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United States securities and exchange commission logo
January 23, 2024
CHU Chun On Franco
Chief Executive Officer
Waton Financial Limited
Suite 3605-06, 36th Floor
Tower 6 The Gateway
Harbour City, Tsim Sha Tsui
Kowloon, Hong Kong
Re:Waton Financial Limited
Draft Registration Statement on From F-1
Submitted December 22, 2023
CIK No. 0001987363
Dear CHU Chun On Franco:
            We have reviewed your draft registration statement and have the following comment(s).
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR. If you do not believe a comment applies to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to this letter and your amended
draft registration statement or filed registration statement, we may have additional comments.
Draft Registration Statement on Form F-1 submitted December 22, 2023
Cover Page
1.Please disclose prominently on the prospectus cover page that you are not a Hong Kong
operating company but a British Virgin Islands company with operations conducted by
your subsidiaries based in Hong Kong.  Explain whether this structure is used to provide
investors with exposure to foreign investment in Hong Kong if the law prohibits direct
foreign investment in the operating companies, and disclose that investors may never hold
equity interests in the Hong Kong operating company.
2.Clearly disclose how you will refer to the holding company and subsidiaries when
providing the disclosure throughout the document so that it is clear to investors which
entity the disclosure is referencing and which subsidiaries or entities are conducting the

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business operations.  Refrain from using terms such as "we" or "our" when describing the
activities of functions of the operating subsidiaries.
Prospectus Summary, page 1
3.Please disclose at the forepart of your prospectus summary that a substantial portion of
your revenue was derived from a single related party customer, Wealth Guardian
Investment Limited, and quantify such percentage. Also, revise throughout your
prospectus such that when discussing the increase in revenues experienced between fiscal
years ended 2022 and 2023, you highlight clearly that such increase was derived from
revenues earned as a result of your arrangement with such related party. Further, disclose
in the prospectus summary your dependence on a single related party supplier, Shenzhen
Jinhui Technology Co., Ltd, for providing SaaS services.
4.Consistent with your disclosure on pages 22 and 96, please disclose in the prospectus
summary that WSI is involved in certain ongoing inquiries from the HKSFC concerning
its practices relating to protection of client assets, and that WSI may be subject to
disciplinary actions of the HKSFC as a result of contraventions of regulations by WSI’s
substantial shareholders, which could lead to revocation or suspension of licenses. To the
extent the substantial shareholder is an officer or director of the company, disclose their
name or advise why you believe such disclosure is not necessary.
5.We note your disclosure that the company uses a structure that involves subsidiaries based
in Hong Kong, the Cayman Islands, and the British Virgin Islands. Describe all contracts
and arrangements through which you claim to have economic rights and exercise control
that results in consolidation of the subsidiaries’ operations and financial results into your
financial statements. Identify clearly the entity in which investors are purchasing their
interest and the entities in which the company’s operations are conducted. Describe the
relevant contractual agreements between the entities and how this type of corporate
structure may affect investors and the value of their investment, including how and why
the contractual arrangements may be less effective than direct ownership and that the
company may incur substantial costs to enforce the terms of the arrangements. Disclose
the uncertainties regarding the status of the rights of the British Virgin Islands holding
company with respect to its contractual arrangements with the subsidiaries its founders
and owners, and the challenges the company may face enforcing these contractual
agreements due to legal uncertainties and jurisdictional limits. We note that you have
include a diagram illustrating your corporate structure. Please revise to disclose clearly the
ownership of the entities by direct equity interest by solid line or solid arrows and entities
controlled by contractual arrangements by dashed line or dashed arrows, if applicable.
6.In your summary of risk factors, disclose the risks that your corporate structure and
having the majority of the company’s operations in Hong Kong poses to investors. In
particular, describe the significant regulatory, liquidity, and enforcement risks with cross-
references to the more detailed discussion of these risks in the prospectus. For example,
specifically discuss risks arising from the legal system in China, including risks and

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uncertainties regarding the enforcement of laws and that rules and regulations in China
can change quickly with little advance notice; and the risk that the Chinese government
may intervene or influence your operations at any time, or may exert more control over
offerings conducted overseas and/or foreign investment in China-based issuers, which
could result in a material change in your operations and/or the value of the securities you
are registering for sale. Acknowledge any risks that any actions by the Chinese
government to exert more oversight and control over offerings that are conducted overseas
and/or foreign investment in China-based issuers could significantly limit or completely
hinder your ability to offer or continue to offer securities to investors and cause the value
of such securities to significantly decline or be worthless.
Controlled Company, page 13
7.Please discuss here and on page 43 the controlling shareholders' ability to control matters
requiring shareholder approval, including the election of directors, amendment of
organizational documents, and approval of major corporate transactions, such as a change
in control, merger, consolidation, or sale of assets. Further, clarify whether you plan to
rely on the “controlled company” exemptions from certain corporate governance
requirements.
Risk Factors, page 16
8.Given the Chinese government’s significant oversight and discretion over the conduct and
operations of your business, please revise to describe any material impact that
intervention, influence, or control by the Chinese government has or may have on your
business or on the value of your securities. Highlight separately the risk that the
Chinese government may intervene or influence your operations at any time, which could
result in a material change in your operations and/or the value of your securities. Also,
given recent statements by the Chinese government indicating an intent to exert more
oversight and control over offerings that are conducted overseas and/or foreign investment
in China-based issuers, acknowledge the risk that any such action could significantly limit
or completely hinder your ability to offer or continue to offer securities to investors and
cause the value of such securities to significantly decline or be worthless. We remind you
that, pursuant to federal securities rules, the term “control” (including the
terms “controlling,” “controlled by,” and “under common control with”) means “the
possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person, whether through the ownership
of voting securities, by contract, or otherwise.”
Management's Discussion and Analysis of Financial Condition and Results of Operations, page
58
9.Please revise your MD&A to discuss your financial condition and material changes in
financial condition.  Considering the materiality of the amount, specifically describe the
underlying reasons for the $1.2 million recognized in accumulated other comprehensive

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income as of April 1, 2021. Please ensure you provide sufficient information to allow an
investor to clearly understand how and why the amount was recognized.  Refer to Item
303 of Regulation S-K for guidance.
Key Components of Results of Operations - Revenues, page 60
10.In order to more clearly present material trends in your revenue, please revise to disclose
in a tabular format the amount of “Brokerage commission and handling charge income”
and “Project development income” and any other material amount of revenue recognized
by quarter.
Non-GAAP Measures, page 66
11.Please tell us why there is no deferred income tax impact related to excluding share-based
compensation expenses in your adjusted net income non-GAAP measure.  Refer to
Question 102.11 of the Non-GAAP Financial Measures C&D’s for guidance.
Other Income, page 66
12.We note your disclosure that “our foreign currency exchange gain was mainly raised from
foreign exchange differences in converting customers’ deposits from HK$ to US$ or vice
versa, to facilitate their securities trading transactions in Hong Kong or U.S. stock
exchanges.”  Please revise to disclose if you charge a fee or incorporate a bid/ask spread
in converting your customers deposits.  If not, please revise to more clearly explain what
generated $700 thousand of gains noting your disclosure on page 71 that your exposure to
foreign exchange fluctuations is minimal since HK$ is currently pegged to US$.
Revenue Recognition - Brokerage commission and handling charge income, page 70
13.Please tell us in detail and revise as necessary to explain how you considered discounts for
commissions, as disclosed on page 87, in determining the transaction price.  Specifically
clarify if the discounts represent variable consideration and if it is constrained.
Revenue Recognition - Project development income, page 70
14.Please provide us a detailed accounting analysis related to your project development
income revenue recognition policies.  Specifically tell us the following:

•Each promised good or service provided and specifically how you determined if your
promised goods or services included any software licenses, cloud-based services
including SaaS, customer options, professional services, or maintenance and support
(M&S) services.
•If the contracts included licenses of on-premise software.
•If the contracts included licenses of software subject to a hosting arrangement in the
scope of ASC 985.
•How you considered whether the license of software was distinct from other

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promised goods or services including any cloud-based services including SaaS.
•More clearly explain the cloud-based SaaS services provided, how you determined
the transaction price and if you satisfy the performance obligation at a point in time
or over time.
•More clearly explain the M&S services provided and clarify if the customer can
access the SaaS applications without subscribing to the M&S services.
•Why your disclosure does not reference SaaS services which you use throughout the
filing to describe your project development income.

Please revise your disclosure including in the notes to your financial statements to clarify
the above and more clearly identify each performance obligation, including any licenses
of software, any other the key accounting judgement made.
Industry, page 73
15.We note your disclosure here, in the prospectus summary, and in the business section, that
you are the fifth largest B2B fintech services providers for small and medium brokers in
Asia Pacific in terms of revenue, with revenue of US$5.2 million, accounting for 4.4% of
the market. When referencing such position here and throughout, please also disclose your
reliance on and the significant portion of such revenue that was derived from a single
related party customer.
Business, page 83
16.We note your disclosure on page 86 that WSI has invested in The Micro Connect, a new
financial market exchange platform in Macau for investing and trading of Daily Revenue
Contracts (“DRCs”). Please clarify what you mean "invested in", disclose the material
terms of any agreements, and discuss the anticipated timeframe for incorporating the
DRCs trading function in WSI’s trading platform APP. We also note that WSI has
engaged its supplier to develop this trading function which is not currently listed on WSI’s
trading platform APP. Please clarify if the supplier you engaged is a related party, and if
so disclose any material terms of your supplier agreement.
17.We note your disclosure on page 86 that WSI plans to develop and offer more
comprehensive service functions of the Broker Cloud solutions through product and
technology innovation, including digital asset-related functions such as trading access to
digital assets trading platform and AI-related functions. We also note that WSI has been
sourcing suitable partners such as digital asset platform operators to develop the new
functions in WSI’s SaaS services. Describe whether the planned business of any
subsidiary or affiliate entails, or will entail, the creation, issuance or use of crypto assets
and, if so, how those crypto assets will be used. If applicable, also disclose any related
business risks and challenges, including any known trends or uncertainties that are
reasonably expected to have a material impact on results of operations or financial
condition. Please also tell us whether you will undertake any determination of the
characterization of such crypto assets as securities, and include appropriate risk factor

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disclosure discussing the consequences to your business if any of the crypto assets you
service or support are securities. Also disclose here or elsewhere the material regulations
and regulatory entities that govern or have the potential to affect any crypto-related
business activities, and how you intend to comply with federal and state regulations,
including, for example, a discussion of whether you are or will be required to register as
an exchange or broker-dealer under the Exchange Act, and whether you are or will be
required to register as a money transmitter or a money services business.
Our Services - Securities brokerage services, page 87
18.Please revise to disclose, for each period presented, the percentage of brokerage
commissions recognized from transactions accessed through WSI’s trading APP.
Securities Brokerage Customers, page 89
19.We note your disclosure that when the introducing broker customer’s customers place
trade orders, it will, on behalf of its end users, place back-to-back orders through its
trading accounts maintained with WSI. Please revise to clarify how the introducing broker
places the trade order in the trading APP with you.  For example, manually input the trade,
use an application programming interface (API), et