F-1/A: Haoxi Health Technology Eyes Expansion with $12.5 Million Unit Offering

Haoxi Health Technology Limited plans to raise capital through a unit offering, each unit containing a Class A Ordinary Share (or pre-funded warrant) and warrants, to fund working capital, acquisitions, and compliance improvements.

Summary

• Haoxi Health Technology Limited is conducting an offering of 4,166,666 units, with an option for underwriters to purchase an additional 625,000 units.
• Each unit comprises one Class A Ordinary Share (or a pre-funded warrant), one Series A warrant, and one Series B warrant.
• The company intends to use the net proceeds of approximately $11.4 million for working capital, acquisitions, and enhancing internal controls.
• The Series A warrants have a 5-year term and are exercisable upon issuance, with the exercise price adjusting on the Series B Exercise Date.
• The Series B warrants also have a 5-year term and are exercisable after the Series B Exercise Date at $0.0001 per share.
• The company's Class A Ordinary Shares are listed on The Nasdaq Capital Market under the symbol HAO.
• The offering is subject to various risks, including those related to doing business in China and the potential impact of regulatory changes.
• The company is an emerging growth company and a foreign private issuer, which allows for reduced reporting requirements.

Sentiment

Score: 5

Explanation: The document presents a mix of positive and negative aspects. The capital raise is a positive, but the risks associated with operating in China and the dilution of shares temper the overall sentiment.

Positives

• The offering will provide additional capital for working capital and potential acquisitions.
• The company has a management team with experience in marketing for healthcare companies.
• The company has developed a stable placement with mainstream online advertising platforms in China.
• The company's Class A Ordinary Shares are listed on The Nasdaq Capital Market under the symbol HAO.

Negatives

• The company is subject to legal and operational risks associated with business operations in China.
• The PRC government may intervene or influence operations and this offering at any time.
• The company is subject to the CSRC filing procedures, which could limit the ability to offer securities to investors.
• There is no established trading market for the Units or the Warrants.
• The Warrants in this offering are speculative in nature.
• You will experience immediate and substantial dilution in the net tangible book value of Class A Ordinary Shares purchased.

Risks

• Changes in PRC political and economic policies could 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 the company conducts its business activities.
• The CSRC has promulgated Overseas Listing Trial Measures on February 17, 2023.
• You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the prospectus based on foreign laws.
• Any requirement to obtain prior approval under the M&A Rules and/or any other regulations promulgated by relevant PRC regulatory agencies in the future could limit or delay this offering.
• PRC regulations regarding acquisitions impose significant regulatory approval and review requirements, which could make it more difficult for us to pursue growth through acquisitions.
• 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.
• Any failure to comply with PRC regulations regarding the registration requirements for employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
• PRC regulations of loans to, and direct investment in, PRC entities by offshore holding companies, and governmental control of currency conversion, may limit our ability to use the proceeds of this offering to make loans or additional capital contributions to Haoxi Beijing.
• We may need dividends and other distributions on equity paid by Haoxi Beijing to satisfy our liquidity requirements and any limitation on the ability of Haoxi Beijing to transfer cash out of China and/or make remittances to pay dividends to us could limit our ability to access cash generated by the operations of Haoxi Beijing.
• We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.
• Dividends payable to our foreign investors and gains on the sale of our Class A Ordinary Shares by our foreign investors may be subject to PRC tax.
• We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
• Restrictions on currency exchange may limit our ability to utilize our revenue effectively.
• Fluctuations in exchange rates could result in foreign currency exchange losses to us and may reduce the value of, and amount in U.S. Dollars of dividends payable on, our shares in foreign currency terms.
• Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees salaries as required by PRC regulations may subject the operating entity to penalties.
• 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.
• To the extent cash or assets of our business, or of Haoxi Beijing, is in PRC, such cash or assets may not be available to fund operations or for other use outside of the PRC, due to interventions of or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.
• PRC laws and regulations related to our current business operations are sometimes vague and uncertain and any changes in such laws and regulations, which may be quick with little advance notice, and interpretations of which may impair our ability to operate profitably.
• 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.
• Certain customers contributed to a significant percentage of our total revenue during the fiscal years 2023 and 2022, and losing one or more of them could have a material adverse impact on our financial performance and business prospects.
• We have significantly unstable operating revenue, anticipate increases in our operating expenses in the future, and may not achieve or sustain profitability on a consistent basis.
• Pandemics, epidemics and other outbreaks, natural disasters, terrorist activities, and political unrest could disrupt the PRC operating entities delivery and operations, which could materially and adversely affect their business, financial condition, and results of operations.
• The operating entitys business is geographically concentrated, which subjects it to greater risks from changes in local or regional conditions.
• The operating entity is exposed to concentration risk, due to its reliance on its major supplier, Ocean Engine.
• 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.
• There is no public market for the Units or the Warrants.
• The Warrants in this offering are speculative in nature.
• Holders of the Warrants will not have rights of holders of our Class A Ordinary Shares until such Warrants are exercised.
• Certain recent initial public offerings of companies with public floats comparable to the anticipated public float of us have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company.
• 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 Chief Executing Officer, and his interests may not be aligned with the interests of our other shareholders.
• The dual-class structure of our ordinary shares may adversely affect the trading market for our Class A Ordinary Shares.
• Since we are a controlled company within the meaning of the Nasdaq listing rules, we may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.
• Substantial future sales of our Class A Ordinary Shares or the anticipation of future sales of our Class A Ordinary Shares in the public market could cause the price of our Class A Ordinary Shares to decline.
• We do not intend to pay dividends for the foreseeable future.
• If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.
• Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.
• We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this will make it more difficult to compare our performance with other public companies.
• Because we are an emerging growth company, we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Class A Ordinary Shares.
• The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.

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, with a focus on the healthcare sector. The industry is rapidly evolving, driven by the growth of mobile advertising and the increasing demand for online healthcare services.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• To assess the company's performance against industry benchmarks, we would need data on key metrics such as customer acquisition cost, conversion rates, and revenue per customer, compared to similar companies in the Chinese online marketing and healthcare advertising sectors.
• Comparable companies could include other Chinese digital marketing agencies focusing on the healthcare industry, such as iClick Interactive Asia Group Limited or Baidu's healthcare marketing services.
• Without specific data on these competitors, it's difficult to determine whether Haoxi's results are above, below, or in line with industry standards.

Related Party Transactions

• In April 2024, the Company transferred $350,000 to Haoxi HK, and then Haoxi HK transferred $300,000 to WFOE.
• In May 2024, the Company transferred $950,000 to Haoxi HK.

Stakeholder Impact

• Shareholders will experience immediate 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.

Next Steps

• Submit filing application to the CSRC within three working days after the completion of this offering.
• The underwriters are expected to deliver such securities against payment in U.S. dollars in New York, New York on or about [], 2024.

Key Dates

Keywords

offering, warrants, class A ordinary shares, haoxi health technology, health technology, ipo, china, securities, listing, regulatory, risk factors, financials