F-1: Park Ha Biological Files F-1 for Share Offering Amid Nasdaq Delisting Threat

Park Ha Biological Technology Co., Ltd. filed an F-1 registration statement for a follow-on offering of up to 11.4 million ordinary shares and warrants, while facing a Nasdaq minimum bid price deficiency notice.

Summary

• Park Ha Biological Technology Co., Ltd. is offering up to 11,428,571 ordinary shares and warrants to purchase an equal number of ordinary shares on a best-efforts basis.
• The assumed public offering price is $0.35 per share and accompanying warrants, significantly below the last reported Nasdaq sale price of $0.487 per share on September 18, 2025.
• The company received a Nasdaq notice on September 2, 2025, for failing to meet the minimum $1.00 bid price requirement, with a compliance period until March 2, 2026.
• Revenue increased by $386,269 to $1,239,197 for the six months ended April 30, 2025, compared to $852,928 for the same period in 2024.
• The company reported a net loss of $19,835,994 for the six months ended April 30, 2025, a significant decline from a net income of $48,900 for the six months ended April 30, 2024.
• Total revenue decreased by $77,251 to $2,381,851 for the fiscal year ended October 31, 2024, from $2,459,102 in 2023.
• Net income decreased by $373,481 to $478,561 for the fiscal year ended October 31, 2024, from $852,042 in 2023.
• The company operates through PRC Subsidiaries and is a holding company incorporated in the Cayman Islands, conducting all operations in China.
• As of April 30, 2025, the company had 39 franchisees in China, a decrease from 45 as of October 31, 2024.
• The company's business focuses on developing its private skincare label, direct product sales, and franchise alliances, with a brand (Park Ha) providing solutions for problematic skin.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges, including a substantial net loss in the most recent six-month period and declining annual revenue and net income. The Nasdaq minimum bid price deficiency notice adds considerable uncertainty and risk. While there are stated growth strategies and competitive advantages, the current financial performance and regulatory issues are strong negative indicators, outweighing recent revenue growth.

Positives

• Revenue for the six months ended April 30, 2025, increased by $386,269 to $1,239,197, demonstrating recent top-line growth.
• The company has a complete commercial network with 39 franchisees across various provinces in China as of April 30, 2025.
• Growth strategies include strengthening product development, improving training, enhancing social media marketing, improving supply chain capacity, and seeking strategic investments/acquisitions.
• Competitive advantages include an innovative social marketing model, a stable supply chain system, and a strong and diversified management team.
• The company has established official accounts on popular Chinese short video platforms (Douyin, RED, WeChat Video) and launched a live channel on Douyin to promote products and engage with consumers.

Negatives

• The company reported a substantial net loss of $19,835,994 for the six months ended April 30, 2025, a significant deterioration from net income in the prior year period.
• Total revenue decreased by $77,251 for the fiscal year ended October 31, 2024, compared to 2023, indicating a decline in annual sales.
• Net income for the fiscal year ended October 31, 2024, decreased by $373,481, showing a decline in profitability.
• The number of franchisees decreased from 45 as of October 31, 2024, to 39 as of April 30, 2025, suggesting potential challenges in franchise growth or retention.
• The company received a Nasdaq notice on September 2, 2025, for not meeting the minimum $1.00 bid price requirement, posing a delisting risk.
• The company does not own the formulas for its products, relying on third-party manufacturers, which could adversely affect operations if agreements fail or competitors use the same manufacturers.

Risks

• PRC government intervention or influence on operations, including potential disallowance of the corporate structure, could materially change operations or devalue shares.
• Uncertainties in the PRC legal system and rapid changes in regulations could adversely affect the business.
• Trading in securities on U.S. markets may be prohibited under the Holding Foreign Companies Accountable Act (HFCAA) if the PCAOB cannot inspect the auditor for two consecutive years.
• The company is subject to CSRC filing requirements for post-listing follow-on offerings, and failure to comply could lead to sanctions or hinder capital-raising activities.
• Recent greater oversight by the Cyberspace Administration of China (CAC) over data security, particularly for companies seeking foreign listings, could impact the business.
• Reliance on dividends and distributions from PRC Subsidiaries for cash and financing, with potential restrictions on fund transfers by the PRC government.
• Difficulties in enforcing U.S. court judgments against the company or its management in China or the Cayman Islands.
• Fluctuations in currency exchange rates could materially and adversely affect the value of investments.
• Changes in PRC political, economic, and governmental policies may have an adverse impact on the business.
• Failure to comply with PRC laws and regulations related to labor and employee benefits may subject the company to penalties or additional costs.
• PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies may delay or prevent the use of financing proceeds.
• Certain PRC regulations may make it more difficult to pursue growth through acquisitions.
• The company may be classified as a PRC resident enterprise for PRC enterprise income tax purposes, resulting in unfavorable tax consequences for the company and shareholders.
• PRC regulations relating to offshore investment activities by PRC residents may limit PRC Subsidiaries' ability to change registered capital or distribute profits.
• The company operates in a dynamic industry with a limited operating history, meaning historical results may not be indicative of future performance.
• Intense competition in the beauty industry could lead to loss of market share.
• Success is dependent on the continued popularity, quality, effectiveness, and safety of products.
• Inability to provide superior customer experiences could materially and adversely affect business and reputation.
• Reliance on a limited number of suppliers for raw materials and ingredients poses a risk of supply chain disruptions and inability to obtain supplies at competitive prices.
• Significant portion of revenue derived from a few major customers, making the company vulnerable to decreased demand from these customers.
• Growth through franchising may not occur as rapidly as anticipated, impacting the business model's success.
• The Chairperson of the Board and CEO, Ms. Xiaoqiu Zhang, has significant influence, and her interests may not always align with other shareholders.
• The trading price of the Ordinary Shares is likely to be volatile, which could result in substantial losses to investors.
• Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial results or fraud.
• The company's best-efforts offering has no minimum amount, meaning it may not raise sufficient capital to fund business plans.

Future Outlook

The company intends to use the net proceeds from this offering for the expansion of directly operated stores. Growth strategies include strengthening the development of proprietary products, improving training practices, enhancing social media-based sales and marketing capabilities, improving supply chain capacity, and seeking strategic investment, acquisition, and other cooperation opportunities in the beauty industry across China. The company plans to focus on small molecule peptide hydration penetration technology in R&D and open vocational training schools in inland and western China.

Management Comments

• Our management monitors the cash position of each entity within our organization regularly and prepares budgets on a monthly basis to ensure each entity has the necessary funds to fulfill its obligation for the foreseeable future and to provide adequate liquidity.
• In the event that there is a need for cash or a potential liquidity issue, it will be reported to our Chief Financial Officer and subject to approval by our board of directors, we will enter into an intercompany loan for the applicable subsidiary in accordance with applicable PRC laws and regulations.
• We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.
• We believe that our solutions have a strong competitive edge in China's beauty market.
• Our CEO and CTO each has over ten years of experience in the industry and plays essential roles in reaching out to potential customers.
• We believe that their experience, coupled with their profound understanding of the beauty industry and their passion and determination, make them effective business leaders. They are firmly committed to our mission and customer-oriented approach, helping more customers to solve skin problems.
• We believe that Chinese consumers expect to have a more intimate product use experience offered by beauty brands on social media platforms.
• We believe that our O2O Model has enabled us to reach a wider audience online, attract new customers, engage with customers across multiple channels, and increase sales while our customers can enjoy significant discounts and a seamless shopping experience.
• We believe that through our physical stores, we have built a closer relationship with our customers to enhance their experience with Park Ha products.
• The Company is currently evaluating options to regain compliance and intends to timely regain compliance with Nasdaq's continued listing requirement, including, among other things, to effect a share consolidation.

Industry Context

The company operates in the highly competitive beauty market in China, competing with established multinational and domestic brands, as well as smaller niche brands. The industry is characterized by a strong emphasis on social marketing, digital engagement, and the Online-to-Offline (O2O) business model. The company's focus on proprietary skincare for problematic skin and its franchise model aligns with trends in specialized beauty solutions and localized market penetration. However, the market is dominated by larger players like Fanwenhua, DR PLANT, and Beauty Farm, who benefit from longer operating histories and economies of scale, posing significant competitive challenges for Park Ha Biological.

Comparison to Industry Standards

• The company faces intense competition from established players like Fanwenhua, DR PLANT, and Beauty Farm, each with over 100 franchisees nationwide, significantly more than Park Ha's 39 franchisees as of April 30, 2025.
• Larger competitors benefit from economies of scale, allowing them to produce goods at lower costs per unit, which could result in pricing advantages that Park Ha may struggle to match while maintaining profitability.
• The company's reliance on third-party manufacturers for product formulas, without owning the intellectual property, contrasts with industry leaders who typically control their core R&D and formulations to maintain competitive differentiation and prevent competitors from introducing similar products at lower prices.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of this prospectus, the company is not involved in any legal or administrative proceedings that may have a material adverse impact on its business, balance sheets, or results of operations and cash flows.

Related Party Transactions

• Related party transactions for the year ended October 31, 2024, are detailed in Item 7 of the 2024 Annual Report.
• Related party transactions for the six months ended April 30, 2025, are detailed in Note 12 of the report of foreign private issuer on Form 6-K filed on August 26, 2025.

Stakeholder Impact

• **Shareholders**: Potential dilution from the new share and warrant offering. Risk of significant decline in share value due to net losses and Nasdaq delisting threat. Uncertainty regarding enforceability of U.S. judgments in China/Cayman Islands.
• **Employees**: Continued employment and potential growth opportunities through expansion plans and vocational training schools. Compliance with PRC labor laws is a factor.
• **Customers**: Continued access to Park Ha brand skincare products and services. Potential for improved product offerings and customer experience through R&D and enhanced marketing.
• **Franchisees**: Opportunities for growth and support through training and supply chain improvements. However, a decrease in the total number of franchisees suggests potential challenges or churn.
• **Suppliers**: Continued business relationships, but the company's reliance on a limited number of suppliers creates concentration risk for both parties.
• **Creditors**: The company's net loss and capital raise indicate a need for funding, which could impact its ability to service existing debts, though the filing states the company does not intend to incur debts beyond its ability to pay.

Next Steps

• Complete the proposed best-efforts offering of Ordinary Shares and Warrants.
• Regain compliance with Nasdaq's minimum bid price requirement by March 2, 2026, potentially through a share consolidation.
• Strengthen the development of proprietary products, focusing on small molecule peptide hydration penetration technology.
• Improve training practices, including opening vocational training schools in inland and western China.
• Enhance social media-based sales and marketing capabilities.
• Improve supply chain capacity by partnering with additional third-party manufacturers and establishing partnerships with warehouse and distribution centers.
• Evaluate and selectively seek strategic alliances, investment, and acquisition opportunities in the beauty industry across China.
• File with the CSRC within three business days after the completion of this offering, as required by the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies.

Key Dates

Recommendation

The company's recent financial performance is highly concerning, marked by a substantial net loss of nearly $20 million in the first six months of 2025, a sharp reversal from prior profitability. This, coupled with declining annual revenue and net income in fiscal year 2024, indicates significant operational challenges. The Nasdaq minimum bid price deficiency notice and the proposed dilutive 'best-efforts' offering, which lacks a minimum raise commitment, further compound the risk. While growth strategies are outlined, the immediate financial deterioration and regulatory pressures suggest a high degree of uncertainty and potential for further share price decline. A seasoned investor would likely view these factors as strong indicators to exit or avoid the stock.

Keywords

Skincare, Beauty products, Franchise, China market, Cosmetics, Biotechnology, SEC filing, Nasdaq, PHH, F-1, Public offering, Warrants, PRC regulations, Cross-border data flow, Cybersecurity, HFCAA, Emerging growth company, Foreign private issuer