F-1/A 1 ff12021_liongroup.htm REGISTRATION STATEMENT

As filed with the U.S. Securities and Exchange Commission on January 27, 2021.

Registration No. 333-250176

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

______________________

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

______________________

Lion Group Holding Ltd.
(Exact Name of Registrant as Specified in Its Charter)

______________________

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

______________________

Cayman Islands

 

6211

 

Not Applicable

(State or Other Jurisdiction of Incorporation or Organization)

 

(Primary Standard Industrial Classification Code Number)

 

(IRS Employer
Identification Number)

______________________

Unit A-C, 33/F
Tower A, Billion Center
1 Wang Kwong Road
Kowloon Bay
Hong Kong

+(852) 2820
-9000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

c/o Cogency Global Inc.
122 East 42
nd Street, 18th Floor
New York, NY 10168
(212) 947
-7200
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

______________________

Copies to:

Lawrence Venick, Esq.
Loeb & Loeb LLP
3 Connaught Road Central
Hong Kong SAR
Tel: +852.3923.1111
Fax: +852.3923.1100

 

Joan Wu, Esq.
Hunter Taubman Fischer & Li LLC
800 Third Avenue, Suite 2800
New Yok, NY 10022
Tel: 212.530.2208
Fax: 212.202.6380

______________________

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. S

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 S

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.

 

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CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered(1)

 

Proposed
maximum aggregate offering
price
(2)(3)

 

Amount of
Registration
Fee

Class A ordinary shares, par value US$0.0001 per share

 

$

23,000,000

 

$

2,509.30

Warrants to purchase American depositary shares(4)

 

 

23,000,000

 

 

Class A ordinary shares, par value US$0.0001 per share, underlying the American depositary shares issuable upon exercise of Warrants(5)

 

$

[  ]

 

$

[  ]

Representative’s warrants to purchase American depositary shares(4)

 

 

 

 

Class A ordinary shares, par value US$0.0001 per share, underlying the American depositary shares issuable upon exercise of representative’s warrants(6)

 

$

[  ]

 

$

[  ]

Total

 

$

[  ]

 

$

[  ]

____________

(1)      Represents the maximum number of Class A Ordinary Shares, represented by American depositary shares (“ADSs”), each representing one Class A Ordinary Share.

(2)      Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933.

(3)      Includes Class A ordinary shares that are issuable upon the exercise of the underwriter’s over-allotment option. Also includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within [    ] days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These Class A ordinary shares are not being registered for the purpose of sales outside the United States.

(4)      Pursuant to Rule 457(g) under the Securities Act, no separate registration fee is required for the warrants registered hereby.

(5)      Based on a per share exercise price for the Warrants of not less than [    ]% of the public offering price per ADS and Warrant in this offering.

(6)      Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The representative’s warrants are exercisable at a per share exercise price equal to 110% of the public offering price. As estimated solely for the purpose of recalculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the Representative’s Warrants is equal to 110% of $[    ] (which is equal to 5% of $[    ]).

(7)      Pursuant to Rule 457(p) under the Securities Act, the registrant is offsetting the full amount of the registration fee due under this registration statement with registration fees previously paid with respect to the registration statement on Form F-1 (initially filed on November 18, 2020.

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.

 

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

SUBJECT TO COMPLETION, DATED January 27, 2021

PROSPECTUS

LION GROUP HOLDING LTD.

[    ] American Depositary Shares
Representing [    ] Class A Ordinary Shares (par value US$0.0001 per share)
Warrants to Purchase [    ] American Depositary Shares

We are offering [    ] American Depositary Shares, or ADSs, and warrants to purchase [    ] ADSs, or Warrants, at an aggregate offering price of $[    ] per ADS and Warrant. The ADSs and Warrants will be separately issued, but the ADSs and Warrants will be issued and sold to purchasers in a combination of one ADS and one Warrant to purchase one ADS for a combined offering price of $[    ]. Each Warrant will be immediately exercisable for one ADS at an exercise price of $[    ] per ADS and expire 5 years after the issuance date. Upon the closing of this offering, we have agreed to issue to the representative warrants, or the Representative’s Warrants, to purchase a number of ADSs equal to 5% of the ADSs sold in this public offering. The Representative’s Warrants will be exercisable at an exercise price per ADS equal to 110% of the public offering price. The Representative’s Warrants are exercisable commencing six months from the effective date of this registration statement and will be exercisable for five years after the effective date of this registration statement.

ADSs representing our Class A ordinary shares and our 2019 Warrants are listed on the Nasdaq Capital Market, or the Nasdaq, under the symbol “LGHL” and “LGHLW”, respectively. On January 26, 2021, the closing trading price for our ADSs and 2019 Warrants, as reported on the Nasdaq, were $3.26 and $0.2150, respectively.

We are, and following the completion of this offering will continue to be, a “controlled company” as defined under the Nasdaq Stock Market Rules because Jian Wang, our chairman of the board and Chunning Wang, our chief executive officer will continue to collectively hold approximately 87.95% of our voting power total issued and outstanding share capital, assuming the underwriter does not exercise its over-allotment option and none of the Warrants, the Representative’s Warrants or other outstanding warrants are exercised, or 87.50% of our total voting power, if the underwriter exercises its over-allotment option for ADSs and Warrants in full, assuming none of the Warrants, the Representative’s Warrants or other outstanding warrants are exercised.

Immediately upon the completion of this offering, [    ] Class A Ordinary Shares and [    ] Class B Ordinary Shares will be issued and outstanding, assuming the underwriter does not exercise its over-allotment option and none of the Warrants, the Representative’s Warrants or other outstanding warrants are exercised. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes based on our dual-class structure and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.

Investing in our securities is highly speculative and involves a high degree of risk. See “Risk Factors” section beginning on page 10 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities and in the documents incorporated by reference into this prospectus.

PRICE $ PER ADS AND WARRANT

 

Per ADS and Warrant

 

Total

Public offering price

 

$

 

 

$

 

Underwriters’ discount and commissions(1)

 

$

 

 

$

 

Proceeds to us, before expenses(2)

 

$

 

 

$

 

____________

(1)       The per ADS and Warrant calculation represents the average underwriting discounts and commissions per ADS and Warrant. See “Underwriting” for additional disclosure regarding compensation to the underwriter payable by us.

(2)       Does not include proceeds from the exercise of the Warrants in cash, if any.

The offering is being underwritten on a firm commitment basis. We have granted the underwriter an option exercisable within 45 days from the date of this prospectus to purchase up to an additional [    ] ADSs at a price of $[    ] per ADS and/or up to an additional [    ] Warrants at a price of $[    ] price per Warrant, less the underwriting discount, to cover over-allotments, if any.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE COMPANY IS A CRIMINAL OFFENSE.

The underwriter expect to deliver the ADSs and Warrants against payment in U.S. dollars to purchasers in New York, New York on or about         , 2021.

Sole Book-Running Manager

MAXIM GROUP LLC

The date of this prospectus is [•].

 

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TABLE OF CONTENTS

 

Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

ii

SUMMARY OF THE PROSPECTUS

 

1

THE OFFERING

 

3

SELECTED HISTORICAL FINANCIAL INFORMATION

 

8

RISK FACTORS

 

10

USE OF PROCEEDS

 

38

DIVIDENDS

 

39

CAPITALIZATION

 

40

DILUTION

 

41

CORPORATE HISTORY AND STRUCTURE

 

42

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

43

INDUSTRY

 

63

BUSINESS

 

69

MANAGEMENT

 

91

BENEFICIAL OWNERSHIP OF SECURITIES

 

97

RELATED PARTY TRANSACTIONS

 

98

DESCRIPTION OF SHARE CAPITAL

 

100

DESCRIPTION OF AMERICAN DEPOSITARY SHARES AND WARRANTS

 

104

TAXATION

 

114

UNDERWRITING

 

121

EXPENSES

 

125

EXPERTS

 

126

LEGAL MATTERS

 

126

WHERE YOU CAN FIND MORE INFORMATION

 

126

INDEX TO FINANCIAL STATEMENTS

 

F-1

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the ADSs and Warrants offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Neither we nor the underwriter has done anything that would permit this offering or possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where action for that purpose is required, other than in 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 ADSs and Warrants and the distribution of this prospectus or any filed free writing prospectus outside of the United States.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements may include statements relating to:

•        changes in the market for our products and services;

•        our ability to access additional capital;

•        our ability to attract and retain qualified personnel;

•        changes in general economic, business and industry conditions;

•        changes in applicable laws or regulations;

•        expansion plans and opportunities;

•        the ongoing coronavirus (“COVID-19”) pandemic;

•        other risks and uncertainties indicated in this prospectus, including those set forth under the section entitled “Risk Factors”; and

•        other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

These forward-looking statements are based on information available as of the date of this prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. For a discussion of the risks involved in our business and investing in our securities, see “Risk Factors.”

Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

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SUMMARY OF THE PROSPECTUS

This summary highlights selected information from this prospectus and may not contain all of the information that is important to you in making an investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.See also the section entitled “Where You Can Find More Information.”

Prior to the Business Combination, we owned no material assets and did not operate any business. Upon the consummation of the Business Combination, we became the ultimate parent company of Lion Financial Group Limited (“Lion”) and all of our business will be conducted through Lion and its subsidiaries. Unless otherwise indicated or the context otherwise requires, references in this prospectus to “we,” “our” “us” and other similar terms refer to Lion Group Holding Ltd. and its consolidated subsidiaries.

Overview

We are one of the few Chinese investor-focused trading platforms that offer a wide spectrum of products and services. Our business lines include our (i) CFD trading service, (ii) insurance brokerage service, (iii) futures brokerage service, (iv) securities brokerage service and (v) asset management service. We provide these services through our all-in-one Lion Brokers Pro app and a variety of apps available on iOS, Android and PC platforms. Our clients are mostly well-educated and affluent Chinese investors residing both inside and outside the PRC, as well as institutional clients in Hong Kong that use our futures brokerage service.

Our trading platform allows users to trade approximately 100 futures products on major futures exchanges worldwide (excluding the PRC), including the Chicago Mercantile Exchange (CME), Singapore Exchange (SGX), the Hong Kong Futures Exchange (HKFE) and Eurex Exchange (Eurex), as well as stocks listed on the New York Stock Exchange (NYSE), Nasdaq and Hong Kong Stock Exchange (HKSE), and PRC stocks listed on the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) that are eligible for the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs (together, “Stock Connect”). In addition, our customers may also use our platform to trade various financial products, such as stock indices, commodities, futures, forex, ETFs, warrants and callable bull/bear contracts, on global exchanges or OTC markets.

Our financial performance increased significantly from 2018 to 2019, as our revenue increased from US$6.6 million to US$18.5 million, respectively. We also improved from a loss before income taxes of US$2.7 million in 2018, to income before income taxes of US$8.3 million in 2019. For the six months ended June 30, 2020, we generated income before income taxes of US$2.4 million.

Our Strengths

We believe that the following strengths contribute to our success and differentiate us from our competitors:

•        We are well positioned in a fast-growing trillion-dollar segment with substantial growth potential.

•        We will be providing superior user experience to our clients through our industry-leading Internet platform.

•        We offer a diversified product portfolio for trading in global financial markets.

•        We have an experienced management team supported by industry talents.

Our Strategies

We plan to implement the following strategies:

•        Strengthen our leading position in key markets and expand our demographic and geographic coverages in new markets.

•        Enhance technological infrastructure and cybersecurity.

•        Drive product innovation and explore other complementary services.

•        Attract and retain key talent.

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Risk Factors

Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors” immediately following this prospectus summary, that represent challenges that we face in connection with the successful implementation of our strategy and the growth of our business.

Corporate Information

Our principal executive office will be that of Lion, located at Unit A-C, 33/F, Tower A, Billion Center, 1 Wang Kwong Road, Kowloon Bay, Hong Kong, and its telephone number is +852 2796 2900.

Impact of COVID-19 on Our Operations and Financial Performance

In December 2019, COVID-19 emerged and has subsequently spread worldwide. In March 2020, the World Health Organization declared COVID-19 as a pandemic. Our various business lines have been adversely impacted by COVID-19. CFD trading volumes and futures contract volumes decreased significantly compared to the same period of prior year, which was mainly attributable to economic and financial impact brought about by COVID-19 on the Group’s customers, causing a decrease in both their willingness to trade and make investments as well as their disposable income allocated making such transactions. Further, customers’ concerns about future unpredictability also caused their trading activity to decline, impacting our CFD trading business in particular. In addition, travel restrictions in Hong Kong caused cancellations and prevented management from attending branding, business promotions, and exhibition activities, which limited the opportunities to acquire new customers. Meanwhile, our futures and insurance brokerage businesses were adversely affected as new or existing customers may not be able to travel to Hong Kong to open new futures trading accounts or purchase insurance products. No impairments were recorded as of the consolidated balance sheet date, as the carrying amounts of the Group’s assets are expected to be recoverable; however, due to significant uncertainty surrounding the situation, management’s judgment regarding this could change in the future. In addition, the Group cannot reasonably estimate the related financial impact to the Group’s future financial results given the uncertainties surrounding the duration of the outbreak. The Group will continue to monitor the impact of the COVID-19 outbreak closely.

 

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THE OFFERING

(Company please provide or confirm information on the yellow highlights)

The information below is only a summary of more detailed information included elsewhere in this prospectus. This summary may not contain all of the information that is important to you or that you should consider before making a decision to invest in our securities.

Offering price

 

Combination price of $[          ] for one ADS and one Warrant to purchase one ADS.

ADSs offered by us

 

[            ] ADSs (or [            ] ADSs if the underwriter exercises its over-allotment option to purchase such additional ADSs in full), assuming neither the Warrants nor the Representative’s Warrants are exercised.

Warrants offered by us

 

Warrants to purchase [            ] of our ADSs (or [            ] ADSs if the underwriter exercises its over-allotment option to purchase such additional Warrants in full). Each Warrant will have an exercise price of $[            ] per ADS, exercisable commencing on the date of issuance and will expire in five years from the date of issuance. The terms of the Warrants will be governed by a warrant agent agreement, dated as of the closing date of this offering, that we expect to be entered into among us, American Stock Transfer & Trust Company, LLC. American Stock Transfer & Trust Company, LLC is referred to as the Warrant Agent in this prospectus. This prospectus also relates to the offering of the Class A ordinary shares issuable upon exercise of the Warrants. For additional information regarding the Warrants, see “Description of American Depositary Shares and Warrants.”

The ADSs and Warrants will be separately issued, but the ADSs and Warrants will be issued and sold to purchasers in a combination of one ADS and one Warrant to purchase one ADS for a combined offering price of $[            ].

Ordinary shares outstanding immediately after this offering

 


[            ] ordinary shares, comprised of [            ] Class A ordinary shares and [            ] Class B ordinary shares, assuming the underwriter does not exercise its over-allotment option and none of the Warrants, the Representative’s Warrants or other outstanding warrants are exercised.

The ADSs

 

Each ADS represents one Class A ordinary shares, par value US$0.0001 per share.

The depositary will hold Class A ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time.

We do not expect to pay dividends in the foreseeable future after this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. If, however, we declare dividends on our Class A ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our Class A ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement.

You may surrender your ADSs to the depositary in exchange for Class A ordinary shares. The depositary will charge you fees for any exchange.

We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended.

To better understand the terms of the ADSs, you should carefully read the “Description of American Depositary Shares and Warrants” section of this prospectus. You should also read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.

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Ordinary Shares

 

Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. In respect of all matters subject to a shareholder vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes based on our dual-class structure. Each Class B ordinary share is convertible into Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder to any person or entity other than holders of Class B ordinary shares or their affiliates, such Class B ordinary shares shall be automatically and immediately converted into the equivalent number of Class A ordinary shares. See “Description of Share Capital” for more information.

Over-allotment option

 

We have granted to the underwriter an option, exercisable within 45 days from the date of this prospectus, to purchase up to an additional [            ] ADSs and/or up to an additional [            ] Warrants to cover over-allotment.

Use of Proceeds

 

We expect that we will receive net proceeds of approximately $[ ] million from this offering, or approximately $[ ] million if the underwriter exercises its over-allotment option in full, at an offering price of $[ ] per ADS and Warrant, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, assuming none of the Warrants, the Representative’s Warrants or other outstanding warrants are exercised.

We expect to use any proceeds for general corporate purposes, which may include working capital needs, business expansion, branding and marketing activities, upgrading technology infrastructure, and other general administrative matters, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this prospectus. For more information on the use of proceeds, see “Use of Proceeds” on page 38.

Risk factors:

 

An investment in our securities involves significant risks. As an investor, you should be able to bear a complete loss of your investment. You should carefully consider the risks that are described in the “Risk Factors” section beginning on page 10 of this prospectus.

Lock-up

 

We, our directors, executive officers and certain of our affiliates have agreed with the representative, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any ADSs, ordinary shares or securities convertible into or exercisable or exchangeable for our ADSs or ordinary shares for a period of 90days following the date of this prospectus. See “Underwriting” for more information.

Listing

 

Our ADSs and 2019 Warrants are listed on the NASDAQ under the symbols “LGHL” and “LGHLW”, respectively. We do not plan on applying to list the Warrants on the Nasdaq, or any other national securities exchange..

Payment and settlement

 

The underwriters expect to deliver the ADSs against payment therefor through the facilities of DRS on               , 2021.

Depositary

 

Deutsche Bank Trust Company Americas

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Conventions that Apply to this Prospectus

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

“$,” “USD,” “US$” and “U.S. dollar” each refers to the United States dollar.

“2019 Warrant” means a warrant to purchase shares of common stock of Proficient issued in the Initial Public Offering and simultaneous private placements. Each Warrant entitles the holder thereof to purchase one share of common stock of Proficient at a price of $11.50 per share.

“ADSs” refers to our American depositary shares, each of which represents one Class A Ordinary Share.

“ADRs” refers to the American depositary receipts that evidence our ADSs.

“Amended and Restated Memorandum and Articles of Association” means the currently effective amended and restated memorandum and articles of association of Lion Group Holding Ltd. which became effective upon the consummation of the Business Combination.

“Business Combination Agreement” means the Business Combination Agreement, dated as of March 10, 2020, which is later amended and restated as of May 12, 2020, by and among us, Proficient, Merger Sub, Lion, the Sellers and the other parties thereto.

“Business Combination” or “Transactions” means the Merger and the Share Exchange, and other transactions contemplated by the Business Combination Agreement.

“CFD” means a contract for differences, an agreement between an investor and a CFD broker to exchange the difference in the value of a financial product between the time the contract opens and closes.

“Class A Ordinary Shares” means our Class A ordinary shares, par value $0.0001 per share.

“Class B Ordinary Shares” means our Class B ordinary shares, par value $0.0001 per share.

“Code” means the Internal Revenue Code of 1986, as amended.

“Companies Act” means the Companies Act (2020 Revision) of the Cayman Islands, as may be amended from time to time.

“Escrow Shares” means 45% of the Exchange Shares otherwise issuable to the Sellers at the Closing set aside in escrow upon the closing of the Business Combination.

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

“Exchange Shares” means the ordinary shares that Sellers received in exchange of their original holdings in Lion Financial Group Limited upon the consummation of the Business Combination.

“Founder Shares” means shares of Proficient common stock, 2,875,000 of which are currently outstanding and were issued to the Initial Stockholders prior to the Initial Public Offering of Proficient.

“HK$” or “Hong Kong dollars “means” the legal currency of Hong Kong.

“Initial Public Offering” means the initial public offering of Proficient, consummated on June 3, 2019.

“Initial Stockholders” means the holders of Founder Shares.

“iResearch” means iResearch Consulting Group.

“JOBS Act” means the Jumpstart Our Business Startups Act.

“Lion” means Lion Financial Group Limited, a corporation organized under the laws of the British Virgin Islands.

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“Merger” means the merger of Merger Sub with Proficient, with Proficient surviving such merger, prior security holders of Proficient receiving our securities and Proficient becoming a wholly-owned subsidiary of us.

“Merger Sub” means Lion MergerCo I, Inc., a Cayman Islands exempted company.

“Nasdaq” means the Nasdaq Stock Market LLC.

“Ordinary Shares” means our ordinary shares, par value $0.0001 per share, including Class A Ordinary Shares and Class B Ordinary Shares, unless otherwise specified.

“PIPE Warrant” means the warrant represents the right to purchase one Class A Ordinary Share in the form of ADSs at a price of $3.00 per share or $3.00 per ADS.

“Private Placement Warrants” means the Warrants owned by the Sponsor and issued by Proficient simultaneously with the consummation of the Initial Public Offering.

“Proficient” or “Purchaser” means Proficient Alpha Acquisition Corp., a Nevada corporation.

“PRC” or “China” refers to the People’s Republic of China, excluding, for the purpose of this prospectus, Taiwan, Hong Kong and Macau.

“Public Stockholders” means the holders of Public Shares.

“Public Shares” means shares of common stock of Proficient issued as part of the Units sold in the Initial Public Offering.

“Public Warrants” means the Warrants included in the Units sold in the Initial Public Offering, each of which is exercisable for one share of common stock of Proficient, in accordance with its terms.

“Redemption” means the right of the holders of Proficient common stock to have their shares redeemed in accordance with the procedures set forth in this prospectus.

“Rights” means the rights included in the Units sold in the Initial Public Offering, each of which is exercisable for one-tenth (1/10) of one share of common stock of Proficient, in accordance with its terms.

“RMB” and “Renminbi” each refers to the legal currency of China.

“SEC” means the U.S. Securities and Exchange Commission.

“Sellers” means the shareholders of Lion named as seller parties to the Business Combination Agreement as of the effective date of this registration statement.

“Share Exchange” means the exchange of 100% of the ordinary shares of Lion for our capital shares.

“Sponsor” means Complex Zenith Limited, a British Virgin Islands company controlled by Shih-Chung Chou, a director of Proficient. Shih-Chung Chou had served as the sponsor of Proficient since its Initial Public Offering until March 12, 2020, when he entered into an agreement with Complex Zenith Limited and assigned all of his equity interest in Proficient and his rights and obligations as a sponsor to Complex Zenith Limited.

“Trust Account” means the trust account that holds a portion of the proceeds of the Initial Public Offering and the concurrent sale of the Private Placement Warrants.

“Units” means units issued in the Initial Public Offering, each consisting of one share of common stock of Proficient, one Warrant and one Right.

“U.S.” means the United States of America.

“U.S. GAAP” means United States generally accepted accounting principles.

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“Warrant” means a warrant to purchase one ADS of the Company issued in this offering. Each Warrant entitles the holder thereof to purchase one ADS at a price of $[        ] per ADS expire 5 years after the issuance date.

“we,” “our,” “us,” “the company” and other similar terms refer to Lion Group Holding Ltd. and its consolidated subsidiaries.

This prospectus contains translations of Hong Kong dollars into U.S. dollars solely for the convenience of the reader. The conversion of Hong Kong dollars into U.S. dollars are based on the exchange rates set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Unless otherwise noted, all translations from Hong Kong dollars to U.S. dollars and from U.S. dollars to Hong Kong dollars in this prospectus were made at a rate of HK$7.7501 to US$1.00, the noon buying rate in effect as of June 30, 2020.

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SELECTED HISTORICAL FINANCIAL INFORMATION

The following tables set forth selected historical financial information derived from Lion’s audited consolidated financial statements as of and for the years ended December 31, 2017, 2018 and 2019, each of which is included elsewhere in this prospectus. Such financial information should be read in conjunction with the audited financial statements and related notes included elsewhere in this prospectus.

The following selected consolidated financial data as of June 30, 2020 and for the six months ended June 30, 2019 and 2020 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should carefully read the following selected financial information in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Lion’s financial statements and the related notes contained elsewhere in this prospectus.

Consolidated Statements of Operations and Comprehensive (Loss) Income

 

Year ended December 31,

 

Six months ended June 30,

   

2017

 

2018

 

2019

 

2019

 

2020

   

US$

 

%

 

US$

 

%

 

US$

 

%

 

US$

 

%

 

US$

 

%

                           

(Unaudited)

     

(Unaudited)

   

Revenues

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

CFD trading services

 

 

 

 

 

 

 

 

 

12,843,574

 

 

69.3

 

 

4,703,195

 

 

58.70

 

 

5,126,239

 

 

79.7

 

Insurance brokerage services

 

9,623,359

 

 

97.3

 

 

5,378,679

 

 

81.8

 

 

2,648,141

 

 

14.3

 

 

1,820,214

 

 

22.7

 

 

638,574

 

 

9.9

 

Futures brokerage and securities brokerage services

 

268,252

 

 

2.7

 

 

2,066,354

 

 

31.5

 

 

2,215,867

 

 

12.0

 

 

1,461,652

 

 

18.3

 

 

617,242

 

 

9.6

 

Others

 

 

 

 

 

(876,770

)

 

(13.3

)

 

819,268

 

 

4.4

 

 

22,180

 

 

0.3

 

 

48,461

 

 

0.8

 

Total revenues

 

9,891,611

 

 

100.0

 

 

6,568,263

 

 

100.0

 

 

18,526,850

 

 

100.0

 

 

8,007,241

 

 

100.0

 

 

6,430,516

 

 

100.0

 

     

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Expenses

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Commission expenses

 

(8,221,372

)

 

(83.0

)

 

(5,471,602

)

 

(83.3

)

 

(3,355,205

)

 

(18.1

)

 

(2,275,430

)

 

(28.4

)

 

(762,061

)

 

(11.9

)

Compensation expenses

 

(1,211,785

)

 

(12.3

)

 

(1,639,288

)

 

(25.0

)

 

(2,430,636

)

 

(13.1

)

 

(1,017,639

)

 

(12.7

)

 

(1,486,160

)

 

(23.0

)

Communication and technology expenses

 

(144,156

)

 

(1.5

)

 

(588,353

)

 

(9.0

)

 

(823,433

)

 

(4.4

)

 

(365,576

)

 

(4.6

)

 

(469,662

)

 

(7.3

)

Professional fees

 

(59,038

)

 

(0.6

)

 

(227,998

)

 

(3.5

)

 

(761,238

)

 

(4.1

)

 

(62,622

)

 

(0.7

)

 

(153,853

)

 

(2.4

)

Services fees

   

 

   

 

   

 

   

 

   

 

   

 

 

(164,414

)

 

(2.1

)

 

(231,785

)

 

(3.6

)

Interest expenses

 

(36,665

)

 

(0.3

)

 

(118

)

 

 

 

(731,812

)

 

(4.0

)

 

(979

)

 

(0.0

)

 

(79,343

)

 

(1.2

)

General and administrative expenses

 

(272,682

)

 

(2.8

)

 

(539,773

)

 

(8.2

)

 

(692,648

)

 

(3.7

)

 

(320,507

)

 

(4.0

)

 

(292,788

)

 

(4.6

)

Occupancy expenses

 

(502,120

)

 

(5.1

)

 

(548,331

)

 

(8.3

)

 

(591,936

)

 

(3.2

)

 

(236,701

)

 

(3.0

)

 

(323,224

)

 

(5.0

)

Other expenses

 

(75,512

)

 

(0.8

)

 

(297,674

)

 

(4.5

)

 

(859,118

)

 

(4.6

)

 

(48,246

)

 

(0.6

)

 

(254,442

)

 

(4.0

)

Total expenses

 

(10,523,330

)

 

(106.4

)

 

(9,313,137

)

 

(141.8

)

 

(10,246,026

)

 

(55.3

)

 

(4,492,114

)

 

(56.1

)

 

(4,053,318

)

 

(63.0

)

(Loss)/income before income taxes

 

(631,719

)

 

(6.4

)

 

(2,744,874

)

 

(41.8

)

 

8,280,824

 

 

44.7

 

 

3,515,127

 

 

43.9

 

 

2,377,198

 

 

37.0

 

Income tax expenses

 

(102,936

)

 

(1.0

)

 

(26,334

)

 

(0.4

)

 

(64,472

)

 

(0.3

)

 

(59,993

)

 

(0.7

)

 

(3,321

)

 

(0.1

)

Net (loss)/income

 

(734,655

)

 

(7.4

)

 

(2,771,208

)

 

(42.2

)

 

8,216,352

 

 

44.4

 

 

3,455,134

 

 

43.2

 

 

2,373,877

 

 

36.9

 

Other comprehensive income (loss)

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Foreign currency translation adjustment

 

(95,125

)

 

(1.0

)

 

(24,749

)

 

(0.4

)

 

75,637

 

 

0.4

 

 

(39,839

)

 

(0.5

)

 

20,560

 

 

0.3

 

Comprehensive (loss)/income

 

(829,780

)

 

(8.4

)

 

(2,795,957

)

 

(42.6

)

 

8,291,989

 

 

44.8

 

 

3,415,295

 

 

42.7

 

 

2,394,437

 

 

37.2

 

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Consolidated Statements of Financial Positions

 

As of December 31,

 

June 30,
2020

   

2017

 

2018

 

2019

 
               

(Unaudited)

Assets

 

 

   

 

   

 

   

 

 

Cash and cash equivalents

 

$

2,337,161

 

$

3,116,209

 

$

6,388,978

 

$

8,111,409

Restricted cash

 

 

619,970

 

 

3,991,949

 

 

2,192,201

 

 

1,470,486

Securities owned, at fair value

 

 

 

 

1,107,233

 

 

180,201

 

 

9,424

Derivative, at fair value

 

 

 

 

 

 

194,110

 

 

11,069

Receivables from broker-dealers and clearing organizations

 

 

25,588

 

 

842,045

 

 

20,409

 

 

18,703

Receivables from broker-dealers and clearing organizations – client accounts

 

 

907,568

 

 

5,566,745

 

 

1,664,552

 

 

2,182,623

Commissions receivables

 

 

344,230

 

 

157,004

 

 

88,560

 

 

60,839

Short-term loans receivable

 

 

 

 

 

 

1,637,310

 

 

2,087,593

Other receivables

 

 

645,048

 

 

 

 

 

 

306,368

Prepaids and deposits

 

 

268,987

 

 

470,707

 

 

676,355

 

 

452,385

Fixed assets, net

 

 

76,121

 

 

105,964

 

 

73,688

 

 

53,186

Intangible asset

 

 

63,980

 

 

63,847

 

 

67,964

 

 

86,762

Other assets

 

 

131,122

 

 

251,058

 

 

233,343

 

 

219,558

Deferred taxes

 

 

 

 

 

 

677

 

 

198

Total assets

 

$

5,419,775

 

$

15,672,761

 

$

13,418,348

 

$

15,070,603

   

 

   

 

   

 

   

 

 

Liabilities

 

 

   

 

   

 

   

 

 

Payables to broker-dealer and clearing organizations

 

$

8,625

 

$

 

$

 

$

607,132

Payables to clients

 

 

1,518,026

 

 

9,551,219

 

 

3,853,693

 

 

3,044,689

Commissions payable

 

 

468,668

 

 

125,668

 

 

29,439

 

 

16,953

Dividends payable

 

 

 

 

 

 

385,901

 

 

Other payables

 

 

196,609

 

 

205,519

 

 

417,445

 

 

1,149,637

Short-term borrowings

 

 

 

 

 

 

1,412,570

 

 

621,101

Short-term borrowings from related party

 

 

 

 

 

 

128,415

 

 

Derivative, at fair value

 

 

 

 

20,287

 

 

 

 

Tax payable

 

 

76,276

 

 

 

 

 

 

Deferred taxes

 

 

1,778

 

 

1,150

 

 

 

 

Total liabilities

 

$

2,269,982

 

$

9,903,843

 

$

6,227,463

 

$

5,439,512

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RISK FACTORS

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our securities could decline due to any of these risks, and, as a result, you may lose all or part of your investment.

Risks Related to Our Business and Industry

We operate in a heavily regulated industry, and are subject to extensive and evolving regulatory requirements in the jurisdictions in which we operate.

We operate in a highly-regulated industry and must comply with the applicable regulatory requirements in the jurisdictions it operates. Our major regulators include, Cayman Islands Monetary Authority (CIMA), Securities and Futures Commission of Hong Kong (HKSFC), the Hong Kong Insurance Authority (HKIA), and Hong Kong Customs and Excise Department (HKCED). These regulators and self-regulatory organizations govern our business operations in a variety of ways and conduct regular examinations of our business to monitor our compliance with applicable regulations. Among other things, we are subject to regulations with regard to (i) our sales practices, including our interaction with and solicitation of clients and our marketing activities; (ii) the custody, control and safeguarding of our clients’ assets; (iii) maintaining specified minimum amounts of capital and limiting withdrawals of funds from our regulated operating subsidiaries; (iv) submitting regular financial and other reports to regulators; (v) licensing for our operating subsidiaries and our employees; and (vi) the conduct of our directors, officers, employees and affiliates. In addition, as the online brokerage service industry in Hong Kong is at a relatively early stage of development, interpretation and enforcement of the applicable regulatory regime are subject to significant uncertainties, which may result in difficulties in determining whether our existing practices violates any applicable laws and regulations.

Compliance with these regulations is complicated, time consuming and expensive. Our ability to comply with all applicable laws and regulations is largely dependent on our internal compliance system, as well as our ability to attract and retain qualified compliance personnel. While we maintain systems and procedures designed to ensure that we comply with applicable laws and regulations, we cannot assure you that we are able to prevent all possible violations. Non-compliance with applicable laws or regulations could result in sanctions being levied against us, including the imposition of fines or penalties, censures, restrictions on certain business activities, suspension or expulsion from a jurisdiction or market or the revocation or limitation of licenses, which could adversely affect our reputation, prospects, revenues and earnings. Furthermore, any future change in the regulatory, legal and industry environment for the futures brokerage services, securities brokerage services, CFD trading services, insurance brokerage services, or asset management services may have a significant impact on our business.

In addition, we are subject to regular investigations, inquiries and inspections from the relevant regulatory bodies. For example, from time to time, our HKSFC-licensed subsidiaries may be subject to or required to assist in inquiries or investigations by regulatory authorities in Hong Kong, principally the HKSFC. The HKSFC 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. Similarly, our Cayman subsidiary may be subject to CIMA’s on-site inspections and inquiries from time to time. If any misconduct is identified as a result of inquiries, reviews, investigation or inspections, the relevant regulatory authorities may take disciplinary actions against us. There also remains a risk that we may not be able to rectify our practices to be in compliance with the relevant rules and regulations following the identification of any such misconduct or material non-compliance, which may result in regulators taking additional actions against it. We were inspected by both the HKSFC and CIMA during 2019, and both regulators identified certain areas in which our operations can improve. We have finished implementing the measures recommended by the HKSFC and received letters from the HKSFC confirming that they had no further comments relating to their inspections of Lion Asset Management Limited on November 21, 2019, and of both Lion International Securities Group Limited and Lion Futures Limited on May 20, 2020. These are the only subsidiaries subject to HKSFC oversight and inspection. We are still in the process of implementing the improvements recommended by CIMA and expect that we will be able to adopt a sufficient number of these changes in time to satisfy CIMA. However, if we are unable to make these changes we may be subject to fines or other disciplinary actions. If any such outcome occurs, there may be a material and adverse effect on our business, results of operations, financial conditions and prospects.

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We had incurred net losses in the past, and we may incur losses again in the future.

We had net losses of US$0.7 million and US$2.8 million in 2017 and 2018, respectively. Although we had net income of US$8.2 million in 2019 and US$2.4 million for the six months ended June 30, 2020, we cannot assure you that we will be able to continue to generate net income in the future. We anticipate that our operating cost and expenses will increase in the foreseeable future as we continue to grow our business, attract new clients, enhance our risk management capabilities and increase our brand recognition. These efforts may prove more costly than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. There are other external and internal factors that could negatively affect our financial condition. For example, the trading volume achieved on our platform may be lower than expected, which may lead to lower than expected revenues. Furthermore, we may adopt a new share incentive plans in the future, which will result in significant share-based compensation expenses to us. We generated 99.7%, 112.6%, 85.9% and 61.0% of our total revenues from commissions charged to our clients who trade on our platform in 2017, 2018 and 2019 and for the six months ended June 30, 2020, respectively. Any material decrease in our commissions would have a substantial impact on our financial conditions. As a result of the foregoing and other factors, we may continue to incur net losses in the future.

We may not be able to obtain or maintain all necessary licenses, permits and approvals and to make all necessary registrations and filings for our business activities in multiple jurisdictions and related to residents therein, especially in the PRC or otherwise relating to PRC residents.

We operate in a heavily-regulated industry which requires various licenses, permits and approvals in different jurisdictions to conduct our businesses. Our clients include people who live in jurisdictions where we do not have licenses issued by the local regulatory bodies. It is possible that authorities in those jurisdictions may take the position that we are required to obtain licenses or otherwise comply with local laws and regulations in order to conduct our business with residents living in those jurisdictions. In any jurisdictions, if we fail to comply with the regulatory requirements, we may risk being disqualified for our existing businesses or being rejected for renewal of our qualifications and/or licenses upon expiry by the regulatory authorities as well as other penalties, fines or sanctions. In addition, in respect of any new business that we may contemplate, we may not be able to obtain the relevant approvals for developing such new business if we fail to comply with the relevant regulations and regulatory requirements. As a result, we may fail to develop new business as planned, or we may fall behind our competitors in such businesses.

We do not hold any licenses or permits from any PRC regulatory bodies for our securities brokerage business. Currently, a large number of our clients are PRC residents and certain of the executive directors and other independent contractors are providing supporting services remotely from the PRC. The transactions on our trading platform are all conducted outside PRC and our current activities in China does not require a securities brokerage license, a making license or permit under existing PRC securities laws and regulations. However, there remains uncertainties as to how the current and any future PRC laws and regulations will be interpreted or implemented in the context of operating securities-related business in China. We cannot assure you that our current operating model will not be deemed as operating securities brokerage business in China, subjecting us to further inquiries or rectifications. If certain of our activities in China were deemed by PRC regulators to be providing securities brokerage services, investment consulting services or stock options brokerage business in China, we would be required to obtain the required licenses or permits from the relevant regulatory bodies, including the China Securities Regulatory Commission (CSRC). The failure to obtain such licenses or permits may subject us to regulatory actions and penalties, including fines, suspension of parts or all of our operations in the PRC, and temporary suspension or removal of our websites and mobile application in China. In such cases, our business, financial condition, results of operations and prospects may be materially and adversely affected.

PRC governmental control of currency conversion, cross-border remittance and offshore investment could have a direct impact on the trading volume on our platform, and the PRC government could further tighten restrictions on converting Renminbi to foreign currencies and/or deems our practices to be in violation of PRC laws and regulations.

A majority of our clients are PRC residents and are therefore subject to the restrictions under the rules and regulations promulgated by the State Administration of Foreign Exchange (SAFE), regarding the conversion of Renminbi into foreign currencies and the remittance and the use of such funds outside China. Under current PRC foreign exchange regulations, each PRC citizen is permitted to convert up to an aggregate of US$50,000 equivalent Renminbi each year for appropriate personal use. Such appropriate use does not include direct investment into secondary stock markets,

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