F-1: Baird Medical Files for Resale of Ordinary Shares and Warrants Following Business Combination

Baird Medical Investment Holdings Limited has filed a registration statement for the potential resale of up to 33,832,033 ordinary shares and 11,500,000 ordinary shares issuable upon exercise of warrants.

Summary

• Baird Medical Investment Holdings Limited has filed a registration statement for the potential resale of up to 33,832,033 ordinary shares by selling securityholders and 11,500,000 ordinary shares issuable upon exercise of warrants.
• The ordinary shares include 27,463,627 shares held by Betters Medical, which will be distributed to its existing shareholders, 6,028,406 shares held by the Sponsor and certain other shareholders of ExcelFin, 50,000 shares held by Cohen, and up to 290,000 shares issuable upon conversion of Series A Convertible Preferred Shares held by GFC.
• The warrants were issued on October 1, 2024, in exchange for public warrants of ExcelFin Acquisition Corp.
• The selling securityholders may offer all or part of the registered securities from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices.
• The company will not receive any proceeds from the sale of the securities by the selling securityholders, but will receive proceeds from the exercise of warrants if the warrants are exercised for cash.
• The likelihood that warrant holders will exercise the warrants and any cash proceeds that the company would receive is dependent upon the market price of the ordinary shares.
• Based on the closing price of the ordinary shares at $2.87 on November 13, 2024, which is less than the exercise price of $11.50 per share, the company believes warrant holders will be unlikely to exercise their warrants.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company is a leader in its market and has growth potential, there are significant risks and uncertainties, including potential share price volatility, regulatory hurdles, and reliance on future warrant exercises for funding. The financial results show a decline in revenue and net income, which is a negative factor.

Positives

• The registration allows existing securityholders to potentially realize gains on their investments.
• The company may receive proceeds from the exercise of warrants if the share price increases above the exercise price.
• The company has completed the filing procedures in connection with the business combination with ExcelFin under the Overseas Listing Trial Measures.

Negatives

• The sale of a large number of shares by selling securityholders could increase the volatility of the market price of the ordinary shares or result in a significant decline in the public trading price.
• The company will not receive any proceeds from the sale of shares by the selling securityholders.
• The company believes it is unlikely that warrant holders will exercise their warrants based on the current share price.

Risks

• The sale of a large number of shares by selling securityholders could increase the volatility of the market price of the ordinary shares or result in a significant decline in the public trading price.
• Certain selling securityholders may experience a positive rate of return on the securities they sell, while public holders may not experience a similar rate of return.
• The company faces various legal and operational risks and uncertainties associated with being based in or having substantially all of its operations in China.
• The company is subject to a number of prohibitions, restrictions and potential delisting risk under the Holding Foreign Companies Accountable Act.
• The company may need to complete filing procedures for future offshore fund-raising activities, and there is no guarantee that the company will be able to obtain such approval or complete such filing.
• The company relies on dividends and other distributions on equity paid by its PRC subsidiaries to fund any cash and financing requirements it may have, and any limitation on the ability of its PRC subsidiaries to make payments to the company could have a material adverse effect on its ability to conduct its business.
• The company is a controlled company and may be exempt from certain corporate governance requirements that could adversely affect public shareholders.
• The company is a foreign private issuer and is exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers.

Future Outlook

The company intends to retain most, if not all, of its available funds and any future earnings to operate and expand its business and does not expect to pay any dividends in the foreseeable future.

Management Comments

• The company believes the warrant holders will be unlikely to exercise their warrants, and the company is unlikely to receive proceeds from the exercise of warrants based on the current share price.
• The company believes that microwave ablation treatments are safer, less invasive and easier to operate with faster recovery periods and lower complication rates for patients, as compared to traditional treatment methods.

Industry Context

The document highlights the company's position as a leading microwave ablation medical device developer and provider in the PRC, operating in a growing market with increasing demand for minimally invasive tumor treatments. The company is also expanding into overseas markets such as the U.S., the EU and Southeast Asia.

Comparison to Industry Standards

• The company ranked first among microwave ablation medical device providers in the treatment of thyroid nodules and breast lumps in the PRC in terms of sales revenue and sales volume of microwave ablation needles in 2022 according to the Frost & Sullivan Report.
• The company was the third largest microwave ablation medical device provider in the PRC in terms of sales revenue in 2022.
• The company's revenue was US$35.1 million in 2022 and $31.5 million in 2023, and its net income was $12.8 million in 2022 and $10.7 million in 2023.
• The company's revenue was US$11.5 million for the six months ended June 30, 2023 and US$13.1 million for the six months ended June 30, 2024, and its net income was US$2.4 million for the six months ended June 30, 2023 and US$4.4 million for the six months ended June 30, 2024.

Related Party Transactions

• In 2023, three of Betters Medicals preference shares holders elected to exercise their right to require Betters Medical, Haimei Wu and certain shareholders of Betters Medical, on a joint and several basis, to repurchase or purchase 100% of their preference shares.
• Haimei Wu, the Chairwoman and Chief Executive Officer, is the legal owner of the premises to which the Tianhe District Usage Certificate was granted.
• The company's use of the Taicang Plant is conducted pursuant to a sublease agreement to which certain affiliated entities are parties.
• The company is party to a Subscription Agreement dated June 30, 2021, and certain of its affiliates, as well as the Shareholders Agreement.

Stakeholder Impact

• Shareholders may experience share price volatility and potential dilution.
• Employees may be affected by changes in the company's operations and financial performance.
• Customers may be affected by changes in the company's product offerings and pricing.
• Suppliers may be affected by changes in the company's procurement practices.
• Creditors may be affected by changes in the company's financial condition and ability to repay debt.

Next Steps

• The company will use its reasonable best efforts to have the registration statement declared effective as soon as practicable.
• The company will determine the payment of dividends and fund transfer based on its specific business needs in accordance with the applicable laws and regulations.
• The company may need to complete filing procedures for future offshore fund-raising activities, including conducting follow-on offering in the United States.

Key Dates

Keywords

ordinary shares, warrants, resale, selling securityholders, business combination, ExcelFin, Baird Medical, China, HFCAA, CSRC