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Plutus Financial Group Ltd. – IPO: ‘F-1/A’ on 2/23/24

On:  Friday, 2/23/24, at 4:40pm ET   ·   Accession #:  1493152-24-7686   ·   File #:  333-276791

Previous ‘F-1’:  ‘F-1’ on 1/31/24   ·   Latest ‘F-1’:  This Filing   ·   1 Reference:  To:  Plutus Financial Group Ltd. – Previous ‘F-1’ on 1/31/24

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

 2/23/24  Plutus Financial Group Ltd.       F-1/A                  4:4.8M                                   M2 Compliance LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1/A       Pre-Effective Amendment to Registration Statement   HTML   3.83M 
                by a Foreign Issuer                                              
 3: EX-23.1     Consent of Expert or Counsel                        HTML      8K 
 4: EX-99.6     Miscellaneous Exhibit                               HTML      4K 
 2: EX-15.1     Letter re: Unaudited Interim Financial Info         HTML      7K 

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

Registration No. 333-276791

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

FORM F-1

Amendment No. 1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Plutus Financial Group Limited

(Exact name of Registrant as specified in its charter)

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

8/F, 80 Gloucester Road

Wan Chai, Hong Kong

(852) 2968 1192
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

The Crone Law Group P.C.

500 Fifth Ave, Suite 938

New York, NY 10110

Phone: (646) 861-7891
(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 the public:
as soon as practicable after the effective date of this registration statement.

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

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

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

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

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

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

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

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

EXPLANATORY NOTE

This Registration Statement contains two prospectuses, as set forth below.

The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points:

The Registrant has included in this Registration Statement a set of alternate pages after the back-cover page of the Public Offering Prospectus (the “Alternate Pages”) to reflect the foregoing differences in the Resale Prospectus as compared to the Public Offering Prospectus. The Public Offering Prospectus will exclude the Alternate Pages and will be used for the public offering by the Registrant. The Resale Prospectus will be substantively identical to the Public Offering Prospectus except for the addition or substitution of the Alternate Pages and will be used for the resale offering by the Selling Stockholders.

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

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS, DATED February 23, 2024

Plutus Financial Group Limited

2,100,000 Ordinary Shares

This is the initial public offering, or the “offering,” of up to 3,780,000 Ordinary Shares, par value US$0.0001 per share (each, an “Ordinary Share”, collectively, “Ordinary Shares”) of Plutus Financial Group Limited, a Cayman Islands exempted company with limited liability whose principal place of business is in Hong Kong. Up to 1,680,000 Ordinary Shares may be offered for resale or otherwise or otherwise disposed of by each stockholder named in the separate Resale Prospectus (the “Selling Stockholders”) in an amount equal to 100% of the shares held by each Selling Stockholder. In addition, 2,100,000 Ordinary Shares are being sold by the Company on a firm commitment underwritten basis.

The sale of the Selling Stockholder Ordinary Shares is conditioned upon the successful completion of the sale of the Ordinary Shares by the Company in the underwritten primary offering. Sales by Selling Stockholders prior to the listing of our ordinary shares on the Nasdaq Capital Market, if any, will be at a fixed price of $5.00 per share. Following listing of our shares on the Nasdaq, the per share public offering price of the Ordinary Shares to be sold by the Selling Stockholders will be the then-prevailing market price. The successful listing of our shares on the Nasdaq Capital Market is a condition to the closing of our underwritten primary offering and the secondary offering by our selling stockholders. The registration of the Selling Stockholder Ordinary Shares does not mean that the selling stockholders will offer or sell any of the Selling Stockholder Ordinary Shares. We will not receive any proceeds from any sale or disposition of the Selling Stockholder Ordinary Shares. In addition, we will pay all fees and expenses incident to the registration of the resale of the Selling Stockholder Ordinary Shares. Furthermore, the underwriters will neither underwrite the sale of the Ordinary Shares nor receive any compensation from the sale of the Ordinary Shares by the Selling Stockholders. The Selling Stockholders may offer their shares from time to time directly or through one or more broker-dealers or agents at market prices prevailing at the time of sale. However, the Selling Stockholders will not sell any Selling Stockholder Ordinary Shares until after the closing of the underwritten primary offering. The offering by the Selling Stockholders will remain open for 180 days following the date of this prospectus. For additional information on the possible methods of sale that may be used by the selling stockholders, you should refer to the section of this prospectus entitled “Selling Stockholders—Plan of Distribution”.

Prior to this offering, there has been no public market for the Ordinary Shares of Plutus Group. Plutus Group expects that the initial public offering price will be between US$4.00 and US$6.00 per Ordinary Share. It intends to list the Ordinary Shares on the Nasdaq Capital Market under the symbol “PLUT” However, there is no assurance that the offering will be closed and that the Ordinary Shares of Plutus Group will be trading on Nasdaq Capital Market.

Plutus Financial Group Limited is an “emerging growth company” under applicable U.S. federal securities laws and is eligible for reduced public company reporting requirements.

Upon the completion of this offering, the Company will have 14,100,000 Ordinary Shares issued and outstanding. The Company’s founder, Zhisheng Zhao, and its CEO, Ting Kin Cheung, will together beneficially own 10,320,000 Ordinary Shares, representing 73.2% of the total voting power of the Company’s issued and outstanding share capital immediately following the completing of this offering assuming the underwriters do not exercise their over-allotment option, or 71.6% of the Company’s total voting power if the underwriters exercise their over-allotment option in full. Each Ordinary Share is entitled to one vote.

Investing in the Company’s Ordinary Shares involves a high degree of risk.

Investors in our Ordinary Shares are not purchasing equity securities in our subsidiaries that conduct substantive business operations in Hong Kong. Instead, investors in this offering are purchasing equity securities of a Cayman Islands holding company. We are a Cayman Islands holding company that conducts all of our operations and operates our businesses in Hong Kong through our Hong Kong operating subsidiaries. Such structure involves unique risks to investors in our Ordinary Shares. Pursuant to the “long arm” provisions of the laws and regulations of the mainland PRC, as discussed in more detail in this Prospectus, investors face some risk that PRC authorities could disallow this structure, which would result in a material adverse effect on our operations and would cause the value of our Ordinary Shares to significantly decline or become worthless. Please refer to the Risk Factor entitled: “Substantially all operations of the Company’s operating subsidiaries are in Hong Kong, a special administrative region of the PRC. However, due to the long arm provisions under the current PRC laws and regulations . . .” under the section entitled “Risk Factors” for more information.

Pursuant to the Holding Foreign Companies Accountable Act (“HFCAA”), the Public Company Accounting Oversight Board (the “PCAOB”) issued a Determination Report on December 16, 2021 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. In addition, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations. The Company’s registered public accounting firm, WWC, P.C., is headquartered in San Mateo, CA, is not headquartered in mainland China or Hong Kong, and was not identified in this report as a firm subject to the PCAOB’s determination. On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “SOP”) with the China Securities Regulatory Commission and the Ministry of Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreement”), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. The SOP Agreement remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the SOP Agreement disclosed by the SEC, the PCAOB shall have sole discretion to select any audit firms for inspection or investigation and the PCAOB inspectors and investigators shall have a right to see all audit documentation without redaction. On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination. Should the PCAOB determine in the future that positions taken by authorities in the PRC have obstructed its ability to inspect and investigate registered public accounting firms in mainland China and Hong Kong completely, then the companies audited by those registered public accounting firms would be subject to a trading prohibition on U.S. markets pursuant to the HFCA Act. In such an event, you may be deprived of the benefits of such inspection which could result in limitation or restriction to the Company’s access to the U.S. capital markets and trading of its securities may be prohibited under the HFCAA. See Risk Factor –” Although the audit report included in this prospectus was issued by U.S. auditors headquartered in San Mateo, California who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate the Company’s auditor completely, investors would be deprived of the benefits of such inspection and the Ordinary Shares of the Company may be delisted or prohibited from trading.”

All operations of the Company are primarily located in Hong Kong, a Special Administrative Region of the People’s Republic of China (“China” or the “PRC”), and therefore, the Company may be subject to unique risks due to uncertainty of the interpretation and the application of the PRC laws and regulations. In addition, the Company does not expect to be materially affected by recent statements by the PRC government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, including, but not limited to, the cybersecurity review and regulatory review of overseas listing of its Ordinary Shares through an offshore holding company. However, due to long arm-provisions under the current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. The Company is also subject to the risks of uncertainty about any future actions of the PRC government or authorities in Hong Kong in this regard.

Should the PRC government choose to exercise significant oversight and discretion over the conduct of the Company’s business, they may intervene in or influence the Company’s operations. Such governmental actions:

The Company is aware that recently, the PRC government has initiated a series of regulatory actions and new policies to regulate business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a variable interest entity (“VIE”) structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon the legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any. It is also highly uncertain what the potential impact such modified or new laws and regulations will have on Plutus Group’s daily business operation, its ability to accept foreign investments and the listing of its Ordinary Shares on U.S. or other foreign exchanges. These actions could result in a material change in Plutus Group’s operations and could significantly limit or completely hinder its ability to complete this offering or cause the value of its Ordinary Shares to significantly decline or become worthless. See “Prospectus Summary — Substantially all operations of the operating subsidiaries are in Hong Kong, a special administrative region of the PRC. However, due to the long arm provisions under the current PRC laws and regulations, the PRC government may exercise significant oversight and discretion over the conduct of Plutus Group’s business and may intervene in or influence its operations at any time, which could result in a material change in Plutus Group’s operations and/or the value of its Ordinary Shares. The PRC government may also intervene or impose restrictions on Plutus Group’s ability to move money out of Hong Kong to distribute earnings and pay dividends or to reinvest in its business outside of Hong Kong. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may also be quick with little advance notice and the Company’s assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.” Beginning on page 10.

As of the date of this prospectus, the operations of Plutus Group in Hong Kong and its registered public offering in the United States are not subject to the review nor prior approval of the Cyberspace Administration of China (the “CAC”) nor the China Securities Regulatory Commission (the “CSRC”). Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. In the event that (i) the PRC government expanded the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC and that Plutus Group is required to obtain such permissions or approvals, or (ii) Plutus Group inadvertently concluded that relevant permissions or approvals were not required or that Plutus Group did not receive or maintain relevant permissions or approvals required, any action taken by the PRC government could significantly limit or completely hinder operations of Plutus Group in Hong Kong and its ability to offer or continue to offer its Ordinary Shares to investors and could cause the value of such securities to significantly decline or be worthless.

The Company’s operating subsidiaries are located in Hong Kong and the Company has no subsidiary, VIE structure, or any direct operations in mainland China. Pursuant to the Basic Law of the Hong Kong Special Administrative Region (the “Basic Law”), which is a national law of the PRC and constitutional document for Hong Kong, national laws of the PRC shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong). Pursuant to the long arm provisions under current PRC laws and regulations, however, the PRC government could exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time. Such oversight and discretion, if exercised in the future, could significantly limit or completely hinder the Company’s ability to complete this offering or cause the value of its Ordinary Shares to significantly decline or become worthless. Currently, the Company is not required to obtain permissions or approvals from any PRC authorities to issue its Ordinary Shares to foreign investors. The PRC government, however, holds sovereign authority over Hong Kong and could choose in the future to expand the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC. In the event that we have incorrectly concluded CRSC or CAC permissions or approvals were not required for this offering and we fail to receive or maintain such permissions or approvals, any action taken by the PRC government could significantly limit or completely hinder our operations in Hong Kong and our ability to offer or continue to offer our Ordinary Shares to investors, thereby causing the value of such securities to significantly decline or be worthless.

Transfers of Cash To and From Our Operating Subsidiaries

As a holding company, we will rely on dividends and other distributions on equity paid by our operating subsidiaries for our cash and financing requirements. We are permitted under the laws of the Cayman Islands and our memorandum and articles of association (as amended from time to time) to provide funding to our subsidiaries incorporated in the BVI and Hong Kong, through loans or capital contributions. Our BVI subsidiaries are permitted under the laws of the BVI to provide funding to us through dividend distribution subject to certain restrictions laid down in the BVI Business Companies Act 2004 (as amended) and memorandum and articles of association of our BVI subsidiaries. Our subsidiaries (other than our Cayman Islands and BVI subsidiaries) are permitted under the respective laws of Hong Kong to provide funding to us through dividend without restrictions on the amount of the funds, other than as limited by the amount of their distributable earnings. However, to the extent cash is in our Hong Kong operating subsidiaries, there is a possibility that the funds may not be available to fund our operations or for other uses outside of the Hong Kong due to interventions or the imposition of restrictions and limitations by the Hong Kong government on the ability to transfer cash. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to us. In addition, despite the general protections afforded by the Basic law, due to ‘long arm’ provisions under current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. There is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash into or out of Hong Kong. The PRC government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from the other entities within our organization or to reinvest in our business outside of Hong Kong and on our ability to move money into Hong Kong to fund our business operation and to satisfy our investment needs in Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business within and outside of Hong Kong and may also affect our ability to transfer and receive funds to and from our operating subsidiaries in Hong Kong. There is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash into or out of China, including Hong Kong. (Please see – Risk Factor – “There is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash into or out of Hong Kong,” at Page 39.) We do not have a formal cash management policy that dictates how funds are transferred.

The structure of cash flows within our organization, and a summary of the applicable regulations, are as follows:

1. Our equity structure is a direct holding structure, that is, the entity issuing Ordinary Shares in this offering is Plutus Financial Group Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability. Plutus Financial Group Limited, the issuer in this offering, holds wholly-owned direct subsidiaries organized in the British Virgin Islands, who in turn hold wholly-owned operating subsidiaries incorporated and operating in Hong Kong. See “Corporate History and Structure” for additional details.

2. Within our direct holding structure, the cross-border transfer of funds within our corporate group is legal and compliant with the laws and regulations of Hong Kong, the BVI and the Cayman Islands. After investors’ funds enter Plutus Financial Group limited, the funds can be directly transferred to Plutus Financial Holdings Limited (BVI), Plutus Investment Holdings Group Limited and Plutus Investments Holdings International Limited. Plutus Financial Holdings Limited (BVI) can then transfer the funds to One Promise Investment Immigration Consulting Limited (formerly known as Plutus Financial Holdings Limited) (HK). Plutus Investment Holdings Group Limited can then transfer the funds to Plutus Securities Limited. Plutus Investments Holdings International Limited can then transfer the funds to Plutus Asset Management Limited and Plutus Asset Management Cayman Limited.

If the Company intends to distribute dividends, Plutus Asset Management Limited and Plutus Asset Management Cayman Limited will transfer the dividends to Plutus Investments Holdings International Limited in accordance with the laws and regulations of Hong Kong and Cayman Islands; Plutus Securities Limited will transfer the dividends to Plutus Investment Holdings Group Limited in accordance with the laws and regulations of Hong Kong; One Promise Investment Immigration Consulting Limited (HK) will transfer the dividends to Plutus Financial Holdings Limited (BVI) in accordance with the laws and regulations of Hong Kong. Plutus Financial Holdings Limited (BVI), Plutus Investment Holdings Group Limited and Plutus Investments Holdings International Limited will transfer the funds to Plutus Financial Group limited in accordance with the laws and regulations of the BVI. Plutus Financial Group limited will then transfer the dividends to all of its shareholders respectively in proportion to the Ordinary Shares they hold in accordance with the laws and regulations of the Cayman Islands, regardless of whether the shareholders are U.S. investors or investors in other countries or regions. We currently intend to retain our net earnings for use in expanding our business, and do not foresee distributing shareholder dividends in the near future.

3. The Company declared a special dividend of HK$24,451,000 on August 30, 2022. The Company was wholly-owned by Mr. Zhisheng Zhao through Radiant Global Ventures Limited and Divine Star Ventures Limited on August 30, 2022. The Company did not pay out funds for the dividend. Instead, the special dividend was offset by the amount due from Mr. Zhisheng Zhao. The amount due from Mr. Zhisheng Zhao was decreased by HK$24,451,000 after declaration of the special dividend. Except as disclosed above, during the years ended December 31, 2021 and 2022 and the six months ended June 30, 2023, and through the date of this prospectus, neither the Company nor any of its subsidiaries has paid dividends or made distributions to any investors. No funds have been transferred by any of the holding companies to their respective subsidiaries for the years ended December 31, 2021 and 2022, and the six months ended June 30, 2023 and through the date of this prospectus, to fund their business operations. In the future, any cash proceeds raised from overseas financing activities may be transferred by us to our subsidiaries via capital contribution or shareholder loans.

4. Our Hong Kong operating subsidiaries’ ability to distribute dividends is based upon their distributable earnings. Currently, the Companies Ordinance of Hong Kong permits our Hong Kong operating subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with applicable accounting standards and regulations.

This prospectus does not constitute, and there will not be, an offering of securities to the public in the Cayman Islands.

The underwriters are selling 2,100,000 Ordinary Shares (or 2,4155,000 Ordinary Shares if the underwriters exercise their over-allotment option in full) in this Offering on a firm commitment basis. The Company has granted the underwriters an option, exercisable for 45 days following the effective date of this prospectus, to purchase up to an additional fifteen percent (15%) of the Ordinary Shares offered in this offering on the same terms to cover over-allotments. The Registration Statement of which this prospectus is a part also covers the Ordinary Shares issuable upon the exercise thereof. For additional information regarding the Company’s arrangement with the underwriters, please see “Underwriting” beginning on page 143.

The underwriters expect to deliver the Ordinary Shares against payment in U.S. dollars to purchasers on or about [__________], 2024.

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

Prospectus dated February 23, 2024

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus or in any related free-writing prospectus. The Company has not authorized anyone to provide you with information different from that contained in this prospectus or in any related free-writing prospectus. The Company is 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.

The Company has 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 the Company 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 Plutus Group believes 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 25^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.

COMMONLY USED DEFINED TERMS

FORWARD-LOOKING STATEMENTS

The Company have made statements in this prospectus, including under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “The Company’s Business” and elsewhere that constitute forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about the Company’s plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.

Examples of forward-looking statements include:

The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. The Company discusses its known material risks under the heading “Risk Factors” above. Many factors could cause its actual results to differ materially from those expressed or implied in its forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, the Company urges you to read the entire prospectus carefully, especially the risks of investing in the Company’s Ordinary Shares discussed under “Risk Factors,” before deciding whether to buy the Ordinary Shares.

The Mission of Plutus Group

“Integrity, Persistence, Professionalism, Innovation and Vitality” are the five core values of Plutus Group. The Company takes “Integrity” as the foundation of our business, “Persistence” as everything customer-oriented, and it provide customers with “Professional” products and quality services. The Company’s business strategy is to practice “Innovation” and “Vigor” in service to its customers.

The Company has a development vision is to become a leading Asian financial institution. The Company believes that its greatest responsibility is to create common good with society. The Company will continue to use its influence on financial markets to create a new paradigm.

What We Do

Plutus Group provides financial services through its primary Hong Kong operating subsidiaries, Plutus Securities and Plutus Asset Management. Plutus Securities is licensed with the SFC to carry out Type 1 (dealing in securities) regulated activities and mainly offers (i) securities dealings and brokerage services; (ii) margin financing services; and (iii) underwriting and placing services and is also an exchange participant of the HKEx. Plutus Asset Management is licensed with the SFC to carry out Type 4 (advising on securities) and Type 9 (asset management) regulated activities in Hong Kong and mainly offers (i) asset management services and (ii) investment advisory services to our customers.

Our team is familiar with the local and global financial markets and has extensive experience in investment and asset management. Through comprehensive training and our dedication to quality services, our team provides customers with comprehensive professional analysis and investment advice.

Corporate History and Structure

Plutus Group is a holding company incorporated under the laws of the Cayman Islands on January 12, 2022. The Company’s beneficial shareholders are Zhisheng Zhao and Ting Kin Cheung, who hold their ownership through two British Virgin Islands holding companies. The Company’s direct subsidiaries are: (i) Plutus Investment Holdings Group Limited, a British Virgin Islands company; (ii) Plutus Investment Holdings International Limited, a British Virgin Islands company; and (iii) Plutus Financial Holdings Limited, a British Virgin Islands company. Plutus Investment Holdings Group Limited and Plutus Investment Holdings International Limited are holding companies incorporated on February 8, 2022. Plutus Financial Holdings Limited is a holding company incorporated on February 11, 2019.

Plutus Group operates its business through its indirect operating subsidiaries in Hong Kong. Below is a list of our material operating subsidiaries:

The following diagram illustrates our corporate structure as of the date of this prospectus, including our principal subsidiaries and their respective principal subsidiaries. The issuer in this offering is Plutus Financial Group Limited, a Cayman Islands exempted company. Our operations are conducted primarily through the Hong Kong entities Plutus Securities Limited and Plutus Asset Management Limited, which are indirect wholly-owned subsidiaries of the issuer.

Operating Subsidiaries

Our business and financial results are contributed primarily by our two operating subsidiaries, namely Plutus Securities Limited and Plutus Asset Management Limited.

Plutus Securities Limited

Plutus Securities is licensed with the SFC to carry out Type 1 (dealing in securities) regulated activities and is an exchange participant of the HKEx and mainly offers (i) securities dealings and brokerage services; (ii) margin financing services; and (iii) underwriting and placing services.

Plutus Asset Management Limited

Plutus Asset Management is licensed with the SFC to carry out Type 4 (advising on securities) and Type 9 (asset management) regulated activities in Hong Kong and mainly offers (i) asset management services and (ii) investment advisory services to our customers.

Holding Companies

As of the date of this Prospectus, Plutus Investment Holdings Group Limited, Plutus Investment Holdings International Limited, Plutus Asset Management Cayman Limited, Plutus Financial Holdings Limited (BVI), and One Promise Investment Immigration Consulting Limited (HK) act as investment holding companies.

Our Revenue Model

Plutus Securities

Securities Dealing and Brokerage Services

The Company provides its securities dealings and brokerage services through Plutus Securities. Plutus Securities offers securities dealing and brokerage services for trading in securities on the stock exchange of Hong Kong, such as scrip handling and settlement services, account maintenance services, nominee and corporate action services and related services. Plutus Securities maintains securities trading accounts with external brokers and is required to pay brokerage commissions and fees to them for orders it placed with them on behalf of its customers.

Plutus Securities charges its customers commission for executing trades in securities on the secondary market based on the transaction value of each completed trading order, normally at a flat rate from 0.08% to 0.25%, with an average of 0.16%. Certain trades are subject to a minimum fee ranging from HK$50 up to HK $100 for securities brokerage services. For handling fees, Plutus Securities does not charge customers any commission, but charges its customers a fixed handling fee determined by the underlying services as requested by the customers.

Our customers are mainly high net worth individuals and private companies and are mainly sourced by referrals through our management’s network and our existing customers.

During the years ended December 31, 2021 and 2022 and six months ended June 30, 2023, our securities dealing and brokerage services represents 1) the commissions generated from the execution of the trades in securities on the stock exchange of Hong Kong of our customers, and 2) the handling fee for subscription for the securities under IPO offering.

The revenue arising from the commissions generated from the execution of trades in securities by our customers amounted to HK$710,000 and HK$1,750,000 for the years ended December 31, 2021 and 2022, respectively. We earned these commissions from both individual customers and external brokers. We received the commissions of HK$10,000 and HK$8,000 from external brokers for the placement of underlying trading volume of approximately HK$25 million and HK$35 million during the years ended December 31, 2021 and 2022, respectively. The revenue arising from handling fees amounted to HK$1,206,000 and HK$162,000 for the years ended December 31, 2021 and 2022, respectively. We earned handling fees from both individual customers and external brokers. We received handling fees of HK$1,100,000 and nil from external brokers for the placement of orders during the years ended December 31, 2021 and 2022, respectively. These handling fees primarily represent handling fees for subscriptions for securities under IPO offerings.

The revenue arising from the commissions generated from the execution of trades in securities by our customers amounted to HK$808,000 and HK$2,809,000 for the six months ended June 30, 2022 and 2023, respectively. The total volume of the execution of trades are HK$469 million and HK$1,491 million for the six months ended June 30, 2022 and 2023, respectively. We earned these commissions from both individual customers and external brokers. We received the commissions of HK$6,000 and HK$1,000 from external brokers for the placement of underlying trading volume of approximately HK$19 million and HK$4 million during the six months ended June 30, 2022 and 2023, respectively. The revenue arising from handling fees amounted to HK$43,000 and HK$158,000 for the six months ended June 30, 2022 and 2023, respectively. We earned handling fees from individual customers only and no handling fees were earned from external brokers during the six months ended June 30, 2023 and 2023. 

Underwriting and Placing Services

Plutus Securities provides underwriting, sub-underwriting services in IPOs by acting as book runner, lead manager, syndicate or underwriter in IPOs for listing applicants. Plutus Securities may also act as placement agent or sub-placing agent for secondary market fund raising exercises, such as debt issuance and equity issuance by listed companies. When Plutus Securities acts as underwriter and placement agent, it will take the lead in providing the services of sourcing the investors or lenders and its commission will be received from the equity and debt issuers based on funds raised. When acting as sub-underwriter and sub-placing agent, Plutus Securities will also provide the service of sourcing the investors and lenders, and for such cases, its commission will be received from the underwriter and placing agent based on funds raised from the investors or lenders sourced by Plutus Securities. For cases in which Plutus Securities is involved to provide underwriting services in IPOs for listing applicants, we are obliged to take up the unsubscribed offered shares up to our agreed maximum underwriting commitment.

Plutus Securities’ underwriting and placing commissions vary from case by case and are determined after arm’s length negotiations with each customer (IPO listing applicants and listed companies), with reference to the size of the fund raising, market rate, valuation of the offering, pricing, perceived market response and sentiment and bargaining power in the deal. The underwriting and placing commission received is calculated with reference to the fund-raising size and/or the aggregate offer price of the number of securities placed and/or underwritten by us, usually it will be flat rate ranging from 6% to 10.5% of the fund-raising size.

Underwriting and placing commission fee is recognized at a point in time when the transactions are executed and services are rendered.

Plutus Securities mainly provides underwriting and placing services to listed companies and also IPO listing applicants in Hong Kong. Plutus Securities’ deals mainly originate from networks from our management and referrals from professional parties or our existing customers.

The revenue arising from the underwriting and placing services for our customers (IPO listing applicants and listed companies) amounted to HK$33,028,000 and HK$3,776,000 for the years ended December 31, 2021 and 2022, respectively.

The revenue arising from the underwriting and placing services for our customers (IPO listing applicants and listed companies) amounted to HK$1,388,000 and HK$921,000 for the six months ended June 30, 2022 and 2023, respectively.

Margin Financing

Plutus Securities offers margin financing to its customers by providing them with margin loans which are repayable on demand with the securities held under margin accounts it maintains as collateral. For customers that require margin loans and IPO financing, upon the opening of the securities account, we generally require customers to execute a margin agreement, an authorization form for the repledge of securities collateral and a letter of personal guarantee before commencing the approval process. We maintain a list of securities that we accept as collateral for the margin loans and the margin ratio for such collateral securities will also be displayed on a margin list which we maintain and update regularly, particularly for securities with higher price fluctuations. We currently only accept shares of listed companies on the stock exchange of Hong Kong as securities collateral for margin loans. We refer to a number of factors when establishing and updating the margin ratios on the margin list, such as the trading volume, trading frequency, historical price fluctuations, market volatility of the respective securities and the margin ratios of other financial institutions. We also take into account the years of relationship with the customer and assess the size and risk of the customer’s existing portfolio before approving the margin loan and determining the level of collateral required. Similar factors are also applied when setting out the initial margin limits for customers, such as the financial situation of the customer (supported by objective proof), obtain internal/external credit reference information on the customer, the quality of the collateral securities, the investment objectives, risk appetite and trading patterns of the customer and any other relevant known factors that may affect the customer’s financial status or default risk. After setting out the initial margin limits for the customers, Plutus Securities closely monitors the customer’s margin accounts and reviews its margin clients regularly (at least annually) and whenever there is a significant change of any of the determining factors when setting out its initial margin limits. A customer’s margin limit will be modified as appropriate in response to a material change in the key factors described above. The margin loans which are approved are repayable on demand with the securities held under margin accounts maintained by us as collateral. We have a dedicated team for monitoring the collateral requirements on a daily basis. Our customers are mainly our existing customers of our securities dealings and brokerage services.

Not all customers that have opened brokerage accounts with us, have also applied for margin accounts. As of December 31, 2021 and 2022 and June 30, 2023, 83%, 74% and 76% of the customers that applied for margin loans have margin loans outstanding, respectively.

The margin loans will be charged at an interest rate determined and reviewed by the Plutus Securities’ directors from time to time (at least once every month) which will be published in the statement of accounts to customers. The interest rates charged range from 8% to 20%, with reference to the credit risk, taking into account the collateral provided, the volatility of the market, and other factors. During the years ended December 31, 2021 and 2022 and six months ended June 30, 2023, Plutus Securities financed its margin financing via its internal resources, and there are no financing costs or other related costs for its margin lending activities. The table below shows a roll forward showing our non-IPO margin lending activities for the periods presented in this prospectus:

Plutus Securities also provides IPO financing to customers for subscriptions for shares offered under IPO. We take into consideration the overall market sentiment, the quality of the shares being listed (to be provided as collateral to secure the IPO financing) and investors’ reaction, when determining whether to provide IPO financing to subscription for shares offered under that IPO. Customers who apply for IPO financing must maintain a margin account with us and deposit an amount no less than 10% of the total subscription amount. We adopt similar approval and monitoring processes for our IPO financing and margin financing.

For IPO financing, the interest rates charged on the outstanding loans to customers for subscribing for shares offered under an IPO are up to 4.5% per annum, and the outstanding loans sizes are generally up to 90% of the subscription amounts. The collateral requirement and interest rates charged to related parties versus unrelated parties are the same.

All margin loans are secured. During the years ended December 31, 2021 and 2022 and six months ended June 30, 2023, the Company has not written off any margin loans or IPO loans.

The revenue arising from the interest income generated from the non-IPO margin financing of our customers amounted to HK$4,818,000 and HK$6,990,000 for the years ended December 31, 2021 and 2022, respectively. The revenue arising from the interest income generated from the IPO financing amounted to HK$336,000 and nil for the years ended December 31, 2021 and 2022, respectively.

The revenue arising from the interest income generated from the non-IPO margin financing of our customers amounted to HK$3,478,000 and HK$3,338,000 for the six months ended June 30, 2022 and 2023, respectively. There was no revenue arising from the interest income generated from the IPO financing for the six months ended June 30, 2022 and 2023.

The table below shows a roll forward showing our IPO margin lending activities for the periods presented in this prospectus:

Plutus Asset Management

Asset Management Services

Plutus Asset Management manages discretionary accounts for its customers, which Plutus Asset Management is appointed to manage their account on their behalf at its own discretion. There will be a fixed management fee received by us from Plutus Asset Management’s customer which is calculated with reference to a fixed percentage of the sum of the market value of the securities and the outstanding balance of the customer’s account. Such fee is determined by us with reference to the amount of funds in the discretionary account managed by us, relationship with the customer and the perceived trading volume in the account. The discretionary accounts are located and held in Hong Kong and Plutus Asset Management maintains the custody and control the discretionary accounts of our customers.

Plutus Asset Management provides asset management services by acting as investment manager for funds established by it or by external parties. Depending on the investment fund structure, Plutus Asset Management generally enters into an investment management agreement with the funds to act as the investment manager or sub-investment manager, to invest and re-invest the assets of the fund in accordance with the fund’s investment strategy. In return for its services, Plutus Asset Management will receive a subscription fee up to 5%, a management fee up to 2%, and a performance fee/carried interest (depending on whether the fund is an open-ended or close-ended fund) up to 20%, which is determined by, the investment strategy of the fund, investment period, investment size and market rate. For funds established by Plutus Asset Management, it shall also take into account the relationship with the potential investors when fund-raising.

The funds established by us are located and held in the Cayman Islands and Hong Kong and the manager of the funds maintains custody and control of the funds.

The funds established by external parties are located and held in the Cayman Islands and the manager of the funds maintains custody and control of the funds of our customers.

Our customers are mainly private companies, high net worth individuals, which mainly originate through the network of our management, and referrals from professional parties or our existing customers.

(iii) Investment Advisory Services

Plutus Asset Management provides investment advisory services for professional investors and other funds not managed by it and charge its customers on an agreed-upon investment advisory fee, generally based on the value of assets under their portfolios.

Our customers are mainly high net worth individuals and other investment funds, which mainly originate through the network of our management, and referrals from professional parties or our existing customers.

The revenues arising from our asset management services amounted to HK$2,897,000 and HK$6,599,000 for the years ended December 31, 2021 and 2022, respectively.

The revenues arising from our asset management services amounted to HK$3,167,000 and HK$1,488,000 for the six months ended June 30, 2022 and 2023, respectively.

Below is a summary of the revenue generated by each of our material operating subsidiaries (organized by type of service provided), together with income before income taxes, the total assets, total liabilities and net assets for the years ended December 31, 2021 and 2022 and the six months ended June 30, 2022 and 2023.

The Industry in Which the Company Operates

Financial and Wealth Management Industry in Hong Kong

The financial and wealth management business in Hong Kong is mainly operated by licensed corporations (the “LCs”) and registered institutions (the “Ris”), and mainly provides (i) securities dealing and brokerage services; (ii) placing and underwriting services; (iii) asset management and fund advisory services; and (iv) investment and corporate finance advisory services.

The table of the market size by revenue of the establishments engaged in the financial and wealth management industry in Hong Kong by market segment from 2016-2026E is as follows:

Source: Frost & Sullivan

The market size by revenue of the establishments engaged in the financial and wealth management industry in Hong Kong has grown greatly from approximately HK$179.1 billion (approximately US$23.0 billion) in 2016 to approximately HK$304.9 billion (approximately US$39.1 billion) in 2021, representing a compound annual growth rate (“CAGR”) of approximately 11.2% from 2016 to 2021, which was attributable to the strong market performance and the global economic recovery during the past year. In 2021, approximately 37.4% and 35.1% of aforesaid revenue were arisen from the asset management and fund advisory services and securities dealing and brokerage services, respectively. Placing and underwriting services and investment and corporate finance advisory services accounted for approximately 16.2% and 3.0%, respectively, while the others represented for approximately 8.3% of the total market revenue of the financial and wealth management industry in Hong Kong in 2021. The market size by revenue is expected to increase from approximately HK$344.2 billion (approximately US$44.1 billion) in 2022 to approximately HK$542.5 billion (approximately US$69.6 billion) in 2026, at a CAGR of approximately 12.0% from 2022 to 2026, which is expected to be benefited from the continuous government support on this industry and the offering of diversified products and services in multiple currencies and multiple levels to meet the various demands of both local and international investors. The asset management and fund advisory services and the securities dealing and brokerage services are expected to continue to dominate this market in 2026, at approximately HK$226.9 billion (approximately US$29.1 billion) and approximately HK$188.2 billion (approximately US$24.1 billion), respectively.

Please see the section entitled “Industry” beginning on page 89 of this Prospectus for more information.

The Company’s Competitive Strengths

The Company believes that the following competitive strengths are essential to its success and differentiate us from its competitors:

Our Challenges

Our Strategies for Meeting Our Challenges and Further Growth

To meet our competitive challenges, further grow our business and enhance our competitive position, the Company intends to pursue the following strategies:

Summary of Significant Risk Factors

Investing in the Ordinary Shares involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in our Ordinary Shares. Below please find a summary of the significant risks the Company faces, organized under relevant headings. These risks are discussed more fully in the section titled “Risk factors.”

Risks related to a future determination that the Public Company Accounting Oversight Board (the “PCAOB”) is unable to inspect or investigate our auditor completely.

The audit report included in this prospectus was issued by WWC, P.C. (“WWC”) a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. The Company has no intention of dismissing WWC in the future or of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. The PCAOB is currently unable to conduct inspections in China without the approval of PRC government authorities. If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate. In addition, under the HFCAA, as amended by the Consolidated Appropriations Act, 2023, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for two consecutive years.

Pursuant to the HFCAA, the PCOAB issued a Determination Report on December 16, 2021 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 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. In addition, the PCOAB’s report identified the specific registered public accounting firms which are subject to these determinations. Our registered public accounting firm, WWC, is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination. (Please see – Risk Factor – “Although the audit report included in this prospectus was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection and our Ordinary Shares may be delisted or prohibited from trading,” at Page 34.)

Because all of the Company’s operations are in Hong Kong, a special administrative region of China, it faces a risk that the government of the PRC could intervene in or influence is operations at any time, which could result in a material change in the Company’s operations and/or the value of its Ordinary Shares.

Currently, the Company is not required to obtain permissions or approvals from any PRC authorities to either: (1) operate our business; or (2) issue its Ordinary Shares to foreign investors. Should the PRC government choose to exercise additional influence or control over Hong Kong businesses similar to the Company, however, through the promulgation of new laws or regulations applicable to Hong Kong, the Company could be required to obtain more licenses, permits, approvals or certificates, and its business, financial condition and results of operations could be adversely affected. In the event that (i) the PRC government expanded the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC and that Plutus Group is required to obtain such permissions or approvals, or (ii) Plutus Group inadvertently concluded that relevant permissions or approvals were not required or that Plutus Group did not receive or maintain relevant permissions or approvals required, any action taken by the PRC government could significantly limit or completely hinder operations of Plutus Group in Hong Kong and its ability to offer or continue to offer its Ordinary Shares to investors and could cause the value of such securities to significantly decline or be worthless. (Please see – Risk Factor – “Because all of the Company’s operations are in Hong Kong, a special administrative region of China, it faces a risk that the government of the PRC could intervene in or influence our operations at any time, which could result in a material change in the Company’s operations and/or the value of its Ordinary Shares,” at Page 38.)

Substantially all operations of the operating subsidiaries are in Hong Kong, a special administrative region of the PRC. However, due to the long arm provisions under the current PRC laws and regulations, the PRC government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our Ordinary Shares. The PRC government may also intervene or impose restrictions on our ability to move money into or out of Hong Kong to distribute earnings and pay dividends or to reinvest in our business outside of Hong Kong or within Hong Kong. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may also be quick with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.

Plutus Group is a holding company which conduct its operations in Hong Kong through the Company’s operating subsidiaries, Plutus Securities and Plutus Asset Management, both incorporated in Hong Kong. The Company’s operations are primarily located in Hong Kong and some of its customers are PRC individuals or companies that have shareholders or directors that are PRC individuals. As of the date of this prospectus, the Company does not expect to be materially affected by recent statements by the PRC government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. However, due to long arm provisions under the current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. The PRC government may choose to exercise significant oversight and discretion, and the policies, regulations, rules, and the enforcement of laws of the PRC government to which the Company is subject may change rapidly and with little advance notice to the Company or its shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and may be inconsistent with the Company’s current policies and practices. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way the Company conducts its business, could require the Company to change certain aspects of its business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, the Company’s business, financial condition and results of operations could be adversely affected and such measured could materially decrease the value of its Ordinary Shares, potentially rendering it worthless. (Please see – Risk Factor – “Substantially all operations of the operating subsidiaries are in Hong Kong, a special administrative region of the PRC. However, due to the long arm provisions under the current PRC laws and regulations, the PRC government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of its Ordinary Shares. The PRC government may also intervene or impose restrictions on our ability to move money out of Hong Kong to distribute earnings and pay dividends or to reinvest in our business outside of Hong Kong. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may also be quick with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain,” at Page 38.)

Risks Related to the Potential Imposition of Currency Controls on Hong Kong by the PRC Government

In addition, despite the general protections afforded by the Basic law, due to ‘long arm’ provisions under current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. The PRC government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from other entities within our organization or to reinvest in our business outside of Hong Kong and our ability to move money into Hong Kong to fund our business operation and to satisfy our investment needs in Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business within and outside of Hong Kong and may also affect our ability to transfer and receive funds to and from our operating subsidiaries in Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business within and outside of Hong Kong and may also affect our ability to transfer and receive funds to and from our operating subsidiaries in Hong Kong. (Please see – Risk Factor – “There is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash into or out of Hong Kong,” at Page 39.) We do not have a formal cash management policy that dictates how funds are transferred.

Risks Related to Enforceability of Judgments and Foreign Legal Systems.

Plutus Group is a Cayman Islands exempted company and substantially all of its assets are located outside of the United States. Substantially all of the Company’s current operations are conducted in the Hong Kong. In addition, its current officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside 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 Cayman Islands, Hong Kong or other relevant jurisdictions may render you unable to enforce a judgment against our assets or the assets of our directors and officers. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. In addition, CFN Lawyers, the Company’s counsel as to Hong Kong law, has advised us that there is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (1) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty), and (2) final and conclusive on the merits of the claim, but not otherwise. 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. Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong, in original actions or in actions for enforcement, of judgments of U.S. courts of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any state or territory within the United States. (Please see – Risk Factor – “Certain judgments obtained against us by our shareholders may not be enforceable and foreign legal systems present unique risks to investors,” at Page 34.)

Risks related to the limited operating history of the Company.

The operating subsidiaries of the Company began operations in 2018 and have continually sought to expand our product and service offerings. As a result, its business model has not been fully proven and it has limited financial data that can be used to evaluate our current business and future prospects, which subjects us to a number of uncertainties, including our ability to plan for, model and manage future growth and risks. Its historical revenues should not be considered indicative of its future performance. The Company’s operating subsidiaries have also encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly changing and heavily regulated industries, including achieving market acceptance of our products and services, attracting and retaining customers, complying with laws and regulations that are subject to evolving interpretations and application and increasing competition and expenses as it expands its business. The Company cannot be sure that it will be successful in addressing these and other challenges it may face, and its business may be adversely affected if it does not manage these risks successfully. (Please see – Risk Factor – “The Company has a limited operating history, which makes it difficult to evaluate its business and prospects and increases the risks associated with an investment in its Ordinary Shares.”)

Risks Related to Revenue and Receivables Concentration.

We derive a significant portion of our revenues from a few major customers. For the six months ended June 30, 2023, one customer accounted for 26% of our total revenues. For the six months ended June 30, 2022, one customer accounted for 16% of our total revenues. For the year ended December 31, 2022, two customers accounted for 16% and 12% of our total revenues. For the year ended December 31, 2021, three customers accounted for 29%, 25% and 22% of our total revenues.

As of June 30, 2023, one customer accounted for 13% of the total balance of loans to customers and receivables from customer. As of December 31, 2022, one customer accounted for 14% of the total balance of loans to customers and receivables from customer. As of December 31, 2021, two customers accounted for 21% and 12% of the total balance of loans to customers and receivables from customers.

Please see – Business – Our customers” on page 97 for the customers mix for the revenue and receivables concentration.

There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. We cannot guarantee that these customers will continue to retain us to provide them brokerage services, asset management services or margin financing services. Their demands for our financial services may be affected due to factors such as changes in investment preference, market outlook and general economy, which are beyond our control. Any decline in demand or termination of the services offered by us by our top customers decides materially negatively affect our revenues, results of operations and financial condition. (Please see – Risk Factor – “We have a substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues.”)

Risks related to competition.

There is a significant number of existing market participants in the financial and securities services industry in Hong Kong providing services similar to ours. The Company’s larger competitors may have advantages over us such has brand recognition and reputation in the market, wider range of value adding services, stronger human and financial resources and operational presence in more geographic locations. The Company also faces competition from local medium and small-sized financial services providers which offer similar range of services. New participants may enter into the market insofar as they have engaged appropriate qualified professionals and obtained the requisite regulatory licenses and permits. Given the keen competition, the Company cannot assure that it will be able to maintain its competitive edge in response to the fast-changing business environment.

The market for online brokerage and wealth management services is also relatively new, rapidly evolving and intensely competitive. The Company expects competition to continue and intensify in the future. It faces competition from traditional retail brokerage firms and financial service providers in Hong Kong and worldwide, many of which may be significantly larger than us with access to exponentially greater resources. Major international brokerage companies that have large retail online brokerage businesses as well as online brokerage units of commercial banks may also take advantage of their established resources and satisfy applicable regulatory requirements through acquisitions and organic development. The Company cannot assure you that its efforts to enhance its service offerings will be successful or that it will be able to compete effectively or efficiently with current or future competitors. Furthermore, the current competitors and new entrants in the online brokerage and wealth management industries may also seek to develop new service offerings, technologies or capabilities that could render some of the services that the Company offers obsolete or less competitive, and some of them may adopt more aggressive pricing policies or devote greater resources to marketing and promotional campaigns than it does. (Please see – Risk Factor – “The Company faces fierce competition in the financial and securities services industry in Hong Kong and may lose its competitive edge to its competitors.”)

Risks related to fluctuations in customer trading volumes.

The Company’s revenues and profitability depend in part on the level of trading activity of the securities of our customers, which are often affected by factors beyond our control, including economic and political conditions, broad trends in business and finance and changes in the markets in which such transactions occur. Weaknesses in the markets in which the Company operates, including economic slowdowns, have historically resulted in reduced trading volumes for us. Declines in trading volumes generally result in lower revenues from transaction execution activities. Lower levels of volatility generally have the same directional impact. Declines in market values of securities or other financial instruments can also result in illiquid markets, which can also result in lower revenues and profitability from transaction execution activities. Our business is also subject to general economic and political conditions, in particular the economic and political conditions in Hong Kong and worldwide, such as macroeconomic and monetary policies, legislation and regulations affecting the financial and securities industries, upward and downward trends in the business and financial sectors, inflation, currency fluctuations, availability of short-term and long-term funding sources, cost of funding and the level and volatility of interest rates. (Please see – Risk Factor – “Because our revenues and profitability depend largely on customers’ trading volume, they are prone to significant fluctuations and are difficult to predict. Declines in trading volumes generally result in lower revenues from transaction execution activities, which may affect our financial condition, results of operations and prospects.”)

Risks related to the Company’s margin financing business.

The Company’s margin financing business may not develop as expected if customers fail to perform contractual obligations or the value of collateral held to secure the obligations is inadequate. As its margin financing business expands, the Company may be subject to greater credit risks. In particular, the Company may not always be able to fully recover the margin value through margin calls and our exposure to credit loss may be exacerbated during periods of high market volatility. (Please see – Risk Factor – “The Company may not be able to develop its margin financing business as expected and may be exposed to credit risks related to this business, primarily arising from loans and advances, and receivables. In addition, the Company needs adequate funding at reasonable costs to successfully operate its margin financing business, and access to adequate funding at reasonable costs cannot be assured.”)

Risks related to potential trading errors

The Company needs to execute and monitor securities dealing transactions in a timely and vigilant manner for our securities dealing and brokerage business, which is heavily dependent on the satisfactory performance of its trading system. Trading errors may occur in the case of trading system breakdown or failure. The Company cannot guarantee that the measures and procedures it has in place to protect and maintain its trading system will completely deter, or be continuously effectively in deterring, trading errors. Trading errors may also occur as a result of human mistakes made by our employees in processing customers’ orders or instructions. Any trading errors may cause us to incur significant losses and may materially and adversely affect our reputation, operations and financial performance. (Please see – Risk Factor – “Any trading errors relating to securities dealing and brokerage business of the Company may cause significant losses.”)

Risks related to network interruptions, security breaches or computer virus attacks and failures in the information technology systems of the Company.

The information technology systems of the Company support substantially all phases of our operations and are an essential part of our technology infrastructure. If these systems fail to perform, the Company could experience disruptions in its operations, slower response time or decreased customer satisfaction. The Company must process, record and monitor a large number of transactions and its operations are highly dependent on the integrity of our technology systems and our ability to make timely enhancements and additions to its systems. System interruptions, errors or downtime can result from a variety of causes, including unexpected interruptions to the internet infrastructure, technological failures, changes to its systems, erroneous or corrupted data, changes in customer usage patterns, linkages with third-party systems and power failures. The Company’s systems are also vulnerable to disruptions from human error, execution errors, errors in models such as those used for risk management and compliance, employee misconduct, unauthorized trading, external fraud, computer viruses, distributed denial of service attacks, computer viruses or cyberattacks, terrorist attacks, natural disaster, power outage, capacity constraints, software flaws, events impacting our key business partners and vendors, and other similar events. (Please see – Risk Factor – “Unexpected network interruptions, security breaches or computer virus attacks and failures in our information technology systems could have a material adverse effect on our business, financial condition and results of operations.”

Risks related to regulatory compliance.

The Company is subject to extensive regulations and the market in which it operates, Hong Kong, is highly regulated. However, the online brokerage service industry (including, for example, the use of cloud-based operating, computing and record keeping technology as well as biometric identification technology) is at a relatively early stage of development, and applicable laws, regulations and other requirements may be changed and adopted from time to time. The Company may be subject to examinations and inquiries by the relevant regulators on a regular or ad-hoc basis. Our business operations in Hong Kong are subject to applicable Hong Kong laws, regulations, guidelines, circulars, and other regulatory guidance, including, for example, the SFO and its subsidiary legislation. These laws and regulations set out the licensing requirements, regulate our operational activities and standards, and impose requirements such as maintaining minimum liquidity or capital along with other filing, record keeping and reporting obligations relevant to our business operations. Failure to comply with applicable laws and regulations in markets the Company operates can result in investigations and regulatory actions, which may lead to penalties, including reprimands, fines, limitations or prohibitions on our future business activities or suspension or revocation of our licenses or trading rights. Any outcome of such nature may affect our ability to conduct business, harm our reputation and, consequently, materially and adversely affect our business, financial condition, results of operations and prospects. (Please see – Risk Factor – “The Company is subject to extensive and evolving regulatory requirements in the markets it operates in, non-compliance with which may result in penalties, limitations and prohibitions on our future business activities or suspension or revocation of its licenses and trading rights, and consequently may materially and adversely affect our business, financial condition, operations and prospects.”)

No established public market for the Company’s shares prior to this offering.

Prior to this initial public offering, there has been no public market for the Company’s Ordinary Shares. The Company plans to list the Ordinary Shares on the Nasdaq Capital Market. Its Ordinary Shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. If an active trading market for the Ordinary Shares does not develop after this offering, the market price and liquidity of the Ordinary Shares will be materially and adversely affected. (Please see – Risk Factor – “There has been no public market for our Ordinary Shares prior to this offering, and you may not be able to resell the Ordinary Shares at or above the price you paid, or at all.”)

Transfers of Cash To and From Our Subsidiaries

Plutus Group declared a special dividend of HK$24,451,000 on August 30, 2022, Plutus Group was wholly owned by Mr. Zhisheng Zhao through Radiant Global Ventures Limited and Divine Star Ventures Limited on August 30, 2022. Plutus Group did not receive the funds from our subsidiaries. Instead, the special dividend was offset by the amount due from Mr. Zhisheng Zhao. The amount due from Mr. Zhisheng Zhao was decreased by HK$24,451,000 after the declaration of special dividend. As of December 31, 2022 and June 30, 2023, the remaining amount due from Mr. Zhao was HK$6,322,000 and HK$6,339,000, respectively. This amount is reflected in the portion of the amounts due from related party as reflected in our financial statements. The amount due from Mr. Zhao is unsecured, non-interest bearing and repayable on demand. The balance is non-trade in nature. Saved as disclosed above, during the years ended December 31, 2021 and 2022 and six months ended June 30, 2023, Plutus Group did not declare or pay any dividends and there was no transfer of assets among Plutus Group and its subsidiaries.

If Plutus Group determines to pay dividends on any of its Ordinary Shares in the future, as a holding company, it will be dependent on receipt of funds from our subsidiaries by way of dividend payments. Plutus Group is permitted under the laws of Cayman Islands to provide funding to its subsidiaries through loans or capital contributions without restrictions on the amount of the funds loaned or contributed. Each of Plutus Securities, Plutus Asset Management and One Promise Investment Immigration Consulting Limited is permitted under the laws of Hong Kong to provide funding to Plutus Group through dividend distributions without restrictions on the amount of the funds distributed.

Plutus Group currently intends 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.

There are no statutory prohibitions in the Cayman Islands on the granting of financial assistance by a company to another person for the purchase of, or subscription for, its own, its holding company’s or a subsidiary’s shares. Therefore, a company may provide financial assistance provided the directors of the company, when proposing to grant such financial assistance, discharge their duties of care and act in good faith, for a proper purpose and in the interests of the company. Such assistance should be on an arm’s-length basis. Subject to the Companies Act (Revised) of the Cayman Islands (the “Companies Act”) and our Memorandum and Articles of Association, our board of directors may declare dividends and distributions on Shares in issue and authorize payment of the dividends or distributions out of the funds of Plutus Group. No dividend or distribution shall be paid except out of the realized or unrealized profits of Plutus Group, or out of our share premium account, unless immediately following the payment the Company is unable to pay our debts as they fall due in the ordinary course of business. The Cayman Islands does not impose a withholding tax on payments of dividends to shareholders in the Cayman Islands.

Under the BVI Business Companies Act 2004 (as amended), a British Virgin Islands company may make a dividend distribution to the extent that immediately after the distribution, the value of the company’s assets exceeds its liabilities and that such company is able to pay its debts as they fall due.

Under Hong Kong law, dividends could only be paid out of distributable profits (that is, accumulated realized profits less accumulated realized losses) or other distributable reserves, as permitted under Hong Kong law. Dividends cannot be paid out of share capital. There are no restrictions or limitation under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong, nor there is any restriction on foreign exchange to transfer cash between Plutus Group and its subsidiaries, across borders and to U.S investors, nor there is any restrictions and limitations to distribute earnings from our business and subsidiaries, to Plutus Group and U.S. investors and amounts owed. 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.

Implications of Being an Emerging Growth Company

As a company with less than US$1.07 billion in revenue for our last fiscal year, Plutus Group qualifies as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include, but are not limited to:

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. The Company has elected to use the extended transition period under the JOBS Act. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

The Company will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which it has total annual gross revenues of at least US$1.07 billion; (b) the last day of its fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which it has, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which it is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur as of the end of our fiscal year if the market value of its Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once the Company ceases to be an emerging growth company, it will not be entitled to the exemptions provided in the JOBS Act discussed above.

Implications of Being a Foreign Private Issuer

Plutus Group is incorporated in the Cayman Islands, and more than 50 percent of its outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, Plutus Group is a “foreign private issuer,” as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Exchange Act. As a result, Plutus Group is not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, the Company will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example:

Implications of Being a “Controlled Company”

Upon the listing of our Ordinary Shares on the Nasdaq Stock Market, we will be considered a “controlled company” within the meaning of Nasdaq Rule 5615(c). A “controlled company” is a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. Upon the closing of this Offering, our founder, Zhisheng Zhao, and our CEO, Ting Kin Cheung, will together beneficially own 73.2% of our Ordinary Shares. Under Nasdaq Rule 5615(c), a “controlled company” may be exempted from the requirements of Nasdaq Rules 5605(b)(1) (requiring that the board consist of a majority of independent directors), (d) (requiring a compensation committee of the board consisting of independent directors) and (e) (requiring independent director oversight of director nominations). Should we determine to rely on the “controlled company” exemptions, our board and its decision-making processes would lack the independent oversight typically required of Nasdaq-listed issuers. We do not intend, however, to take advantage of the “controlled company” exemption from Nasdaq corporate governance standards. As disclosed in this Prospectus, we will have a majority independent board upon listing and have adopted board committee charters and policies consistent with Nasdaq’s regular listing and governance rules.

PRC Government Permissions and Approvals

Our PRC counsel, has advised that, as of the date of this prospectus, the Company and its subsidiaries, (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 permission requirements from the China Securities Regulatory Commission (the “CSRC”), the Cyberspace Administration of China (the “CAC”) or any other entity that is required to approve of our operations. This conclusion is based on the fact that: (1) our Company’s operating subsidiaries are located in Hong Kong, (2) we and our subsidiaries have no direct operations in mainland China, and (3) pursuant to the Basic Law of the Hong Kong Special Administrative Region (the “Basic Law”), which is a national law of the PRC and constitutional document for Hong Kong, national laws of the PRC shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong). 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 inadvertently concluded that such approval was not required. If the approval was required while we inadvertently 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 the CSRC 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. The CSRC, the CAC, or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of our Ordinary Shares. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of the Ordinary Shares we are offering, you would be doing so at the risk that the settlement and delivery may not occur. Any uncertainties or negative publicity regarding such approval requirements could have a material adverse effect on our ability to complete this offering or any follow-on offering of our securities or the market for and market price of our Ordinary Shares.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. Under the Trial Measures and the Guidance Rules and Notice, domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. The domestic companies that have already been listed on overseas stock exchanges or have obtained the approval from overseas supervision administrations or stock exchanges for its offering and listing and will complete their overseas offering and listing prior to September 30, 2023 are not required to make immediate filings for its listing yet need to make filings for subsequent offerings in accordance with the Trial Measures. The domestic companies that have already submitted an application for an initial public offering to overseas supervision administrations prior to the effective date of the Trial Measures but have not yet obtained the approval from overseas supervision administrations or stock exchanges for the offering and listing may arrange for the filing within a reasonable time period and should complete the filing procedure before such companies’ overseas issuance and listing. As of the date of this prospectus, as advised by our PRC counsel, Sundial Law Firm, the Company is not considered a domestic company under the Trial Measures and the Trial Measures do not apply to the Company, and its listing on NASDAQ does not require the fulfilling of the filing procedure to the CSRC.

Corporate Information

The principal executive offices of the Company are located at 8/F, 80 Gloucester Road, Wan Chai, Hong Kong. Our telephone number at this address is (852) 2968 1192. The Company’s registered office in the Cayman Islands is currently located at the office of Quality Corporate Services Ltd., Suite 102, Cannon Place, P.O. Box 712, North Sound Rd., George Town, Grand Cayman, KY1-9006 Cayman Islands, which may be changed from time to time at the discretion of directors. The Company’s agent for service of process in the United States is The Crone Law Group P.C., 500 Fifth Ave, Suite 938, New York, NY 10110.

Investors should contact the Company for any inquiries through the address and telephone number of our principal executive offices. The Company’s website is www.plutusfingroup.com. The information contained on that website is not a part of this prospectus.

Notes on Prospectus Presentation

This prospectus contains translations of certain HK$ amounts into U.S. dollar amounts at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from HKD to U.S. dollars and from U.S. dollars to HKD in this prospectus were calculated at the noon buying rate of US$1 = HK$7.8363 on June 30, 2023, as published in H.10 statistical release of the Board of Governors of the Federal Reserve System. The Company makes no representation that the HKD or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or HKD, as the case may be, at any particular rate or at all.

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Some market data and statistical information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of the sources listed above, our internal research and our knowledge of the Hong Kong financial industry.

THE OFFERING

The following assumes that the underwriters will not exercise their option to purchase additional Ordinary Shares in the offering, unless otherwise indicated.

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The following summary consolidated statements of net income for the years ended December 31, 2021 and 2022 and summary consolidated balance sheet data as of December 31, 2021 and 2022 have been derived from our consolidated financial statements included elsewhere in this prospectus. You should read this “Summary Consolidated Financial Data and Operating Data” section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods.

Summary Operating Data

The following summary consolidated financial data for the years ended December 31, 2021 and 2022 and six months ended June 30, 2022 and 2023 has been derived from our consolidated financial statements included elsewhere in this prospectus.

RISK FACTORS

Risks Related to The Company’s Business and Industry

The Company has a limited operating history, which makes it difficult to evaluate its business and prospects and increases the risks associated with an investment in its Ordinary Shares.

The Company’s operating subsidiaries began their operations in 2018 and have continually sought to expand our product and service offerings. As a result, the business model has not been fully proven and it has limited financial data that can be used to evaluate its current business and future prospects, which subjects it to a number of uncertainties, including our ability to plan for, model and manage future growth and risks. The Company’s historical revenues should not be considered indicative of our future performance. For example, the Company’s operating history has coincided with a period of general global macroeconomic growth, as well as growth in the financial services industries in which it operates. Therefore, the Company has not experienced any prolonged downturn or slowdown in macroeconomic or industry growth and cannot assure that it will be able to respond effectively to any such downturn or slowdown in the future. The Company has also encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly changing and heavily regulated industries, including achieving market acceptance of our products and services, attracting and retaining customers, complying with laws and regulations that are subject to evolving interpretations and application and increasing competition and expenses as the Company expands its business. The Company cannot be sure that it will be successful in addressing these and other challenges it may face, and Its business may be adversely affected if it does not manage these risks successfully. In addition, the Company may not achieve sufficient revenue to maintain positive cash flows from operations or profitability in any given period, or at all.

Any trading errors relating to the securities dealing and brokerage business of the Company may cause significant losses.

The Company has to execute and monitor securities dealing transactions in a timely and vigilant manner for our securities dealing and brokerage business, which is heavily dependent on the satisfactory performance of our trading system. Trading errors may occur in the case of trading system breakdown or failure. The Company cannot guarantee that the measures and procedures it has in place to protect and maintain its trading system will completely deter, or be continuously effectively in deterring, trading errors. Trading errors may also occur as a result of human mistakes made by our employees in processing customers’ orders or instructions. Any trading errors may cause us to incur significant losses and may materially and adversely affect the Company’s reputation, operations and financial performance.

The Company is subject to various risks due to illegal or improper activities committed by and misconduct of our personnel or third parties.

The Company is subject to the risk of fraud, illegal act, misconduct or other improper activities committed by our directors, employees, agents, customers or other third parties, such as entering into unauthorized transactions, improperly using or divulging inside information, recommending transactions not suitable for its customers, engaging in fraudulent activities, or engaging in improper or illegal activities or excessive trading to the detriment of us or our customers. The Company cannot assure that its procedures and policies would fully prevent or detect illegal or improper activities in our business operations. If illegal or improper activities transpire and the Company fails to identify them in a timely manner, or at all, it will be in breach of the legal and regulatory requirements in Hong Kong and may be subject to regulatory sanction resulting in financial loss and reputational harm, which would adversely affect our reputation and results of operations.

The Company faces fierce competition in the financial and securities services industry in Hong Kong and may lose our competitive edge to its competitors.

There is a significant number of existing market participants in the financial and securities services industry in Hong Kong providing services similar to ours. The Company’s larger competitors may have advantages over the Company such as having better brand recognition and reputation in the market, wider range of value adding services, stronger human and financial resources, longer operating histories, and operational presence in more geographic locations. The Company also faces competition from local medium and small-sized financial services providers which offer similar range of services. New participants may enter into the market insofar as they have engaged appropriate qualified professionals and obtained the requisite regulatory licenses and permits. Given the keen competition, the Company cannot assure that it will be able to maintain its competitive edge in response to the fast-changing business environment. In addition, competition creates an unfavorable pricing environment in the market in which the Company operates. Intensified competition may cause us to reduce its service fees or commission rates in order to compete with other market players, which could place significant pressure on our ability to maintain gross margins and is particularly acute during market slowdowns, and will in turn materially and adversely affect its market share, financial condition and results of operations.

The Company faces significant competition in the online brokerage industries, and if it is unable to compete effectively, it may lose our market share and its results of operations and financial condition may be adversely affected.

The market for online brokerage services is relatively new, rapidly evolving and intensely competitive. The Company expects competition to continue and intensify in the future. The Company faces competition from traditional retail brokerage firms and financial service providers in Hong Kong and worldwide, many of which may be significantly larger than it is with access to exponentially greater resources. Major international brokerage companies that have large retail online brokerage businesses as well as online brokerage units of commercial banks may also take advantage of their established resources and satisfy applicable regulatory requirements through acquisitions and organic development. The Company expects competition to increase in the future as current competitors diversify and improve their offerings and as new participants enter the market. In order to satisfy the demands of customers for hands-on electronic trading facilities, universal access to markets, smart routing, better trading tools, lower commissions and financing rates, it has embarked on building such facilities and service enhancements. It is building custom-made software and applications to enhance various aspects of our business, including customer services, trading, wealth management, and portfolio construction and monitoring.

Plutus Group cannot assure you that its efforts to enhance its service offerings will be successful or that it will be able to compete effectively or efficiently with current or future competitors. The Company’s competitors may be acquired by, receive investment from, or enter into strategic relationships with, established and well-financed companies or investors, which would help enhance their competitiveness. Furthermore, the current competitors and new entrants in the online brokerage and wealth management industries may also seek to develop new service offerings, technologies or capabilities that could render some of the services that the Company offers obsolete or less competitive, and some of them may adopt more aggressive pricing policies or devote greater resources to marketing and promotional campaigns than it does. The occurrence of any of these circumstances may hinder the Company’s growth and reduce our market share, and thus its business, results of operations, financial condition and prospects would be materially and adversely affected.

We have a substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues.

We derive a significant portion of our revenues from a few major customers. For the six months ended June 30, 2023, one customer accounted for 26% of our total revenues. For the year ended December 31, 2022, two customers accounted for 16% and 12% of our total revenues. For the year ended December 31, 2021, three customers accounted for 29%, 25% and 22% of our total revenues. As of June 30, 2023, one customer accounted for 13% of the total balance of loans to customers and receivables from customer. As of December 31, 2022, one customer accounted for 14% of the total balance of loans to customers and receivables from customers. As of December 31, 2021, two customers accounted for 21% and 12% of the total balance of loans to customers and receivables from customers.

There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. We cannot guarantee that these customers will continue to retain us to provide them brokerage services, asset management services or margin financing services. Their demands for our financial services may be affected due to factors such as changes in investment preference, market outlook and general economy, which are beyond our control. Any decline in demand or termination of the services offered by us by our top customers may materially negatively affect our revenues, results of operations and financial condition. In addition, there are risks inherent in a large portion of our receivables being concentrated amongst a small number of customers. Should one or more customers owing a large portion of our receivables experience financial difficulties and be unable to re-pay their loans timely, not only will our revenues and results of operations be adversely affected, our net assets and ability to continue operating would be severely jeopardized.

If the Company is unable to retain existing customers or attract new customers to increase their trading volume, or if it fails to offer services to address the needs of its customers as they evolve, the Company’s business and results of operations may be materially and adversely affected.

The Company derives a significant portion of its revenues from the online brokerage services provided by Plutus Securities to the Company’s customers. To maintain the high growth momentum of the platforms, the Company depends on retaining current customers and attracting more new customers. If there is insufficient demand for the Company’s online brokerage and margin financing services, the Company might not be able to maintain and increase its trading volume and revenues as it expects, and its business and results of operations may be adversely affected.

The Company’s success depends largely on its ability to retain existing customers. The Company’s customers may not continue to place trading orders or increase the level of their trading activities through the Company’s platforms if it cannot match the prices offered by other market players or if the Company fail to deliver satisfactory services. Failure to deliver services in a timely manner at competitive prices with satisfactory experience will cause our customers to lose confidence in us and use our platforms less frequently or even stop using our platforms altogether, which in turn will materially and adversely affect its business. Even if the Company is able to provide high-quality and satisfactory services through its platforms in a timely manner and at favorable price terms, it cannot assure you that it will be able to retain existing customers due to reasons out of its control, such as its customers’ personal financial reasons or the deterioration of the capital markets condition.

If the Company is unable to maintain or increase its customer retention rates or generate new customers in a cost-effective manner, its business, financial condition and results of operations would likely be adversely affected. Historically, the Company incurred HK$4,500,000, nil and nil in advertising and marketing expenses, representing 10.5%, nil and nil of its total revenues for the years ended December 31, 2021 and 2022 and six months ended June 30, 2023, respectively. Due to COVID-19 related travel restrictions in 2022, the Company did not expend funds on marketing during that year. As of June 30, 2023, the Company had pre-paid certain marketing expenses in the amount of HK$1,400,000. The related marketing activities, however, did not commence until the second half of 2023. Accordingly, marketing expenses for the six months ended June 30, 2023 were nil, and the HK$1,400,000 advanced is reflected as a pre-payment on the Company’s balance sheet as of June 30, 2023. Although the Company has spent significant financial resources on marketing expenses and plans to continue to do so, these efforts may not be cost-effective to attract new customers. The Company cannot assure you that it will be able to maintain or grow its customer base in a cost-effective way.

Plutus Group must stay abreast of the needs and preferences of its customers to serve their evolving trading needs as their investment demands change. If it fails to retain its existing customers by offering services that cater to their evolving investment and trading needs, the Company may not be able to maintain and continue to grow the trading volume facilitated by its platforms, and its business and results of operations may be adversely affected. In addition, if the Company is unable to maintain, enhance or develop the methods the Company uses to retain customers, the costs of customer retention will significantly increase, and its ability to retain customers may be harmed.

Similar to other brokerage and financial services providers, the Company cannot guarantee the profitability of the investment made by customers through its platforms. The profitability of its customers’ investment is directly affected by elements beyond our control, such as economic and political conditions, broad trends in business and finance, changes in volume of securities transactions, changes in the markets in which such transactions occur and changes in how such transactions are processed. While the Company does not provide securities investment consulting services to our users and customers, it provides a social community and information services to facilitate the provision of financial and market information. Although these materials and commentaries contain prominent disclaimers, its customers may seek to hold us responsible when they use such information to make trading decisions and suffer financial loss on their trades, or if their trades are not as profitable as they have expected. Furthermore, it is possible that some customers could solely rely on certain predictive statements made by other users on the Company’s platforms, ignoring our alert warnings that customers should make their own investment judgment and should not predict future performance based on historical records. As a result, the financial loss of its customers may affect the Company’s performance in terms of transaction volumes and revenues as customers decide to abort trading. In addition, some customers who have suffered substantial losses through the Company’s platforms may blame the Company’s platforms, seek to recover their damages from us or bring lawsuits against the Company.

Because our revenues and profitability depend largely on customers’ trading volume, they are prone to significant fluctuations and are difficult to predict. Declines in trading volumes generally result in lower revenues from transaction execution activities, which may affect our financial condition, results of operations and prospects.

Our revenues and profitability depend in part on the level of trading activity of the securities of our customers, which are often affected by factors beyond our control, including economic and political conditions, broad trends in business and finance and changes in the markets in which such transactions occur. Weaknesses in the markets in which the Company operates, including economic slowdowns, have historically resulted in reduced trading volumes for us. Declines in trading volumes generally result in lower revenues from transaction execution activities. Lower levels of volatility generally have the same directional impact. Declines in market values of securities or other financial instruments can also result in illiquid markets, which can also result in lower revenues and profitability from transaction execution activities. Lower price levels of securities and other financial instruments, as well as compressed bid/ask spreads, which often follow lower pricing, can further result in reduced revenues and profitability. These factors can also increase the potential risk for losses on securities or other financial instruments held in inventory and failures of buyers and sellers to fulfill their obligations and settle their trades, as well as claims and litigation. Any of the foregoing factors could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.

Our business is also subject to general economic and political conditions, in particular the economic and political conditions in Hong Kong and worldwide, such as macroeconomic and monetary policies, legislation and regulations affecting the financial and securities industries, upward and downward trends in the business and financial sectors, inflation, currency fluctuations, availability of short-term and long-term funding sources, cost of funding and the level and volatility of interest rates. For example, volatility and drops in stock market performance and uncertainties in macroeconomic conditions caused by global calamities such as the ongoing COVID-19 pandemic could negatively impact our revenues and profitability. See “Risk Factor – A sustained outbreak of the COVID-19 virus could have a material adverse impact on our business, operating results and financial condition.” As a result of these risks, our income and operating results may be subject to significant fluctuations.

The current level of commission and fee rates may decline in the future. Any material reduction in our commission or fee rates could reduce our profitability.

The Company derives a significant portion of its revenues from commissions and fees paid by our customers for trading securities through its platforms. In the years ended December 31, 2021 and 2022, our brokerage commission income and handling charge income, and underwriting and placing service income amounted to HK$34,944,000 and HK$5,688,000 (US$729,000), representing 81.3% and 29.5% of our total revenues during the same years, respectively. In the six months ended June 30, 2022 and 2023, our brokerage commission income and handling charge income, and underwriting and placing service income amounted to HK$2,239,000 and HK$3,888,000, representing 25.2% and 44.6% of our total revenues during the same periods, respectively.

The Company may experience pressure on our commission or fee rates as a result of competition the Company faces in the online brokerage service industry. Some of the Company’s competitors offer a broader range of services to a larger customer base and enjoy higher trading volumes than the Company does. Consequently, the Company’s competitors may be able and willing to offer trading services at lower commission or fee rates than the Company currently offers or may be able to offer. For example, some brokers in Hong Kong offer zero commission fees or similar policies to attract retail securities investors. As a result of this pricing competition, the Company could lose both market share and revenues. The Company believes that any downward pressure on commission or fee rates would likely continue and intensify as it continues to develop our business and gain recognition in our markets. A decline in its commission or fee rates could lower its revenues, which would adversely affect the Company’s profitability. In addition, the Company’s competitors may offer other financial incentives such as rebates or discounts in order to induce trading in their systems rather than in ours. If its commission or fee rate decreases significantly, the Company’s operating and financial results may be materially and adversely affected.

If the Company does not obtain substantial additional financing, including the financing sought in this offering, its ability to execute on its business plan as outlined in this prospectus will be impaired.

The Company’s plans for business expansion and development are dependent upon raising significant additional capital, including the capital sought in this offering. The Company’s plans call for significant new investments in the development of tailor-made software and applications, additional funding for customer margin and credit-line trading, expansion of our customer manager and wealth-management teams, and other items. Management estimates that our capital needs for expansion will be approximately HK$22,000,000. Although the Company expects the proceeds of this offering and its net earnings to substantially fund our planned growth and development, the Company’s management will be required to properly and carefully administer and allocate these funds. Should the Company’s capital needs be higher than estimated, or should additional capital be required after the close of this offering, it will be required to seek additional investments, loans or debt financing to fully pursue our business plans. Such additional investment may not be available to us on terms which are favorable or acceptable. Should the Company be unable to meet our full capital needs, its ability to fully implement our business plan will be impaired.

The Company’s business growth and results of operations may be affected by changes in global and regional macroeconomic conditions.

The strong growth of China’s offshore investment and wealth management markets in recent years has been mainly driven by the rapid expansion in personal investable assets attributable to the increased number of high net-worth individuals and affluent groups and their increasing demands for geographically diverse investment portfolios. However, slowdowns in the Chinese economy will affect the income growth of such individuals, who are the main investors in the investment and wealth management markets outside China, and add uncertainties to these markets.

In addition, uncertainties about China, U.S. and global economic conditions and regulatory changes pose a risk as retail investors and businesses may postpone spending in response to credit constraint, rising unemployment rates, financial market volatility, government austerity programs, negative financial news, declines in income or asset values and/or other factors. These worldwide and regional economic conditions could affect and reduce investment behavior and appetites of retail investors and have a material adverse effect on the demand for our products and services. Demand also could differ materially from our expectations as a result of currency fluctuations. Other factors that could influence worldwide or regional demand include changes in fuel and other energy costs, conditions in the real estate and mortgage markets, unemployment, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors. Furthermore, eruptions of regional tensions, such as the ongoing military conflict involving Ukraine and Russia, and the related sanctions against Russia have resulted in major economic shocks worldwide and substantial volatility across global financial markets. These and other economic factors could materially and adversely affect demand for our products and services. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.

A sustained outbreak of the COVID-19 virus could have a material adverse impact on our business, operating results and financial condition.

There has been a sustained outbreak of the COVID-19 virus globally. COVID-19 had a severe and negative impact on the global economy in 2021 and 2022. Since 2020, governments around the globe have taken measures to contain the spread of the COVID-19 virus, including quarantining individuals infected with or suspected of having COVID-19, prohibiting residents from free travel, encouraging employees of enterprises to work remotely from home and cancelling public activities, among others. The COVID-19 has also resulted in temporary closure of many corporate offices around the world.

In addition, as the outbreak continues to threaten global economies, it may continue to cause significant market volatility and declines in general economic activities. Even before the outbreak of COVID-19, the global macroeconomic environment was facing numerous challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies which had been adopted by the central banks and financial authorities of some of the world’s leading economies even before 2020. The recent outbreak of war in Ukraine has already affected global economic markets, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union, and other countries against Russia. Russia’s military incursion and the resulting sanctions could adversely affect global energy and financial markets and thus could affect the Company’s customer’s business and its business, even though the Company does not have any direct exposure to Russia or the adjoining geographic regions. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, but they could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this section. The Company cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on the business outlook of the Company’s business.

The Company has taken a series of measures in response to the outbreak to protect its employees, including, among others, temporary closure of some offices, remote working arrangements for our employees and travel restrictions or suspension. The Company has also suspended face-to-face customer meetings and account opening, and instead implemented remote KYC procedures and video conference meetings which have partially compensated for the challenges caused by COVID-19 related restrictions. In general, while these measures reduced the efficiency of the Company’s operations, it was not significantly impacted in 2022. The extent to which COVID-19 impacts our results of operations in 2023 will depend on the future developments of the pandemic, including new information concerning the efficacy of vaccines and the global severity of and actions taken to contain the pandemic, which are highly uncertain and unpredictable. In addition, our results of operations could be adversely affected to the extent that the pandemic harms the global economies in general.

The Company may not be able to develop its margin financing business as expected and may be exposed to credit risks related to these businesses, primarily arising from loans and advances, and receivables. In addition, the Company needs adequate funding at reasonable costs to successfully operate its margin financing business, and access to adequate funding at reasonable costs cannot be assured.

The margin financing business of the Company may not develop as expected if customers fail to perform contractual obligations or the value of collateral held to secure the obligations is inadequate. As of December 31, 2021 and 2022 and June 30, 2023, the Company’s loans to customers were HK$71,894,000, HK$56,525,000 and HK$40,815,000, respectively. As the Company’s margin financing business expands, it may be subject to greater credit risks.

The Company has adopted comprehensive internal policies and procedures designed to manage such risks. For example, once the margin value falls below the outstanding amount of the relevant loan extended as a result of a market downturn or adverse movement in the prices of the pledged securities, it will make a margin call requesting the customer to deposit additional funds, sell securities or pledge additional securities to top up their margin value. If the customer’s margin value still falls below the required standard, we will initiate our liquidation protection mechanism on a real-time basis to bring the customer’s account into margin compliance. Although the Company has not incurred losses from or experienced disputes arising out of margin financing during the years ended December 31, 2021 and 2022, it cannot assure you that it will not be exposed to any credit risks associated with its margin financing business, nor can it ensure that it will not experience disputes with its customers after the Company makes margin calls in the future. In particular, the Company may not always be able to fully recover the margin value through margin calls and its exposure to credit loss may be exacerbated during periods of high market volatility. In certain periods, the securities pledged by the Company’s customers may be concentrated on a limited number of securities which may result in a concentration of the Company’s credit exposures to such securities. In the event the Company’s need to liquidate a large amount of certain pledged securities, it may put a further downward pressure on the price of such securities, and it may not be able to fully recover the margin value.

In addition, with regard to receivables there can be no assurance that all counterparties of the Company will meet their payment obligations on time, in full or at all. As of December 31, 2021 and 2022 and June 30, 2023, the balance of our receivables amounted to HK$3,420,000, HK$4,210,000 and HK$4,606,000, respectively. If the Company fails to adequately manage our credit risks, they could materially and adversely affect the Company’s business, results of operations and financial condition. See “Our risk management policies and procedures may not be fully effective in identifying or mitigating risk exposure in all market environments or against all types of risks.”

Moreover, the growth and success of our margin financing business depend on the availability of adequate funding to meet our customer demand for margin loans through the Company’s platforms. The Company provided margin financing service for trading of securities listed on the Hong Kong Stock Exchange. As of June 30, 2023, outstanding margin financing balance was HK$40,815,000 (US$5,208,000). The Company derives the funding for its margin financing business via its internal resources, and there are no financing costs or other related costs for its margin lending activities. To the extent there is insufficient funding from institutional funding partners who are willing to accept the credit risk related to the collateral from the Company’s customers, the funds available for the Company’s margin financing business might be limited and its ability to provide margin financing services to its customers to address their demand for loans would be adversely impacted. In addition, as the Company strives to offer its customers competitively priced services and the online brokerage market is intensely competitive, the Company may attempt to further reduce our interest expenses from its funding partners. If the Company cannot continue to maintain its relationship with these funding partners and obtain adequate funding at reasonable costs, it may not be able to continue to offer or grow our margin financing business. To the extent that the Company’s funding partners find the risk-adjusted returns with us less attractive, it may not be able to obtain the requisite level of funding at reasonable costs, or at all. If it is unable to provide our customers with margin loans or fund the loans on a timely basis due to insufficient funding or less favorable pricing compared to those of our competitors, it would harm the Company’s business, financial condition and results of operations.

Fluctuations in market interest rates may negatively affect the Company’s financial condition and results of operations.

The Company derives a part of its revenues from charging interests on margin balances in connection with our margin financing business. In years ended December 31, 2021 and 2022, the Company’s revenues from interest income derived from its margin financing businesses amounted to HK$4,818,000 and HK$6,990,000, representing 11.2% and 36.3% of our total revenues during the same years, respectively.

In six months ended June 30, 2022 and 2023, the Company’s revenues from interest income derived from its margin financing businesses amounted to HK$3,478,000 and HK$3,338,000, representing 39.1% and 38.3% of our total revenues respectively.

The trend of the level of interest rates is an important factor affecting our earnings. A decline in interest rates may have a negative impact on the Company’s interest income and thus ultimately adversely impact its total revenues. While the Company generally derives higher interest income when there is an increase in market interest rates, a rise in interest rates may also cause its interest expenses to increase. If it is unable to effectively manage its interest rate risk, changes in interest rates could have a material adverse effect on the Company’s profitability.

Although the Company’s management believes that it has implemented effective management strategies to reduce the potential effects of changes in interest rates on our results of operations, any substantial, unexpected or prolonged change in market interest rates could have a material adverse effect on the Company’s financial condition and results of operations. Also, the Company’s interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on its balance sheet. For further discussion of how changes in interest rates could impact us, see the Section “Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Risk” of this prospectus.

A significant decrease in the Company’s liquidity could negatively affect its business and financial management as well as reduce customer confidence in the Company.

Maintaining adequate liquidity is crucial to the Company’s business operations. The Company meets its liquidity needs primarily through cash generated by customer trading activities and operating earnings, as well as cash provided by external financing. Fluctuations in customer cash or deposit balances, as well as changes in regulatory treatment of customer deposits or market conditions, may affect our ability to meet our liquidity needs. A reduction in the Company’s liquidity position could reduce its users’ and customers’ confidence, which could result in the loss of customer trading accounts, or could cause us to fail to satisfy our liquidity requirements. In addition, if the Company fails to meet regulatory capital guidelines, regulators could limit its operations.

Factors which may adversely affect the Company’s liquidity position include having temporary liquidity demands due to timing differences between brokerage transaction settlements and the availability of segregated cash balances, unanticipated outflows of company cash, fluctuations in cash held in banking or brokerage customer trading accounts, a dramatic increase in customers’ margin-financing activities, increased capital requirements, changes in regulatory guidance or interpretations, other regulatory changes, or a loss of market or customer confidence.

If cash generated by customer trading activities and operating earnings is not sufficient for the Company’s liquidity needs, the Company may be forced to seek external financing. During periods of disruptions in the credit and capital markets, potential sources of external financing could be reduced, and borrowing costs could increase. Financing may not be available on acceptable terms, or at all, due to market conditions or disruptions in the credit markets. If the Company experiences any significant decrease in its liquidity, its business, financial condition and results of operations could be adversely impacted.

A significant change in customers’ cash allocations could negatively impact the Company’s net interest revenues and financial results.

The Company derives interest income from depositing un-invested cash balances in its customers’ brokerage trading accounts opened with us at our bank partners. In the years ended December 31, 2021 and 2022, the Company generated HK$1,000 and HK$17,000 (US$2,000) in interest income from bank deposits, respectively, In the six months ended June 30, 2022 and 2023, the Company generated HK$1,000 and HK$67,000) in interest income from bank deposits, respectively a significant portion of which was derived from uninvested cash balances in the Company’s customers’ accounts.

As a result, a significant reduction in the Company’s customers’ allocation to cash, a change in the allocation of that cash (for example as a result of using cash to purchase mutual funds through our platforms), or a transfer of cash out of their accounts opened through the Company’s platforms could reduce our interest income and negatively impact our financial results.

The wealth management products that the Company offers involve various risks and failure to identify or fully appreciate such risks may negatively affect the Company’s reputation, customer relationships, results of operations and financial conditions.

Plutus Group offers its customers access to money market, fixed income, equity, balanced, private funds as well as bonds, catering to different investment targets and risk preferences of its customers. These products often have complex structures and involve various risks, including default risks, interest risks, liquidity risks, market risks, counterparty risks, fraud risks and other risks. In addition, the Company is subject to regulations in relation to wealth management products offered in different jurisdictions, and there is no assurance that its operation will be deemed as in full compliance with such regulations at all times.

The Company’s success in offering our wealth management products and services depends, in part, on its ability to successfully identify the risks associated with such products and services, and failure to identify or fully appreciate such risks may negatively affect our reputation, customer relationships, results of operations and financial conditions. Although the Company does not guarantee the principal or the return of the wealth management products available through its platforms and does not bear any liabilities for any loss to capital invested in the products, it must be cautious of the selection of the financial products it offers and must accurately describe the risks associated with those products for its customers. Although the Company enforces and implements strict risk management policies and procedures, such risk management policies and procedures may not be fully effective in mitigating the risk exposure for all of its customers in all market environments or covering all types of risks. If the Company fails to identify and fully appreciate the risks associated with the financial products it offers, or fails to disclose such risks to its customers, or if its customers suffer financial losses or other damages resulting from the financial products the Company offers, its reputation, customer relationships, results of operations and financial conditions will be materially and adversely affected.

If the Company fails to respond in a timely and cost-effective manner to the needs of its users and customers or if its new service offerings do not achieve sufficient market acceptance, the Company’s business and results of operations may be materially and adversely affected.

The Company’s future success will depend partially on its ability to develop and introduce new service offerings to respond to the evolving needs of our users and customers in a timely and cost-effective manner. The Company provides services in markets that are characterized by rapid technological change, evolving industry standards, frequent new service introductions, and increasing demand for higher levels of customer experience. The Company has expanded our service offerings to include asset management services since 2019 and wealth management services to high net worth individuals since late 2021, and it may continue to expand its new service offerings in the future. In addition, the Company also provides certain services to corporate customers. However, the Company has limited experience in new service offerings, and expansion into new service offerings may involve new risks and challenges that it may not have experienced before. The Company cannot assure you that it will be able to overcome such new risks and challenges and make its new service offerings successful. Initial timetables for the introduction and development of new service offerings may not be achieved and profitability targets may not prove feasible. External factors, such as compliance with regulations, competition and shifting market preferences, may also impact the successful implementation of the Company’s new service offerings. The Company’s personnel and technology systems may fail to adapt to the changes in such new areas or it may fail to effectively integrate new services into its existing operation. The Company may lack experience in managing its new service offerings. In addition, the Company may be unable to proceed our operation as planned or compete effectively due to different competitive landscapes in these new areas. Even if the Company expands its businesses into new jurisdictions or areas, the expansion may not yield intended profitable results. Furthermore, any new service offerings could have a significant impact on the effectiveness of its internal control system. Failure to successfully manage these risks in the development and implementation of new service offerings could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company’s ability to anticipate and identify the evolving needs of its users and customers and to develop and introduce new service offerings to address such needs will be a significant factor in maintaining or improving our competitive position and prospects for growth. It may also have to incur substantial unanticipated costs to maintain and further strengthen such ability. The Company’s success will also depend on its ability to develop and introduce new services and enhance existing services for its users and customers in a timely manner. Even if the Company introduces new and enhanced services to the market, they may not achieve market acceptance.

The Company believes that it must continue to make investments to develop new or enhanced service offerings to remain competitive. It needs to continue to develop and introduce new services that incorporate the latest technological advancements in response to evolving user and customer needs. The Company’s business and results of operations could be adversely affected if it does not anticipate or respond adequately to technological developments or the changing needs of its users and customers. The Company cannot assure you that any such investments in research and development will lead to any corresponding increase in revenue.

The Company’s risk management policies and procedures may not be fully effective in identifying or mitigating risk exposure in all market environments or against all types of risks.

The Company has devoted significant resources to developing its risk management policies and procedures and will continue to do so. Nonetheless, its policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating the Company’s risk exposure in all market environments or against all types of risks. Many of the Company’s risk management policies are based upon observed historical market behavior or statistics based on historical models. During periods of market volatility or due to unforeseen events, the historically derived correlations upon which these methods are based may not be valid. As a result, these methods may not predict future exposures accurately, which could be significantly greater than what our models indicate. This could cause us to incur losses or cause its risk management strategies to be ineffective. Other risk management methods depend upon the evaluation of information regarding markets, business partners, customers, catastrophe occurrence or other matters that are publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated.

In addition, although the Company performs due diligence on potential customers, it cannot assure you that it will be able to identify all the possible issues based on the information available to the Company. If a user or customer does not meet the relevant qualification requirements under applicable laws but is still able to use the Company’s services, the Company may be subject to regulatory actions and penalties and held liable for damages. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to properly record and verify a large number of transactions and events, and these policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks.

Unexpected network interruptions, security breaches or computer virus attacks and failures in the Company’s information technology systems could have a material adverse effect on its business, financial condition and results of operations.

The Company’s information technology systems support substantially all phases of its operations and are an essential part of its technology infrastructure. If the Company’s systems fail to perform, the Company could experience disruptions in operations, slower response time or decreased customer satisfaction. The Company must process, record and monitor a large number of transactions and its operations are highly dependent on the integrity of its technology systems and the Company’s ability to make timely enhancements and additions to its systems. System interruptions, errors or downtime can result from a variety of causes, including unexpected interruptions to the internet infrastructure, technological failures, changes to the Company’s systems, erroneous or corrupted data, changes in customer usage patterns, linkages with third-party systems and power failures. The Company’s systems are also vulnerable to disruptions from human error, execution errors, errors in models such as those used for risk management and compliance, employee misconduct, unauthorized trading, external fraud, computer viruses, distributed denial of service attacks, computer viruses or cyberattacks, terrorist attacks, natural disaster, power outage, capacity constraints, software flaws, events impacting our key business partners and vendors, and other similar events.

The Company’s internet-based business depends on the performance and reliability of the internet infrastructure. The Company cannot assure you that the internet infrastructure it depends on will remain sufficiently reliable for its needs. Any failure to maintain the performance, reliability, security or availability of our network infrastructure may cause significant damage to the Company’s ability to attract and retain users and customers. Major risks involving our network infrastructure include:

In addition, any network interruptions or inadequacy on the part of the Company’s third-party partners may result in disruptions to the services we provide to its users and customers. For example, there have been occasions where some of the Company’s customers were not able to timely execute trades because of poor or delayed performances of software, infrastructure or systems of its third-party partners, which may be exacerbated by sudden increase in trading or other user activity volume. The Company also experienced system shutdown in the past. Such disruptions and other interruptions in the availability of the Company’s services could reduce user and customer satisfaction and result in a reduction in the activity level of the Company’s users and customers as well as the number of customers making trading transactions through our platforms. See “Risk Factor – Failure or poor performance of third-party software, infrastructure or systems on which the Company relies could adversely affect its business.” Furthermore, increases in the volume of traffic on the Company’s online and mobile platforms could strain the capacity of its existing computer systems and bandwidth, which could lead to slower response times or system failures. This could cause a disruption or suspension in its service delivery, which could hurt the Company’s brand and reputation. The Company may need to incur additional costs to upgrade our technology infrastructure and computer systems in order to accommodate increased demand if it anticipates that its systems cannot handle higher volumes of traffic and transaction in the future. In addition, it could take an extended period of time to restore full functionality to the Company’s technology or other operating systems in the event of an unforeseen occurrence, which could affect the Company’s ability to process and settle customer transactions. Despite the Company’s efforts to identify areas of risk, oversee operational areas involving risks, and implement policies and procedures designed to manage these risks, there can be no assurance that it will not suffer unexpected losses, reputational damage or regulatory actions due to technology or other operational failures or errors, including those of its vendors or other third parties.

If the Company fails to protect its platforms or the information of its users and customers, whether due to cyber-attacks, computer viruses, physical or electronic break-in, breaches by third parties or other reasons, it may be subject to liabilities imposed by relevant laws and regulations, and the Company’s reputation and business may be materially and adversely affected.

The Company’s computer system, the networks it uses, the networks and online trading platforms of the exchanges and other third parties with whom it interacts, are potentially vulnerable to physical or electronic computer break-ins, viruses and similar disruptive problems or security breaches. A party that is able to circumvent our security measures could misappropriate proprietary information or customer information, jeopardize the confidential nature of the information the Company transmits over the Internet and mobile network or cause interruptions in our operations. The Company of its service providers may be required to invest significant resources to protect against the threat of security breaches or to alleviate problems caused by any breaches.

In addition, the Company collects, stores and processes certain personal and other sensitive data from its users and customers, which makes the Company a potentially vulnerable target to cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions. While the Company has taken steps to protect the confidential information that it has access to, its security measures could be breached. Because the techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, the Company may not be able to anticipate these techniques or implement adequate preventative measures. Any accidental or intentional security breaches or other unauthorized access to our system could cause confidential user information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. The Company has not experienced any material cyber-security breaches or been subject to any material breaches of any of our cyber-security measures in the past.

In addition, leakages of confidential information may be caused by third-party service providers or business partners. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, the Company’s relationships with users and customers could be severely damaged, it may become susceptible to future claims if its users and customers suffer damages and could incur significant liability and its business and operations could be adversely affected. Furthermore, the Company’s corporate customers may utilize the Company’s technology to serve their own employees and customers. Any failure or perceived failure by the Company to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause its customers to lose trust in the Company and could expose it to legal claims and regulatory actions.

Failure or poor performance of third-party software, infrastructure or systems on which the Company relies could adversely affect its business.

The Company relies on third parties to provide and maintain certain infrastructure that is critical to its business. For example, a strategic partner provides services to the Company in connection with various aspects of the Company’s operations and systems. If such services become limited, restricted, curtailed or less effective or more expensive in any way or become unavailable to us for any reason, the Company’s business may be materially and adversely affected. The infrastructure of the Company’s third-party service providers may malfunction or fail due to events out of its control, which could disrupt its operations and have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. Any failure to maintain and renew the relationships with these third parties on commercially favorable terms, or to enter into similar relationships in the future, could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.

The Company also relies on certain third-party software, third-party computer systems and service providers, including clearing systems, exchange systems, alternate trading systems, order-routing systems, internet service providers, communications facilities and other facilities. Any interruption in these third-party services or software, deterioration in their performance, or other improper operation could interfere with the Company’s trading activities, cause losses due to erroneous or delayed responses, or otherwise be disruptive to its business. In addition, if the Company’s arrangements with any third party are terminated, the Company may not be able to find an alternative source of software or systems support on a timely basis or on commercially reasonable terms. This could also have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.

The Company relies on a number of external service providers for certain key market information and data, technology, processing and supporting functions.

The Company relies on a number of external service providers for certain key market information and data, technology, processing and supporting functions. Furthermore, external content providers provide the Company with financial information, market news, charts, futures and stock quotes and other fundamental data that the Company offers to its customers and users. These service providers face technical, operational and security risks of their own. Any significant failures by them, including improper use or disclosure of our confidential customer, employee or company information, could interrupt the Company’s business, cause the Company to incur losses and harm its reputation. Particularly, the Company have contracted with affiliates of Nasdaq, the Hong Kong Exchange and Clearing Limited, and a few other institutions to allow its customers to access real-time market information data, which are essential for its customers to make their investment decisions and take actions. If the data provided by such information providers were inaccurate or incomplete, or if such information providers fail to update or deliver the data in a timely manner as provided in the agreements, the Company’s customers may suffer losses and our business operations and reputation can be materially and adversely affected.

The Company cannot assure you that the external service providers will be able to continue to provide these services to meet its current needs in an efficient and cost-effective manner, or that they will be able to adequately expand their services to meet our needs in the future. The external service providers’ ability to consistently provide these services is subject to risks from unfavorable political, economic, legal or other developments, such as social or political instability, changes in governmental policies or changes in the applicable laws and regulations.

An interruption in or the cessation of service by any external service provider as a result of system failures, capacity constraints, financial constraints or problems, unanticipated trading market closures or for any other reason and our inability to make alternative arrangements in a smooth and timely manner, if at all, could have a material adverse effect on the Company’s business, results of operations and financial condition.

Further, disputes might arise out of or in connection with the agreements regarding the Company’s or the service providers’ performance of the obligations thereunder. To the extent that any service provider disagrees with the Company on the quality of the products or services, terms and conditions of the payment or other provisions of such agreements, the Company may face claims, disputes, litigations or other proceedings initiated by such service provider against us. The Company may also incur substantial expenses and require significant attention of management in defending against these claims, regardless of their merit. It could also face damages to its reputation as a result of such claims, and the Company’s business, financial condition, results of operations and prospects could be materially and adversely affected.

If major mobile application distribution channels change their standard terms and conditions in a manner that is detrimental to the Company, or terminate their existing relationship with the Company, the Company’s business, financial condition and results of operations may be materially and adversely affected.

The Company currently relies on Apple’s app store, Google’s Play Store and major PRC-based Android app stores to distribute our mobile application, “Plutus Trader” to users. As such, the promotion, distribution and operation of our application are subject to such distribution platforms’ standard terms and policies for application developers, which are subject to the interpretation of, and frequent changes by, these distribution channels. If these third-party distribution platforms change their terms and conditions in a manner that is detrimental to the Company, or refuse to distribute the Company’s application, or if any other major distribution channel with which the Company would like to seek collaboration refuses to collaborate with it in the future, the Company’s business, financial condition and results of operations may be materially and adversely affected.

The Company is dependent upon key executives and highly qualified managers and the Company cannot assure their recruitment and continued retention.

The success of the Company depends, in part, upon the continued services of key members of its management. The Company’s executives’ and managers’ knowledge of the markets, the Company and its business represents a key strength of the Company’s business, which cannot be easily replicated. The success of the Company’s business strategy and its future growth also depend on the Company’s ability to attract, train, retain and motivate skilled managerial, financial, sales, administration, development and operating personnel.

There can be no assurance that the Company’s existing personnel will be adequate or qualified to carry out its strategy, or that the Company will be able to hire or retain experienced, qualified employees to carry out its strategy. The loss of one or more of their key management or operating personnel of the Company, or the failure to attract and retain additional key personnel, could have a material adverse effect on the Company’s business, financial condition and results of operations.

Risks Related to the Company’s Corporate Structure

The Company’s founder Zhisheng Zhao, and its CEO, Ting Kin Cheung, currently own an aggregate of 86.0% of the total voting power of the Company’s outstanding Ordinary Shares, and will own 73.2% immediately after the completion of this offering, assuming the underwriter does not exercise its over-allotment option.

Currently, the Company’s founder and its CEO together own an aggregate of 86.0% of the total voting power of the Company’s outstanding Ordinary Shares and will own an aggregate of 73.2% of the total voting power of its outstanding Ordinary Shares immediately after the completion of this offering, assuming the underwriter does not exercise it over-allotment option. The Company’s founder and majority shareholder and its CEO will have significant influence on determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions. The Company’s majority shareholders will also have the power to prevent or cause a change in control. Without the consent of our majority shareholders, the Company may be prevented from entering into transactions that could be beneficial to it or its minority shareholders. The interests of the Company’s majority beneficial owners may differ from the interests of its other shareholders. The concentration in the ownership of the Ordinary Shares may cause a material decline in the value of the Ordinary Shares. For more information regarding the Company’s beneficial owner and his affiliated entities, see “Principal Shareholders.”

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because the Company is incorporated under Cayman Islands law.

Plutus Group is an exempted company incorporated under the laws of the Cayman Islands. Its corporate affairs are governed by our memorandum and articles of association, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of the Company’s directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of the Company’s shareholders and the fiduciary duties of its directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.

Save for the list of the names of our current directors (and, where applicable, the current alternate directors) being made available for inspection by the Registrar of Companies in the Cayman Islands to any person upon payment of a fee by such person, shareholders of Cayman Islands exempted companies similar to Plutus Group have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under the Company’s articles of association to determine whether or not, and under what conditions, the Company’s corporate records may be inspected by its shareholders but are not obliged to make them available to the Company’s shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. To the extent the Company chooses to follow home country practice with respect to corporate governance matters, the Company’s shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

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 the 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 and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital—Differences in Corporate Law.”

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

Cayman Islands law provides shareholders with only limited rights to convene a general meeting and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our articles of association allow our shareholders holding shares representing in aggregate not less than 10 percent of our voting share capital in issue, to convene a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance notice of at least 7 days is required for the convening of our general meetings. A quorum required for a meeting of shareholders consists of at least one shareholder present or by proxy, representing a majority of the paid up voting share capital in the Company.

Certain judgments obtained against us by our shareholders may not be enforceable and foreign legal systems present unique risks to investors.

Plutus Group is a Cayman Islands exempted company and substantially all of its assets are located outside of the United States. Substantially all of the Company’s current operations are conducted in the Hong Kong. In addition, its current officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside 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 Cayman Islands, Hong Kong or other relevant jurisdictions may render you unable to enforce a judgment against our assets or the assets of our directors and officers. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. In addition, CFN Lawyers, the Company’s counsel as to Hong Kong law, has advised us that there is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (1) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty), and (2) final and conclusive on the merits of the claim, but not otherwise. 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. Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong, in original actions or in actions for enforcement, of judgments of U.S. courts of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any state or territory within the United States. For more information regarding the relevant laws of the Cayman Islands and Hong Kong, see “Enforceability of Civil Liabilities.”

Risks Related to Doing Business In Hong Kong

Although the audit report included in this prospectus was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate the Company’s auditor completely, investors would be deprived of the benefits of such inspection and the Ordinary Shares may be delisted or prohibited from trading.

The audit report included in this prospectus was issued by WWC, P.C. (“WWC”) a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. The Company has no intention of dismissing WWC in the future or of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB. As an auditor of companies that are registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, the Company’ auditor is required under the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. If the Company was to engage a different auditor in the future, it would engage an auditor that is U.S.-based and subject to full PCAOB inspection with all materials related to the audit of our financial statements accessible to the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. In such case, the Company will engage a new qualified and fully inspected auditor, which may result in delaying or restating the Company’s financial statements.

The PCAOB is currently unable to conduct inspections in Hong Kong without the approval of local government authorities. If it is later determined that the PCAOB is unable to inspect or investigate the Company’s auditor completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in Hong Kong that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that the Company’s financial statements and disclosures are adequate and accurate.

As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular mainland China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress which, if passed, would require the SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate the audit work performed by a foreign public accounting firm completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (“EQUITABLE”) Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from U.S. national securities exchanges such as the Nasdaq of issuers included on the SEC’s list for three consecutive years. It is unclear if this proposed legislation will be enacted. Furthermore, there have been recent deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets. On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (the “HFCAA”), which includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The U.S. House of Representatives passed the HFCAA on December 2, 2020, and the HFCAA was signed into law on December 18, 2020. Additionally, in July 2020, the U.S. President’s Working Group on Financial Markets issued recommendations for actions that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies and department with respect to Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors in the United States. In response, on November 23, 2020, the SEC issued guidance highlighting certain risks (and their implications to U.S. investors) associated with investments in China-based issuers and summarizing enhanced disclosures the SEC recommends China-based issuers make regarding such risks. On December 2, 2021, the SEC adopted final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. The Company will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year (as defined in the interim final rules) under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. Under the HFCAA, as recently amended by the Consolidated Appropriations Act, 2023, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for two consecutive years. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the Board is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 16, 2021, the PCAOB issued a 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.

On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “SOP”) with the China Securities Regulatory Commission and the Ministry of Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreement”), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination. If the PCAOB determines in the future that it has been prohibited from conducting complete inspections and investigations of PCAOB-registered public accounting firms in mainland China and Hong Kong, then the companies audited by those registered public accounting firms would be subject to a trading prohibition on U.S. markets pursuant to the HFCA Act.

Should the PCAOB be unable to fully conduct inspection of our auditor’s work papers in Hong Kong, it will make it difficult to evaluate the effectiveness of our auditor’s audit procedures or equity control procedures. Investors may consequently lose confidence in our reported financial information and procedures or quality of the financial statements, which would adversely affect us and out securities.

Risks Related to Legal Uncertainty

The Company is subject to extensive and evolving regulatory requirements in the markets the Company operates in, non-compliance with which may result in penalties, limitations and prohibitions on our future business activities or suspension or revocation of the Company’s licenses and trading rights, and consequently may materially and adversely affect its business, financial condition, operations and prospects.

The Company is subject to extensive regulations and the market in which it operates, Hong Kong, is highly regulated. However, the online brokerage service industry (including, for example, the use of cloud-based operating, computing and record keeping technology as well as biometric identification technology) is at a relatively early stage of development, and applicable laws, regulations and other requirements may be changed and adopted from time to time. The Company may be subject to examinations and inquiries by the relevant regulators on a regular or ad-hoc basis. The Company’s business operations in Hong Kong are subject to applicable Hong Kong laws, regulations, guidelines, circulars, and other regulatory guidance, including, for example, the SFO and its subsidiary legislation. These laws and regulations set out the licensing requirements, regulate the Company’s operational activities and standards, and impose requirements such as maintaining minimum liquidity or capital along with other filing, record keeping and reporting obligations relevant to its business operations. Failure to comply with applicable laws and regulations in markets the Company operates can result in investigations and regulatory actions, which may lead to penalties, including reprimands, fines, limitations or prohibitions on our future business activities or suspension or revocation of our licenses or trading rights. Any outcome of such nature may affect the Company’s ability to conduct business, harm our reputation and, consequently, materially and adversely affect its business, financial condition, results of operations and prospects.

From time to time, our SFC-licensed subsidiaries may be subject to or required to assist in inquiries or investigations by relevant regulatory authorities in Hong Kong, principally the SFC. The SFC conducts on-site reviews and off-site monitoring to ascertain and supervise our business conduct and compliance with relevant regulatory requirements and to assess and monitor, among other things, our financial soundness. The Company is subject to such regulatory examination, reviews and inquiries from time to time. If any misconduct is identified as a result of inquiries, reviews or investigations, the SFC may take disciplinary actions which could lead to revocation or suspension of licenses, public or private reprimand or imposition of pecuniary penalties against us, our responsible officers, licensed representatives, directors or other officers. Any such disciplinary actions taken against us, our responsible officers, licensed representatives, directors or other officers may have a material and adverse impact on our business operations and financial results. In addition, the Company is subject to statutory secrecy obligations under the SFO whereby it may not be permitted to disclose details on any SFC inquiries, reviews or investigations without the consent of the SFC. While the Company does not believe it is conducting securities business in China, it cannot rule out the possibility that the Company will be subject to the supervision of the CSRC or other PRC government authorities in the future.

Plutus Group does not hold any license or permit for providing securities brokerage business in mainland China. Although Plutus Group does not believe it engages in securities brokerage business in Mainland China, there remain uncertainties to the interpretation and implementation of relevant PRC laws and regulations. If some of the Company’s activities in mainland China were deemed by relevant regulators as provision of securities business such as securities brokerage services, investment consulting services, and/or futures business in mainland China, the Company’s business, financial condition, results of operations and prospects may be materially and adversely affected.

Pursuant to the relevant PRC laws and regulations, no entity or individual shall engage in securities business without the approval of the securities regulatory authority of the State Council. Plutus Group does not hold any license or permit in relation to providing securities brokerage business in mainland China. While the Company does not believe the business it is conducting now through our Hong Kong subsidiaries is securities brokerage business in China, the Company cannot assure you that certain of our activities such as redirecting users in China to brokers or other licensed entities outside of China will not be deemed as operating securities brokerage business in China. If some of the Company’s activities were deemed by relevant regulators as provision of securities business such as securities brokerage services, investment consulting services and/or futures business in China, it will be required to obtain relevant licenses or permits from relevant regulatory bodies, including the CSRC, and failure of obtaining such licenses or permits may subject us to regulatory actions and penalties, including fines and temporary suspension or removal of our websites, desktop devices and mobile application in China. In such cases, the Company’s business, financial condition, results of operations and prospects may be materially and adversely affected. In addition, while the Company has internal policies in place regulating relevant activities of its employees and their dealings with the Company’s business partners, if its employees or business partners engage in certain activities that relevant authorities would require permits or licenses for, the Company may be subject to regulatory enquiries or penalties and negative publicity.

The enactment of the Hong Kong National Security Law could impact the Company’s operations.

On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offenses — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, former U.S. President Donald Trump signed the Hong Kong Autonomy Act (“HKAA”) into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on 11 individuals, including HKSAR chief executive Carrie Lam. John Lee is set to be Hong Kong’s next chief executive on July 1, 2022, replacing outgoing Carrie Lam. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” In July 2021, President Joe Biden warned investors about the risks of doing business in Hong Kong, issuing an advisory saying China’s push to exert more control over Hong Kong threatens the rule of law and endangers employees and data. The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions may directly affect the foreign financial institutions as well as any third parties or customers dealing with any foreign financial institution that are targeted. It is difficult to predict the full impact of the Hong Kong National Security Law and HKAA on Hong Kong and companies located in Hong Kong. If the Company’s subsidiaries are determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, the Company’s business operations could be materially and adversely affected.

Because all of the Company’s operations are in Hong Kong, a special administrative region of China, the Company faces a risk that the government of the PRC could intervene in or influence its operations at any time, which could result in a material change in the Company’s operations and/or the value of its Ordinary Shares.

Currently, the Company is not required to obtain permissions or approvals from any PRC authorities to either: (1) operate its business; or (2) issue its Ordinary Shares to foreign investors. The PRC government, however, holds sovereign authority over Hong Kong and could choose in the future to: (1) exercise has significant oversight and discretion over the conduct of our business; and/or (2) intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal goals. In the event that (i) the PRC government expanded the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC and that we Plutus Group is are required to obtain such permissions or approvals, or (ii) we Plutus Group inadvertently concluded that relevant permissions or approvals were not required or that we Plutus Group did not receive or maintain relevant permissions or approvals required, any action taken by the PRC government could significantly limit or completely hinder our operations of Plutus Group in Hong Kong and our its ability to offer or continue to offer our its Ordinary Shares to investors and could cause the value of such securities to significantly decline or be worthless. Should the PRC government choose to exercise additional influence or control over Hong Kong businesses like ours through the promulgation of new laws or regulations applicable to Hong Kong, the Company could be required to obtain more licenses, permits, approvals or certificates, and the Company’s business, financial condition and results of operations could be adversely affected.

Substantially all operations of the Company’s operating subsidiaries are in Hong Kong, a special administrative region of the PRC. However, due to the long arm provisions under the current PRC laws and regulations, the PRC government may exercise significant oversight and discretion over the conduct of the Company’s business and may intervene in or influence our operations at any time, which could result in a material change in the Company’s operations and/or the value of its Ordinary Shares. The PRC government may also intervene or impose restrictions on the Company’s ability to move money out of Hong Kong to distribute earnings and pay dividends or to reinvest in the Company’s business outside of Hong Kong. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may also be quick with little advance notice and the Company’s assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.

Any action by the PRC government to intervene or influence our operations could significantly limit or completely hinder our ability to offer or continue to offer our ordinary to investors and could cause the value of our Ordinary Shares to significantly decline or become worthless. Plutus Group is a holding company, and it conducts its operations in Hong Kong solely through its indirect operating subsidiaries, Plutus Securities and Plutus Asset Management, both incorporated in Hong Kong. The Company’s operations are primarily located in Hong Kong and some of its customers are PRC individuals or companies that have shareholders or directors that are PRC individuals. As of the date of this prospectus, the Company does not expect to be materially affected by recent statements by the PRC government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. However, due to long arm provisions under the current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. The PRC government may choose to exercise significant oversight and discretion, and the policies, regulations, rules, and the enforcement of laws of the PRC government to which the Company is subject may change rapidly and with little advance notice to the Company or its shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and may be inconsistent with the Company’s current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

The Company is aware that recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on the Company’s daily business operation, the ability to accept foreign investments and list on an U.S. or other foreign exchange.

The PRC government may intervene or influence our operations at any time or may exert control over offerings conducted overseas and foreign investment in Hong Kong-based issuers, which may result in a material change in our operations and/or the value of our Ordinary Shares. For example, there is currently no restriction or limitation under the laws of Hong Kong on the conversion of HK dollar into foreign currencies and the transfer of currencies out of Hong Kong and the laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash between the ultimate holding company and the operating subsidiaries in Hong Kong. However, the PRC government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from the other entities within our organization or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to outside of Hong Kong and may affect our ability to receive funds from our operating subsidiaries in Hong Kong. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way the Company conducts its business, could require the Company to change certain aspects of its business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, the Company’s business, financial condition and results of operations could be adversely affected and such measured could materially decrease the value of its Ordinary Shares, potentially rendering it worthless.

There is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash into or out of Hong Kong.

All the Company’s operations are located in Hong Kong, a Special Administrative Region of the People’s Republic of China. In general, pursuant to the Basic Law of the Hong Kong Special Administrative Region (the “Basic Law”), which is a national law of the PRC and a constitutional document for Hong Kong, the national laws of the PRC shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong). Despite the general protections afforded by the Basic law, however, due to ‘long arm’ provisions under current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. The PRC government may choose to exercise significant oversight and discretion, and the policies, regulations, rules, and the enforcement of laws of the PRC government to which the Company is subject may change rapidly and with little advance notice to the Company or its shareholders.

With regard to currency exchange and overseas currency transfers, there is currently no restriction or limitation under the applicable laws of Hong Kong on the conversion of the HK dollar into foreign currencies or the transfer of currencies out of Hong Kong, and the laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash between our holding company and the operating subsidiaries in Hong Kong. However, the PRC government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from other entities within our organization or to reinvest in our business outside of Hong Kong and our ability to move money into Hong Kong to fund our business operation and to satisfy our investment needs in Hong Kong. There is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash into or out of China, including Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business within and outside of Hong Kong and may also affect our ability to transfer and receive funds to and from our operating subsidiaries in Hong Kong.

The operations and services of the Company involve collection, processing, and storage of significant amounts of data concerning our users, customers, business partners and employees and may be subject to complex and evolving laws and regulations regarding privacy and data protection and cybersecurity. If the Company fails to comply with the relevant laws and regulations, its business, results of operations and financial condition may be adversely affected.

The Company is subject to a variety of laws, regulations and other legal and regulatory obligations related to the protection of personal data, privacy and information security in the regions where it does business, and there has been and may continue to be a significant increase in such laws and regulations that restrict or control the use of personal data. In China, the Cybersecurity Law became effective in June 2017 and requires network operators to follow the principles of legitimacy in collecting and using personal information.

In addition, the Information Security Technology—Personal Information Security Specification, or the China Specification, came into force on October 1, 2020. Under the China Specification, after collecting the personal information, the controller of the personal information must immediately conduct the data de-sensitization, implement the technical and administrative measures to store separately the de-sensitized data and the data which may be used to recover the identity of the persons and make sure not to identify the persons in the subsequent process of processing the personal information data. In addition, the data controller must provide the purpose of collecting and using subject personal information, as well as the business functions of such purpose, and the China Specification requires the data controller to distinguish its core function from additional functions to ensure the data controller will only collect personal information as needed.

Similarly, Hong Kong also has data privacy legislation that regulates the collection, use, protection and handling of personal data. Under the relevant legislation, data users are required to comply with various data protection principles in relation to the requirement of lawful and fair collection of personal data, consent of data subjects, retention of personal data, use and disclosure of personal data, security of personal data, personal data policies and practices, and rights to access and correction of personal data. Our operations are primarily located in Hong Kong through our key operating subsidiaries, Plutus Securities and Plutus Asset Management, and some of our customers are PRC corporations and individuals. Plutus Securities and Plutus Asset Management may collect and store certain data (including certain personal information) from our customers for “Know Your Client” purposes, some of whom are PRC individuals. As of date of this prospectus, Plutus Securities and Plutus Asset Management have collected and stored personal information of fewer than 100 PRC customers. The Draft Data Security Measures remains unclear as to whether a Hong Kong company which collects personal information from PRC individuals would be subject to its terms.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection. The Personal Information Protection Law, which came into effect on November 1, 2021, aims at protecting the personal information rights and interests, regulating the processing of personal information, ensuring the orderly and free flow of personal information in accordance with the law and promoting the reasonable use of personal information. The Personal Information Protection Law applies to the processing of personal information within China, as well as certain personal information processing activities conducted by entities outside China for natural persons within China, including those for the provision of products and services to natural persons within China or for the analysis and assessment of acts of natural persons within China. As a result, the Company’s overseas subsidiaries including our Hong Kong subsidiaries, may become subject to relevant personal information protection laws of the PRC.

Personal information, as defined in the Personal Information Protection Law, refers to information related to identified or identifiable natural persons and is recorded by electronic or other means but excluding the anonymized information. The Personal Information Protection Law provides the obligations of a personal information processor and the circumstances under which a personal information processor could process personal information, which include but not limited to, where the consent of the individual concerned is obtained and where it is necessary for the conclusion or performance of a contract to which the individual is a contractual party. The Personal Information Protection Law specifically provides rules for processing sensitive personal information. Sensitive personal information refers to personal information that, once leaked or illegally used, could easily lead to the infringement of human dignity or harm to the personal or property safety of an individual, including biometric recognition, religious belief, specific identity, medical and health, financial account, personal whereabouts and other information of an individual, as well as any personal information of a minor under the age of 14. Only where there is a specific purpose and sufficient necessity, and under circumstances where strict protection measures are taken, may personal information processors process sensitive personal information. A personal information processor should inform the individual of the necessity of processing such sensitive personal information and the impact thereof on the individual’s rights and interests.

In addition, the Personal Information Protection Law imposes pre-approval and other requirements for any cross-border data transfer by PRC entities. Since the Personal Information Protection Law is new, there are uncertainties as to the interpretation and application of it, especially in relation to its applicability and requirements for our offshore subsidiaries when they engage in personal information processing activities for natural persons within China. While the Company does not believe the pre-approval requirements for any cross-border data transfer will apply to the way it currently collects information from persons within China, if regulatory bodies deem its current data collection model as a cross-border data transfer, the Company will be subject to the relevant requirements. Furthermore, the Company may need to take certain additional measures in the future to be in compliance with the Personal Information Protection Law.

Regulatory requirements on cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations or significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. For example, the SCNPC promulgated the PRC Data Security Law, which took effect on September 1, 2021. The Data Security Law provides for a security review procedure for the data activities that may affect national security. In addition, the Personal Information Protection Law provides that critical information infrastructure operators or personal information processors whose processing of personal information reaches the threshold amount prescribed by the CAC, must store within the territory of the PRC the personal information collected or generated by them within the territory of the PRC. Unless otherwise a security assessment is not required as provided by law, administrative regulations or the national cyberspace authority, where it is necessary to provide such information to an overseas recipient, a security assessment organized by the CAC must have been passed.

On December 28, 2021, the CAC, the NDRC, the MIIT, and several other PRC governmental authorities jointly issued the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaced the Measures for Cybersecurity Review published on April 13, 2020. Pursuant to Cybersecurity Review Measures, critical information infrastructure operators that purchase network products and services and network platform operators engaging in data processing activities that affect or may affect national security are subject to cybersecurity review under the Cybersecurity Review Measures. According to the Cybersecurity Review Measures, before purchasing any network products or services, a critical information infrastructure operator shall assess potential national security risks that may arise from the launch or use of such products or services and apply for a cybersecurity review with the cybersecurity review office of the CAC if national security will or may be affected. In addition, network platform operators who possess personal information of more than one million users and intend to be listed at a foreign stock exchange must be subject to the cybersecurity review.

Furthermore, the exact scope of “critical information infrastructure operators” (the “CIIO”) under the Cybersecurity Review Measures and the current regulatory regime also remains unclear. Pursuant to the Regulations on Protection of Security of Critical Information Infrastructure, or the CIIO Security Protection Regulations, which became effective on September 1, 2021, the competent governmental departments and the supervision and management departments of some key industries, or the Security Protection Departments, governing such key industries and areas serve as the departments in charge of the security protection of critical information infrastructure and the Security Protection Departments are responsible for identifying critical information infrastructure in their respective industries and areas, timely notify the identification results to the operators. In the event of the occurrence of any major cybersecurity incident or discovery of any major cybersecurity threat for the critical information infrastructure, the operator shall report to the protection authorities and the public security authorities as required. The Company does not believe it is classified as a CIIO as of the date of this annual report. However, the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws; therefore, it is uncertain whether it could be deemed as a CIIO under PRC law in the future. In the event the Company is classified as a CIIO or otherwise become under investigation or review by the CAC, it may have to substantially change certain of its current practice and its operations may be materially and adversely affected.

In addition, the MIIT further issued the Administrative Measures on the Administration of Data Security in the Industry and Information Technology Areas (for Trial Implementation) (Draft for Comment), or the Draft Data Security Measures in the IIT Field, on February 10, 2022. The Draft Data Security Measures in the IIT Field stipulates that all businesses which handle industrial and telecoms data in China are required to categorize such information into “ordinary,” “important” and “core” and businesses processing “important” and “core” data shall comply with certain filing and reporting obligations. The Draft Data Security Measures in the IIT Field also notes that sharing “important” and “core” data to a foreign party requires a special review and approval process. The Company cannot predict the impact of the above draft measures, if any, at this stage, and it will closely monitor and assess any development in the rule-making process.

The Company cannot assure you that the measures it have taken or will take in the future will be effective or fully satisfy the relevant regulatory authorities’ requirements, and any failure or perceived failure by the Company to comply with such laws and regulations may result in governmental investigations, fines, removal of its app from the relevant application stores and/or other sanctions on the Company. As of the date of this prospectus, the Company had not been involved in any investigations on cybersecurity review made by the CAC on such basis, and it had not received any inquiry, notice, warning, or sanctions in such respect.

In the event that the Company is inadvertently deemed to be an Investment Company under the Investment Company Act of 1940 (the “40 Act”), it would become subject to significant additional disclosure, reporting, and other regulatory requirements beyond those that will be applicable to it under the Securities Act and the Securities Exchange Act, resulting in regulatory burdens and expenses which would likely be unsurmountable.

Section 3(a)(1)(A) of the ‘40 Act defines an investment company to include an issuer primarily engaged (or holding itself out as being primarily engaged) in the business of investing in securities. The SEC and the courts have developed a number of criteria to be used in determining whether an issuer is engaged “primarily” in a non-investment business. The applicable criteria include: the issuer’s historical development; its public representations concerning its activities; the activities of its officers and directors, the extent of their involvement in the management of the issuer; the nature of its present assets; and the sources of its present income. The most significant criteria are the nature of an issuer’s assets (as evidenced by the percentage of the issuer’s assets invested in investment securities) and the sources of the issuer’s present income (as evidenced by the percentage of the issuer’s income derived from investment securities).

The Company primarily derives its income from commissions by offering securities dealing and brokerage services, securities underwriting and placing services and other financing services, as well as asset management fees generated by providing asset management services and investment advisory services. As an investment adviser, the Company is primarily focused on investing the assets of others, and not as an investment company investing for its own account. As disclosed in the Company’s consolidated financial statements included in this Prospectus, the Company does not hold a material amount of investment securities for its own account. In addition, none of the Company’s revenues have been derived from assets comprising investment securities. Thus, the two most important factors for determining the Company’s primary business indicate that the Company is not engaged in the business of investing, reinvesting or trading in securities for its own account.

The Company is also relying on the exemption from the definition of an investment company under Section 3(c)(2)(A) of the ‘40 Act because it is “primarily engaged in the business of underwriting, placing services and distributing securities issued by other persons, it acts as broker and dealer, as a market intermediary, and provides other financing services, and its gross income is derived principally from these business and related activities.” In fact, all of the Company’s revenues have been derived from brokerage commissions, underwriting and placement agent fees, asset management fees, and interest income.

The Company and its subsidiaries and affiliated entities intend to continue to operate their businesses in a manner that will permit them to maintain exemption from the ‘40 Act. There remains some risk, however, that the Company could inadvertently fall within the definition of an investment company in the future, either by coming to hold substantial minority interests in other companies that it does not control, by temporarily holding investment securities constituting a large percentage of its assets, or by some other means. In the event that the Company inadvertently becomes an investment company within the definition of the ‘40 Act, it would become subject to extensive additional registration, reporting, management, governance, and other regulatory burdens that far exceed those already applicable to ordinary public issuers under the ‘33 Act and the ‘34 Act. These additional regulatory burdens, if incurred, would likely be insurmountable for the Company.

Risks Related to This Offering and the Ordinary Shares

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

Prior to this initial public offering, there has been no public market for the Company’s Ordinary Shares. The Company plans to list its Ordinary Shares on the Nasdaq Capital Market. The Company’s Ordinary Shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. If an active trading market for the Ordinary Shares does not develop after this offering, the market price and liquidity of the Ordinary Shares will be materially and adversely affected.

Negotiations with the underwriters will determine the initial public offering price for the Ordinary Shares which may bear no relationship to their market price after the initial public offering. The Company cannot assure you that an active trading market for the Ordinary Shares will develop or that the market price of the Ordinary Shares will not decline below the initial public offering price.

Because the Company is offering to sell Ordinary Shares at an assumed public offering price to be $5.00 and the Selling Stockholders are offering to sell Ordinary Shares following the completion of the primary underwritten offering at the then-prevailing market price, purchasers of shares from the Selling Stockholders could pay more or less per share than investors in the firm commitment underwritten offering.

The per share public offering price of the Ordinary Shares to be sold by the Company is assumed to be $5.00, the midpoint of the estimated price range of $4.00 and $6.00 per share. The per share public price of the Ordinary Shares to be sold by the Selling Stockholders following the completion of the primary underwritten offering will be at the then-prevailing market price. As a result, purchasers of shares from the Selling Stockholders could pay more or less per share than investors in the firm commitment underwritten offering.

If securities or industry analysts do not 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 the Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If industry or securities analysts decide to cover the Company and in the future downgrade its 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 its Ordinary Shares to decline.

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 Ordinary Shares in this offering, you will pay more for your Ordinary Shares than the amount paid per share by our existing shareholders for their Ordinary Shares. As a result, you will experience immediate and substantial dilution of approximately US$3.10 per Ordinary Share, representing the difference between the initial public offering price of US$5.00 per Ordinary Share and our net tangible book value per Ordinary Share as of December 31, 2022 after giving effect to the net proceeds to us from this offering. In addition, you may experience further dilution to the extent that our Ordinary Shares are issued upon the exercise of any share options. See “Dilution” for a more complete description of how the value of your investment in the Ordinary Shares will be diluted upon completion of this offering.

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

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

Our board of directors has discretion as to whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium account; provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our 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.

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

Sales of Ordinary Shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of the Ordinary Shares to decline. Immediately after the completion of this offering, the Company will have 14,100,000 Ordinary Shares outstanding, assuming the underwriters do not exercise their over-allotment option. All Ordinary Shares sold in this offering will be freely transferable without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act. All of its executive officers and directors and shareholders holding at least ten percent of our common stock have agreed not to sell our Ordinary Shares for a period of 180 days following the effective date of this prospectus, subject to extension under specified circumstances. Ordinary shares subject to these lock-up agreements will become eligible for sale in the public market upon expiration of these lock-up agreements, subject to volume and other restrictions as applicable under Rules 144 and 701 under the Securities Act. To the extent shares are released before the expiration of the lock-up period and sold into the market, the market price of the Ordinary Shares could decline. Moreover, the perceived risk of this potential dilution could cause shareholders to attempt to sell their shares and investors to short the Ordinary Shares. These sales also may make it more difficult for the Company to sell equity or equity-related securities in the future at a time and price that it deems reasonable or appropriate. In addition, rapid market sales or sales in significant volumes of up to 1,680,000 Ordinary Shares offered by the Selling Stockholders may significantly depress the market value of the Ordinary Shares held by investors in our underwritten primary offering.

You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income or increase the price of our Ordinary Shares.

As of June 30, 2023, our cash was HK$24,972,000 (US$3,187,000). Immediately following the completion of this offering, the Company expects to receive net offering proceeds of approximately US$22,010,000 after deducting underwriting discounts and the estimated offering expenses payable by us. It intends to use these funds as set forth under “Use of Proceeds.” However, the Company’s management will have considerable discretion in the application of the net proceeds received by the Company. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not improve the Company’s efforts to achieve or maintain profitability or increase the price of its Ordinary Shares. The net proceeds from this offering may be placed in investments that do not produce income or that lose value.

The Company may need additional capital and may sell additional Ordinary Shares or other equity securities or incur indebtedness, which could result in additional dilution to its shareholders or increase its debt service obligations.

The Company may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions it may decide to pursue. If its cash resources are insufficient to satisfy its cash requirements, the Company may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities or equity-linked debt securities could result in additional dilution to the Company’s shareholders. The incurrence of indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict its operations. Plutus Group cannot assure you that financing will be available in amounts or terms acceptable to it, if at all.

Plutus Group is an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

Plutus Group is an “emerging growth company,” as defined in the JOBS Act, and it may take advantage of certain exemptions from various requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 so long as it is an emerging growth company. As a result, if the Company elects not to comply with such auditor attestation requirements, its investors may not have access to certain information they may deem important.

In addition, under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. The Company has elected to avail ourselves of an exemption that allows it to delay adopting new or revised accounting standards until such time as those standards apply to private companies. As a result, it will not be subject to the same new or revised accounting standards as other public companies that comply with the public company effective dates. The Company has also elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result of these elections, the information that the Company provides to its stockholders may be different than you might receive from other public reporting companies.

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

Because the Company qualifies as a foreign private issuer under the Exchange Act, it is exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

Plutus Group will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, the Company intends to publish our results on a semi-annual basis as press releases, distributed pursuant to the rules and regulations of the Nasdaq Capital Market. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information the Company is required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

As an exempted company incorporated in the Cayman Islands, the Company is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq Capital Market corporate governance requirements; these practices may afford less protection to shareholders than they would enjoy if the Company complied fully with the Nasdaq Capital Market corporate governance requirements. Currently, the Company does not have any immediate plans to rely on home country practice with respect to its corporate governance after the completion of this offering.

Plutus Group may lose its 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, 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 the Company’s Ordinary Shares are directly or indirectly held by residents of the U.S. and it fails to meet additional requirements necessary to maintain our foreign private issuer status. In the future, if the Company loses its foreign private issuer status as of the last date of our second fiscal quarter, it would be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms beginning on the following January 1, which are more detailed and extensive than the forms available to a foreign private issuer. The Company would also have to mandatorily comply with U.S. federal proxy requirements, and its officers, directors and principal shareholders would become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, the Company would lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq Capital Market listing rules. As a U.S. listed public company that is not a foreign private issuer, the Company would incur significant additional legal, accounting and other expenses that it 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.

Plutus Group will incur increased costs as a result of being a public company.

Upon completion of this offering, Plutus Group will become a public company and expect to incur significant legal, accounting and other expenses that it did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq Capital Market, impose various requirements on the corporate governance practices of public companies. As a company with less than US$1.07 billion in net revenues for our last fiscal year, the Company qualifies as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.

The Company expects these rules and regulations to increase its legal and financial compliance costs and to make some corporate activities more time-consuming and costly. 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 of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, it 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 us to obtain director and officer liability insurance, and it 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 its public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on its board of directors or as executive officers. The Company is currently evaluating and monitoring developments with respect to these rules and regulations, and it cannot predict or estimate with any degree of certainty the amount of additional costs it may incur or the timing of such costs.

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

If the Company fails to maintain proper internal financial reporting controls, its ability to produce accurate financial statements or comply with applicable regulations could be impaired.

Prior to this offering, Plutus Group was a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. The Company will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that will allow its management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002. Although the Company’s independent registered public accounting firm is not required to attest to the effectiveness of the Company’s internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the date the Company is no longer an emerging growth company, the Company’s management will be required to report on its internal controls over financial reporting under Section 404.

As of June 30, 2023, the Company’s management assessed the effectiveness of its internal control over financial reporting and believes that our internal controls are effective. In order to assist in establishing and maintain its internal controls over financial reporting, the Company has retained an external consultant having sufficient knowledge of US GAAP and SEC reporting requirements to handle the financial reporting function of the Company. In the future, the Company intends to recruit and retain sufficient staff to address these needed in-house. In addition, and in preparation for our public offering and listing, the Company will be appointing independent directors, establishing an audit committee, and strengthening its corporate governance.

If the Company does not continue to maintain effective internal financial reporting controls and continue to monitor and improve them, it could risk inaccuracies in its financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Upon the completion of this offering, the Company will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require the Company to include a report from management on our internal control over financial reporting in its annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2023. In addition, once the Company ceases to be an “emerging growth company” as such term is defined in the JOBS Act, the Company’s independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Even if the Company’s management continues to conclude that its internal control over financial reporting is effective, the Company’s independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with its internal controls or the level at which the Company’s controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after the Company becomes a public company, its reporting obligations may place a significant strain on the Company’s management, operational and financial resources and systems for the foreseeable future. The Company may be unable to timely complete its evaluation testing and any required remediation.

ENFORCEABILITY OF CIVIL LIABILITIES

The Company is incorporated under the laws of the Cayman Islands as an exempted company with limited liability. It is incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands exempted company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws than the United States and provides less protection for investors. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Substantially all of the Company’s assets are located outside the United States. In addition, a majority of its directors and officers are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against the Company and its officers and directors.

The Company has appointed The Crone Law Group P.C., 420 Lexington Avenue, Suite 2446, New York, NY 10170 as the Company’s agent to receive service of process with respect to any action brought against the Company in the U.S. District Court for the Southern District of New York in connection with this offering under the federal securities laws of the United States or the securities laws of any State in 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 in connection with this offering under the securities laws of the State of New York.

Harney Westwood & Riegels, the Company’s counsel as to Cayman Islands law, has advised us that it is uncertain whether the courts of the Cayman Islands will allow shareholders of the Company to originate actions in the Cayman Islands based upon securities laws of the United States. In addition, there is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our Company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. The Company has been further advised that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, a final and conclusive monetary judgment for a definite sum obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided that:

CFN Lawyers, the Company’s counsel as to Hong Kong law, has advised us that (1) it would be highly unlikely that the courts of Hong Kong would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, and (2) there is uncertainty as to whether the courts of Hong Kong would entertain original actions brought in Hong Kong against the Company or its directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States.

A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (1) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty) and (2) final and conclusive on the merits of the claim, but not otherwise. 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.

Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong, in original actions or in actions for enforcement, of judgments of United States courts of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any State or territory within the United States.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect the Company’s financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:

You should read this prospectus and the documents that the Company refers to in this prospectus with the understanding that its actual future results may be materially different from and worse than what the Company expects. Other sections of this prospectus include additional factors which could adversely impact the Company’s business and financial performance. Moreover, the Company operates in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for the Company’s management to predict all risk factors and uncertainties, nor can it assesses the impact of all factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company qualifies all of its forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SELLING STOCKHOLDERS

The table below presents information regarding the Selling Stockholders and the Selling Stockholder Ordinary Shares that they may offer from time to time under the Resale Prospectus. This table is prepared based on information supplied to us by the Selling Stockholders and reflects holdings as of the date of this prospectus.

The number of shares in the column “Total Number of Shares to be Offered for Selling Stockholder Account” represents all of the Ordinary Shares that the Selling Stockholders may offer under the Resale Prospectus. The Selling Stockholders may sell some, all, or none of their shares offered by the Resale Prospectus. We do not know how long the Selling Stockholders will hold the shares before selling them, and we currently have no agreements, arrangements, or understandings with the Selling Stockholders regarding the sale of any of the shares.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the Commission under the Exchange Act and includes Ordinary Shares with respect to which the Selling Stockholders have voting and investment power. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days after the date of this table. To our knowledge and subject to applicable community property rules, the persons and entities named in the table have sole voting and sole investment power with respect to all equity interests beneficially owned. We had an aggregate of 12,000,000 Ordinary Shares outstanding as of the date of this prospectus.

(1) Mr. Chu Kuang Chun is the sole director and shareholder of Gain Best Investments Limited and, in the capacity, has the authority to make investment and voting decisions with regard to its Ordinary Shares.

Selling Stockholders Plan of Distribution

We are registering the Selling Stockholder Ordinary Shares to permit the resale of the Selling Stockholder Ordinary Shares by the Selling Stockholders from time to time after the date of the Resale Prospectus. We will not receive any of the proceeds from the sale of the Selling Stockholder Ordinary Shares. We will bear all fees and expenses incident to the registration of the Selling Stockholder Ordinary Shares in the registration statement of which this prospectus forms a part. The Selling Stockholder Ordinary Shares will not be sold through Pacific Century Securities or R.F. Lafferty & Co., Inc. in this initial public offering, nor will the underwriters receive any compensation from the sale of the Ordinary Shares by the Selling Stockholders.

The Selling Stockholders may sell all or a portion of the Selling Stockholder Ordinary Shares beneficially owned by them and offered hereby from time to time directly or through one or more broker-dealers or agents or in the over-the-counter market at market prices prevailing at the time of sale. If the Selling Stockholder Ordinary Shares are sold through broker-dealers, the Selling Stockholders will be responsible for any commissions or agent’s commissions. The Selling Stockholder Ordinary Shares may be sold in one or more transactions at prevailing market prices at the time of the sale. However, the Selling Stockholders will not sell any Selling Stockholder Ordinary Shares until after the closing of the underwritten primary offering. The offering by the Selling Stockholders will remain open for 180 days following the date of the Resale Prospectus. These sales may be effected in transactions, which may involve crosses or block transactions:

The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available, rather than under the Resale Prospectus. However, the Selling Stockholders will not sell any Selling Stockholder Ordinary Shares until after the closing of the primary underwritten initial public offering.

Under applicable rules and regulations under the Securities Exchange Act, as amended (the “Exchange Act”), any person engaged in the distribution of the shares of Ordinary Shares may not simultaneously engage in market making activities with respect to the shares of Ordinary Shares for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of Ordinary Shares by the Selling Stockholders or any other person. We will make copies of the Resale Prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of the Resale Prospectus at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act, as amended).

If the Selling Stockholders effect such transactions by Selling Stockholder Ordinary Shares to or through broker-dealers or agents, such broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Stockholders or commissions from purchasers of the Selling Stockholder Ordinary Shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the Selling Stockholder Ordinary Shares or otherwise, the Selling Stockholders may enter into hedging transactions with broker-dealers which may, in turn, engage in short sales of the Selling Stockholder Ordinary Shares in the course of hedging in positions they assume. The Selling Stockholders may also sell Selling Stockholder Ordinary Shares short and deliver Selling Stockholder Ordinary Shares covered by the Resale Prospectus to close out short positions and to return borrowed shares in connection with such short sales. The Selling Stockholders may also loan or pledge Selling Stockholder Ordinary Shares to broker-dealers that in turn may sell such shares.

The Selling Stockholders may pledge or grant a security interest in some or all of the warrants or Selling Stockholder Ordinary Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Selling Stockholder Ordinary Shares from time to time pursuant to an amendment to the Resale Prospectus under applicable provision of the Securities Act, amending, if necessary, the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under the Resale Prospectus.

The Selling Stockholders and any broker-dealer participating in the distribution of the Selling Stockholder Ordinary Shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the Selling Stockholder Ordinary Shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of Selling Stockholder Ordinary Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

Under the securities laws of some states, the Selling Stockholder Ordinary Shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Selling Stockholder Ordinary Shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any Selling Stockholder will sell any or all of the Selling Stockholder Ordinary Shares registered pursuant to the registration statement, of which the Resale Prospectus forms a part.

The Selling Stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Selling Stockholder Ordinary Shares by the Selling Stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the Selling Stockholder Ordinary Shares to engage in market-making activities with respect to the Selling Stockholder Ordinary Shares. All of the foregoing may affect the marketability of the Selling Stockholder Ordinary Shares and the ability of any person or entity to engage in market-making activities with respect to the Selling Stockholder Ordinary Shares.

Once sold under the registration statement, of which the Resale Prospectus forms a part, the Selling Stockholder Ordinary Shares will be freely tradeable in the hands of persons other than our affiliates.

USE OF PROCEEDS

Plutus Group estimates that it will receive net proceeds from this offering of approximately US$8,420,000, or approximately US$9,869,000 if the underwriters exercise their option to purchase additional Ordinary Shares in full, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, assuming an offering per share price of US$5.00. We will receive no proceeds from the sale of the Selling Stockholder Ordinary Shares under the separate Resale Prospectus.

The primary purposes of this offering are to create a public market for the Company’s shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital. The Company plans to use the net proceeds of this offering as follows:

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. The Company’s 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, the Company may use the proceeds of this offering differently than as described in this prospectus. See “Risk Factors—Risks Related to This Offering and the Ordinary Shares—You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income or increase the price of our Ordinary Shares.”

Pending use of the net proceeds, the Company intends to hold the net proceeds from this offering in demand deposits or invest them in interest-bearing government securities.

DIVIDEND POLICY

The Company has not previously declared or paid cash dividends and has no plan to declare or pay any dividends in the near future on its shares. The Company currently intends to retain most, if not all, of its available funds and any future earnings to operate and expand its business.

Plutus Group is an investment holding company incorporated in the Cayman Islands. It relies principally on dividends from our Hong Kong subsidiaries for its cash requirements, including any payment of dividends to our shareholders.

Our board of directors has discretion as to whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium account, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. 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. Please see the section entitled “Taxation” beginning on page 139 of this prospectus for information on the potential tax consequences of any cash dividends declared.

CAPITALIZATION

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

The pro forma and pro forma as adjusted information below is illustrative only and our capitalization following the completion of this offering is subject to adjustment based on the initial public offering price of our Ordinary Shares. You should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.