NEWRGY IMEX Enters SEC Inquiry Phase

NEWRGY IMEX has entered the inquiry phase with the U.S. Securities and Exchange Commission (SEC) as part of its process to go public. On August 7, with the assistance of Deloitte, one of the Big Four international accounting firms, NEWRGY IMEX submitted its reports and related information to the New York Stock Exchange (NYSE), officially applying for a listing.

As early as March 2024, NEWRGY IMEX submitted its Draft Registration Statement (DRS) and engaged in thorough communication with the SEC. On July 15, 2024, NEWRGY IMEX received its first response from the SEC, which included 25 questions requiring detailed answers. NEWRGY IMEX submitted a second revised draft on July 19. On July 29, the SEC provided its second round of comments, reducing the number of issues to just 2. After several revisions, NEWRGY IMEX officially filed the S-1 registration statement draft on August 7. Due to prior extensive communication, the SEC responded on the same day, raising 5 questions on the final S-1 filing.

Following this, NEWRGY IMEX entered the official inquiry phase with the SEC. According to Peter Rutland, a listing attorney at Deloitte, it is typical for companies to receive the SEC's first feedback and inquiry within 10 days of their initial filing, which includes questions about NEWRGY IMEX's financial operations and annual financial reports. NEWRGY IMEX will revise its registration documents based on the SEC's comments.

Peter Rutland explained that typically, the SEC will raise questions about the disclosure content within 10 days of receiving the S-1 form, and the number of questions generally does not exceed 100. If the number of questions exceeds this threshold, it not only indicates poor drafting quality but also suggests potential issues with the company's current listing qualifications. Rutland noted that from past experiences, companies with fewer than 50 questions are usually of good quality, 60 to 70 questions are the norm, and companies with more than 80 questions attract special attention from the market. The rapid response and low number of questions in NEWRGY IMEX's case are very rare, indicating the management's high confidence and thorough preparation for entering the capital market.

Peter Rutland further elaborated that the SEC's inquiries are highly targeted. The SEC does not use a fixed inquiry template but instead asks specific questions based on the industry and the company's characteristics. These targeted questions may be more pointed but also save time for both parties.

When asked about the specific questions raised by the SEC, Peter Rutland mentioned that the first set of questions focused on risk factors. The draft registration statement's risk factors section spans 30 to 40 pages, covering internal and external risks. The SEC's first question was: among these factors, which ones truly reflect NEWRGY IMEX's core risks, are directly related to the company's performance, and could cause significant stock price volatility in the future? Additionally, to minimize future stock price volatility, NEWRGY IMEX lists both probable and less likely risks, which the SEC understands. Rutland noted that such comprehensive disclosure reduces the likelihood of investors holding the company accountable or suing it due to stock price fluctuations.

The SEC also emphasized inquiries about NEWRGY IMEX's financial statements. Besides being transparent, the financial statements need the CFO to explain in layman's terms why the company achieved certain profits over the past three years, what changes occurred in expenditures, and what foreseeable trends exist. For example, if the financial statements look promising but it is known that a major customer will not place orders next year, failing to disclose this could be seen as incomplete information disclosure and potentially fraudulent to investors.

Peter Rutland concluded, "NEWRGY IMEX's ability to respond so quickly to the SEC's inquiries demonstrates the management's high confidence in themselves and their thorough preparation for entering the capital market."