S-1/A: QDM International Files for Nasdaq Listing Amid Strong Revenue Growth and Strategic Expansion

Sentiment:

Registration Statement for Public Offering 28 July 2025 9:31 PM

QDM International Inc., a Hong Kong-based insurance brokerage, seeks to raise $6 million in a public offering and list its common stock on Nasdaq, reporting significant revenue and net income increases for the fiscal year ended March 31, 2025.

Capital raiseThe company is undertaking a firm commitment public offering of common stock to raise $6,000,000.Net proceeds from the offering are estimated to be approximately $[ ] (assuming midpoint price) after deducting underwriting discounts and expenses.Proceeds are intended for expansion of service offerings (40%), marketing and branding (20%), new hires and training (10%), and working capital/general corporate purposes (30%).The company previously consummated a public offering in March 2023, raising $2,339,937.

Better than expectedNet income increased by 208.3% for the fiscal year ended March 31, 2025, compared to the previous year.Total revenue grew by 23.2% for the fiscal year ended March 31, 2025.Gross profit margin increased by 48.8% due to a significant decrease in cost of sales, driven by lower referral fees.

Summary

QDM International Inc. (QDM) is a Florida holding company that conducts its insurance brokerage business primarily in Hong Kong through its indirectly wholly-owned subsidiary, YeeTah.
YeeTah sells life and medical insurance, general insurance, and provides Mandatory Provident Fund (MPF) and Occupational Retirement Schemes Ordinance (ORSO) services, offering approximately 489 insurance products from 22 companies.
The company is pursuing a firm commitment public offering of common stock, aiming to raise $6,000,000, with an estimated public offering price between $[ ] and $[ ] per share.
QDM has applied to list its common stock on The Nasdaq Stock Market LLC (Nasdaq) under the symbol QDMI, currently trading on the OTCQB Venture Market.
For the fiscal year ended March 31, 2025, total revenue increased by approximately $1.5 million, or 23.2%, to $8,381,274, compared to $6,366,154 in 2024.
Net income for the fiscal year ended March 31, 2025, increased by approximately $3.3 million, or 208.3%, to $4,823,338, compared to $1,564,538 in 2024.
The company strategically expanded into referral business in December 2023, generating $540,616 in revenue from this segment for the fiscal year ended March 31, 2025.
Cost of sales decreased by approximately $2.8 million, or 72.8%, for the year ended March 31, 2025, primarily due to a reduction in referral fee rates from approximately 52.5% to 10% following a Hong Kong Insurance Authority circular.
Huihe Zheng, President, CEO, and Chairman, holds approximately 82.1% of the company's voting power, making QDM a controlled company under Nasdaq rules.

Sentiment

Score: 7

Explanation: The company shows strong financial performance with significant revenue and net income growth, and is pursuing a strategic Nasdaq listing and business expansion. However, it faces substantial risks related to customer concentration, regulatory uncertainties (especially from the PRC government), and internal control weaknesses, which temper overall sentiment.

Positives

Total revenue increased by 23.2% to $8,381,274 for the fiscal year ended March 31, 2025, driven by expanded insurance partner collaborations and an increase in insurance policies.
Net income surged by 208.3% to $4,823,338 for the fiscal year ended March 31, 2025, reflecting strong operational performance.
Gross profit margin increased significantly by 48.8% due to lower referral fees paid, following a regulatory directive.
Strategic expansion into referral business generated $540,616 in revenue for the fiscal year ended March 31, 2025, diversifying revenue streams.
Maintains good relationships with 22 insurance companies in Hong Kong, offering a broad range of 489 insurance products.
Possesses an experienced management team and sales force with strong commitment to rigorous training and development.
The Hong Kong insurance market is projected for continued growth, with life insurance forecasted to reach $112.42 billion by 2032 and non-life insurance $14.6 billion by 2032.
Increasing disposable income, rising geriatric population, and strong demand for health and risk protection among Chinese consumers are fueling market growth in Hong Kong.

Negatives

Significant revenue concentration risk, with approximately 68.1% of total commissions attributed to one insurance company for the fiscal year ended March 31, 2025 (down from 96.5% in 2024).
A limited public trading market exists for common stock on the OTCQB, and there is no assurance that the Nasdaq listing application will be approved or sustained.
Reliance on licensed technical representatives for all sales, with intense competition for attracting and retaining highly productive personnel.
Risk of misconduct by technical representatives could lead to regulatory sanctions, litigation, or reputational harm.
Commission revenue is subject to quarterly fluctuations due to seasonality and timing of policy renewals, which are outside of the company's control.
Identified material weaknesses in internal control over financial reporting, including lack of proper segregation of duties, formal documentation, and independent directors/audit committee.
As a controlled company, QDM may choose to exempt itself from certain Nasdaq corporate governance requirements, potentially reducing protections for public shareholders.
No history of paying cash dividends, and no anticipation of paying dividends in the foreseeable future, as earnings are intended for business expansion.

Risks

Business is subject to concentration risks arising from dependence on a single or limited number of insurance company partners.
Inability to attract and retain highly productive technical representatives could materially and adversely affect business.
Misconduct of technical representatives may have a material adverse effect on business, results of operations, or financial condition.
Extensive regulations for insurance brokerage and MPF intermediary businesses in Hong Kong; failure to comply could result in fines, censure, suspensions, or license revocation.
Intense competition in the Hong Kong insurance intermediary industry could lead to loss of customers and negatively affect financial results.
Commission revenue is based on premiums and rates set by insurance companies; any decrease could adversely affect results of operations.
Quarterly variations in commission revenue due to seasonality and policy renewals may unexpectedly impact results of operations.
Future success depends on continuing efforts of senior management and key personnel; loss of their services could harm business.
Inability to ensure accuracy and completeness of product information and effectiveness of insurance product recommendations could lead to reputational harm and reduced business.
Potential liability, loss of customers, and damage to reputation for any failure to protect confidential customer information, including non-compliance with the Personal Data (Privacy) Ordinance.
Reliance on dividends and other distributions from Hong Kong operating subsidiary for cash and financing requirements; PRC government restrictions on cash/asset transfers could have a material adverse effect.
Political risks and economic instability in Hong Kong may adversely impact results of operations, including changes in PRC government policies.
Substantial uncertainties and restrictions with respect to PRC government policies and laws could significantly impact business in Hong Kong and value of common stock.
Enactment of the Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region could impact Hong Kong operating subsidiary.
Risk that the PRC government may intervene or influence operations at any time, or exert more control over overseas offerings and foreign investment in Hong Kong/PRC-based issuers, potentially hindering ability to offer securities or rendering them worthless.
Potential for becoming subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection.
Trading in securities may be prohibited under the HFCA Act if the PCAOB determines it cannot inspect or investigate the auditor completely for two consecutive years.
Difficulty for shareholders to enforce any judgment obtained in the United States against the company or its officers/directors due to assets and personnel being outside the U.S.
Business, financial condition, and results of operations, and/or value of common stock may be materially and adversely affected if mainland China laws and regulations become applicable.
CEO, Mr. Huihe Zheng, has substantial influence (82.1% voting power), and his interests may not align with other shareholders, potentially preventing or causing a change of control.
Considerable discretion in the use of net proceeds from the offering, which may not align with investor expectations or improve profitability.
Limited market for common stock on OTCQB; inability to list on Nasdaq or sustain trading could make it difficult to dispose of securities.
An active market for common stock may never develop, leading to significant price fluctuations.
Increased costs and management time required for compliance as a public company listed on Nasdaq, especially after no longer being a smaller reporting company.
Uncertainty if reduced disclosure requirements for smaller reporting companies will make common stock less attractive to investors.
If securities or industry analysts do not publish research or publish negative reports, stock price and trading volume could decline.
Experience additional dilution from future equity offerings.
Existing shareholders may sell shares after lock-up, potentially impacting trading price.
Provisions of Bylaws and Florida law may delay or prevent a takeover.

Future Outlook

The company intends to expand its distribution network by further participating in the growing life insurance sector in Hong Kong, building relationships with strategic partners in Hong Kong and mainland China (such as wealth management companies, funds, trust companies, and overseas immigration agencies), and strengthening relationships with leading insurance companies to potentially obtain favorable commission rates and exclusive rights to distribute high-margin products. Future earnings are intended to finance business operations and expansion, with no anticipated cash dividends in the foreseeable future. The company acknowledges uncertainties regarding potential future PRC government intervention or changes in regulations that could impact its operations or ability to offer securities.

Management Comments

Believe that providing superior customer service is the most important aspect of business for brand building and product differentiation.
Strategy has been to focus on life insurance due to generally higher commissions.
Intend to actively recruit sales and marketing professionals to help increase sales of life insurance products in Hong Kong.
Plan to leverage existing customer base to cross-sell life insurance products to non-life insurance customers.
Hope to obtain favorable commission rates and exclusive rights to distribute high-margin products or collaborate with insurance company partners to custom-develop products.

Industry Context

Hong Kong has one of Asia's most developed insurance markets, with a high per capita insurance premium and a 20.0% penetration rate in 2022, significantly higher than mainland China's 3.9%. The market is driven by increasing disposable income, a rising geriatric population, growing chronic diseases, and strong demand for health and risk protection among Chinese consumers, especially visitors from mainland China. The resumption of cross-border travel and regional integration within the Greater Bay Area are expected to fuel growth. Challenges include limited penetration of online insurance and complex industry regulations like IFRS 17, which can restrict new entrants. The company aims to capitalize on the growth potential, particularly in the life insurance sector, by expanding its distribution network and strengthening partnerships.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Financial Officer and Secretary	Tim Shannon	Wei Li	2024-08-05	Tim Shannon resigned; Wei Li appointed.
Director	NA	Fawn Ren	2024-11-06	Appointment to the Board.
Director Nominee	NA	Lei Sun	Upon commencement of Nasdaq trading	Nomination for Board appointment upon Nasdaq listing.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Structure	Board of directors will be divided into three classes with staggered, three-year terms upon Nasdaq listing.	Upon Nasdaq listing	May delay or prevent a change of management or control of the company.
Committee Establishment	Will establish an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee in compliance with Nasdaq listing rules.	Upon Nasdaq listing	Aims to improve corporate governance and oversight, addressing identified material weaknesses in internal controls.
Controlled Company Status	Will be a controlled company under Nasdaq rules due to Mr. Zheng's significant voting power (82.1%), allowing potential exemptions from certain corporate governance requirements.	Upon completion of offering	Could cause common stock to look less attractive to certain investors and may reduce protections afforded to public shareholders if exemptions are utilized.
Code of Ethics and Business Conduct	Board will adopt a Code of Ethics and Business Conduct applicable to all employees, executive officers, and directors.	Upon Nasdaq listing	Aims to promote ethical conduct and compliance within the company.

Legal Proceedings

Not involved in any material legal proceedings.
Not aware of any legal proceedings threatened or in which any director or officer or their affiliates is a party adverse to the company or has a material adverse interest.

Related Party Transactions

Huihe Zheng, the principal shareholder, CEO, and Chairman, advanced $129,056 to the company during the fiscal year ended March 31, 2025 (compared to $244,313 in 2024).
The company repaid $812,277 to Huihe Zheng during the fiscal year ended March 31, 2025 (compared to nil in 2024).
On October 9, 2024, the company issued 6,000,000 shares of Series B Preferred Stock to Mr. Zheng at $0.10 per share, in exchange for the cancellation of $600,000 of debt owed to him.
The 'due to related party' balance with Huihe Zheng was $1,283,221 as of March 31, 2024, which is unsecured, interest-free, and due on demand.
The company intends to adopt a related party transactions policy, requiring Audit Committee review and approval for material related party transactions.

Stakeholder Impact

**Shareholders:** Potential for immediate and substantial dilution from the public offering. Existing shareholders' voting power will be significantly concentrated with the CEO. Nasdaq listing could increase liquidity and visibility, but delisting risks and penny stock status could negatively impact value.
**Employees:** New hires and training are planned, potentially increasing employment opportunities and professional development.
**Customers:** Expansion of service offerings and distribution network aims to provide broader product choices and enhanced services.
**Suppliers/Partners:** Strengthening relationships with insurance companies and building connections with strategic partners (e.g., wealth management companies, trust companies) are key growth strategies.
**Creditors:** The issuance of Series B Preferred Stock to cancel $600,000 of debt owed to the CEO improves the company's balance sheet by reducing liabilities.

Next Steps

Complete the public offering of common stock.
Obtain approval and list common stock on The Nasdaq Stock Market LLC.
Expand service offerings.
Increase marketing and branding efforts.
Recruit and hire new management, sales, and customer service personnel.
Strengthen relationships with existing and new insurance companies and strategic partners.
Remediate identified material weaknesses in internal control over financial reporting, including hiring qualified accounting personnel, establishing a financial and system control framework, formulating U.S. GAAP accounting policies, assessing Sarbanes-Oxley compliance, and establishing an independent audit committee.

Key Dates

Date	Description
1998-11-01	24/7 Kid Doc, Inc. (predecessor to QDM) incorporated in Florida.
2015-01-01	YeeTah began offering life insurance products.
2020-03-03	Stock Purchase Agreement entered into by Huihe Zheng and Tim Shannon, resulting in change of control of 24/7 Kid.
2020-03-10	QDM International Inc. incorporated in Florida as a wholly-owned subsidiary of 24/7 Kid.
2020-06-30	Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (Hong Kong National Security Law) passed.
2020-10-21	Share Exchange Agreement closed, QDM acquired QDM BVI and its indirect subsidiary YeeTah, becoming an operating company.
2020-12-18	The Holding Foreign Companies Accountable Act (HFCA Act) enacted.
2021-07-06	General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued Opinions on Severe and Lawful Crackdown on Illegal Securities Activities.
2021-11-03	Company acquired 100% of QDMI Software Group Limited (QDMS) through Lutter Global Limited (LGL).
2022-12-15	PCAOB vacated its previous Determination List, concluding it could inspect/investigate audit firms in mainland China and Hong Kong in 2022.
2022-12-29	Consolidated Appropriations Act, 2023 signed into law, amending HFCA Act to reduce consecutive years for trading prohibition from three to two.
2023-03-01	Company consummated a public offering (2023 Offering), issuing 289,104,000 shares of common stock.
2023-03-31	Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (Trial Measures) and five supporting guidelines came into effect.
2023-05-16	CSRC promulgated supporting guideline No. 6 to the Trial Measures.
2023-10-04	Company sold QDMS to Mr. Huihe Zheng for no consideration.
2023-12-01	Company strategically expanded its business model by entering into a collaborative partnership with a trust company in Hong Kong for referral business.
2024-03-28	Company filed Articles of Amendment to increase authorized shares and effect a 10-for-1 forward stock split.
2024-04-05	10-for-1 forward stock split became effective.
2024-05-07	CSRC promulgated supporting guideline No. 7 to the Trial Measures.
2024-05-22	Hong Kong Insurance Authority issued a circular mandating lower referral fees for introducing clients.
2024-08-05	Wei Li appointed Chief Financial Officer and Secretary; Tim Shannon resigned as CFO.
2024-10-04	Company filed Articles of Amendment to increase authorized Series B preferred stock from 2M to 10M shares.
2024-10-07	Increase in authorized Series B preferred stock became effective.
2024-10-09	Company issued 6,000,000 shares of Series B Preferred Stock to Huihe Zheng in exchange for cancellation of $600,000 debt.
2024-11-06	Fawn Ren appointed as a director of the Company.
2025-03-31	End of fiscal year for financial reporting.
2025-07-10	Date of ZH CPA, LLC's audit report.
2025-07-24	Last reported price of common stock ($3.42 per share) on OTCQB and shareholder count (380).
2025-07-25	Date of DeHeng Law Offices (Hong Kong) LLP's legal opinion.
2025-07-28	Filing date of Amendment No. 3 to Form S-1 Registration Statement.

Recommendation

hold

The company demonstrates strong financial performance with significant revenue and net income growth, driven by strategic expansion into referral business and a focus on high-commission life insurance. The planned Nasdaq listing could enhance market visibility and liquidity. However, substantial risks exist, including high customer concentration, the potential for PRC government intervention in Hong Kong operations, and identified material weaknesses in internal controls. The CEO's significant voting power also presents corporate governance concerns. Given the strong financial upside balanced by considerable regulatory and operational risks, a 'hold' recommendation is appropriate for a seasoned investor, suggesting monitoring progress on risk mitigation and sustained performance before further investment.

Keywords

Insurance Brokerage, Hong Kong, SEC Filing, Nasdaq Listing, Public Offering, Life Insurance, General Insurance, MPF, ORSO, Financial Services, Investment Products, Referral Business, Corporate Governance, Risk Management, China Regulations, HFCA Act, Controlled Company

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