F-1/A: Zi Yun Dong Fang Launches IPO for Southeast Asia Consulting

Zi Yun Dong Fang Limited, a Cayman Islands holding company, is launching its initial public offering of 1,500,000 Ordinary Shares on Nasdaq Capital Market, aiming to raise capital for business expansion in Southeast Asia.

Summary

• Zi Yun Dong Fang Limited is undertaking an Initial Public Offering (IPO) of 1,500,000 Ordinary Shares at an estimated price range of US$4.00 to US$6.00 per share.
• The company anticipates receiving approximately US$5.4 million in net proceeds (at the US$5.00 midpoint, without over-allotment option exercise) to fund business expansion, brand promotion, and general corporate purposes.
• Zi Yun Dong Fang Limited is a Cayman Islands holding company with no material operations, conducting all business through its wholly-owned Hong Kong subsidiary, Ziyun Oriental Consulting Management Limited.
• Ziyun Oriental provides advisory and consulting services, specializing in investment feasibility in Southeast Asia (Vietnam and Thailand), offering business feasibility reports, site visiting services, and corporate support services.
• Total revenues increased by 22.6% to US$2,732,998 for the year ended May 31, 2025, from US$2,228,823 in the prior year.
• Gross profit increased by 18.4% to US$1,999,511 for the year ended May 31, 2025, but the gross margin decreased from 75.8% to 73.2%.
• Net income decreased by 25.7% to US$789,020 for the year ended May 31, 2025, compared to US$1,062,270 for the year ended May 31, 2024.
• The company exhibits significant customer concentration, with its top five customers accounting for 82.4% of total revenue in 2025 and 90.0% in 2024.
• As an 'Emerging Growth Company' and 'Foreign Private Issuer,' the company benefits from reduced U.S. public company reporting requirements.
• Post-offering, CEO Zixiao Hui will be the controlling shareholder with approximately 68.64% of the voting power, classifying the company as a 'controlled company' under NASDAQ rules, though it does not intend to use the associated corporate governance exemptions.

Sentiment

Score: 4

Explanation: While the company is undertaking an IPO to fund growth and has seen revenue increases, the decline in net income and operating income, coupled with substantial increases in administrative expenses (partially IPO-related), and significant operational and regulatory risks, temper the overall sentiment. The high customer concentration and management's lack of public company experience also contribute to a cautious outlook.

Positives

• Total revenues increased by US$504,175 or 22.6% from US$2,228,823 for the year ended May 31, 2024, to US$2,732,998 for the year ended May 31, 2025.
• Gross profit increased by US$310,449 or 18.4% from US$1,689,062 for the year ended May 31, 2024, to US$1,999,511 for the year ended May 31, 2025.
• Revenue from site visiting services significantly increased by US$462,003 or 159.1% from US$290,330 in 2024 to US$752,333 in 2025, driven by a growing customer base and more projects.
• Cash and cash equivalents increased to US$1,442,306 as of May 31, 2025, from US$737,268 as of May 31, 2024.
• The company has established close cooperative relationships with government departments, industry associations, and law firms in multiple Southeast Asian countries, providing access to real-time information.
• Plans include digitization efforts, such as utilizing big data and client management systems for more accurate service solutions.
• Intends to expand into other Southeast Asian markets, including Indonesia and the Philippines, within the next three years.
• The company's auditor, WWC, P.C., is U.S.-based and subject to PCAOB inspections, which helps mitigate certain risks related to the Holding Foreign Companies Accountable Act (HFCAA).

Negatives

• Net income decreased by US$273,250 or 25.7% from US$1,062,270 for the year ended May 31, 2024, to US$789,020 for the year ended May 31, 2025.
• Operating income decreased by US$335,029 or 26.7% from US$1,257,152 for the year ended May 31, 2024, to US$922,123 for the year ended May 31, 2025.
• Gross margin decreased from 75.8% in 2024 to 73.2% in 2025, primarily due to an increase in lower-margin site visiting services.
• General and administrative expenses increased substantially by US$645,478 or 149.4% from US$431,910 in 2024 to US$1,077,388 in 2025, largely due to IPO-related audit fees.
• The company is newly formed (April 23, 2024) with no operating history and has just commenced business operations, making an investment highly risky with potential for complete loss.
• Significant customer concentration exists, with the top five customers accounting for 82.4% of total revenue in 2025 and 90.0% in 2024, posing a risk if these customers reduce or cease purchasing services.
• Dependence on third-party service providers and suppliers exposes the business to potential supply chain interruptions and delays.
• The company lacks specific cash management policies and procedures, generally keeping funds within the entities where they are raised.
• The Chief Executive Officer, Zixiao Hui, is not required to commit his full time to the company, which may lead to conflicts of interest.
• The current management team lacks experience in managing a U.S. publicly traded company and complying with associated laws.
• The company does not maintain director and officer (D&O) liability insurance for its key executive.
• Currently, there is no independent audit committee or audit committee financial expert, which may hinder the Board of Directors' effectiveness and prevent listing on a national securities exchange until established.
• The Board of Directors acts as the compensation committee, which presents a risk that executive compensation may not be commensurate with financial performance.

Risks

• The company is newly formed with no operating history and has not generated any revenue, making an investment highly risky with potential for complete loss.
• Reliance on professional services performed by unrelated third parties, including licensed professionals, could damage reputation and affect business if services are not performed to acceptable standards.
• Inability to compete successfully against new and established companies with greater resources providing similar advisory and consulting services in Hong Kong and the PRC.
• Failure to develop and market services may limit potential revenues and decrease the value of Ordinary Shares.
• Political events in China and globally (social unrest, terrorism, regime changes, changes in laws and regulations) may significantly affect business, assets, or operations.
• The global economy and financial markets may negatively affect the company's business and clients.
• Failure to develop new clients and retain existing ones could have a material adverse effect on business, financial condition, and results of operations.
• Acts of God, acts of war, epidemics (including COVID-19), and other disasters could materially and adversely affect the business.
• Loss of services of any director or executive officer or failure to timely identify and retain competent personnel could negatively impact the ability to develop products and services.
• Internal controls over financial reporting may not be effective, potentially leading to significant and adverse effects on business and reputation.
• Lack of an independent audit committee and audit committee financial expert may hinder Board effectiveness and prevent listing on a national securities exchange.
• The Board of Directors acting as the compensation committee presents a risk that compensation may not be commensurate with financial performance.
• Limitations on director and officer liability and indemnification may discourage shareholders from bringing lawsuits against officers or directors.
• Management has no experience in managing an SEC reporting public company.
• Difficulty establishing adequate management, legal, and financial controls in the PRC.
• Lack of insurance coverage for all business risks could negatively affect cash flow and liquidity.
• The PRC government may exercise significant direct oversight and discretion over Hong Kong operations, potentially resulting in a material change in operations and/or the value of Ordinary Shares.
• The Hong Kong operating subsidiary may become subject to laws and regulations of Mainland China, impairing profitability and impacting the value of Ordinary Shares.
• Funds or assets in Hong Kong or a Hong Kong entity may not be available for use outside of Hong Kong due to interventions or restrictions by the PRC government on cash or asset transfers.
• Uncertainties with respect to the PRC legal system, including enforcement of laws and sudden changes in regulations, could adversely affect the company and limit legal protections.
• Actions by the PRC government to exert more oversight and control over overseas offerings and/or foreign investments in Hong Kong-based issuers could significantly limit or hinder the ability to offer securities and cause their value to decline or become worthless.
• The future development of national security laws and regulations in Hong Kong could trigger sanctions and other measures causing economic harm.
• Investors are buying shares of a Cayman Islands holding company with operations conducted in Hong Kong by its subsidiary, not directly in the operating company.
• Reliance on dividends and other distributions from the subsidiary to fund cash and financing requirements; any limitation on the subsidiary's ability to make payments could materially decrease the value of Ordinary Shares.
• The controlling shareholder, Mr. Zixiao Hui, will own more than a majority of voting power, enabling him to control outcomes of matters submitted to shareholders for approval, and his interests may differ from other shareholders.
• Trading in securities may be prohibited under the Holding Foreign Companies Accountable Act (HFCAA) if the PCAOB is unable to inspect or investigate the auditor for two consecutive years, potentially leading to delisting.
• There has been no public market for Ordinary Shares prior to this offering, and a liquid public market may not develop, making it difficult to resell shares.
• The trading price of Ordinary Shares may be volatile due to broad market factors, industry performance, political/social conditions, and other factors beyond control, potentially resulting in substantial losses.
• Ordinary Shares may be thinly traded, making it difficult to sell at or near ask prices or at all.
• If securities or industry analysts do not publish or publish inaccurate/unfavorable research, the market price and trading volume could decline.
• Investors must rely on price appreciation for return on investment as dividends are discretionary and not expected in the foreseeable future.
• As a foreign private issuer, the company is exempt from certain U.S. domestic public company provisions, which may afford less protection to shareholders.
• Risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could subject U.S. investors to significant adverse tax consequences.
• Incurrence of increased costs as a public company, particularly after ceasing to qualify as an emerging growth company.
• Reduced disclosure requirements applicable to emerging growth companies may make Ordinary Shares less attractive to investors.
• The estimate of the size of the addressable market may prove inaccurate, limiting future growth potential.
• Negative publicity arising from claims of not properly addressing client needs could adversely affect public perception, sales, and profitability.
• Potential for litigation in the ordinary course of business, which could divert resources and affect financial results.
• Labor disputes may have an adverse effect on operations.
• Technology failures or security breaches could disrupt operations and negatively impact the business.
• Failure to comply with cybersecurity, data privacy, data protection, or other data-related laws and regulations may materially and adversely affect the business.
• The company may be affected by the currency peg system in Hong Kong; if the HKD devalues, foreign currency expenditures may increase.

Future Outlook

The company plans to enhance client relationship management, utilize big data and AI for service optimization, and expand its geographic scope into other Southeast Asian markets (Vietnam, Indonesia, Thailand, Philippines) within the next three years. It also intends to strengthen brand building, marketing efforts, and talent cultivation to support sustainable growth and adapt to evolving market dynamics. The company aims to upgrade its services through advanced technologies by adopting mature, ready-to-use third-party software solutions rather than developing proprietary technologies.

Management Comments

• "We aim to provide one-stop cross-border enterprise service solutions and overseas landing services for Southeast Asian enterprises."
• "The mission is to provide customers with comprehensive information solutions and achieve sustainable development through innovative technology and high-quality services, aiming to provide one-stop cross-border landing solutions for going global of Chinese enterprises and coming in for overseas enterprises."
• "The Management understands that as of the date of this prospectus, the Company and its operating subsidiary have no operations in China and is not required to complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures."
• "Our current auditor, WWC, P.C. is not headquartered in mainland China or Hong Kong and was not identified by the PCAOB in its report on December 16, 2021 as a firm subject to the PCAOBs determinations, which determinations were vacated on December 15, 2022."
• "Our Company is permitted under the laws of the Cayman Islands to provide funding to our operating subsidiary in Hong Kong through loans and/or capital contributions without restrictions on the amount of the funds."
• "As a smaller business, the Company does not have specific cash management policies and procedures that dictate how funds are transferred throughout the organization. The Companys general policy, however, has been to keep funds within the entities where they are raised or generated in order to support the local entitys operations."
• "We do not currently expect the Revised Review Measures to have an impact on our business, our operations or this offering as we do not believe that our operating subsidiary would be deemed to be an operator of critical information infrastructure or a data processor controlling personal information of no less than one million users, that would be required to file for cybersecurity review before listing in the U.S."
• "We do not plan to rely on the phase-in rules for newly listed companies and will comply fully with the NASDAQ listing standards at the time of listing."
• "Ziyun Oriental believes site visits can be an essential component in order to assess a business performance and management functions."
• "Ziyun Oriental believes that all of these advantages allow it to adapt quickly to evolving market dynamics, capture growth opportunities, and forge new paths ahead."
• "Ziyun Oriental adopts a compliance-centric and conservative approach of the reliance on third-party and any AI technologies and systems."

Industry Context

The company operates within the business management consulting services market, which is experiencing significant digital transformation. Strategy consulting is a major segment, projected to exceed US$43 billion by 2032, with large enterprises being the primary clients due to their complex needs and higher spending. North America currently dominates this market, driven by digital transformation initiatives. The industry is seeing a shift towards outcome-based pricing and a demand for consultants to assist with technology integration and strategic planning. The company's focus on Southeast Asia positions it in a region with active economies and market potential, aligning with broader industry trends of seeking efficiency and competitive advantage through consulting expertise.

Management Changes

Corporate Governance

Legal Proceedings

• No pending or threatened claims and litigation as of May 31, 2025, and May 31, 2024, and through the issuance date of these consolidated financial statements, that had a material adverse effect on the operations or financial condition of the company.

Related Party Transactions

• Amount due from Mr. Zixiao Hui (CEO, director, shareholder) was US$242,811 (net of allowance) as of May 31, 2024, and US$0 as of May 31, 2025.
• Amount due to Mr. Zixiao Hui was US$213,368 as of May 31, 2025.
• Amount due to Ms. Na Li (shareholder) was US$72,863 as of May 31, 2025.
• Amount due to Jiangsu Yalu Cloud Enterprise Management Consulting Co., Ltd. (wholly owned by Mr. Zixiao Hui) was US$183,724 as of May 31, 2025, and US$212,071 as of May 31, 2024.
• Amount due to Mr. Bing Yuan (former shareholder/director) was US$29,628 as of May 31, 2024, and US$0 as of May 31, 2025.
• Staff costs paid to Jiangsu Yalu Cloud Enterprise Management Consulting Co., Ltd. were US$7,233 (Cost of revenues) and US$32,246 (G&A expenses) for FY2025, and US$418,764 (Cost of revenues) and US$81,369 (G&A expenses) for FY2024.
• Consulting service fees paid to Ms. Na Li were US$341,485 (Cost of revenues) for FY2025.
• Salaries paid to Mr. Zixiao Hui were US$23,118 for FY2025 and US$23,015 for FY2024.
• All related party balances were unsecured, interest-free, and had no specific repayment terms.

Stakeholder Impact

• **Shareholders**: New investors face significant dilution (US$4.63 per share) and a high degree of investment risk, including potential for complete loss. Returns are expected to rely on price appreciation as no dividends are anticipated. Limited protection due to Cayman Islands incorporation and foreign private issuer status, along with the controlling shareholder's influence, are notable concerns. The potential for PFIC classification could also lead to adverse tax consequences for U.S. investors.
• **Employees**: The company plans to invest in talent cultivation, team building, training, and incentive programs, which could benefit employees. No significant labor disputes have been experienced to date.
• **Customers**: The company's customer-led approach, customized services, and plans for digitization and service innovation aim to enhance customer experience. However, high customer concentration (top five customers account for 82.4% of 2025 revenue) poses a risk if key customers reduce business.
• **Suppliers/Third-Party Service Providers**: The business's dependence on third-party providers and suppliers exposes it to potential supply chain interruptions and delays, which could impact service delivery.
• **Creditors**: Risks related to the company's ability to obtain future financing and potential restrictions by the PRC government on cash transfers from Hong Kong could affect the company's ability to meet its obligations.

Next Steps

• Complete the Initial Public Offering (IPO) and list Ordinary Shares on the Nasdaq Capital Market under the symbol YLY.
• Allocate 20% of net proceeds towards enhancing analysis and reporting tools by investing in technical infrastructure like AI predictive analysis.
• Allocate 15% of net proceeds to build a high-quality team and provide necessary training.
• Allocate 30% of net proceeds for growth initiatives, including market research, identification of emerging opportunities, service optimization, user efficiency, and operational efficiency.
• Allocate 35% of net proceeds to brand building, including improving website and social media presence, participating in exhibitions, and organizing seminars.
• Expand into other Southeast Asian markets (Vietnam, Indonesia, Thailand, Philippines) within the next three years.
• Strengthen research and monitoring of regulations in various target markets to ensure project compliance.
• Continue to optimize existing services and explore new service models, additional customization, and more streamlined solutions.
• Upgrade the intelligence level of services through big data and artificial intelligence by adopting mature, ready-to-use software tools from third-party vendors.
• Actively seek more cooperation opportunities with other domestic and foreign service organizations, industry associations, and government departments.
• Strengthen talent cultivation and team building through internal training, external learning, and establishing incentive and promotion mechanisms.
• Establish an independent Audit Committee, Compensation Committee, and Nominating Committee to comply with NASDAQ listing standards.
• Adopt a written code of business conduct and ethics and an executive compensation recovery policy.

Key Dates

Recommendation

While the company is undertaking an IPO to fund growth and has demonstrated revenue increases, the significant decline in net income and operating income in the most recent fiscal year, coupled with a substantial increase in administrative expenses (partially IPO-related), raises concerns about immediate profitability. The high customer concentration, inherent risks of a newly public company with limited operating history, and complex regulatory environment in Hong Kong/PRC warrant a cautious approach. The controlling shareholder structure and lack of D&O insurance for the CEO also add to the risk profile. A 'Hold' recommendation allows investors to monitor the company's ability to execute its growth plans, improve profitability, diversify its customer base, and navigate regulatory complexities post-IPO before making a more definitive investment decision.

Keywords

Initial Public Offering, IPO, Nasdaq Capital Market, YLY, Consulting, Advisory, Southeast Asia, Hong Kong, Vietnam, Thailand, Business Feasibility, Site Visiting Services, Corporate Support Services, Emerging Growth Company, Foreign Private Issuer, SEC Filing, Financial Reporting, Corporate Governance, Risk Management, Zixiao Hui, Ziyun Oriental