the PRC” beginning on page 26 for more details concerning how risks relating to the PRC could affect the results of our operations.

Our results of operations are subject to seasonality and other fluctuations.

We are subject to seasonality and other fluctuations in our business. Our revenue is also largely affected by tourism and public holiday seasons in China, Macau, and neighboring Asian countries, and revenue may increase or decrease because of these activities. The launch of new promotions or the timing of such promotions may further cause our quarterly results to fluctuate and differ from historical patterns. Our results of operations will likely fluctuate due to these and other factors, some of which are beyond our control, including but not limited to: (i) fluctuations in overall consumer demand for alcoholic beverages during certain months and holidays; (ii) introduction of new policies or regulatory measures governing travel to Macau; (iii) fluctuations in exchange rates that impact our acquisition costs of imported alcohol products; and (iv) macro-economic conditions and their effect on discretionary consumer spending. If we fail to accurately identify the seasonal trends in our business and match our customer services and supplies in an effective manner, it may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.

A reduction in consumer demand for alcoholic beverages, which may result from a variety of factors, could materially and adversely affect our business, results of operations and financial results.

We rely on consumers’ demand for our alcoholic beverages. Consumer preferences may shift due to a variety of factors, including changes in demographic or social trends, changes in discretionary income, changes in the price of consumer products due to inflation, changes in laws and regulations, public health policies, and perceptions, and changes in leisure, dining, and beverage consumption patterns. Our continued success will require us to anticipate and respond effectively to shifts in consumer behavior and drinking tastes. If consumer preferences were to move away from our products, our results of operations would be materially and adversely affected. Some of the factors that may cause a reduction in consumer demand for alcoholic beverages include:

Our portfolio includes a range of luxury alcoholic beverages, and demand for these brands may be particularly susceptible to changing economic conditions and consumer tastes, preferences, and spending habits, which may reduce our sales of these products and adversely affect our profitability. An unanticipated decline or change in consumer demand or preference could also materially affect our ability to forecast future production requirements, which could, in turn, impair our ability to effectively adapt to changing consumer preferences. Any reduction in the demand for our products would materially and adversely affect our business, results of operations and financial results.

Our lack of internal controls over financial reporting may affect the market for and price of our Ordinary Shares. 

Our disclosure and internal controls over financial reporting may not be effective. We may not have the financial resources or personnel to develop or implement systems that would provide us with the necessary information on a timely basis to be able to implement financial controls. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees due to labor legislations and immigration laws of Macau. As a result of these factors, we may experience difficulty establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records, and instituting business practices that meet the U.S. GAAP standards. We may have made and may in the future make mistakes in the financial statements that are included or will be included in our public filings, such as a registration statement, due to lack of internal controls over financial reporting. If we fail to maintain an effective system of disclosure and internal controls over financial reporting, our ability to timely produce accurate financial statements or comply with applicable regulations could be impaired. For more details concerning internal controls over financial reporting, please see “Risk Factors — Risks Related to our Ordinary Shares and This Offering — We have identified material weaknesses in our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our consolidated financial statements” on page 39. 

Our success depends substantially on the continued retention of certain key personnel and our ability to hire and retain qualified personnel in the future to support our growth and execute our business strategies. 

If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, our business may be disrupted, and our financial condition and results of operations may be materially and adversely affected. While we depend on the abilities and participation of our current management team generally, we rely particularly upon Son I Tam, our CEO, CFO, Chairman, and principal shareholder, who is responsible for the development and implementation of our business plans. Competition for senior management in Macau is intense and the pool of qualified candidates is limited. We cannot assure you that the services of our senior executive and other key personnel will continue to be available to us, or that we will be able to find a suitable replacement for them if they were to leave. The loss, for any reason, of the service of Son I Tam or other key personnel, or our failure to recruit, train or retain qualified personnel could significantly and adversely impact our business and the results of operations.

The alcoholic beverages import and export industry in Macau is highly competitive and growing rapidly in the past few years; if we are unable to compete successfully, our financial condition and results of operations may be harmed. As a result, we may lose market share and customers. 

The alcoholic beverages industry in Macau has been changing and developing rapidly and has become very competitive in recent years. As it is relatively easy to enter the market, there are many other trading companies providing services of various qualities across Macau. We face competition from long-established traditional Macau alcohol distributors and retailers as well as new companies which rely on modern technology such as E-commerce platforms. Our current or future competitors may have longer operating histories, greater brand recognition, better supplier relationships, larger customer bases, more cost-effective fulfillment capabilities or greater financial, technical, or marketing resources than we do. Competitors may leverage their brand recognition, experience and resources to compete with us in a variety of ways, including investing more heavily in research and development and making acquisitions for the expansion of their products and services. Some of our competitors may be able to secure more favorable terms from suppliers, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing or inventory policies and devote substantially more resources to their website and system development than us. Increased competition may reduce our profitability, market share, customer base and brand recognition. Competition is mainly based on rates, brand recognition, turnaround time, quality of venue and service levels. Additionally, individual consumers may change their budgets and preferences and choose venues outside Macau that offer lower rates or have access to venues and facilities that we do not have access to, which may have an adverse effect on our competitive position, results of operations and financial condition. There is no assurance that we will be able to compete effectively or successfully against existing or future competitors. Such competitive pressures and uncertainties could materially impact our business operation and financial conditions.

The growth of third-party online and other alcoholic beverages supply intermediaries may adversely affect our margins and profitability. 

Our products can also be purchased and distributed through our cooperating agencies or third-party intermediaries whom we have profit sharing arrangements with or pay commissions to. If the volume of any supply intermediary becomes substantial, it may be in a better bargaining position to negotiate a higher profit percentage or commission, or other significant concession from us. As a result, the growth and importance of these supply intermediaries may adversely affect our ability to control the supply and cost of our products, which would in turn adversely affect our margins and profitability. 

Any harm to the reputation of the brands and the manufacturers of the alcoholic beverage products that we sell may materially and adversely affect our business and results of operations.

Brand prestige and reputation are critical to the popularity and sales performance of high-end alcoholic beverages. Because we are a wholesaler of high-end alcoholic beverages, we rely on the prestige of the brands and the reputation of the brand owners and their efforts in promoting the brand in the market while we focus more on developing and maintaining sales channels. As such, the success of our business depends heavily upon the status of the brands and the efforts of the brand owners, which are not within our control. Therefore, any harm to the reputation and prestige of the brands of the leading products we sell, such as the Chinese liquor brands Moutai, Wuliangye, or Xijiu, or French cognac brand Remy Martin, or Scottish whiskey brand Macallan, may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.

We rely on the alcohol product brands’ marketing materials when promoting our products.

The Operating Entity has limited control over the promotional materials used by the alcoholic beverage manufacturers, which may not align with our branding or values. This lack of control can make it difficult for the Operating Entity to differentiate its products from similar products from the same alcohol brand sold by our competitors, as consumers may not see a compelling reason to choose one wholesaler’s products over the others. The Operating Entity’s success in promoting its products is dependent on the manufacturers’ marketing efforts. If the manufacturers’ marketing efforts are not effective, the results of our operation can be negatively impacted.

Our main product sales are highly concentrated on a limited number of product categories.

Although we sell a wide range of alcoholic beverages, including Chinese liquor, French cognac, Scottish whiskey, fine wine, Champagne, and other miscellaneous beverage alcohol, the three main alcoholic beverages we sell are Chinese liquors, French cognac, and Scottish whiskey. Our sales of these three main categories of products accounted for 99.73% of our total percentage of sales revenue for the six months ended June 30, 2023, and 97.63%, 97.97%, and 99.44% of our total percentage of sales revenue, respectively, for the fiscal years 2020, 2021, 2022, and the six months ended June 30, 2023. Our sales of Chinese liquors were by far the most significant component of our revenues, accounting for 80.46%, 79.18%, 86.57% and 96.89% of our total percentage of sales revenue in these time periods. This means that our success is highly dependent on the overall success of these three categories of products in the market, especially Chinese liquor. If any of these products is not doing well in the market for any reason, such as significant supply shortage, price hike, reputational damage of the brands or their brand owner, it may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.

If counterfeit products are sold under our brand names and trademarks, our reputation and financial results could be materially and adversely affected.

From time to time, we may work with third-party merchants and dealers, who are separately responsible for sourcing counterfeit products that are sold under our brand names and trademarks. Although we have adopted measures to help consumers verify the authenticity of products sold on the general Macau market and to remove any counterfeit products found by us, these measures may not always be successful. Counterfeit products may be defective or inferior in quality as compared to authentic products and may pose health and safety risks to our customers. If our customers are injured by counterfeit products sold under our brand names and trademarks, we may be subject to lawsuits, severe administrative penalties, and criminal liability. We believe our brand and reputation are extremely important to our success and our competitive position. The discovery of counterfeit products sold under our brand names and trademarks may severely damage our reputation and cause customers to refrain from making future purchases from us, which would materially and adversely affect our business operations and financial results.

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

Our business often requires us to manage a large volume of inventory effectively. We depend on our forecasts of demand for and popularity of our products to make purchase decisions and to manage our inventory. Demand for products, however, can change significantly between the time inventory or components are ordered and the date of sale. Demand may be affected by seasonality, new product launches, rapid changes in product cycles and pricing, product defects, changes in consumer spending patterns, changes in consumer tastes with respect to our products and other factors, and our customers may not order products in the quantities that we expect. It may be difficult to accurately forecast demand and determine the appropriate product or component to be in inventory.

If we fail to manage our inventory effectively or negotiate favorable credit terms with suppliers, we may be subject to a decline in inventory values, and significant inventory write-downs or write-offs. In addition, if we are required to lower sale prices to reduce inventory level or to pay higher prices to our suppliers in order to secure the right to return products to our suppliers, our profit margins might be negatively affected. Any of the above may materially and adversely affect the results of operations and financial condition.

We rely on a limited number of customers for our business. 

The Company has a concentration of its revenues with specific customers. As of June 30, 2023, four customers’ accounts receivable accounted for 46.82%, 17.41%, 13.34% and 10.32% of the total outstanding accounts receivable balance. As of December 31, 2022, two customers’ accounts receivable accounted for 49.8% and 35.6% of the total outstanding accounts receivable balance. As of December 31, 2021, two customers’ account receivable accounted for 37.2% and 35.3% of the total outstanding accounts receivable balance. For the six months ended June 30, 2023, two customers accounted for 23.87% and 16.47% of total revenue. For the year ending on December 31, 2022, four customers accounted for 15.4%, 12.4%, 10.6% and 10.4% of total revenue. For the year ending on December 31, 2021, four customers accounted for 15.0%, 11.7%, 11.2% and 10.0% of total revenue.

A loss of any of these customers could adversely affect the operating results or cash flows of the Operating Entity. 

The Operating Entity’s revenue depends on the marketing strategies and business plan of third parties.

Our Operating Entity’s revenue is heavily dependent on collaborations with casinos through various programs such as flash sales, consignment, and reward and redemption programs. However, we do not have decision-making power over the timing, scale, and actual implementation details of these events. Consequently, our revenue is susceptible to the management decisions of third-party casinos, which are outside our control.

The Operating Entity does not have long-term contracts with its suppliers, who can reduce order quantities or terminate their sales to the Operating Entity at any time.

Our Operating Entity does not maintain long-term supply contracts with our suppliers. Instead, we primarily procure products in bulk ad hoc in the market based on quality, price, and other commercial terms consistent with prevailing competition and market conditions.

As of June 30, 2023, the Operating Entity purchased approximately 79.5% of its inventory from two suppliers. For the year ending on December 31, 2022, the Company purchased approximately 89.6% of its inventory from three suppliers. For the year ending on December 31, 2021, the Company purchased approximately 72.9% of its inventory from one supplier.

As of December 31, 2022, accounts payable to three major suppliers accounted for 66.0%, 15.3%, and 12.7% of the total accounts payable outstanding. As of December 31, 2021, accounts payable to one major supplier accounted for 97.6% of the total accounts payable outstanding.

Without long-term supply contracts, our suppliers can reduce quantities or priority of our orders or terminate their sales to us due to circumstances beyond our control or unknown to us. Although we have not historically experienced any significant or prolonged difficulties in our product procurement, potential reduction of supply or loss of any of these established relationships has the capacity to disrupt our procurement operations, necessitating a significant investment of our time and effort to cultivate new supply connections. However, due to the abundance of competitive suppliers, our established ad hoc procurement practice based on prevailing market conditions, and our established market position in Macau, we believe such disruption would likely be temporary, and we would be able to find suitable suppliers in a timely manner and may establish relationships with suitable replacements over time. Nevertheless, if we fail to identify suitable replacement suppliers in a timely manner or with reasonable product pricing for the type of products we specialize in selling, our operation may be disrupted, and our net revenue, gross profit margin, and the results of operations may be adversely and materially impacted.

If we fail to manage and expand our relationships with distributors, dealers, or suppliers, or otherwise fail to source products or services at favorable terms, our business and growth prospects may be adversely and materially impacted.

As of June 30, 2023, we relied on two major suppliers, who supplied 79.5% of our total purchases. For the fiscal year ending on December 31, 2022, we relied heavily on three major suppliers, who together supplied 89.6% of our total purchases. Our suppliers are concentrated primarily due to our established relationship and familiarity with these suppliers, which helps the Operating Entity maintain a relatively stable and efficient procurement operation. While we have maintained positive relationships with these distributors and suppliers, we recognize that compared to competitors with a more diversified supplier base, our business with concentrated suppliers is more vulnerable to change in economic conditions, labor actions, regulatory changes, natural disasters, or other similar factors. Even if we continue to maintain good relationships with our suppliers, there is always a risk that they may face financial difficulties or go out of business, leaving us without critical products or services. If we are unable to source products or services at favorable prices, our net revenues and gross profit margins may be materially and adversely affected.

In addition, if our suppliers cease to provide us with favorable payment terms, our requirements for working capital may increase and our operations may be materially and adversely affected. We will also need to develop relationships with new suppliers to ensure that we have access to a steady supply of products on favorable commercial terms or to offer sufficient products and services at acceptable prices sought by our customers. Any negative developments in our relationships with distributors, dealers and suppliers could materially and adversely affect our business and growth prospects. If we fail to attract new distributors or dealers to sell our products, or new suppliers to sell their products to us due to any reason, our business and growth prospects may be materially and adversely affected.

We may regularly encounter actual, potential, or perceived conflicts of interest, including related party transactions, and our failure to identify and address such conflicts of interest could adversely affect our business.

We face the possibility of actual, potential, or perceived conflicts of interest in the ordinary course of our business operations. Conflicts of interest may exist between (i) our different businesses; (ii) us and our customers; (iii) our customers; (iv) us and our employees; (v) our customers and our employees, (vi) us and our controlling shareholder(s), and entities controlled by our controlling shareholder(s), or (vii) us and our directors or executive officers or entities controlled by our directors or executive officers. A conflict of interest occurs when an individual’s private interest (or the interest of a member of his or her family or close friend(s) or business associate(s)) interferes, or appears to interfere, with the interests of our company as a whole. A conflict of interest can arise when an employee, officer or director (or a member of his or her family or a close friend(s) or business associate(s)) takes actions or has interests that may make it difficult to perform his or her work for our company objectively and effectively. Conflicts of interest also arise when an employee, officer or director (or a member of his or her family or close friend(s) or business associate(s)) receives improper personal benefits as a result of his or her position in our company. We intend to adopt a Code of Business Conduct and Ethics, which covers a broad range of matters including the handling of conflicts of interest, compliance issues and other corporate policies. This Code of Business Conduct and Ethics will apply to all of our executive officers, board members and employees.

As we expand the scope of our business and our customer base, it is critical for us to be able to timely address potential conflicts of interest, including situations where two or more interests within our business naturally exist but are in competition or conflict. In accordance with the BVI Business Companies Act, our currently effective Memorandum and Articles of Association contains certain board of directors disclosure and voting procedures that are designed to identify and address conflicts of interest, including conflicts of interest relating to related party transactions. We plan to adopt an Audit Committee Charter effective upon the completion of this offering and the listing of our Ordinary Shares on Nasdaq to include additional internal control and risk management procedures to further address conflicts of interest issues. However, appropriately identifying and managing actual, potential, or perceived conflicts of interest is complex and difficult, and our reputation and our customers’ confidence in us could be damaged if we fail, or appear to fail, to deal appropriately with one or more actual, potential, or perceived conflicts of interest. It is possible that actual, potential, or perceived conflicts of interest could also give rise to customer dissatisfaction, litigation, or regulatory enforcement actions. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation, which could materially and adversely affect our business in a number of ways, including a reluctance of some potential customers and counterparties to do business with us. Any of the foregoing could materially and adversely affect our reputation, business, financial condition, and results of operations.

Interruptions or failures that impair access to information technology systems could adversely affect the business of the Operating Entity.

The Operating Entity relies on information technology systems to process, transmit, and store information in relation to its operations. These information technology systems may be vulnerable to interruption due to a variety of events beyond our control, including but not limited to, natural disasters, telecommunications failures, computer viruses, hacking, and other security issues. Any material interruptions or failures in these information technology systems could cause disruptions in business operations and may require a significant investment to update, remediate or replace with alternate systems. The costs and potential problems associated with supporting, maintaining, remediating, and upgrading the existing information technology systems, or with implementing new systems, may severely disrupt the Operating Entity’s business operations.

Increased labor costs, inability to retain qualified employees, or unfavorable labor relations may adversely affect the business, financial condition or results of operations.

The Operating Entity aims to motivate and retain qualified employees. Its ability to manage and control labor costs is subject to numerous external factors, including the balance of the supply and demand of the labor market, prevailing wages, unemployment levels, insurance costs, as well as changes in laws and regulations governing wage and employee benefits, including Labour Relations Law (Law No.7/2008) and Law on Employment of Non-Resident Workers (Law No.21/2009), which is the general regime of labor relations in Macau. Any changes in these external factors could significantly increase labor costs, which would reduce the Operating Entity’s net income and cash flows.

Although the Operating Entity has not historically been, and is not currently, subject to significant employment-related claims, The Operating Entity may potentially be subject to various employment-related claims, such as individual actions or government enforcement actions relating to wage-hour, labor standards, or healthcare and benefit issues. Such actions, if brought against the Operating Entity and successful in whole or in part, may materially and adversely affect the Operating Entity’s business.

Failure to renew our current leases or locate desirable alternatives for our facilities could materially and adversely affect our business.

As of the date of this prospectus, we leased an aggregate of approximately 1,484 square feet of property for our offices. We use this space for communication and development, customer service and management, and for our operations in general. We may not be able to successfully extend or renew such leases upon expiration of the current term on commercially reasonable terms or at all. Thus, we could be forced to relocate our affected operations. This could lead to disruption of our operations resulting in significant relocation expenses, which could adversely affect our business, financial condition, and results of operations. In addition, we compete with other businesses for premises at certain locations or of desirable sizes. As a result, even though we could extend or renew our leases, rental payments may significantly increase because of the high demand for the leased properties. In addition, we may not be able to locate desirable alternative sites for our facilities as our business continues to grow, and such failure in relocating our affected operations could affect our business and operations.

If we are unable to offer premium products and services at attractive prices to meet customer needs and preferences, our business, financial condition, and results of operations may be materially and adversely affected.

Our future growth depends on our ability to continue attracting new customers and increasing the spending level of existing customers. Constantly changing consumer preferences have affected and will continue to affect the Macau market. We must stay abreast of emerging lifestyle and consumer preferences and anticipate product and services trends that will appeal to existing and potential future customers. Our customers choose to purchase quality products or services from us due in part to the attractive prices and premium services that we offer, and they may choose to shop elsewhere if we cannot match the prices, products or services offered by our competitors. If our customers cannot find their desired products or services within our portfolio, they may stop buying our products or using our services, which in turn may materially and adversely affect our business, financial condition and results of operations.

The Operating Entity may not succeed in its cost-saving strategies.

The Operating Entity continues to identify and execute cost-saving opportunities designed to improve operational efficiencies and optimize project management. There is no assurance that the Operating Entity will be able to achieve or sustain cost savings, realize and sustain operational efficiencies, or achieve other benefits that it may initially expect. Such failures may result in various unnecessary costs, temporary operational inefficiencies, and could negatively impact our business, financial condition and the results of operations.

The entry into strategic alliances, or mergers and acquisitions may expose the Operating Entity to additional risks.

The Operating Entity may consider potential strategic alliances that would complement the current product offerings, increase the size and geographic scope of its operations or otherwise present growth and/or other opportunities. Any such developments may entail numerous risks, including:

In addition, there can be no assurance that the Operating Entity will be able to identify suitable candidates or consummate such transactions on favorable terms or at all. Such failure, or the Operating Entity’s failure to enter new markets, enter strategic alliances, or successfully complete the integration of any new or acquired businesses could have a material adverse effect on its business, prospects, financial condition, liquidity, results of operations and cash flows.

Our management team does not have any experience managing a public company.

Members of our management team do not have experience managing a publicly traded company, interacting with public company investors, or complying with the increasingly complex laws pertaining to public companies. Additionally, some members of our management team were recently hired. Our management team may not successfully or efficiently manage their new roles and responsibilities. Our transition to a public company will subject us to significant regulatory oversight and reporting obligations under the U.S. federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and operating results.

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

The Operating Entity maintains workers’ compensation insurance for its employees and third-party liability insurance for its vehicles in compliance with applicable Macau laws. However, it should be noted that the availability and adequacy of the Operating Entity’s insurance coverage is not guaranteed, and certain types of risks may not be covered, such as war, force majeure, or certain business interruptions. Moreover, there is no assurance that the Operating Entity will be able to renew its current insurance policies on favorable terms upon expiration, which may materially impact its business if claims are not covered or if policies cannot be renewed. It is important to note that the Operating Entity does not have business disruption insurance, and any such event could result in significant costs and divert our resources.

Natural disasters and unusual weather conditions, power outages, pandemic outbreaks, terrorist acts, global political events and other extraordinary events could materially and adversely affect our results of operations, financial condition and future prospects.

In addition to the impact of COVID-19, natural disasters such as fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, power outages, other pandemic outbreaks, terrorist acts or disruptive global political events, or similar disruptions could materially and adversely affect our business operations and financial performance. In addition, in recent years, there have been other breakouts of epidemics regionally and globally. Normal business operations and results of operations could be adversely affected to the extent that any of the extraordinary events harm the economies of Macau, the PRC or the global economy broadly.

Local taxation may increase, and current tax exemptions may not be extended.  

We are subject to the following local taxation: 

The loss of any of these exemption benefits or increases in tax rates or imposition of additional taxes may have a materially adverse effect on our financial condition and results of operations. 

Risks Related to Doing Business in Macau

The success of our business depends on the tourism and gaming industries of Macau.

Macau’s economy relies heavily on the gaming and tourism industries and, as a result, our business depends on the success of these two industries. The primary driver of our revenue and cash flow is the sale of alcoholic beverages and related services to casinos, hotels, food, and wine wholesalers (who primarily serve casinos), and restaurants and other businesses that rely on the tourism industry boosted by the gaming sector. As our operations are heavily reliant on casino tourism, we are indirectly exposed to the risks that impact the gaming industry, including, but not limited to:

Although it is difficult to predict the likelihood that any of these risks may materialize and to quantity the impact on our business operations should any of them materialize, it is not unforeseeable that such risks, should they materialize, their collectively impact could result in a material change in our operations and/or the value of the Ordinary Shares offered in this offering or could significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of such securities to significantly decline or be worthless.

Regulations affecting gaming, tourism or other related industries could materially and adversely impact our business.

Changes to Macau’s gaming or tourism laws could affect the development and revenue of Macau’s gaming industry, leading to an impact on the overall economy since Macau’s tourism industry is closely tied to the gaming industry, with many tourists visiting Macau to experience the gaming culture. As the success of our business depends, to a great extent, on Macau’s tourism and gaming industries, any negative effect on these industries may also negatively affect our operations. For example, Macau has established a licensing system for gaming promoters, known as “junkets”, which have the responsibility of sourcing VIP players for casinos. Traditionally, Macau’s junkets have acted as marketing agents for casinos, playing a vital role in attracting and serving VIP players who typically participate in high-stakes casino games. However, the implementation of Law No. 16/2022 has brought about significant changes to the requirements for obtaining a junket license. These changes involve an increase in the minimum capital and guarantee requirements, additional reviews, and restrictions on junket commission rates. As a result, major casinos in Macau have experienced a notable decline in their VIP betting revenue. Therefore, if there is any change to Macau’s gaming or tourism laws that materially affect the development and revenue of Macau’s gaming industry, leading to an impact on Macau’s overall economy, it could result in a material adverse impact on our business, financial condition, operating results, and/or the value of the Ordinary Shares in this offering or could significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of such securities to significantly decline or be worthless.

The implementation of a legal drinking age in Macau could materially and adversely impact our business.

In November 2023, Macau will implement the Law on the Prevention and Control of Minors’ Consumption of Alcoholic Beverages, which prohibits the sale of alcoholic beverages containing alcohol by volume in excess of 1.2 percent to individuals under the age of 18 in Macau. The implementation of the new law in Macau will lead to a decrease in the number of individuals consuming alcoholic beverages. As a result, our customer base, which primarily consists of casinos, liquor stores, and food product and alcoholic beverage distributors, will likely experience negative effects on their sales due to fewer people being able to purchase alcoholic beverages. If our customers witness a decline in their revenue and reduce their purchases of alcoholic beverages, it will directly and adversely affect our business, financial condition, and operational outcomes.

Although the impact of regulatory changes may not be immediate and could take some time to materialize, it is crucial to monitor the situation carefully to see how these changes will affect our business in Macau. If material, negative impacts on Macau’s gaming and tourism industries materialize, such impacts could materially adversely affect our financial condition and operational results.

Conducting business in Macau has certain risks relating to political, economic, and social changes in Macau and China. 

Conducting business in Macau involves certain risks relating to changes in the political, economic, and social conditions of China and Macau. Additional risks include changes in Macau’s governmental policies, Macau’s laws and regulations, or exchange control regulations, restrictions on foreign investment, repatriation of capital, measures introduced to combat inflation, such as interest rate hikes, and changes to the rates or method of taxation. Our operations in Macau are exposed to the risk of changes in laws and policies that govern operations of Macau-based companies. The PRC government may continue to adopt policies and regulatory measures applicable in mainland China aimed at curtailing possible corruption, which, however, may indirectly impact Macau’s gaming and tourism industries. Therefore, we cannot be certain whether new PRC government policies and regulatory measures applicable in mainland China may indirectly but nevertheless materially and adversely affect our business, financial condition, results of operations or prospects.

The number of visitors to Macau from China and elsewhere may decline due to natural disasters, outbreaks of disease, terrorist attacks, security alerts, military conflicts, regulatory restrictions of travel, or other factors.

Macau’s subtropical climate and location on the South China Sea subjects it to extreme weather conditions, including typhoons and heavy rainstorms. For example, in 2022, there were six typhoons that impacted areas within 800 kilometers of Macau. Unfavorable weather conditions or other natural disasters such as earthquakes, tsunamis, or major typhoons could severely disrupt transportation to Macau and prevent gaming patrons from travelling to Macau. Similarly, material events such as outbreaks of infectious diseases, including COVID-19, terrorist attacks, security alerts, or military conflicts could have a negative impact on travel and leisure expenditures, including lodging, gaming, and tourism. Any PRC restriction that results in the decrease of visitors from China to Macau may adversely affect Macau’s economy and our business. For instance, the PRC traditionally has imposed restrictions on PRC residents’ travel to Macau. Although, to our knowledge, the PRC has not implemented new restrictions affecting PRC residents’ ability to travel to Macau since 2008, there is no assurance that there will not be future restrictions and other factors that may negatively impact the flow of visitors from China. Any of these, or other factors such as riots or demonstrations, could have a negative impact on visitor arrivals to Macau from China and elsewhere. If the number of visitors from the China and elsewhere decrease, it may affect Macau’s tourism industry which in turn could reduce retailer consumers of alcoholic beverages in Macau thus could indirectly and adversely affect our business. Should this materialize, it could materially and adversely affect our business, financial condition, results of operations or prospects.

Fluctuation in the value of the Hong Kong dollar, U.S. dollar, Pataca or RMB may adversely affect our expenses and profitability.

While our reporting currency is the U.S. dollar, the majority of the Macau Subsidiary’s revenues are denominated in Hong Kong dollars and Macau Patacas. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the local currencies of the Macau Subsidiary. The fluctuation in the value of the Hong Kong dollar and Macau Patacas against the U.S. dollar may be affected by, among other things, changes in political and economic conditions. Although the exchange rate between the Hong Kong dollar and the U.S. dollar has been pegged since 1983 and the Macau Pataca is pegged to the Hong Kong dollar, we cannot assure you that the Hong Kong dollar will remain pegged to the U.S. dollar or that the Macau Pataca will remain pegged to the Hong Kong dollar. In addition, because the currency market for Macau Patacas is relatively small and undeveloped, our ability to convert large amounts of Macau Patacas into U.S. dollars over a relatively short period of time may be limited. As a result, we may have difficulty converting Macau Patacas into U.S. dollars, which could hinder our ability to service certain expenses denominated in U.S. dollars. On the other hand, to the extent that we are required to convert U.S. dollar financings into Hong Kong dollars or Macau Patacas for our operations, fluctuations in the exchange rates between Hong Kong dollars or Macau Patacas against the U.S. dollar could have an adverse effect on the amounts we receive from the conversion.

Furthermore, the depreciation of RMB against U.S. dollar or Hong Kong dollar will affect the purchasing power of visitors from China, which in turn may affect the visitation and level of spending at Macau. To date, we have not engaged in hedging transactions with respect to foreign exchange exposure of our revenues and expenses in our day-to-day operations. Any significant fluctuations in the exchange rates mentioned above may have a material adverse effect on our business, financial condition, results of operations or prospects.

Inflationary pressures resulting in governmental action to control economic growth and inflation could lead to adverse material and adverse impact on our profitability and operating expenses.

We are also exposed to inflation risk. Inflationary factors, such as increases in labor costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses and may have a material adverse effect on our business, financial condition, results of operations or prospects.

Issues in the collectability and timing of collection of our account receivables could materially and adversely affect our results of operations and financial condition.

Our cash flow depends on the timely receipt of payments from our customers. There is no assurance that our customers will pay us on time and in full. Should we experience any unexpected delay or difficulty in collecting account receivables from our customers, it may have a material adverse effect on our revenues, business, financial condition, results of operations or prospects.

Any restrictions of cash flows among Epsium BVI, Epsium Hong Kong, and our Operating Entity in Macau may adversely affect our ability to meet our financial requirements or make dividend or other shareholder distributions to our shareholders.

Epsium BVI is a holding company with no operations of its own. We conduct our operations in Macau primarily through our Macau subsidiary. We may rely on dividends to be paid by our Macau subsidiary to fund our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. If our Macau subsidiary incurs debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

If the Company determines to pay dividends on any of the Ordinary Shares in the future, as a holding company incorporated in the British Virgin Islands, the Company will be dependent on receipt of funds from Epsium HK. Epsium HK, in turn, will be dependent on the receipt of funds from the Operating Entity. Current Macau regulations permit the Operating Entity to pay dividends to Epsium HK. Payments of dividends by Epsium HK is subject to Hong Kong regulations. There are currently no restrictions on dividends transfers from Hong Kong to the British Virgin Islands and to U.S. investors. As of the date of this prospectus, there has been no distribution of dividends or assets among the holding company or the subsidiaries and no transfers, dividends, or distributions to our shareholders.

We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.

Although we do not currently have cash or assets in the PRC and our Hong Kong subsidiary, Epsium HK, does not have substantive operations other than facilitating inventory procurement in Hong Kong, to the extent cash or assets in the business is in the PRC, Hong Kong or a PRC or Hong Kong entity in the future, the funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the Company or our subsidiary by the PRC government to transfer cash or assets.

We are subject to Hong Kong and Macau laws and regulations that are generally applicable to Hong Kong entities and Macau entities, including Hong Kong and Macau laws and regulations that result in oversight over data security.

Our majority-owned direct subsidiary Epsium HK, as a Hong Kong registered entity, is subject to Hong Kong laws generally applicable to Hong Kong entities, including Hong Kong laws and regulations that result in oversight over data security. Epsium HK is a holding company and does not conduct any substantive operations in Hong Kong except for facilitating inventory procurement in Hong Kong for our only operating subsidiary, which is in Macau. Epsium HK does not maintain any office facility or personnel, does not have revenue or expenses other than those associated with inventory procurement in Hong Kong from a few Hong Kong beverage distributors. We believe Epsium HK is compliant with the laws and regulations governing its existence and business operations in Hong Kong, including without limitation, laws and regulations relating to data privacy and anti-monopoly, to the extent such laws and regulations are applicable to Epsium HK. Due to the predominantly wholesale nature and limited scale of our overall business and our lack of substantive operations in Hong Kong (except for facilitating inventory procurement), we do not believe laws and regulations relating to data privacy and anti-monopoly in Hong Kong currently have any impact on our ability to conduct business, accept foreign investment, or list on a U.S. or foreign exchange.

Our majority-owned indirect operating subsidiary, Luz, as a Macau registered entity, is subject to Macau laws generally applicable to Macau entities. Luz is an import trading and wholesaler of primarily alcoholic beverages in Macau. We believe Luz is compliant with the laws and regulations governing its existence and operations in Macau, including without limitation, laws and regulations relating to data privacy and unfair competition and anti-monopoly, to the extent such laws and regulations are applicable to Luz. Luz’s direct customers primarily consist of supermarkets, restaurants, hotel casinos and other retailers in Macau and it generally does not conduct retail sales. Due to the predominantly wholesale nature and limited scale of our operations solely via Luz in Macau, it is not part of Luz’s business activities, nor does it have any access, to gather private data from the ultimate retail consumers of our downstream distributors such as supermarkets, restaurants, hotel casinos and other retailers in Macau. As such, we do not believe laws and regulations relating to data privacy and anti-monopoly in Macau currently have any impact on our ability to conduct business, accept foreign investment, or list on a U.S. or foreign exchange.

Risks Related to the PRC

We operate only in Macau through our Macau operating entity, Luz, and are subject to Macau laws and regulations, including the Basic Law. As a Hong Kong registered entity, Epsium HK is subject to Hong Kong laws generally applicable to Hong Kong entities. However, as a holding company without any substantive operations in Hong Kong except for facilitating inventory procurement in Hong Kong for our Macau operating entity, Epsium HK does not maintain any office facility or personnel and has no revenue or expenses other than those related to inventory procurement in Hong Kong. As such, we do not believe that Epsium HK’s legal and operational risks in Hong Kong, such as legal and operational risks associated with Hong Kong data security oversight, anti-monopoly concerns, ability to conduct business in Hong Kong or accept foreign investment or list on a U.S. or other foreign exchange, are material to our business, financial condition, results of operations, prospects, our ability to conduct business in Hong Kong or accept foreign investment operations, or list on a U.S. or other foreign exchange because Epsium HK does not currently engage in activities subject to these laws and regulations.

Although we and our subsidiaries are not based in China and we have no operations in China, we may be subject to legal and operational risks indirectly by virtue of doing business with parties in China or even directly if we decide to operate in China in the future. Additionally, each of Macau and Hong Kong is a Special Administrative Region of the People’s Republic of China with its own legal system under the Chinese policy of “one-country, two-systems,” which poses unique risks to our investors. If there is a significant change to current political and legal arrangements in Macau or Hong Kong, or between China and Macau, or China and Hong Kong, or if there is a duly declared state of war or state of emergency endangering national unity or security under the existing respective Basic Law of Hong Kong and Macau, however unlikely, it could potentially impact Macau and Hong Kong companies. Companies operated in Macau or Hong Kong may face the same or similar regulatory risks as those faced by companies operated in the PRC, such as risks relating to the ability to offer securities to investors, list securities on a U.S. or other foreign exchange, or accept foreign investment.

Macau and PRC’s legal systems are evolving and have inherent uncertainties that could limit the legal protection available to you.

All our operations are in Macau. Under the “one country, two systems” principle, Macau Special Administrative Region of the People’s Republic of China (Macau) is governed by its local constitution, the Basic Law, which was promulgated by the NPC, the highest legislative body of the PRC (including Macau and Hong Kong SARs), to be the governing law in Macau and to establish Macau as a SAR. The Basic Law vests Macau, as a SAR different from other provinces and municipalities of the PRC, with executive, legislative and independent judicial powers (including that of final adjudication) and intends to ensure that “[t]he socialist system and policies shall not be practiced in the Macao Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years.” (Article 5).

Article 18 of the Basic Law explicitly provides that “national laws” of the PRC “shall not be applied in Macao” except for those listed in Annex III to the Basic Law (“Annex III”), which is permitted to only include laws “relating to defense and foreign affairs as well as other matters outside the limits of the autonomy of” Macau. Currently, only 12 PRC laws are listed in Annex III relating to such matters fundamental to a country’s sovereignty and identity, such as the PRC’s capital city, calendar, national anthem, national flag, national emblem, the National Day of the PRC, nationality of the PRC citizens, diplomatic privileges and immunities, consular privileges and immunities, territorial sea and the contiguous zone, exclusive economic zone and continental shelf, garrison, immunity from judicial compulsory measures for property of foreign central banks.

However, Macau, including the Macao Peninsula, Taipa Island and Coloane Island, has been part of the territory of China since ancient times and, by virtue of the Joint Declaration and the Basic Law, has become subject to the sovereignty of the People’s Republic of China and is deemed a “local administrative region of the People’s Republic of China” since its establishment as a SAR under the Basic Law. As such, for so long the laws in Annex III are confined to the subject matter described in the paragraph immediately above, Article 18 authorizes the Standing Committee of the NPC to add to or delete from laws in Annex III after consulting with Macau’s Standing Committee of Basic Law and Macau government, whose Chief Executive shall be ultimately appointed by the Central Government (Article 47). Additionally, pursuant to Article 18, the Central Government can apply “relevant national laws” in Macau if the NPC decides to “declare a state of war or, by reason of turmoil within the Macao Special Administrative Region which endangers national unity or security and is beyond the control of the government of the Region, decides that the Region is in a state of emergency.”

Therefore, if there is a duly declared state of war or state of emergency endangering national unity or security under the existing Basic Law or that the Basic Law is fundamentally amended by the National People’s Congress of the PRC, however unlikely, because Macau is a constituent part of the PRC, it could potentially impact Macau’s legal system and may create uncertainty in whether existing PRC laws would be made applicable in Macau and Macau entities such as Luz, our Operating Entity in Macau. If so, our business, financial condition, results of operations, and prospects could be materially affected, and it may also affect our ability to offer or continue to offer securities to investors and significantly affect the value of such securities. Please refer to “Regulation – The Basic Law of the Macau SAR promulgated by the National People’s Congress of the PRC (“NPC”), the highest body of the PRC legislature, as Macau’s Constitution” on page 89 for a more detailed discussion of the Basic Law.

Additionally, we have trademarks registered in both Hong Kong and Macau. The intellectual property rights and confidentiality protections in Hong Kong and Macau may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Macau 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.

The PRC economy has a great impact on tourism activities in Macau. Meanwhile, the PRC government has exercised and continues to exercise substantial oversight and supervision over virtually every sector of the Chinese economy through regulation and state ownership.

Our business may be harmed by the decrease in tourism due to changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property, and other matters. The PRC local 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 to adjust the economic policies 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 impact the interest we then hold in Chinese properties. For example, in recent years, to combat the spread of the COVID-19 pandemic, governments worldwide, including the PRC and Macau SAR implemented many restrictive policies and measures, including quarantines, travel restrictions, lockdowns, and temporary closure of stores and business facilities. Although the Chinese government has since lifted many of these restricted policies and measures, the impact of COVID-19 pandemic and these restrictive policies and measures may have long-term effects on the Chinese economy. Further, if any of COVID-19’s new variants, such as SARS-CoV2, become a significant threat in China or if another epidemic outbreak emerges and affects China, there is no assurance that the Chinese government will not adopt restrictive measures in response. The COVID-19 pandemic and these government policies and measures may cause decreased economic activity in China, which may, in turn, adversely affect our operating results.

Uncertainties with respect to the PRC legal system could materially affect us, as China is the country of origin of the Chinese liquor, our main product, and we partially rely on suppliers operating in the PRC region and a few of our clients are PRC entities.

We are a top wholesaler of high-end Chinese liquor in Macau. We primarily procure products in bulk ad hoc in the market without formal long-term supply and distribution arrangements. For the fiscal year ended December 31, 2022, our top supplier is Guangzhou Lijunde Wine Co. Ltd, constituting 54% of our total purchases. A few of our clients are PRC corporates. There is no assurance that we may not have more suppliers or customers from the PRC. PRC manufacturers and distributors of Chinese liquor are subject to PRC laws and regulations. However, China’s legal system is still evolving, and recently enacted laws, rules, and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to interpretation by PRC regulatory agencies. In particular, because some of these laws, rules, and regulations are relatively new and because of the nonbinding nature of court decisions, the interpretation and enforcement of these laws, rules, and regulations involve uncertainties and are not always uniform and predictable. In addition, published laws and regulations may not be able to codify all policies and practices of various governmental agencies in China in a timely manner. As a result, Chinese liquor manufacturers and suppliers may also need to adjust their operations from time to time following guidance provided by competent governmental agencies. These uncertainties may affect judgment on the relevance of legal requirements and affect and cause uncertainties in the business operations of manufacturers and suppliers of Chinese liquor, which may cause a chain reaction to indirectly and ultimately affect us.

For instance, the PRC anti-corruption and bribery policies and enhanced enforcement may affect the sale and consumption of high-end Chinese liquor, moon cakes, and other items typically used as gifts for relationship building and consumed in banquets, during holidays and festivals; any PRC restrictions on the issuance of travel documents may adversely affect Macau’s tourism industry, reducing the spending on high-end Chinese liquor by mainland Chinese tourists in Macau; national laws and local policies in the PRC that affect any material aspects of the production and operation of Chinese liquor manufacturers may affect the overall availability of high-end Chinese liquor in the market, for instance, if the PRC adopts more stringent standards for certain areas, such as environmental protection or corporate social responsibilities to further limit industrial chemical and wastewater discharge in alcohol productions, our suppliers and customers may incur increased compliance costs and may pass those increased costs on to us. Additionally, there have been calls for health policy responses to alcohol consumption and harm, industry structure, and marketing practices in China, according to a recent article published in the United States National Library of Medicine (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9141045/). If PRC laws and policies are implemented to curtail the overall consumption of alcohol in Chinese society, it may reduce the overall market demand, leading to reduced supply and ultimately impacting our business. Although we cannot predict the full effects of future developments in the PRC legal system on our business operations, materialization of the foregoing known potential factors, individually or accumulatively, may materially affect the manufacture and supply of Chinese liquor and ultimately have a material impact on our business, financial condition, results of operations, and prospects.

Additionally, because Macau is a constituent part of the PRC, should the Basic Law be fundamentally amended by the NPC, however unlikely, there are also risks that the PRC authorities may have the ability to intervene or influence our operations by adopting new laws, regulations, or policies to exert oversight and control over offerings conducted overseas and/or foreign investment in Macau-based issuers, which could result in a material change in our operations and/or the value of our securities. If there is a significant change to current political arrangements between China and Macau, companies operated in Macau may face similar regulatory risks as those faced by companies operated in the PRC, including the ability to offer securities to investors, list securities on a U.S. or other foreign exchange, or conduct business or accept foreign investment. These risks will become even more prominent and direct if we expand our operations into or develop a physical presence in China. If such circumstances arise, relevant risks may arise. Please refer to “Risk Factors – Risks Related to the PRC - Macau and PRC’s legal systems are evolving and have inherent uncertainties that could limit the legal protection available to you” on page 27 for more details. Please refer also to “Regulation – The Basic Law of the Macau SAR promulgated by the National People’s Congress of the PRC (“NPC”), the highest body of the PRC legislature, as Macau’s Constitution” beginning from page 89 for discussions regarding the lack of direct applicability of the PRC laws to Macau and the lack of direct jurisdiction of departments of the Central Governments, provincial and municipal governments of the PRC in Macau.

The newly enacted Holding Foreign Companies Accountable Act and the Accelerating Holding Foreign Companies Accountable Act passed by the U.S. Senate, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the Public Company Accounting Oversight Board. These developments could add uncertainties to our offering and listing on the Nasdaq Capital Market, and Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect or fully investigate our auditor.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors. On December 18, 2020, the HFCAA was signed by President Donald Trump and became law. This legislation requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the PCAOB is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection by the PCAOB. Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years beginning in 2021, the issuer’s securities are banned from trade on a national exchange or through other methods.

On June 22, 2021, the U.S. Senate passed the AHFCAA, which, if passed by the U.S. House of Representatives and signed into law by the President, would decrease the number of non-inspection years for foreign companies to comply with PCAOB audits from three to two years, thus reducing the time period before their securities may be prohibited from trading or delisted.

On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the HFCAA. Rule 6100 provides a framework for the PCAOB to use to determine whether it is unable to inspect or investigate registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, The SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate.

On December 16, 2021, the PCAOB issued the Determination Report which found that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in PRC and Hong Kong, because of positions taken by PRC authorities in those jurisdictions (the “Determination”). Furthermore, the Determination Report identified the specific registered public accounting firms which are subject to these determinations, i.e., PCAOB Identified Firms. PCAOB made these determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCAA.

The lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors to lose confidence in audit procedures and reported financial information and the quality of financial statements of China-based companies.

On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission (the “CSRC”) and the Ministry of Finance (“MOF”) of the People’s Republic of China, governing inspections and investigations of audit firms based in PRC and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.

On December 15, 2022, the PCAOB announced that it has completed the inspections, determined that it had complete access to inspect or investigate completely registered public accounting firms headquartered in PRC and Hong Kong, and voted to vacate the Determination Report. On December 29, 2022, the e Consolidated Appropriations Act (“CAA”) was signed into law by President Biden. The CAA contained, among other things, an identical provision to the AHFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

Our auditor, TAAD, LLP, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards. Our auditor is headquartered in Diamond Bar, California, and is subject to inspection by the PCAOB on a regular basis. Our auditor was last inspected by the PCAOB in 2021. Nevertheless, the recent developments would add uncertainties to our offering, and we cannot assure you whether Nasdaq 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. It remains unclear what the SEC’s implementation process related to the above rules and amendments will entail or what further actions the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on U.S. companies that have significant operations in the PRC or Macau and have securities listed on a U.S. stock exchange. Although we do not have any operations in the PRC, some of our suppliers and customers are based in China, and there is no assurance that we may not find it desirable and in the best interests of our shareholders to expand our operations to China, in which case, we would be subject to the same risks and uncertainties faced by China based companies. Additionally, although, to our knowledge, Macau has not been subject to PCAOB investigations that are conducted in a similar manner to those conducted upon China and Hong Kong, and the PCAOB’s ability to exercise oversight authority over Macau based accounting firms has not been called into questions likely due to the fact there are only limited numbers of Macau based companies listed in the United States, there is no assurance that the designation of Macau would not become an issue in the future. In addition, the above rules and amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require significant expense and management time.

Recent greater oversight by the Cyberspace Administration of China (the “CAC”) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business should we start an online retail business platform directly targeting our sales at mainland consumers.

While we are currently not subject to the laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection, should we establish a retail platform directly targeting retail customers and collecting a sufficient amount of their personal information to grow our business further in the future, we may be subject to the oversight of the CAC and its regulations and measures.

On December 28, 2021, 13 governmental departments of the PRC, including the CAC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provide that, in addition to critical information infrastructure operators (“CIIOs”) that intend to purchase Internet products and services, net platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures require that an online platform operator which possesses the 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.

On November 14, 2021, the CAC published the Draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”), which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the CAC. According to the Security Administration Draft, data processing operators shall apply for a cybersecurity review by the relevant Cyberspace Administration of the PRC under certain circumstances, such as (i) mergers, restructurings, and divisions of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest which affects or may affect the national security, (ii) overseas listings of data processors that process personal data for more than one million individuals, (iii) Hong Kong listings of data processors that affect or may affect national security, and (iv) other data processing activities that affect or may affect the national security. The deadline for public comments on the Security Administration Draft was December 13, 2021.

The PRC Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress of the PRC (“SCNPC”) on June 10, 2021, and took effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the People’s Republic of China, or the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021.

In addition, the PRC regulatory authorities have recently taken steps to strengthen the regulations on data protection and conducted several rounds of relevant inspections. The Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications, which came into effect on May 1, 2021 (the “Necessary Personal Information Rules”), require that the operators of mobile apps shall not deny the users who do not consent to the collection of unnecessary personal information from using the basic functions and services of such apps. In addition, under the Necessary Personal Information Rules, “necessary personal information” refers to personal information necessary for ensuring the normal operation of an app’s basic functional services. The basic functional services of the operating entities’ apps are providing instant messaging services through texts, pictures, voice, and video, where the necessary personal information includes mobile phone numbers and account numbers of registered users and lists of accounts of instant messaging contact persons.

Neither we nor the Operating Entity is subject to cybersecurity and data security review by the CAC because of Article 18 of the Basic Law. As of the date of this prospectus, we have not received any notice from any authorities identifying the Operating Entity as CIIOs or requiring us or the operating entities to undergo a cybersecurity review or network data security review by the CAC. However, should we establish a retail platform in the PRC that directly targets PRC consumers and collect personal information of over a million of such consumers, such potential PRC platform would likely be subject to the oversight of the CAC and its regulations and measures. If so and if we fail to comply with the CAC regulations and measures as a result of the CAC oversight, we could incur material costs to ensure compliance and be subject to fines. Additionally, we could experience devaluation of securities or delisting, may no longer be able to conduct offerings to foreign investors, and no longer be permitted to continue our current business operations. Please refer to “Risk Factors – Risks Related to the PRC - Macau and PRC’s legal systems are evolving and have inherent uncertainties that could limit the legal protection available to you.” on page 27 for more details.

Please refer to “Regulation – The Basic Law of the Macau SAR promulgated by the National People’s Congress of the PRC (“NPC”), the highest body of the PRC legislature, as Macau’s Constitution” beginning on page 89 for discussions regarding the lack of direct applicability of the PRC laws to Macau and the lack of direct jurisdiction of departments of the Central Governments, and provincial and municipal governments of the PRC in Macau.

There is no assurance that Macau will not enact local laws like the Trial Measures promulgated by the CSRC, which could subject us to additional compliance requirements in the future.

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC; if a domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for an initial public offering in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies.

On February 24, 2023, the CSRC revised the Archives Rules issued in 2009. The revised Archives Rules came into effect on March 31, 2023. In the overseas listing activities of domestic companies, domestic companies, as well as securities companies and securities service institutions providing relevant securities services thereof, should establish a sound system of confidentiality and archival work, shall not disclose state secrets, or harm the state and public interests. Where a domestic company provides or publicly discloses to the relevant securities companies, securities service institutions, overseas regulatory authorities and other entities and individuals, or provides or publicly discloses through its overseas listing entity, any document or material involving any state secret or any work secret of any governmental agency, it shall report to the competent authority for approval in accordance with the law, and submit to the secrecy administration department for filing. Securities companies and securities service organizations shall comply with the confidentiality and archive management requirements and keep the documents and materials properly. Securities companies and securities service institutions that provide domestic enterprises with relevant securities services for overseas issuance and listing of securities shall keep the working papers they compile (such as the records of working plan and procedure, evidence and supporting materials related to the services which are obtained and prepared by the aforementioned service providers) within the territory of the PRC. If such working papers need to be taken abroad, approval shall be obtained in accordance with relevant provisions.

The Trial Measures, and the revised Archives Rules, once enacted, do not presently subject us to additional compliance requirements as we are not a “domestic company”, and they have no general application in Macau SAR because of the Basic Law. However, we cannot assure you that Macau will not enact similar laws as the Trial Measure that could subject us to additional compliance requirements or that we would be able to meet such requirements. Any such future requirements may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or become worthless.

Risks Related to our Ordinary Shares and This Offering

There has been no public market for our Ordinary Shares prior to this offering, and you may not be able to resell our Ordinary Shares at or above the price you paid, or at all.

Prior to this offering, there has been no public market for our Ordinary Shares. The initial offering price of our Ordinary Shares is the result of negotiations between the Company and the underwriter, and the initial offering price may differ significantly from the market price for our Ordinary Shares following the offering. There is no assurance that an active trading market for our Ordinary Shares will develop or that the market price for our Ordinary Shares will not decline below the initial public offering price.

Because our initial public offering price is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.

If you purchase the Ordinary Shares in this offering, you will pay more for your Ordinary Shares than the amount paid by our existing shareholders for their Ordinary Shares on a per share basis. As a result, you will experience immediate and substantial dilution of $[●] per share, representing the difference between our net tangible book value per share of $7,657,155, or $0.64 per Ordinary Share as of June 30, 2023, after giving effect to this offering and an assumed initial public offering price of $4.5 per share, which is the midpoint of the price range set forth on the cover page of this prospectus. In addition, you may experience further dilution to the extent that our Ordinary Shares are issued upon the exercise of share options.

The trading price of our Ordinary Shares is likely to be volatile, which could result in substantial losses to investors.

The trading price of our Ordinary Shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for our Ordinary Shares may be highly volatile for factors specific to our own operations, including the following:

Any of these factors may result in large and sudden changes in the volume and price at which Ordinary Shares will trade. Furthermore, the stock market in general experiences price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our Ordinary Shares. Volatility or a lack of positive performance in the price of our Ordinary Shares may also adversely affect our ability to retain key employees, most of whom have been granted equity incentives.

In the past, shareholders of public companies have often brought securities class action suits against companies following periods of instability in the market price of their securities. If the Company were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our operations and require the Company and/or the Operating Entity to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether successful or not, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, the Company may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

The price of our Ordinary Shares could be subject to rapid and substantial volatility.

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization companies. Our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trade, and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

In addition, if the trading volumes of our Ordinary Shares are low, people buying or selling in relatively small quantities may easily influence the prices of our Ordinary Shares. This low volume of trade could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional Ordinary Shares or other of our securities and our ability to obtain additional financing in the future. There is no assurance that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, the holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

If securities or industry analysts cease to publish research or reports about our business, or if they adversely change their recommendations regarding the Ordinary Shares, the market price for the Ordinary Shares and trading volume could decline.

The trading market for Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover the Company downgrade the Ordinary Shares, the market price for the Ordinary Shares would likely decline. If one or more of these analysts cease to cover the Company or fail to regularly publish reports on the Company, the Company could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for the Ordinary Shares to decline.

Substantial future sales or perceived potential sales of our Ordinary Shares in the public market could cause the price of our Ordinary Shares to decline.

Sales of our Ordinary Shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our Ordinary Shares to decline. All Ordinary Shares sold in this offering will be freely transferable without restriction or additional registration under the Securities Act. The remaining Ordinary Shares issued and outstanding after this offering and the concurrent private placements will be available for sale, upon the expiration of the 6-month lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable provided in Rules 144 and 701, as applicable, under the Securities Act. Our pre-IPO shareholders may be able to sell their Ordinary Shares under Rule 144 after the completion of this offering. Because these shareholders have paid a lower price per Ordinary Share than participants in this offering, when they are able to sell their pre-IPO shares under Rule 144, they may be more willing to accept a lower sales price than the IPO price. This fact could impact on the trading price of the Ordinary Shares following the completion of the offering, to the detriment of participants in this offering. Under Rule 144, before our pre-IPO shareholders can sell their shares, in addition to meeting other requirements, they must meet the required holding period. To the extent shares are released before the expiration of the lock-up period and sold on the market, the market price of our Ordinary Shares could decline.

The Company currently does not expect to pay dividends in the foreseeable future after this offering and you must rely on price appreciation of our Ordinary Shares for return on your investment.

The Company currently intends to retain most, if not all, of the available funds and any future earnings after this offering to fund development and growth. As a result, the Company does not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our Ordinary Shares as a source for any future dividend income.

The Company’s board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of British Virgin Islands law. The dividend policy is subject to the discretion of our bord of directors and will depend on, among other things, our earnings, financial condition, capital requirements and other factors. There is no assurance that our board of directors will declare dividends even if we are profitable. Under British Virgin Islands law. we may only pay dividends if we are solvent before and after the dividend payment in the sense that we will be able to pay our debts as they fall due; and the value of the assets of our Company exceeds the sum of our total liabilities. Even if the Company’s board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on the future results of operations and cash flow, the Company’s capital requirements and surplus, the amount of distributions, if any, received by the Company from subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by the Company’s board of directors. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future price appreciation of our Ordinary Shares. There is no guarantee that our Ordinary Shares will appreciate in value after this offering or even maintain the price at which you purchased the Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment in our Ordinary Shares.

The Company has broad discretion in the use of the net proceeds from our initial public offering and may not use them effectively.

To the extent (i) the Company raises more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) the Company determines that the proposed uses set forth in that section are no longer in the best interests of the Company, the Company cannot specify with any certainty the particular uses of such net proceeds that the Company will receive from our initial public offering. Our management will have broad discretion in the application of such net proceeds, including working capital and other general corporate purposes, and the Company may spend or invest these proceeds in a way with which the shareholders disagree. The failure by our management to apply these funds effectively could harm the business and financial condition. Pending their use, the Company may invest the net proceeds from the initial public offering in a manner that does not produce income or that loses value.

We are a BVI company and, because judicial precedent regarding the rights of shareholders is more limited under BVI law than under U.S. law, you may have less protection for your shareholder rights than you would under U.S. law.

The Company is a business company incorporated under the laws of the British Virgin Islands. Our corporate affairs are governed by our Memorandum and Articles of Association, as amended and restated from time to time, the BVI Act and the common law of the British Virgin Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to the Company under British Virgin Islands law are governed by the BVI Act and the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands and from the common law of England, which has persuasive, but not binding, authority on a court in the British Virgin Islands. The rights of our shareholders and the fiduciary duties of our directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the British Virgin Islands. As a result of all of the above, holders of our shares may have more difficulty in protecting their interests through actions against our management, members of the board of directors or controlling shareholders than they would as shareholders of a U.S. public company.

As the rights of shareholders under BVI law differ from those under U.S. law, you may have fewer protections as a shareholder.

Shareholders of BVI companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. Shareholders of a BVI company could, however, bring a derivative action in the BVI courts, and there is a clear statutory right to commence such derivative claims under Section 184C of the BVI Act. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a BVI company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The BVI courts are also unlikely to recognize or enforce against us judgments of courts in the United States based on certain liability provisions of U.S. securities law; and to impose liabilities against us, in original actions brought in the BVI, based on certain liability provisions of U.S. securities laws that are penal in nature. There is no statutory recognition in the BVI of judgments obtained in the United States, although the courts of the BVI will generally recognize and enforce the non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. The BVI Act offers some limited protection for minority shareholders. The principal protection under statutory law is that shareholders may apply to the BVI court for an order directing the company or its director(s) to comply with, or restraining the company or a director from engaging in conduct that contravenes the BVI Act. Under the BVI Act, the minority shareholders have a statutory right to bring a derivative action in the name of and on behalf of the company in circumstances where a company has a cause of action against its directors. This remedy is available at the discretion of the BVI court. A shareholder may also bring an action against the company for breach of duty owed to him as a member. A shareholder who considers that the affairs of the company have been, are being or likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, likely to be oppressive, unfairly discriminatory, or unfairly prejudicial to him in that capacity, may apply to the BVI court for an order to remedy the situation.

There are common law rights for the protection of shareholders that may be invoked, largely dependent on English common law. Under the general rule pursuant to English common law known as the rule in Foss v. Harbottle, a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express dissatisfaction with the conduct of the company’s affairs by the majority or the Board of Directors. However, every shareholder is entitled to have the affairs of the company conducted properly according to BVI law and the constituent documents of the company. As such, if those who control the company have persistently disregarded the requirements of company law, then the courts may grant relief. Generally, the areas in which the courts will intervene are the following: (1) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (2) acts that constitute fraud on the minority where the wrongdoers control the company; (3) acts that infringe or are about to infringe on the personal rights of the shareholders, such as the right to vote; and (4) where the company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders. This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered.

Under the laws of the BVI, the rights of minority shareholders are protected by provisions of the BVI Act dealing with shareholder remedies and other remedies available under common law (in tort or contractual remedies). The principal protection under statutory law is that shareholders may bring an action to enforce the constitutional documents of the company (i.e., the Memorandum and Articles of Association) as shareholders are entitled to have the affairs of the company conducted in accordance with the BVI Act and the Memorandum and Articles of Association of the company. A shareholder may also bring an action under statute if he feels that the affairs of the company have been or will be carried out in a manner that is unfairly prejudicial or discriminating or oppressive to him. The BVI Act also provides for certain other protections for minority shareholders, including in respect of investigation of the company and inspection of the company books and records. There are also common law rights for the protection of shareholders that may be invoked, largely dependent on English common law since the common law of the BVI for business companies is limited.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act of the British Virgin Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Differences in Corporate Law” on page 105,

Certain judgments obtained against the Company by our shareholders may not be enforceable.

The Company is a British Virgin Islands company and substantially all of our assets are located outside of the United States. In addition, most of our current directors and officers are nationals and residents of countries other than the United States. As a result, it may be difficult or impossible for you to bring an action against the Company or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the British Virgin Islands and of China (including those of Macau) may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 

We may not be able to pay any dividends on our Ordinary Shares in the future due to BVI law.

Under BVI law, we may only pay dividends to our shareholders if the value of our assets exceeds our liabilities and we are able to pay our debts as they become due. We cannot give any assurance that we will declare dividends of any amounts, at any rate or at all in the future. Future dividends, if any, will be at the discretion of our Board of Directors, and will depend upon our results of operations, cash flows, financial condition, payment to us of cash dividends by our subsidiaries, capital needs, future prospects and other factors that our directors may deem appropriate.

There can be no assurance that the Company will not be a passive foreign investment company (“PFIC”) for United States federal income tax purposes for any taxable year, which could subject United States holders of our Ordinary Shares to significant adverse United States federal income tax consequences.

A non-United States corporation will be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such taxable year is passive income or (ii) at least 50% of the value of its assets (based on average of the quarterly values of the assets) during such year is attributable to assets that that produce or are held for the production of passive income. Based on the current and anticipated value of our assets and the composition of our income assets, the Company does not expect to be a PFIC for United States federal income tax purposes for our current taxable year ended December 31, 2022 or in the foreseeable future. However, the determination of whether the Company is a PFIC according to the PFIC rules is made on an annual basis and depends on the composition of our income and assets and the value of our assets from time to time. Therefore, changes in the composition of our income or assets or value of our assets may cause the Company to become a PFIC. The determination of the value of our assets (including goodwill not reflected on our balance sheet) may be based, in part, on the quarterly market value of Ordinary Shares, which is subject to change and may be volatile.

The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether the Company is or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain guidance from the Internal Revenue Service, or IRS, relating to the classification of assets as producing active or passive income. Such regulations guidance is potentially subject to different interpretations. If, due to different interpretations of such regulations and guidance, the percentage of our passive income or the percentage of our assets treated as producing passive income increases, the Company may be a PFIC in one or more taxable years. If the Company is a PFIC for any taxable year during which a United States person holds Ordinary Shares, certain adverse United States federal income tax consequences could apply to such United States person.

For as long as the Company is an emerging growth company, the Company will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

The Company is classified as an “emerging growth company” under the JOBS Act because the Company generated less than US$1.235 billion in revenues for our last fiscal year. For as long as the Company is an emerging growth company, which may be up to five full fiscal years, unlike other public companies, the Company will not be required to, among other things, (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (iii) provide certain disclosure regarding executive compensation required of larger public companies, or (iv) hold nonbinding advisory votes on executive compensation. The Company will remain an emerging growth company for up to five years, although the Company will lose that status sooner if the Company has more than US$1.235 billion of revenues in a fiscal year, has more than $700 million in market value of our Ordinary Shares held by non-affiliates, or issues more than $1.0 billion of non-convertible debt over a three-year period.

To the extent that the Company relies on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our Ordinary Shares to be less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile. Our election to take advantage of any of the benefits of the extended transition period for complying with new or revised accounting standards allows for the delay of the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies, and that as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates with similar disclosure.

The Company is a foreign private issuer within the meaning of the rules under the Exchange Act, and as such the Company is exempt from certain provisions applicable to U.S. domestic public companies.

Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors, and principal shareholders purchase or sell our shares. In addition, foreign private issuers are not required to file their annual report on Form 20-F until one hundred twenty (120) days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within seventy-five (75) days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time-consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain and maintain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.

As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing standards.

As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq rules that allow us to follow our home country’s law for certain governance matters. Certain corporate governance practices in our home country, the BVI, may differ significantly from Nasdaq corporate governance listing standards. If we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.

As a “controlled company” under the Nasdaq Stock Market Rules, our Company may choose to exempt the Company from certain corporate governance requirements that could have an adverse effect on shareholders.

We are currently a “controlled company” within the meaning of the corporate governance listing requirements of Nasdaq because Mr. Son I Tam, as our CEO, CFO, Chairman, and principal shareholder, currently owns more than 50% of our outstanding Ordinary Shares. As of the date of this prospectus, Mr. Tam, as the controlling shareholder of the Company, can decide on all matters requiring shareholder approval or matters which may be approved by shareholders under the Company’s Memorandum and Articles of Association by virtue of his controlling ownership in the Company based on his direct and indirect ownership (through Epsium HK) of the Company’s outstanding Ordinary Shares, including the election of directors, amendment of memorandum and articles of association, and approval or disapproval of major corporate transactions, such as a change in control, a transaction with take-over effect, merger, consolidation, or sale of assets. The Company has adopted a Code of Business Conduct and Ethics to impose certain review procedures that require independent director review and approval of conflict of interests and related party transactions, which applies to all directors, officers, and employees of the Company, including Mr. Tam. Additionally, the Company plans to adopt an Audit Committee Charter effective upon the completion of this offering and the listing of our Ordinary Shares on Nasdaq to include additional internal control and risk management procedures to further address conflicts of interest issues.

Nevertheless, a controlled company may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors be independent, as defined in Nasdaq rules and the requirement that our compensation and nominating committees consist entirely of independent directors. Although we do not intend to rely on the controlled company exemption under Nasdaq rules, we could elect to rely on this exemption in the future. If we elect to rely on the controlled company exemption, a majority of the members of our board of directors might not be independent directors and our nominating and compensation committees might not consist entirely of independent directors. Accordingly, during any time while we remain a controlled company relying on the exemption and during any transition period following a time when we are no longer a controlled company, our shareholder would not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements. Our status as a controlled company could cause our Ordinary Shares to look less attractive to certain investors or otherwise harm our trading price.

The Operating Entity’s functional currency is the Macanese Pataca, Epsium HK’s functional currency is the Hong Kong dollar, and the reporting currency of the Company is the U.S. dollar. Changes in exchange rates, or revaluations, could adversely impact our business and results of operations.

The Operating Entity conducts its business in MOP, Epsium HK conducts its business in HKD and the financial statements that we file with the SEC and provide to our shareholders are presented in USD. Changes in the exchange rates between HKD and USD, or MOP 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 and the Macau Pataca against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes in local political and economic conditions and perceived changes in the economy of Hong Kong, Macau and the United States, as applicable. Any significant revaluation of the Hong Kong dollar or the Macau Pataca may materially and adversely affect our cash flows, revenue and financial condition. Further, changes in the conversion rates between the United States dollar and the Hong Kong dollar, and the United States dollar and the Macau Pataca, could affect that amount of proceeds we will have available for our business.

We have identified material weaknesses in our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our consolidated financial statements.

In preparing our consolidated financial statements as of and for the fiscal years ended December 31, 2022 and December 31, 2021, we have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies. The material weaknesses identified included (i) our lack of proper documentation for transactions involving our Operating Entity and certain related parties controlled by Mr. Tam, our CEO, CFO, Chairman, and principal shareholder, and the intermingling of funds between Mr. Tam and the Operating Entity relating to such transactions, (ii) a lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements; (iii) certain cutoff issues concerning revenue and inventory recognition requiring adjustments thereto, (iv) lack of effective policies and procedures in place to provide adequate, independent oversight over financial reporting, timely preparations and review of accounting records (including general journal entries), and (v) a lack of clarity on job responsibilities and segregation of duties among certain staff. Additionally, we have identified significant deficiencies in that the Company manually, as opposed to using an EPR system, to integrate its inventory and accounting record, which could lead to errors; and we had a high frequency of cash transactions, the documentation of which should be improved. Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures including (i) appointing or nominating independent Board members with financial reporting experience or proficiency; (ii) engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control, (iii) adopting a Code of Business Conduct and Ethics and a Cash Management Policy on September 27, 2023. Additionally, we also plan to address the weakness by (i) formulating and adopting proper internal control policies and financial control system to monitor, detect, and avoid any unsuitable transactions and to ultimately improve our internal control over financial reporting status; (ii) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function; and (iii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting.

The existence of material weaknesses is an indication that there is a more than remote likelihood that a material misstatement of our financial statements will not be prevented or detected in a future period, and the process of designing and implementing effective internal controls and procedures will be a continual effort that may require us to expend significant resources to establish and maintain a system of controls that is adequate to satisfy our reporting obligations as a public company. Although, we are taking remedial measures to improve the effectiveness of our controls, we cannot assure you that the measures we take will be sufficient to remediate the material weaknesses described above and identified in the future or that we will implement and maintain adequate controls over our financial processes and reporting in the future in order to avoid additional material weaknesses in our internal controls over financing reporting.

Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies 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 business, financial condition, results of operations and prospects, and the trading price of our Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

The Company will incur increased costs as a result of being a public company, particularly after the Company ceases to qualify as an “emerging growth company.”

Upon completion of this offering, the Company will become a public company and expect to incur significant legal, accounting and other expenses that the Company did not incur as a private company. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and Nasdaq Stock Market, impose various requirements on the corporate governance practices of public companies. The Company expects these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costlier.

As a result of becoming a public company, the Company will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. The Company also expects that operating as a public company will make it more difficult and more expensive for the Company to obtain director and officer liability insurance, and the Company may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, the Company will incur additional costs associated with our public company reporting requirements. It may also be more difficult for the Company to find qualified persons to serve on our board of directors or as executive officers. The Company cannot predict or estimate with any degree of certainty the amount of additional costs the Company may incur or the timing of such costs.

In addition, after the Company is no longer an “emerging growth company”, the Company expects to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the other rules and regulations of the SEC.

The Company may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, the Company is a foreign private issuer, and therefore, the Company is not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. The Company would lose our foreign private issuer status if, for example, more than 50% of our Ordinary Shares are directly or indirectly held by residents of the U.S. and the Company fails to meet additional requirements necessary to maintain our foreign private issuer status. If the Company loses our foreign private issuer status on this date, the Company will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. The Company will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, the Company will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq listing rules. As a U.S. listed public company that is not a foreign private issuer, the Company will incur significant additional legal, accounting, and other expenses that the Company will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.

The obligation to disclose information publicly may put the Company at a disadvantage to competitors that are private companies.

Upon completion of this offering, the Company will be a public company in the United States. As a public company, the Company will be required to file periodic reports with the Securities and Exchange Commission upon the occurrence of matters that are material to the Company and shareholders. Although the Company may be able to attain confidential treatment of some of our developments, in some cases, the Company will need to disclose material agreements or results of financial operations that the Company would not be required to disclose if the Company were a private company. Our competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with the Company. Similarly, as a U.S. public company, the Company will be governed by U.S. laws that our competitors, which are mostly private Chinese companies, are not required to follow. To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public company status could affect our results of operations.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates”, “believes”, “hopes”, “expects”, “anticipates”, “estimates”, “projects”, “intends”, “plans”, “will”, “would”, “should”, “could”, “may” or other similar expressions in this prospectus. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed, and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

We describe certain material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied, or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

Industry Data and Forecasts

This prospectus contains data related to the alcoholic beverages wholesale industry in Macau. In connection with the Offering, we have engaged Frost & Sullivan to conduct a detailed analysis and prepare an industry report on the markets in which we operate (the “Frost & Sullivan Report”). Services provided by Frost & Sullivan include market assessments, competitive benchmarking, and strategic and market planning for a variety of industries. Except for the Frost & Sullivan Report, we did not commission any other industry report in connection with the Offering.

We have extracted certain information from the Frost & Sullivan Report in sections headed “Prospectus Summary”, “Risk Factors”, “Industry Overview”, “Business”, “Financial Information” and elsewhere in this prospectus to provide our potential investors with a more comprehensive presentation of the industries in which we operate. Unless otherwise noted, all of the data and forecasts contained in this section are derived from the Frost & Sullivan Report. Projected data was obtained from historical data analysis plotted against macroeconomic data with reference to specific industry-related factors. Frost & Sullivan believes that the basic assumptions used in preparing the Frost & Sullivan Report, including those used to make future projections, are factual, correct, and not misleading. Frost & Sullivan has independently analyzed the information, but the accuracy of the conclusions of its review largely relies on the accuracy of the information collected. Frost & Sullivan research may be affected by the accuracy of these assumptions and the choice of these primary and secondary sources.

To the extent any industry data supplied by us include projections, it is based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on our business and the market price of our Ordinary Shares. In addition, the rapidly changing nature of the industry subjects any projections or estimates relating to the growth prospects or future condition of the industry to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the British Virgin Islands as a BVI business company limited by shares. We are incorporated in the British Virgin Islands because of certain benefits associated with being a British Virgin Islands entity, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of exchange control or currency restrictions and the availability of professional and support services. However, the British Virgin Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a lesser extent. In addition, British Virgin Islands companies may not have standing to sue before the federal courts of the United States.

Substantially all of our assets are located outside the United States, in Macau. In addition, all our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. In particular, all our directors and officers are located at Macau, Hong Kong, or Singapore with our independent director Mr. Siu Keung Yeung in Hong Kong, our director nominee, Kewei Joshua Cui, in Singapore, and the rest of our director, director nominees and officers in Macau. As a result, it may be difficult for investors to effect service of process within the United States upon us or such persons or to enforce against them or against us, judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

There is no statutory enforcement in the British Virgin Islands of judgments obtained in the U.S., however, the courts of the British Virgin Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at common law so that no retrial of the issues would be necessary, provided that:

We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any State of the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

Ogier, our counsel as to BVI law, has advised us that the United States and the BVI do not have a treaty providing for reciprocal recognition and enforcement of judgments of courts of the United States in civil and commercial matters and that a final judgment for the payment of money rendered by any general or state court in the United States based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be automatically be enforceable in the BVI. We have also been advised that a final and conclusive judgment obtained in U.S. federal or state courts under which a sum of money is payable as compensatory damages (i.e., not being a sum claimed by a revenue authority for taxes or other charges of a similar nature by a governmental authority, or in respect of a fine or penalty or multiple or punitive damages) may be the subject of an action on a debt in the court of the British Virgin Islands under the common law doctrine of obligation.

We incorporated in the BVI in order to enjoy the following benefits: (1) political and economic stability; (2) an effective judicial system; (3) a favorable tax system; (4) the absence of exchange control or currency restrictions; and (5) the availability of professional and support services. However, certain disadvantages accompany incorporation in the BVI. These disadvantages include, but are not limited to, the following: (1) the BVI 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 (2) BVI companies may not have standing to sue before the federal courts of the United States. Our constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated.

Ogier has further advised us that there is uncertainty as to whether the BVI would:

Vong Hin Fai Lawyers & Private Notary, our counsel as to Macau law, have advised us the recognition and enforcement of foreign judgments are provided for under the Macau Civil Procedure Law. Macau courts may recognize and enforce foreign judgments in accordance with the requirements set forth in the Macau Civil Procedure Law, unless there is a special arrangement in place, such as the Agreement on Reciprocal Confirmation and Enforcement of Judgments in Civil and Commercial Matters between China and the Macau Special Administrative Region of 2006. For the Macau courts to recognize and enforce foreign judgments, the following requirements must generally be met:

Under Hong Kong law, foreign judgments can be enforced under statute under the Foreign Judgments (Reciprocal Enforcement) Ordinance or under common law. However, there is still uncertainty as to whether the judgment of United States courts will be directly enforced in Hong Kong, as the United States and Hong Kong do not have a treaty or other arrangements providing for reciprocal recognition and enforcement of judgments of courts of the United States in civil and commercial matters. The Foreign Judgments (Reciprocal Enforcement) Ordinance is a registration scheme for the recognition and enforcement of foreign judgments based on reciprocity but the United States is not a designated country under the Foreign Judgments (Reciprocal Enforcement) Ordinance. As a result, a judgment rendered by a court in the United States, including as a result of administrative actions brought by regulatory authorities, such as the SEC, and other actions, will not be enforced by the Hong Kong courts under the statutory regime. In addition, the Supreme People’s Court of the PRC and the Government of Hong Kong have entered into the “Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region pursuant to Choice of Court Agreements between Parties Concerned” (“the Arrangement”). The Mainland Judgements (Reciprocal Enforcement) Ordinance gave effect to the Arrangement and is a registration scheme for recognition and enforcement of PRC judgements based on reciprocity. Other than the Arrangement, Hong Kong has not entered into any multilateral convention or bilateral treaty regarding the recognition and enforcement of foreign judgments. Accordingly, as mentioned, a foreign judgment may be enforced in Hong Long at common law by bringing an action in a Hong Kong court since the judgment may be regarded as creating a debt between the parties to it, provided that the foreign judgment, among other things, is a final judgment conclusive upon the merits of the claim and is for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment.  

USE OF PROCEEDS

Based upon an assumed initial public offering price of $4.5 per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, we estimate that we will receive net proceeds from this offering, after deducting the estimated underwriting discounts and the estimated offering expenses payable by us, of approximately $[●].

Our Company plans to use the net proceeds received from this offering for the following purposes:

The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our Ordinary Shares and facilitate our future access to the capital markets. We do not have binding agreements or commitments for any acquisitions or investments outside the ordinary course of business at this time. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, our Company may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds our Company receives from this offering are not immediately used for the above purposes, our Company may invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

DIVIDEND POLICY

Our board of directors has discretion on whether to distribute dividends subject to certain restrictions under British Virgin Islands law, namely that we may only pay dividends if we are solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business; and the value of assets of our company will not be less than the sum of our total liabilities. Even if we decide to pay dividends, the form, frequency, and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors that the board of directors may deem relevant.

As of the date of this prospectus, our Macau Subsidiary has not made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. Our Company intends to keep any future earnings to finance the expansion of our business, and our Company does not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the PFIC rules, the gross amount of distributions our Company makes to investors with respect to our Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

If our Company determines to pay dividends on any of our Ordinary Shares in the future, as a holding company incorporated in the British Virgin Islands, our Company will be dependent on receipt of funds from Epsium HK. Epsium HK, in turn, will be dependent on the receipt of funds from the Operating Entity. Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars.

According to Macau law, income received in Macau is subject to taxation under Macau’s Complementary Tax provisions, regardless of whether the recipient is an individual or a corporation, their specific industry, nationality, or domiciliation. However, taxpayers may be eligible for deductions and allowances.

Any dividends received by either individuals or corporate shareholders are considered as income and thus are subject to complementary tax as stated above.

Non-residents and companies not incorporated in Macau that do not conduct business activities in Macau, are normally not registered with the Macau Financial Services Bureau as taxpayers, and therefore are not required to submit their income tax returns in Macau. However, the Macau taxation authorities may challenge the accuracy of income statements and may calculate the amounts due based on prior results or estimations. In such events, appeals are available for unsatisfied parties.

Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us.

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2023:

You should read this capitalization table in conjunction with “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as well as the consolidated financial statements and the related notes appearing elsewhere in this prospectus.