F-1/A: Zi Yun Dong Fang Limited Files for Nasdaq IPO

Zi Yun Dong Fang Limited, a Cayman Islands holding company operating in Hong Kong, Vietnam, and Thailand, is launching an initial public offering of 1,500,000 Ordinary Shares on the Nasdaq Capital Market.

Summary

• Zi Yun Dong Fang Limited is conducting an Initial Public Offering (IPO) of 1,500,000 Ordinary Shares.
• The anticipated initial public offering price is between US$4.00 and US$6.00 per Ordinary Share, with a midpoint of US$5.00.
• Expected gross proceeds from the offering are US$7,500,000, or US$8,625,000 if the underwriters' over-allotment option is fully exercised.
• Net proceeds to the company are estimated at approximately US$5.4 million, after deducting underwriting discounts and estimated offering expenses.
• The company is a Cayman Islands holding company with operations conducted through its wholly-owned Hong Kong subsidiary, Ziyun Oriental Consulting Management Limited, and a Shanghai subsidiary, Ziqi Dongyun (Shanghai) Enterprise Consulting Co., Ltd.
• Ziyun Oriental provides advisory and consulting services focused on investment feasibility in Southeast Asia, specifically Vietnam and Thailand, offering business feasibility reports, site visiting services, and corporate support services.
• Total revenues increased by 22.6% from $2.23 million for the year ended May 31, 2024, to $2.73 million for the year ended May 31, 2025.
• Gross profit increased by 18.4% from $1.69 million for the year ended May 31, 2024, to $2.00 million for the year ended May 31, 2025.
• Net income decreased from $1,062,270 for the year ended May 31, 2024, to $789,020 for the year ended May 31, 2025.
• Gross margin decreased from 75.8% in 2024 to 73.2% in 2025.
• General and administrative expenses increased by 149.4% to $1.08 million in 2025, primarily due to IPO-related audit fees.
• The net proceeds from the offering will be used for business expansion (20% for AI predictive analysis, 15% for team building, 30% for growth initiatives) and brand building (35%).
• Zixiao Hui, the Chairman and CEO, will be the controlling shareholder, beneficially owning approximately 68.64% of the voting power post-offering.
• The company has applied to list its Ordinary Shares on the Nasdaq Capital Market under the symbol YLY, with the closing of the offering conditioned upon NASDAQ's final approval.

Sentiment

Score: 4

Explanation: While the company demonstrates strong revenue growth and a clear strategy for expansion into Southeast Asia, the significant decline in net income despite this growth, coupled with a substantial increase in general and administrative expenses (largely IPO-related), raises concerns about underlying profitability and cost management. The high customer concentration, dependence on a non-full-time CEO, and the inherent geopolitical and regulatory risks associated with operating in Hong Kong and potentially China, further add to the uncertainty. The IPO proceeds are earmarked for growth, which is positive, but the company's lack of public company experience and the potential for delisting under the HFCAA warrant a cautious 'hold' recommendation until there is clearer evidence of sustained profitability and effective navigation of these significant risks.

Positives

• Total revenues increased significantly by 22.6% from $2.23 million in 2024 to $2.73 million in 2025, demonstrating business growth.
• Revenue from site visiting services showed robust growth, increasing by 159.1% from $290,330 in 2024 to $752,333 in 2025, indicating strong demand in this segment.
• The company maintains high gross profit margins, at 73.2% in 2025 and 75.8% in 2024, reflecting efficient service delivery.
• A clear allocation plan for IPO net proceeds includes investments in AI predictive analysis (20%), team building and training (15%), growth initiatives (30%), and brand building (35%), signaling strategic future development.
• Established close cooperative relationships with government departments, industry associations, and law firms in multiple Southeast Asian countries, providing access to real-time information and support.
• The company emphasizes a customer-led approach, offering customized service packages and engaging with clients throughout the entire process to ensure precision and local market integration.

Negatives

• Net income decreased by 25.7% from $1,062,270 in 2024 to $789,020 in 2025, despite a substantial increase in revenue.
• Gross margin declined from 75.8% in 2024 to 73.2% in 2025, indicating a slight reduction in profitability per service.
• General and administrative expenses surged by 149.4% from $431,910 in 2024 to $1,077,388 in 2025, primarily due to IPO-related audit fees, impacting overall profitability.
• The holding company, Zi Yun Dong Fang Limited, is newly formed (April 23, 2024) and has no operating history or material operations of its own, making future prospects difficult to evaluate.
• The company exhibits high customer concentration, with the top five customers accounting for 82.4% of total revenue in 2025 and 90.0% in 2024, posing a significant risk if any major customer is lost.
• Operations are heavily dependent on third-party service providers and suppliers, which could lead to business interruptions, delays, or inability to meet customer demands if these relationships are disrupted.
• The Chief Executive Officer, Zixiao Hui, is not required to commit his full time to the company's affairs and has other business interests, potentially leading to conflicts of interest and reduced focus.
• Management lacks experience in managing a U.S. public company and complying with the complex laws and regulations applicable to such entities.
• The company does not maintain insurance coverage for all business risks, such as properties, receivables, and public liability, which could expose it to significant losses.
• The company's Ordinary Shares may be thinly traded and subject to high volatility due to its relatively small public float and capitalization, making it difficult for investors to liquidate shares at desired prices.

Risks

• The PRC government may exercise significant direct oversight and discretion over the conduct of business in Hong Kong, potentially leading to intervention, material changes in operations, or devaluation of Ordinary Shares.
• Uncertainties exist with respect to the PRC legal system, including vague and rapidly changing laws and regulations, which could adversely affect the business and limit legal protections.
• There is uncertainty whether the company's existing or future business will be included in China's 'Negative List' for foreign investment, which could deem the corporate structure illegal and require restructuring or cessation of operations.
• The company faces the risk of delisting from U.S. stock exchanges under the Holding Foreign Companies Accountable Act (HFCAA) if the PCAOB is unable to inspect its auditor for two consecutive years, despite the current auditor being U.S.-based and inspected.
• Future operations in China or processing personal information of over one million users could subject the company to cybersecurity review by the Cyberspace Administration of China (CAC), potentially leading to sanctions or operational restrictions.
• The implementation of the Hong Kong National Security Law and the Safeguarding National Security Ordinance could trigger additional sanctions or penalties by foreign governments, causing economic harm to the business.
• Investors are buying shares of a Cayman Islands holding company, not directly in the Hong Kong operating subsidiary, which may limit direct equity interests and protection.
• The PRC government may impose future restrictions or limitations on the company's ability to transfer cash out of Hong Kong or distribute earnings from its subsidiary, materially affecting liquidity and business expansion.
• The holding company is newly formed with no operating history and has not generated any revenue, making an investment highly risky and potentially leading to a complete loss of investment.
• High customer concentration, with a small group of customers accounting for a large percentage of revenue, poses a risk if these relationships are not maintained.
• Reliance on professional services from unrelated third parties and suppliers exposes the company to risks of service interruptions, delays, and inability to meet customer demands.
• The company's failure to develop and market its services effectively may limit potential revenues and decrease share value.
• Political events, social unrest, and changes in laws and regulations in China and globally may significantly affect the business, assets, or operations.
• The global economy and financial markets, including slowdowns in the Chinese economy, could negatively affect the business and client spending behavior.
• The loss of key executive Zixiao Hui or the inability to attract and retain competent personnel could negatively impact business development and growth.
• Internal controls over financial reporting may not be effective, potentially leading to material misstatements, restatements, or regulatory sanctions.
• The company currently lacks an independent audit committee and audit committee financial expert, which 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 executive 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, which could lead to difficulties in compliance and operations.
• The company currently does not have insurance coverage for all business risks, potentially exposing it to significant financial losses.
• Estimates of the addressable market size may be inaccurate, leading to lower-than-anticipated future growth.
• Negative publicity, regardless of veracity, could adversely affect the company's public perception, sales, and profitability.
• The company may become party to litigation, which could divert resources and negatively impact business and share price.
• Labor disputes could disrupt operations, increase labor costs, and decrease operational flexibility.
• Acts of God, acts of war, epidemics (like COVID-19), and other disasters could materially and adversely affect the business.
• Technology failures or security breaches could disrupt operations, compromise confidential information, and lead to reputational damage.
• Failure to comply with cybersecurity, data privacy, and data protection laws and regulations could result in penalties and legal liabilities.
• The company may be affected by changes in Hong Kong's currency peg system to the US dollar, potentially increasing expenditures.
• The trading price of Ordinary Shares may be volatile due to broad market factors, performance of other Hong Kong/Chinese companies, and the company's small public float.
• If securities or industry analysts publish inaccurate or unfavorable research, the market price and trading volume could decline.
• Shareholders must rely on price appreciation for return on investment, as dividends are discretionary and subject to Cayman Islands law restrictions.
• As a foreign private issuer, the company is exempt from certain U.S. securities rules, potentially affording less protection to shareholders.
• As a Cayman Islands company, the company may adopt corporate governance practices that differ significantly from Nasdaq standards, offering less protection to shareholders.
• There is no assurance that the company will not be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could lead to significant adverse tax consequences for U.S. investors.
• The company will incur increased costs as a public company, particularly after it ceases to qualify as an emerging growth company.
• The reduced disclosure requirements applicable to emerging growth companies may make the Ordinary Shares less attractive to investors.

Future Outlook

The company plans to enhance client relationship management, improve customer experiences, and promote long-term sustainable relationships. It intends to utilize big data and client management systems for in-depth analysis of client needs and market trends, providing more accurate service solutions. The company aims to fulfill corporate social responsibility and promote sustainable development. Geographically, it plans to expand into other Southeast Asian markets such as Thailand, Singapore, and Cambodia within the next three years. Furthermore, the company will strengthen research and monitoring of regulations in target markets to ensure compliance and will continue to optimize existing services and explore new service models, including upgrading intelligence levels through big data and artificial intelligence. It also plans to expand partnerships and strengthen brand building through various promotional activities and invest in talent cultivation and team building.

Management Comments

• 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.
• The Management understands that as of the date of this prospectus, the Company is not required to obtain any permissions or approvals from PRC authorities for the continued listing of our Ordinary Shares in the U.S. and to issue our Ordinary Shares to foreign investors, including the CAC or the CSRC.
• Our management, however, will have some flexibility and discretion to apply the net proceeds of this offering.
• We consider that we have maintained a good relationship with our employees and have not experienced any significant disputes with our employees or any disruption to our operations due to any labor disputes.

Industry Context

The company operates in the business management consulting services market, with a specific focus on assessing and researching investment feasibility in Southeast Asia, particularly Vietnam and Thailand. This market is characterized by ongoing digital transformation initiatives across businesses of all sizes, driving demand for strategic guidance, technology selection, and execution support. Strategy consulting, a key service offered by the company, accounted for over 19% of the market share in 2023 and is expected to exceed USD 43 billion by 2032. The company aims to provide one-stop cross-border enterprise service solutions, positioning itself to capitalize on the growing need for specialized consulting in emerging markets.

Comparison to Industry Standards

• The company faces competition from significantly larger service providers in Hong Kong and worldwide, including branches of international investment banks and investment companies, which possess exponentially greater resources.
• Competitors often have advantages such as stronger brand recognition, wider ranges of value-adding services, more robust human and financial resources, and operational presence in more geographic locations.
• To maintain competitiveness, the company emphasizes providing high-quality, customized services, leveraging its expertise, and fostering strong client relationships through dedicated support and tailored solutions.
• The company strives to differentiate itself through efficient operational management, strong collaboration with clients and third-party service providers, and transparent fee structures, offering personalized client services and flexible options.

Management Changes

Corporate Governance

Legal Proceedings

• Neither the company nor any of its subsidiaries has been involved in any litigation, claim, administrative action, or arbitration that had a material adverse effect on operations or financial condition during the years ended May 31, 2025 and 2024, and as of the date of this prospectus.

Related Party Transactions

• Mr. Zixiao Hui (CEO, director, and shareholder) had an amount due from the company of $242,811 as of May 31, 2024, which was reduced to $0 as of May 31, 2025. An amount due to Mr. Zixiao Hui was $213,368 as of May 31, 2025. His salaries were $23,118 in 2025 and $23,015 in 2024.
• Jiangsu Yalu Cloud Enterprise Management Consulting Co., Ltd. (wholly owned by Mr. Zixiao Hui) had an amount due to it of $183,724 as of May 31, 2025, and $212,071 as of May 31, 2024. Staff costs paid to this entity were $7,233 (cost of revenues) and $32,246 (general and administrative expenses) in 2025, compared to $418,764 and $81,369 in 2024, respectively.
• Mr. Bing Yuan (former shareholder and director) had an amount due to him of $29,628 as of May 31, 2024, which was reduced to $0 as of May 31, 2025, following his share transfer and resignation.
• Ms. Na Li (shareholder) had an amount due to her of $72,863 as of May 31, 2025. Consulting service fees paid to Ms. Na Li were $341,485 in 2025.
• All related party balances are unsecured, interest-free, and have no specific repayment terms.

Stakeholder Impact

• **Shareholders**: Potential for dilution from the IPO. Returns on investment will primarily depend on share price appreciation, as dividends are discretionary. Limited protection due to Cayman Islands incorporation and foreign private issuer status. Significant influence of the controlling shareholder (Zixiao Hui) may lead to conflicts of interest. Risks of delisting under the HFCAA could severely impact investment value.
• **Employees**: The company plans to invest in team building and training (15% of IPO proceeds) and establish incentive and promotion mechanisms, indicating a positive impact on employee development and motivation. Good relationships with employees are reported.
• **Customers**: The company's focus on client relationship optimization, customized service packages, and expansion into new Southeast Asian markets aims to enhance customer experience and satisfaction. However, high customer concentration (top 5 customers account for 82.4% of revenue) poses a risk if these relationships are not maintained.
• **Suppliers**: The business relies on third-party service providers and suppliers. Any disruptions or inability of these partners to meet demand could adversely affect the company's ability to serve its customers, potentially impacting supplier relationships.
• **Regulatory Bodies**: The company is subject to scrutiny from the SEC, PCAOB, Nasdaq, and potentially PRC/Hong Kong regulatory authorities. Compliance with evolving and uncertain laws, particularly those related to China's oversight and data security, will require significant attention and resources, with risks of penalties for non-compliance.

Next Steps

• Complete the initial public offering and list Ordinary Shares on the Nasdaq Capital Market under the symbol YLY.
• Enhance analysis and reporting tools by investing in technical infrastructure like AI predictive analysis (20% of net proceeds).
• Build a high-quality team and provide necessary training (15% of net proceeds).
• Implement growth initiatives, including market research, identification of emerging opportunities, service optimization, user efficiency, and operational efficiency (30% of net proceeds).
• Dedicate resources to brand building, including improving website and social media presence, participating in exhibitions, and organizing seminars (35% of net proceeds).
• Expand into other Southeast Asian markets (Thailand, Singapore, Cambodia) within the next three years.
• Strengthen research and monitoring of regulations in various target markets to ensure compliance with laws and industry standards.
• Establish a comprehensive customer feedback mechanism to regularly collect feedback and improve services.
• Continue to optimize existing services and explore new service models, including additional customization and streamlined solutions.
• Actively seek more cooperation opportunities with other domestic and foreign service organizations, industry associations, and government departments.
• Improve the professional skills and comprehensive quality of team members through internal training and external learning.
• Establish sound incentive and promotion mechanisms to motivate team members' enthusiasm and creativity.

Key Dates

Recommendation

While the company demonstrates strong revenue growth and a clear strategy for expansion into Southeast Asia, the significant decline in net income despite this growth, coupled with a substantial increase in general and administrative expenses (largely IPO-related), raises concerns about underlying profitability and cost management. The high customer concentration, dependence on a non-full-time CEO, and the inherent geopolitical and regulatory risks associated with operating in Hong Kong and potentially China, further add to the uncertainty. The IPO proceeds are earmarked for growth, which is positive, but the company's lack of public company experience and the potential for delisting under the HFCAA warrant a cautious 'hold' recommendation until there is clearer evidence of sustained profitability and effective navigation of these significant risks.

Keywords

IPO, SEC F-1/A, Consulting, Advisory Services, Southeast Asia Investment, Hong Kong, Vietnam, Thailand, Cross-border Enterprise Services, Nasdaq Capital Market, Emerging Growth Company, Ziyun Oriental, Financial Reporting, Risk Management, Corporate Governance, PCAOB, HFCAA, China Regulations, Foreign Private Issuer