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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Stock markets are shrivelling, as the burden of public reporting, the growth of private equity and the torrential outflows from mutual funds sap public markets of their old vim. IPOs have become endangered.
Hope, however, springs eternal. Per a regulatory filing on Monday:
Ordinary Shares
1,000,000 Shares of Class A Common Stock
This is the initial public offering of HOT MOM INTERNATIONAL INC. (the “Company” or “ LAMA”). No public market currently exists for our common stock. We are offering 1,000,000 shares of our Class A common stock. You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities.
Hot Mom International (henceforth Hot Mom) yesterday filed a registration statement on Form S-1, indicating its intention to go public in the US. It was an absolute delight to read, as you might imagine, but left several key questions — chiefly, what does Hot Mom International actually sell or do? And why did it pick LAMA as its ticker? — unanswered.
It was time to do some Journalism.
This proved surprisingly tricky. Hot Mom never picked up the phone and we were unable to find a website, though the FT’s open plan office and fear of another run-in with the IT security desk stymied our search.
The company’s corporate address places it either inside or right next door to Union Station in Denver, Colorado. According to the filing, it’s from there that the group markets to hot moms aged between 22 and 65 who “pay attention to life-quality, love travelling and fashion, and have the desire to show themselves”.
The S-1 filing has yet to be reviewed by the Securities and Exchange Commission, and includes no audited financial statements whatsoever. This is because Hot Mom doesn’t yet have a PCAOB auditor, which means it can’t sell any securities. Yet.
The company’s unaudited accounts show total assets of $6.9mn at the end of 2023, revenues of $3.8mn and a gross profit of $3.3mn. Net income was $711,000. Not bad.
So how did they do it?
OVERVIEW: HOT MOM is to create a platform for women’s growth and cultural tourism, with the IP of the World Tourism Hot Moms Competition, to promote the women’s industry ecosystem, and to land the physical Hot Moms 100 quality life hall.
Our Service
1) Event services: recruiting players, city competition zone authorization, partnership
2) Hot Mom 100 Quality Lifestyle Store: supply chain products, event projects
3) Cultural tourism: customized tours, small group tours, tourism promotion conference cooperation
Alas, a quick Google search for “World Tourism Hot Moms Competition” turned up precious little, so on we went.
Hot Mom was only officially incorporated in mid-October, according to LSEG data, but says it has been running hot mom competitions of some sort (with great success) for over a decade:
The Hot Mom Contest has been successfully held for 10 sessions from 2013 to 2024, with more than 100 million fans worldwide and competition areas in more than 60 countries around the world.
FTAV found nothing online to corroborate this claim. Seconds spent searching for clues on X confirmed only the veracity of Elon Musk’s promise in June to allow people to post consensual adult content. LinkedIn proved a barren wasteland.
The next section — outlining the company’s marketing strategy — also caught our eye:
Every woman has a dream in her heart, wearing a luxurious dress under the spotlight, with expectant eyes from the audience, and walking on the gorgeous stage to show her charm.
😑😑😑
Like every share sale prospectus, Hot Mom’s contains a long list of “Risk Factors”, and Hot Mom’s are pretty generic:
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There may not be an active, liquid trading market for our Ordinary Shares.
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We have grown rapidly in recent years and have limited experience operating at our current scale of operations. If we are unable to manage our growth effectively, our brand, company culture and financial results may suffer.
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We have limited sources of working capital and will need substantial additional financing.
Having scrolled through about two-thirds of the roughly 26,000-word document, we finally found something interesting in the section headed “Our Operating Strategy”. It seems Hot Mom is principally based in China.
Expansion of competition areas: We will set up competition areas around the world to expand the influence and participation of the event. Not only will we set up competition areas in major cities in China, but we will also actively expand overseas competition areas to attract hot moms from different countries and regions to participate and promote international cultural exchanges.
A few Ctrl-F’s later and our China-hunch was all but confirmed. Trouble recruiting and training hot moms or judges of hot moms in the world’s second-biggest economy may affect Hot Mom’s business, the filing states:
Labor costs in China have increased with China’s economic development, particularly in the large cities where our facilities are located. Rising inflation in China, which has had a disproportionate impact on everyday essentials such as food, is also putting pressure on wages… If we are unable to attract, train and retain qualified personnel, our business may be materially and adversely affected.
Hot Mom has three controlling directors: chairman of the board Junqiu Ye, chief executive Xiaoqing Li and chief financial officer Man Zhao. If Hot Mom’s planned equity raise were to go ahead, Ye, Le and Zhao would see their 100 per cent stake in the company diluted to 98.04 per cent.
According to the statement, none of the directors, director appointees, or executive officers are related by blood. In other words, no one is someone else’s hot mom, as defined in Item 401 of Regulation S-K. Whether the company’s business model is compatible with Xi Jinping Thought is unclear.
Hot Mom has yet to pick an underwriter for its planned equity offering on Nasdaq’s almost-anything-goes third-tier exchange, where micro-cap Chinese groups have a mixed-to-awful track record.
Sinophiles Boustead Securities, Network 1 Financial Securities and EF Hutton seem like obvious potential candidates for the job, though other underwriters are available.
