Garden Stage Limited — FY2024 Form 20-F
Reporting period: Fiscal year ended March 31, 2024 (not a standalone 2023 fourth-quarter report). The company is a Cayman Islands holding company whose financial-services operations are conducted in Hong Kong through its subsidiaries. Financial statements are prepared under U.S. GAAP; amounts below are in U.S. dollars unless stated otherwise.
Business context and key financial metrics
Garden Stage provides securities brokerage and dealing, underwriting and placement, investment advisory, and asset-management services. It completed its Nasdaq IPO in December 2023; 15.625 million ordinary shares were outstanding at fiscal year-end.
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | $1.408 million | $3.259 million |
| Net loss | $4.589 million | $0.207 million |
| Net margin | (325.8%) | (6.4%) |
| Net cash used in operating activities | $7.091 million | $1.876 million |
| Cash and restricted cash | $8.938 million | $6.317 million |
| Total assets | $16.584 million | $13.131 million |
| Total liabilities | $7.298 million | $11.184 million |
| Shareholders’ equity | $9.285 million | $1.947 million |
FY2024 cash included $2.666 million of unrestricted cash and $6.272 million of restricted cash held for customers. Current assets were $12.256 million and current liabilities $7.100 million, but customer funds and corresponding customer payables are significant components. Customer payables totaled $6.771 million. No material financial borrowings are reported; operating lease liabilities were $0.290 million.
Changes versus FY2023
- Revenue fell 56.8%, chiefly as underwriting and placement income declined 90.3% to $0.153 million, from $1.575 million. Projects decreased from 14 to 8, and the weighted average equity fee rate fell from 3.97% to 2.11%.
- Brokerage commission revenue declined about 56% to approximately $0.398 million. U.S. exchange trading volume dropped from $192.1 million to $13.5 million; Hong Kong exchange volume fell from $143.5 million to $107.9 million.
- New advisory services, launched in April 2023, generated $0.421 million, or 29.9% of revenue. Handling income fell to $0.128 million from $0.370 million; investment-management fee income was nil after fund redemptions.
- Total expenses rose 72.6% to $5.985 million despite lower revenue. Compensation and benefits increased to $3.287 million, including $1.871 million of share-based compensation. Travel and business-development expenses rose to $1.611 million, including about $0.9 million for public relations/marketing and $0.5 million for the Nasdaq listing ceremony. Communications and technology expenses increased to $0.438 million.
- IPO proceeds materially strengthened equity and cash: gross proceeds were $11.5 million and net IPO proceeds in the cash-flow statement were $10.134 million. Financing cash flow was positive $9.694 million, offset by operating cash outflow.
Liquidity, outlook, risks and unusual items
- Management says cash, cash equivalents and restricted cash, together with anticipated operating cash flows, should cover general corporate needs for at least 12 months. However, operating cash use was $7.091 million in FY2024.
- Cash flow included a $6.3 million advance payment for future IT and marketing services, recorded within other assets. Investors should distinguish this advance from immediately available liquidity. The filing reports $6.413 million of total other assets before allowance, including $3.960 million classified as non-current.
- Hong Kong subsidiaries maintained regulatory capital above minimum requirements: total reported capital was $1.713 million against $0.396 million required. The asset-management subsidiary’s figure reflects its December 2023 regulatory return.
- Management plans to develop brokerage, underwriting/placing, advisory, asset management and margin-financing services, and enhance IT systems. Margin financing has not commenced; expansion depends on capital resources and regulatory requirements. No quantified revenue or earnings guidance is provided.
- Revenue is transaction- and market-sensitive and concentrated: the top five customers accounted for 63% of FY2024 revenue; the largest contributed 28%. Underwriting commitments could consume liquidity if offerings are undersubscribed, although none of the reported FY2022–FY2024 projects was undersubscribed.
- The company operates in Hong Kong and describes uncertainty over potential future PRC oversight or requirements affecting Hong Kong-based issuers. Other stated risks include Hong Kong regulatory compliance, customer defaults, competition, cyber and trading-system disruption, and low share liquidity. The controlling shareholder, Oriental Moon Tree Limited, held 73.44% of shares.
- Disclosure controls were concluded ineffective as of March 31, 2024. Identified material weaknesses involve U.S. GAAP/reporting expertise, lack of an internal-audit function and formal risk-control framework, and IT controls. Management describes remediation steps, but does not establish that the weaknesses are fully remediated.
- The financial-statement auditor issued an unqualified U.S. GAAP opinion. The auditor did not express an opinion on internal-control effectiveness. Revenue recognition and share-based compensation were identified as critical audit matters. The company changed auditors in January 2024; the filing reports no accounting disagreements with the predecessor.
- No material legal proceedings or significant off-balance-sheet arrangements are disclosed. Contractual lease commitments total $0.307 million. No dividends have been paid, and none are expected in the foreseeable future.
Important facts for investors to verify
- Reconcile the $6.3 million future-services prepayment to its counterparties, deliverables, timing, recoverability and remaining balance.
- Track operating cash use, unrestricted cash versus customer-restricted balances, and the company’s ability to fund operations without further financing.
- Assess whether revenue can recover and diversify after the steep decline in underwriting and U.S. brokerage activity, and whether the new advisory revenue is recurring.
- Confirm progress in remediating internal-control weaknesses and review the share-option expense, vesting, forfeitures and dilution potential.
- Review customer concentration, related-party balances and transactions, regulatory capital, and any developments affecting Hong Kong operations or the Nasdaq listing.