424B3 1 f424b30121_liongroup.htm

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-252288

PROSPECTUS

LION GROUP HOLDING LTD.

15,380,000 AMERICAN DEPOSITARY SHARES REPRESENTING
CLASS A ORDINARY SHARES

This prospectus relates to the resale from time to time of an aggregate of 15,380,000 Class A Ordinary Shares, represented by American Depositary Shares (“ADS”) (which represents one Class A Ordinary Share), par value $0.0001 per share, of Lion Group Holding Ltd. (“Lion,” the “Company,” “we,” “our,” or “us”), including (i) 800,000 ADSs issuable upon conversion of senior secured convertible debentures (the “2020 Debentures”), (ii) 5,000,000 ADSs issuable upon exercise of a 2-year warrant (the “Series B Warrant”) to purchase ADSs, (iii) 1,200,000 ADSs issuable upon exercise of a warrant (the “Series A Warrant”) to purchase ADSs, (iv) 7,500,000 ADSs issuable upon exercise of a 7-year warrant (the “Series C Warrant”) to purchase ADSs (collectively, together with the Series A Warrant, the Series B Warrant and the Series C Warrant, referred to as the “2020 Warrants”), (v) an additional 80,000 ADSs to be issued in relation to the full subscription of the 2020 Debentures, (vi) an additional 500,000 ADSs issuable (50,000 ADSs for every $1 million in aggregate paid for the 2020 Warrants) upon the full exercise of the Series B Warrant, and (vii) an additional 300,000 ADSs are issuable and will be paid in kind pursuant to the 2020 Debentures if the Company elects not to pay interest quarterly in cash. The 2020 Debentures and the 2020 Warrants were issued to ATW Opportunities Master Fund, L.P (the “selling stockholder”) in connection with a private placement, completed on December 14, 2020 (the “December Private Placement”). We are registering for resale the ADSs issuable upon conversion of the 2020 Debentures and exercise of the 2020 Warrants pursuant to the securities purchase agreement (the “Securities Purchase Agreement”) that we entered into with the selling stockholder as of December 11, 2020.

The 2020 Debentures matures 30 months from their date of issuance and are a senior secured obligation of the Company secured by substantially all of our assets. The 2020 Debentures are convertible at an initial $2.00 per share, subject to adjustment. The 2020 Debentures are subject to a “conversion blocker” such that each of the selling stockholders cannot convert the 2020 Debentures to the extent that the conversion would result in the selling stockholder and its affiliates holding more than 4.99% of the outstanding ordinary shares (which the selling stockholder can increase to 9.99% upon at least 61 days prior written notice to us). The Series B Warrant has a two-year term and is immediately exercisable at an exercise price of $2.00 per ADS. The Series A Warrant is exercisable until on or prior to 5:00 p.m. (New York City time) on December 14, 2027 at an exercise price of $2.45 per ADS. The Series C Warrant has a seven-year term and is immediately exercisable at an exercise price of $2.45 per ADS, but the exercisability of which shall be in proportion to the exercise of the Series B Warrant by the holder of the Series C Warrant. Similar to the 2020 Debentures, the 2020 Warrants include an adjustment provision in the event of a Share Combination Event (as defined below) that reduces to exercise price of such warrants to the Market Price on the sixteenth (16th) trading day following the Share Combination Event. Additionally, if we issue ordinary shares or ordinary share equivalents for an effective price less than $2.20, subject to adjustment, then the exercise price shall be adjusted to such lower price and the number of ADSs issuable upon exercise of the 2020 Warrants shall be adjusted proportionally to maintain the aggregate exercise price of the 2020 Warrants. Further, for each $1 million of subscription amount under the 2020 Debenture and the Series B Warrant, the selling shareholder shall receive a certificate representing 50,000 ADSs (or such lesser number on a ratable basis if the Subscription Amount is less than $1 million). As a result, there are an additional 80,000 ADSs to be issued in relation to the full subscription of the 2020 Debentures and an additional 500,000 ADSs issuable (50,000 ADSs for every $1 million in aggregate paid for the 2020 Warrants) upon the full exercise of the Series B Warrant.

The selling stockholder may offer, sell or distribute all or a portion of the securities registered hereby publicly or through private transactions at prevailing market prices or at negotiated prices. The selling stockholder may retain underwriters, dealers or agents from time to time. See “Plan of Distribution” for more information about how the selling stockholder may sell the ADSs being registered pursuant to this prospectus.

As of the date of this prospectus, our ADSs and Warrants are listed on the NASDAQ under the symbols “LGHL” and “LGHLW”, respectively. On January 29, 2021, the closing sale prices of our ADSs and Warrants were $3.60 and $0.34, respectively.

The offering price of the ADS will be determined between the selling shareholder and us at the time of pricing, considering our historical performance and capital structure, prevailing market conditions, and overall assessment of our business, and may be at a discount to the current market price. Therefore, the recent market price used throughout this prospectus may not be indicative of the actual public offering price for our ADSs and the warrants.

Our ADSs each represent one of our Class A Ordinary Shares. Our ordinary shares consist of Class A Ordinary Shares and Class B Ordinary Shares. In respect of matters requiring the votes of shareholders, holders of Class A Ordinary Shares are entitled to one vote per share, while holders of Class B Ordinary Shares are entitled to ten votes per share based on our dual-class share structure. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while 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 thereof to any person or entity which is not an affiliate of such holder, such Class B Ordinary Shares shall be automatically and immediately converted into the equal number of Class A Ordinary Shares. See “Description of Share Capital.”

Investing in our securities is highly speculative and involves a high degree of risk. See “Risk Factors” section beginning on page 18 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.

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

The date of this prospectus is January 29, 2021.

 

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TABLE OF CONTENTS

 

Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

ii

SUMMARY OF THE PROSPECTUS

 

1

THE OFFERING

 

5

SELECTED HISTORICAL FINANCIAL INFORMATION

 

8

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

10

RISK FACTORS

 

18

USE OF PROCEEDS

 

46

CORPORATE HISTORY AND STRUCTURE

 

47

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

 

48

INDUSTRY

 

68

BUSINESS

 

74

MANAGEMENT

 

96

BENEFICIAL OWNERSHIP OF SECURITIES

 

102

RELATED PARTY TRANSACTIONS

 

103

DESCRIPTION OF SHARE CAPITAL

 

106

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

 

107

SELLING STOCKHOLDER

 

117

PLAN OF DISTRIBUTION

 

118

EXPERTS

 

120

LEGAL MATTERS

 

120

WHERE YOU CAN FIND MORE INFORMATION

 

120

INDEX TO FINANCIAL STATEMENTS

 

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You should rely only on information contained in this prospectus. We have not, and the selling stockholder have not, authorized anyone to provide you with additional information or information different from that contained in this prospectus. Neither the delivery of this prospectus nor the sale of our securities means that the information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted.

The information in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since those dates.

No person is authorized in connection with this prospectus to give any information or to make any representations about us, the securities offered hereby or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us.

Neither we nor the selling stockholder have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus.

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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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The December Private Placement

On December 14, 2020, we completed a private placement (the “December Private Placement”) of $1,600,000 principal amount of the 2020 Debentures. The 2020 Debentures mature 30 months from the dates of issuance and may be redeemed by us prior to maturity as described below. The 2020 Debentures accrue interest at 9% per annum payable quarterly in cash or, in lieu of cash payment, in our ADSs, subject to adjustment and certain customary equity conditions. If interest is paid in our ADSs, the interest conversion rate will be 60% of the lesser of the then conversion price and the average of the five daily volume weighted average prices (“VWAP”) of our ordinary shares immediately prior to the applicable interest payment date. As a result, an additional 300,000 ADSs are issuable and will be paid in kind pursuant to the 2020 Debentures if the Company elects not to pay interest quarterly in cash. The 2020 Debentures are senior secured obligations of ours secured by substantially all of our assets pursuant to the terms of a security agreement dated as of December 14, 2020. The 2020 Debentures are convertible at $2.00 per ADS at any time.

The 2020 Debentures are subject to a “conversion blocker” such that the each of the holders of our 2020 Debentures cannot convert the 2020 Debentures to the extent that the conversion would result in the holder and its affiliates holding more than 4.99% of the outstanding common stock (which the holder can increase to 9.99% upon at least 61 days prior written notice to us).

Commencing on the one year anniversary date of the effective date of this registration statement, so long as at such time the company meets customary equity conditions including the effectiveness of a registration statement registering all of the ADSs issuable upon conversion of the 2020 Debenture (“Conversion Shares”), there is no existing event of default and the ADSs continue to trade on the primary trading market, we may at our option call for redemption all or part of the 2020 Debentures, upon not more than 20 trading days written notice, for an amount equal to 115% of the sum of the principal amount plus accrued but unpaid interest. Additionally, in connection with any such redemption, we will issue to the holder thereof an ADS purchase warrant, in the form of the Series A Warrant, to purchase up to 50% of the number of ADSs underlying the 2020 Debenture subject to such redemption at an exercise price of $2.45, subject to adjustment thereunder.

Any stock splits, reverse splits, recapitalizations, mergers, combinations and asset sales, stock dividends, and similar events (“Share Combination Event”) will result in a customary adjustment of the conversion price of the 2020 Debentures. Additionally, the 2020 Debentures include an adjustment provision that, subject to certain exceptions, on the sixteenth (16th) trading day, following the Share Combination Event, if the 5 lowest VWAPs during the 20 trading days immediately prior to the Share Combination Event (“Market Price”) is less than the then conversion price, then the conversion price of the 2020 Debentures will be reduced to equal to the Market Price. In addition to the foregoing, the conversion price of the 2020 Debenture also includes full ratchet anti-dilution in the event that the Company issues any ADSs or ordinary shares for a per share purchase price less than the then conversion price of the 2020 Debentures. In addition the consent of a majority of the then outstanding 2020 Debenture holders will be required before we can (i) other than permitted indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (ii) other than permitted liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (iii) amend, alter, or repeal any provision of our charter documents, including, without limitation, certificate of incorporation or bylaws, in a manner adverse to the 2020 Debentures; (iv) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of ADSs, ordinary shares or ordinary shares equivalents other than as to (a) the Conversion Shares or the shares issuable upon exercise of the Series B Warrant as permitted or required under the related documents pursuant to the Securities Purchase Agreement and (b) repurchases of ADSs, ordinary shares or ordinary shares equivalents of departing officers and directors of the Company, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors during the term of the 2020 Debenture; (v) repay, repurchase or offer to repay, repurchase or otherwise acquire any indebtedness, other than the 2020 Debentures if on a pro-rata basis, other than regularly scheduled principal and interest payments as such terms are in effect as of the original issue date of the 2020 Debentures, provided that such payments shall not be permitted if, at such time, or after giving effect to such payment, any event of default exist or occur; (vi) pay cash dividends or distributions on any equity securities of the Company; (vii) enter into any transaction with any affiliate of the Company which would be required to be disclosed in any public filing with the Securities and Exchange Commission (the “SEC”), unless such

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transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); (viii) as to our subsidiaries other than Lion Wealth Limited, Lion Foreign Exchange Limited, and Lion Wealth Management Limited, grant any party other than the selling stockholder a security interest in the assets of such subsidiaries; or (ix) enter into any agreement with respect to any of the above foregoing.

We also issued three series of the 2020 Warrants which are exercisable for, in the aggregate, up to 13,700,000 ADSs. The Series B Warrant has a two-year term and is immediately exercisable at an exercise price of $2.00 per ADS. The Series A Warrant is exercisable until on or prior to 5:00 p.m. (New York City time) on December 14, 2027 at an exercise price of $2.45 per ADS. The Series C Warrant has a seven-year term and is immediately exercisable at an exercise price of $2.45 per ADS, but the exercisability of which shall be in proportion to the exercise of the Series B Warrant by the holder of the Series C Warrant. Similar to the 2020 Debentures, the 2020 Warrants include an adjustment provision in the event of a Share Combination Event (as defined below) that reduces to exercise price of such warrants to the Market Price on the sixteenth (16th) trading day following the Share Combination Event. Additionally, if we issue ordinary shares or ordinary share equivalents for an effective price less than $2.20, subject to adjustment, then the exercise price shall be adjusted to such lower price and the number of ADSs issuable upon exercise of the 2020 Warrants shall be adjusted proportionally to maintain the aggregate exercise price of the 2020 Warrants. Further, for each $1 million of subscription amount under the 2020 Debenture and the Series B Warrant, the purchaser shall receive a certificate representing 50,000 ADSs (or such lesser number on a ratable basis if the Subscription Amount is less than $1 million). As a result, there are an additional 80,000 ADSs to be issued in relation to the full subscription of the 2020 Debentures and an additional 500,000 ADSs issuable (50,000 ADSs for every $1 million in aggregate paid for the 2020 Warrants) upon the full exercise of the Series B Warrant.

If at any time after 120 days following April 14, 2021, and prior to the respective expiration date of the Series A Warrant, the Series B Warrant and the Series C Warrant, the Company fails to maintain an effective registration statement with the SEC covering the resale of the shares of common stock underlying the 2020 Debentures and the 2020 Warrants, the 2020 Warrants may be exercised by means of a cashless exercise, subject to applicable law and the terms of the relevant deposit agreement governing the ADSs, until such time as there is an effective registration statement.

We have agreed to file a registration statement with the SEC registering for resale the number of ADSs equal to the principal amount of the 2020 Debentures and 30-months of interest and the ADSs underlying the 2020 Warrants. We will use our best efforts to have this registration statement declared effective by February 11, 2021.

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

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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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SUMMARY OF THE OFFERING

Issuer:

 

Lion Group Holding Ltd.

Securities offered by selling stockholder:

 


Up to an aggregate of 15,380,000 Class A Ordinary Shares, represented by ADSs including (i) 800,000 ADSs issuable upon conversion of the 2020 Debentures, (ii) 5,000,000 ADSs issuable upon exercise of the Series B Warrant to purchase ADSs, (iii) 1,200,000 ADSs issuable upon exercise of the Series A Warrant to purchase ADSs, (iv) 7,500,000 ADSs issuable upon exercise of the Series C Warrant to purchase ADSs, (v) an additional 80,000 ADSs to be issued in relation to the full subscription of the 2020 Debentures, (vi) an additional 500,000 ADSs issuable (50,000 ADSs for every $1 million in aggregate paid for the 2020 Warrants) upon the full exercise of the Series B Warrant, and (vii) an additional 300,000 ADSs are issuable and will be paid in kind pursuant to the 2020 Debentures if the Company elects not to pay interest quarterly in cash.

Offering price:

 

The selling stockholder may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. See “Plan of Distribution.”

Shares outstanding prior to the offering:

 


19,470,649

Use of proceeds:

 

We will not receive any proceeds from the sale of our ADSs by the selling stockholder except for proceeds from the exercise of the Warrants. We will bear all other costs, fees and expenses incurred by us, or by the selling stockholder, in effecting the registration of the shares covered by this prospectus. The selling stockholder, however, will pay any other expenses incurred in selling its common stock, including any brokerage commissions or costs of sale.

For more information on the use of proceeds, see “Use of Proceeds” on page 46.

Trading symbol:

 

Our ADSs and Warrants are listed on the NASDAQ under the symbols “LGHL” and “LGHLW”, respectively.

Risk factors:

 

Investing in our securities involves a high degree of risk and purchasers of our securities may lose their entire investment. See “Risk Factors” and the other information included and incorporated by reference into this prospectus for a discussion of risk factors you should carefully consider before deciding to invest in our securities.

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.

“2020 Debentures” means the senior secured convertible debentures, convertible into 800,000 ADSs, which will mature in 30 months from the dates of issuance pursuant to the 9% Senior Secured Convertible Debenture dated December 14, 2020.

“2020 Warrants” means, together, the Series A Warrant, Series B Warrant and the Series C Warrant.

“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.

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“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.

“December Private Placement” means the 2020 Debentures and the 2020 Warrants owned by ATW Opportunities Master Fund, L.P. and issued by the Company pursuant to Securities Purchase Agreement dated December 11, 2020.

“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.

“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.

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

“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.

“OTCQB” means OTCQB marketplace operated by OTC Markets Group.

“OTCQX” means the OTCQX marketplace operated by OTC Markets Group.

“Pink Open Market” means the OTC — Pink Open Market operated by OTC Markets Group.

“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.

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

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“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.

“Series A Warrant” means a warrant until on or prior to 5:00 p.m. (New York City time) on December 14, 2027 exercisable into 1,200,000 ADSs at an exercise price of $2.45 per ADS pursuant to the Series A American Depositary Shares Purchase Warrant dated December 14, 2020.

“Series B Warrant” means a 2-year warrant exercisable into 5,000,000 ADSs at an exercise price of $2.00 per ADS pursuant to the Series B American Depositary Shares Purchase Warrant dated December 14, 2020.

“Series C Warrant” means a 7-year warrant exercisable into 7,500,000 ADSs at an exercise price of $2.45 per ADS pursuant to the Series C American Depositary Shares Purchase Warrant dated December 14, 2020.

“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 Old 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.

“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.

“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.

7

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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

9

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

We are providing the following unaudited pro forma combined financial information to aid you in your analysis of the financial aspects of the Transactions.

The following unaudited pro forma condensed combined statement of financial positions combines the unaudited historical balance sheet of Proficient as of March 31, 2020, and the audited consolidated historical balance sheet of Lion as of December 31, 2019, giving effect to the Business Combination as if it had been consummated as of March 31, 2020.

The following unaudited pro forma condensed combined statement of profit or loss for the six months ended March 31, 2020 combines the unaudited condensed consolidated statement of comprehensive income of Lion for the six months ended December 31, 2019, and the unaudited statement of operations of Proficient for the six months ended March 31, 2020, giving effect to the Business Combination as if it had occurred as of the earliest period presented.

The following unaudited pro forma condensed combined statement of profit or loss for the twelve months ended September 30, 2019 combines the audited consolidated statement of comprehensive income of Lion for the twelve months ended December 31, 2019 with the audited statement of operations of Proficient for the twelve months ended September 30, 2019, giving effect to the Business Combination as if it had occurred as of the earliest period presented.

This information should be read together with Lion’s and Proficient’s audited and unaudited financial statements and related notes, Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information included elsewhere in this prospectus.

Description of the Transactions

On March 10, 2020, we entered into the Business Combination Agreement with Proficient, Lion, Merger Sub, and the other parties thereto, which was later amended and restated on May 12, 2020 (Proficient, collectively with Merger Sub, shall be referred to as “Proficient” in these unaudited pro forma combined financial statements). The Business Combination Agreement provided that, among other things, (i) that each applicable security holder of Proficient immediately prior to the effective time of the Merger shall receive the equivalent number of our ADSs in lieu of the Class A Ordinary Shares such security holder would otherwise receive in the Merger, and (ii) that we shall establish one or more sponsored ADR facilities for the purpose of issuing the ADSs.

The Business Combination Agreement provided for (i) the merger of Merger Sub with Proficient, with Proficient surviving the Merger and the security holders of Proficient becoming security holders of us, (ii) immediately prior to the effectiveness of such Merger, the exchange of 100% of the outstanding ordinary shares of Lion by the Sellers for our capital shares, and (iii) the adoption of our amended and restated memorandum and articles of association. The Class A ordinary shares and the Class B ordinary shares are identical except that the Class B ordinary shares shall (i) entitle the holder to 10 votes per share and (ii) be convertible, at the election of the holder, into Class A ordinary shares on a one-to-one basis. As a result of and upon consummation of the Business Combination on June 16, 2020, each of Proficient and Lion became a wholly-owned subsidiary of ours, and we became a new public company owned by the prior stockholders of Proficient and the prior shareholders of Lion.

Pursuant to the Business Combination Agreement, upon the consummation of the Business Combination (i) each outstanding share of common stock of Proficient were converted into one Class A Ordinary Share, (ii) each outstanding Warrants were converted into one warrant of ours that entitles the holder thereof to purchase one of our Class A Ordinary Shares in lieu of one share of common stock of Proficient and otherwise upon substantially the same terms and conditions, and (iii) each Right were exchanged for one-tenth of one Class A Ordinary Share. In addition, Proficient provided its public stockholders with the opportunity to redeem, upon closing of the Business Combination, each ordinary share then held by them for cash equal to their pro rata share of the aggregate amount of deposit in the Trust Account, which held proceeds (including interests) of the Proficient’s IPO.

As a result, immediately upon the consummation of the Business Combination on June 16, 2020, (i) an aggregate of 11,109,426 shares of Proficient common stock were redeemed at a redemption price of approximately $10.185 per share into cash, (ii) an aggregate of 1,632,574 Class A Ordinary Shares, represented by 1,632,574 ADSs, were issued to the remaining Proficient’s public stockholders, (ii) an aggregate of 2,875,000 Class A Ordinary Shares, represented by 2,875,000 ADSs, were issued to the Proficient’s founders and (iv) an aggregate of 12,891,602 Ordinary Shares were

10

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issued to Lion’s original shareholders in exchange of their shareholdings in Lion, including 3,140,388 Class A Ordinary Shares and 9,751,214 Class B Ordinary Shares. On November 12, 2020, as a result of post-merger consideration adjustment, an aggregate of additional 121,473 Ordinary Shares were issued to Lion’s original shareholders, including 29,591 Class A Ordinary Shares and 91,882 Class B Ordinary Shares.

Accounting for the Business Combination

The Transactions are accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting, Proficient is treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Lion shareholders having a majority of the voting power of the combined company, Lion comprising the ongoing operations of the combined entity, Lion comprising a majority of the governing body of the combined company, and Lion’s senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Transactions are treated as the equivalent of Lion issuing stock for the net assets of Proficient, accompanied by a recapitalization. The net assets of Proficient are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions are those of Lion.

Basis of Pro Forma Presentation

The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Transactions, are factually supportable and are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Business Combination.

The unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. Lion and Proficient have not had any historical relationship prior to the Transactions. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

There is no historical activity with respect to us, Purchaser, and Merger Sub, and accordingly, no adjustments were required with respect to these entities in the pro forma combined financial statements.

The unaudited pro forma combined financial information has been prepared reflecting the actual redemption of 11,109,426 shares of Proficient common stock upon consummation of the Business Combination at a redemption price of approximately $10.185 per share into cash. Included in the shares outstanding and weighted average shares outstanding as presented in the pro forma combined financial statements are 12,891,602 Ordinary Shares issued to Lion shareholders.

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PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 2020
(UNAUDITED)

 

(A)
Lion (Consolidated)

 

(B)
Proficient

 

Actual Redemptions into Cash

Pro Forma adjustment

 

Pro Forma Balance Sheet

ASSETS

 

 

 

 

 

 

   

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

   

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,388,978

 

 

$

1,342,731

 

 

3,967,335

(2)

 

$

6,699,044

 

   

 

 

 

 

 

   

 

(5,000,000

)(3)

 

 

 

 

Restricted cash – bank balances held on behalf of customers

 

 

2,192,201

 

 

 

   

 

 

 

 

 

2,192,201

 

Receivables from broker-dealers and clearing organizations – customer accounts

 

 

1,664,552

 

 

 

   

 

 

 

 

 

1,664,552

 

Short-term loans receivable

 

 

1,637,310

 

 

 

   

 

 

 

 

 

1,637,310

 

Other assets

 

 

1,535,307

 

 

 

35,219

 

 

 

 

 

1,570,526

 

Total current assets

 

 

13,418,348

 

 

 

1,377,950

 

 

(1,032,665

)

 

 

13,763,633

 

Government securities held in Trust Account