F-1/A: Haoxi Health Technology Eyes $14.4 Million in Unit Offering to Bolster Growth

Haoxi Health Technology plans to offer units consisting of Class A Ordinary Shares and warrants to raise capital for working capital, acquisitions, and compliance improvements.

Summary

• Haoxi Health Technology Limited is planning a firm commitment offering of 3,351,206 units, with an option for underwriters to purchase an additional 502,680 units.
• Each unit comprises one Class A Ordinary Share (or a pre-funded warrant), one Series A warrant, and one Series B warrant.
• The assumed public offering price is $3.73 per unit, based on the last reported sale price on July 29, 2024.
• The pre-funded warrants are exercisable upon issuance at $0.0001 per share and do not expire until fully exercised.
• Series A warrants have a 5-year term, exercisable upon issuance at $3.73 per share, subject to adjustments on the Series B Exercise Date.
• On the Series B Exercise Date, the Series A warrant exercise price will adjust to $0.746, and the number of shares issuable will adjust to 16,756,032.
• Series B warrants have a 5-year term, exercisable on or after the Series B Exercise Date at $0.0001 per share.
• On the Series B Exercise Date, the number of shares issuable upon exercise of the Series B warrants will increase to 13,404,826.
• The company has granted the underwriter an over-allotment option to purchase up to 15% of the units offered.
• The company intends to submit its filing application to the CSRC within three working days after the completion of this offering.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While it highlights positive financial results and growth strategies, it also acknowledges significant risks associated with investing in the company, particularly those related to operating in China and regulatory uncertainties. The sentiment is cautiously optimistic.

Positives

• The offering aims to strengthen the company's financial position for growth and strategic investments.
• The company has a management team with several years of experience in marketing for healthcare companies.
• The company has its own data analysis software, Bidding Compass, which has helped it obtain ad placement data.
• The company has developed a stable placement with mainstream online advertising platforms in China and has been working closely with them since its establishment in 2018.

Negatives

• Investing in the company's Class A Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment.
• The company is subject to certain legal and operational risks associated with business operations of Haoxi Beijing in China and the Chinese regulatory authorities could disallow our corporate structure, which could cause the value of our securities to significantly decline or become worthless.
• The company is subject to the CSRC filing procedures, which could significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares to investors and could cause the value of our Class A Ordinary Shares to significantly decline or become worthless.
• There is no established trading market for the Units or the Warrants.
• You will experience immediate and substantial dilution in the net tangible book value of Class A Ordinary Shares purchased.
• The dual class structure of our ordinary shares has the effect of concentrating voting control with our CEO, and his interests may not be aligned with the interests of our other shareholders.

Risks

• Changes in PRC government policies or relations between China and the United States may adversely affect the company's business.
• Uncertainties exist regarding the interpretation and enforcement of PRC laws and regulations.
• The PRC government exerts substantial influence over the manner in which we conduct our business activities.
• The CSRC has promulgated Overseas Listing Trial Measures on February 17, 2023. Our offering will be determined to be an indirect overseas offering and is, therefore, subject to the CSRC filing procedures, which could significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares to investors and could cause the value of our Class A Ordinary Shares to significantly decline or become worthless.
• Failure to comply with PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or Haoxi Beijing to liability or penalties, limit our ability to inject capital into Haoxi Beijing or limit Haoxi Beijings ability to increase their registered capital or distribute profits.
• Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.
• If advertisers stop purchasing online marketing services from the operating entity or decrease the amount they are willing to spend on marketing campaigns and promotional activities, or if the operating entity is unable to establish and maintain new relationships with advertisers, its business, financial condition, and results of operations could be materially adversely affected.
• If the operating entity fails to maintain its relationships with its media partners, its business, results of operations, financial condition and business prospects could be materially and adversely affected.
• As the operating entity continues to strive for business growth, we may continue to experience net cash outflow from operating activities, and we cannot assure you that we can maintain sufficient net cash inflows from operating activities.
• The limited operating history of the operating entity in the rapidly evolving industry makes it difficult to accurately forecast its future operating results and evaluate its business prospects.
• The operating entity is exposed to concentration risk, due to its reliance on its major supplier, Ocean Engine. If the operating entitys relationship with Ocean Engine deteriorates, or its unable to renew its agreement with Ocean Engine on substantially similar terms, our financial performance, results of operation and ongoing growth could be adversely affected.
• The operating entitys plan to invest in research and development (R&D) of Bidding Compass, may fail to result in a satisfactory return, or any return.

Future Outlook

The company intends to use the proceeds from this offering for working capital and general corporate purposes, acquiring or investing in technologies, solutions or businesses that complement our business, and hiring experienced employees to improve our systems of internal control and compliance with U.S. GAAP and the Sarbanes-Oxley Act of 2002.

Industry Context

The company operates in the online marketing solution industry in China, focusing on the healthcare sector, which is experiencing growth due to increasing income and an aging population.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of new shares and warrants.
• The company's growth strategies may benefit employees through increased job opportunities.
• Customers may benefit from improved online marketing solutions and services.

Next Steps

• The company will proceed with the offering of units.
• The company will submit its filing application to the CSRC within three working days after the completion of this offering.
• The company will use the net proceeds for working capital, acquisitions, and improving internal controls.

Key Dates

Keywords

Haoxi Health Technology, unit offering, Class A Ordinary Shares, warrants, Series A warrant, Series B warrant, EF Hutton LLC, CSRC, China, healthcare marketing, Bidding Compass, Overseas Listing Trial Measures