Core Viewpoint - WORK Medical Technology Group LTD has announced a strategic partnership with Shanghai Chartwell Medical Device Co., Ltd. to enhance growth and innovation in the healthcare sector [1][2]. Company Overview - WORK Medical is a supplier of Class I and II medical devices, with a diverse product portfolio of 21 products, including customized masks and medical consumables, sold in 34 regions in China and over 30 countries globally [3]. - Shanghai Chartwell Medical specializes in high-end medical devices and consumables, offering a wide range of products across various categories, including nuclear medicine and infection control [4]. Partnership Details - The collaboration will involve Chartwell Medical's subsidiaries, including Fuying and Fufeng, focusing on mutual growth and unlocking new opportunities [2]. - The partnership aims to enhance operational efficiency, market leadership, and international competitiveness, with a goal to advance high-end medical technologies [2]. - Specific cooperation projects are expected to enrich WORK Medical's product portfolio and increase the proportion of high-value-added products, leading to substantial revenue and profit growth over the next three years [2]. Future Initiatives - The partnership may include establishing joint investment funds, potential investment in Chartwell Medical, and co-investing in key projects related to healthcare infrastructure and advanced technology [6].

Core Viewpoint - WORK Medical Technology Group LTD has announced a strategic partnership with Shanghai Chartwell Medical Device Co., Ltd to enhance growth and innovation in the healthcare sector [1][2]. Company Overview - WORK Medical Technology Group LTD is a supplier of Class I and II medical devices, with a diverse product portfolio of 21 products, including customized masks and medical consumables, sold in 34 provincial-level regions in China and over 30 countries globally [3]. - The company has received multiple quality-related manufacturing designations and has registered 17 products with the U.S. FDA, allowing entry into the U.S. market [3]. Partnership Details - The collaboration will involve Chartwell Medical's subsidiaries, including Fuying and Fufeng, focusing on mutual growth and unlocking new opportunities [2]. - The partnership aims to enhance operational efficiency, market leadership, and international competitiveness, with a goal to advance high-end medical technologies [2]. - Specific cooperation projects are expected to enrich WORK Medical's product portfolio and increase the proportion of high-value-added products, leading to substantial growth in revenue and profits over the next three years [2]. Strategic Initiatives - The partnership will explore joint investment funds to align industrial and financial resources, including potential investments in Chartwell Medical or merging it into WORK Medical [6]. - Future co-investments are planned in key projects such as healthcare infrastructure, advanced technology R&D, and global acquisitions [6]. Chartwell Medical Overview - Shanghai Chartwell Medical Device Co., Ltd specializes in high-end medical devices and consumables, serving the Asia-Pacific region with a diverse portfolio across multiple categories [4]. - The company holds exclusive agency rights for several leading high-end medical brands from Japan, enhancing its market position [4].

PART I [ITEM 3. KEY INFORMATION](index=6&type=section&id=Item%203.%20Key%20Information) This section details the company's Cayman Islands holding structure, its control over PRC subsidiaries, and significant operational and legal risks, including CSRC regulatory uncertainties and potential HFCA Act delisting - The company operates through a holding structure where investors own shares in WORK Medical Technology Group LTD, a Cayman Islands holding company, which in turn owns the operating subsidiaries in the PRC Investors do not directly hold equity in the Chinese operating entities[26](index=26&type=chunk)[27](index=27&type=chunk) - As a domestic company indirectly listed overseas, the company was required to complete filing procedures with the China Securities Regulatory Commission (CSRC) for its IPO, which was completed on December 21, 2023 Future offerings will also require CSRC filings[30](index=30&type=chunk)[153](index=153&type=chunk)[163](index=163&type=chunk) - The company transferred net IPO proceeds of **$7,373,839** to its PRC subsidiaries Cash transfers from the Cayman holding company to PRC subsidiaries are subject to PRC laws on loans and direct investment Dividends from PRC subsidiaries are restricted, requiring allocation to a statutory reserve fund (at least 10% of after-tax profits until the reserve reaches 50% of registered capital)[39](index=39&type=chunk)[40](index=40&type=chunk) - The company's auditor, WWC, P.C., is based in the U.S. and subject to PCAOB inspection, with the latest inspection completed in 2023 However, the company acknowledges the risk of delisting under the Holding Foreign Companies Accountable Act (HFCA Act) if the PCAOB is unable to inspect its auditors for two consecutive years in the future[37](index=37&type=chunk)[211](index=211&type=chunk)[217](index=217&type=chunk) [D. Risk Factors](index=13&type=section&id=D.%20Risk%20Factors) This subsection outlines significant business, China operations, and securities risks, including reliance on historical growth, regulatory uncertainties, and internal control weaknesses - A material weakness in internal control over financial reporting was identified as of September 30, 2024, due to a lack of accounting staff with appropriate knowledge of U.S. GAAP and SEC reporting requirements This impairs the ability to produce accurate financial statements[246](index=246&type=chunk)[247](index=247&type=chunk)[767](index=767&type=chunk) - The company faces risks from PRC government actions, which could influence operations and subsequent securities offerings Uncertainties in the interpretation and enforcement of PRC laws, including new filing requirements for overseas listings, could hinder the ability to offer securities and cause their value to decline[157](index=157&type=chunk)[158](index=158&type=chunk)[163](index=163&type=chunk) - The company's Chief Operating Officer, Baiming Yu, and his spouse, Liwei Zhang, beneficially own an aggregate of **47.11%** of outstanding Ordinary Shares, giving them substantial influence over corporate transactions and outcomes[232](index=232&type=chunk)[233](index=233&type=chunk) Decline in Mask Revenue | Fiscal Year Ended | Net Revenue from Masks ($) | % of Total Net Revenue (%) | | :--- | :--- | :--- | | September 30, 2022 | $10,619,035 | 53.87% | | September 30, 2023 | $5,091,331 | 37.53% | | September 30, 2024 | $1,559,750 | 13.56% | - The company's PRC subsidiaries have several compliance issues, including failure to file an Environmental Impact Registration Form, obtain necessary fire protection and construction approvals for production lines, and address potential challenges to leased property rights due to lessor non-compliance These could result in fines and operational disruptions[116](index=116&type=chunk)[117](index=117&type=chunk)[120](index=120&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=55&type=section&id=Item%204.%20Information%20on%20the%20Company) This section details the company's corporate history, structure, and business operations, focusing on its PRC subsidiaries' R&D, manufacturing, and sale of Class I and II medical devices [A. History and Development of the Company](index=55&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) WORK Medical Technology Group LTD, a Cayman Islands holding company, operates through PRC subsidiaries consolidated via a May 2022 reorganization, with a multi-layered structure from Cayman to China - The company's corporate structure is a multi-layered holding model: Work Cayman (Cayman Islands) wholly owns Work BVI (British Virgin Islands), which wholly owns Work Medical Technology (Hong Kong) Work Medical Technology wholly owns WFOE (PRC), which in turn wholly owns the main operating entity, Work Hangzhou, and its subsidiaries[262](index=262&type=chunk)[274](index=274&type=chunk) - A corporate reorganization was completed on May 6, 2022, to prepare for the IPO This reorganization consolidated the PRC operating entities under the Cayman Islands holding company structure and has been accounted for retroactively as a combination of entities under common control[821](index=821&type=chunk)[822](index=822&type=chunk) [B. Business Overview](index=58&type=section&id=B.%20Business%20Overview) The company's PRC subsidiaries specialize in R&D, manufacturing, and sale of Class I and II medical devices, generating revenue through a wide domestic and international distribution network Revenue by Sales Channel (FY2022-2024) | Channel | FY2024 Revenue ($) | FY2023 Revenue ($) | FY2022 Revenue ($) | | :--- | :--- | :--- | :--- | | Domestic Distributor | $9,756,622 (85%) | $11,990,599 (90%) | $17,150,575 (87%) | | Domestic Direct End-User | $66,526 (1%) | $607,662 (4%) | $1,140,952 (6%) | | Overseas Distributor | $1,683,292 (15%) | $967,690 (6%) | $1,419,763 (7%) | Product Sales Mix (% of Total Sales) | Product Category | FY2024 (%) | FY2023 (%) | FY2022 (%) | | :--- | :--- | :--- | :--- | | Medical Face Masks | 12.47% | 16.9% | 36.45% | | Artery Compression Tourniquets | 29.03% | 20.27% | 16.03% | | Disposable Breathing Circuits | 17.32% | 12.9% | 9.77% | | Endotracheal Tubes | 14.59% | 7.41% | 5.70% | | Laryngeal Mask Airways | 7.27% | 6.18% | 5.32% | | KN95 Masks | 1.72% | 20.8% | 14.26% | - The company's PRC subsidiaries have a wide distribution network with 953 domestic and 29 export distributors in FY2024, selling products across 34 provincial regions in China and over 30 countries internationally[289](index=289&type=chunk)[319](index=319&type=chunk) R&D Expenses (FY2022-2024) | Fiscal Year Ended | R&D Expenses ($) | % of Total Revenue (%) | | :--- | :--- | :--- | | September 30, 2024 | $302,511 | 2.63% | | September 30, 2023 | $301,644 | 2.22% | | September 30, 2022 | $183,900 | 0.93% | - The company holds 30 registered patents, 16 trademarks, and one copyright in mainland China It actively acquires patents from third parties, such as universities and hospitals, to support new product development, including a visualized prostatic dilatation catheter[351](index=351&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=105&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes the company's financial performance, highlighting significant revenue decline and a net loss in FY2024 due to decreased mask sales, alongside liquidity and capital resources [A. Operating Results](index=105&type=section&id=A.%20Operating%20Results) Operating results show significant revenue decline in FY2023 and FY2024, primarily due to plummeting mask sales, leading to a contracted gross profit margin and a net loss in FY2024 Consolidated Income Statement Summary (FY2022-2024) | Metric | FY 2024 ($) | FY 2023 ($) | FY 2022 ($) | | :--- | :--- | :--- | :--- | | **Net Revenue** | **$11,506,440** | **$13,565,951** | **$19,711,290** | | YoY Change | -15.2% | -31.2% | N/A | | **Gross Profit** | **$2,868,386** | **$4,142,984** | **$4,418,792** | | Gross Margin | 24.9% | 30.5% | 22.4% | | **(Loss) Income from Operations** | **($4,045,185)** | **$412,227** | **$638,328** | | **Net (Loss) Income** | **($3,540,409)** | **$63,383** | **$944,126** | - Revenue from masks plummeted by **69.4%** in FY2024 to **$1.56 million**, down from **$5.09 million** in FY2023, due to decreased demand and a strategic shift in marketing focus Conversely, sales of medical devices other than masks grew by **17.7%** to **$9.41 million** in FY2024[526](index=526&type=chunk)[528](index=528&type=chunk) - General and administrative expenses increased by **144.8%** to **$4.56 million** in FY2024, primarily due to higher professional consulting fees incurred after becoming a public company[539](index=539&type=chunk) [B. Liquidity and Capital Resources](index=109&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from operations, bank loans, and shareholder contributions, with **$6.6 million** cash and **$0.6 million** working capital as of September 30, 2024, deemed adequate for the next 12 months Summary of Cash Flows (FY2022-2024) | Cash Flow Activity | FY 2024 ($) | FY 2023 ($) | FY 2022 ($) | | :--- | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($2,228,087) | $2,209,736 | ($2,258,948) | | Net cash used in investing activities | ($9,064,079) | ($583,304) | ($1,347,165) | | Net cash provided by (used in) financing activities | $15,657,024 | ($728,719) | $3,566,223 | - As of September 30, 2024, the company held **$6,557,605** in cash and had a total working capital of **$647,030**[549](index=549&type=chunk) - Capital expenditures increased significantly to **$9,258,407** in FY2024, up from **$583,304** in FY2023, primarily for purchasing property, buildings, and machinery[564](index=564&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=113&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details the company's leadership, board structure, and employee base, highlighting executive backgrounds, compensation, board committees, and significant share ownership by the COO and his spouse - The board of directors consists of five members: Shuang Wu (CEO, Chairman), Baiming Yu (COO), and three independent directors (Xiaoyang Li, Zhenguo Wu, Robert Johnson)[579](index=579&type=chunk)[594](index=594&type=chunk) - COO Baiming Yu beneficially owns **42.83%** of the company's outstanding Ordinary Shares Together with his spouse, Liwei Zhang (**4.28%**), they control **47.11%** of the company, giving them substantial influence over corporate matters[232](index=232&type=chunk)[620](index=620&type=chunk) - The company has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each composed of the three independent directors[594](index=594&type=chunk)[595](index=595&type=chunk)[596](index=596&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=121&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details major shareholders and extensive related party transactions, including loans, advances, and sales, with significant balances highlighting interconnectedness with management's interests - The company engages in significant related party transactions, including loans, advances, and sales with entities controlled by or related to its executive officers, particularly COO Baiming Yu and CEO Shuang Wu[626](index=626&type=chunk)[935](index=935&type=chunk) Key Related Party Balances (as of Sept 30) | Balance Sheet Item | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Due from related parties** | **$2,707,136** | **$4,237,682** | | Shuang Wu | $1,424,989 | $795,243 | | Hangzhou Qingniu | $855,618 | $1,294,296 | | **Due to related parties** | **$1,217,442** | **$159,612** | | Huiyu Chuanggu | $1,064,916 | $0 | - In FY2024, sales to related party Hangzhou Qingniu (owned by an immediate family member of Baiming Yu) were **$577,370**, representing approximately **5%** of total net revenue[133](index=133&type=chunk)[627](index=627&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=125&type=section&id=Item%208.%20Financial%20Information) This section covers consolidated financial statements, legal proceedings, and dividend policy, noting no material legal proceedings, no past cash dividends, and PRC restrictions on future distributions - The company has never declared or paid cash dividends on its Ordinary Shares and currently intends to retain all available funds and future earnings to operate and grow the business[645](index=645&type=chunk) - Dividend payments from PRC subsidiaries are restricted by PRC law Subsidiaries must allocate at least 10% of after-tax profits to a statutory reserve until it reaches 50% of registered capital These reserves are not distributable as cash dividends[646](index=646&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=127&type=section&id=Item%2010.%20Additional%20Information) This section details the company's Cayman Islands corporate governance and legal framework, including Ordinary Share rights, Board duties, and PRC, Hong Kong, and U.S. federal income tax considerations - The company is an exempted company incorporated in the Cayman Islands, and its corporate affairs are governed by its memorandum and articles of association and the Cayman Companies Act[657](index=657&type=chunk) - Dividends paid by the PRC subsidiaries to the Hong Kong subsidiary may be subject to a **10%** PRC withholding tax This rate may be reduced to **5%** under the China-Hong Kong double tax treaty if certain conditions are met[717](index=717&type=chunk) - The company does not believe it is currently a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, but its status is determined annually and could change The company does not intend to provide the information necessary for U.S. holders to make a QEF election[241](index=241&type=chunk)[733](index=733&type=chunk)[736](index=736&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=141&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily foreign exchange risk due to RMB operations, credit risk from accounts receivable, and interest rate risk - The company's primary market risk is foreign exchange risk, as a substantial majority of its operating activities and assets are denominated in RMB, which is subject to PRC government controls and is not freely convertible[747](index=747&type=chunk) - Credit risk is concentrated in accounts receivable The company manages this by conducting credit evaluations of customers but generally does not require collateral[748](index=748&type=chunk) [ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](index=143&type=section&id=Item%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Security%20Holders%20and%20Use%20of%20Proceeds) This section details the use of proceeds from the company's August 26, 2024 IPO, which generated **$8.4 million** gross and **$7.4 million** net, with funds allocated for an escrow account and general business purposes - The company completed its IPO on August 26, 2024, raising gross proceeds of **$8,367,768** and net proceeds of approximately **$7,373,839** after expenses[760](index=760&type=chunk)[762](index=762&type=chunk) [ITEM 15. CONTROLS AND PROCEDURES](index=143&type=section&id=Item%2015.%20Controls%20and%20Procedures) This section reports that as of September 30, 2024, disclosure controls and internal control over financial reporting were ineffective due to a material weakness in accounting staff expertise, with a remediation plan outlined - Management concluded that as of September 30, 2024, the company's disclosure controls and procedures were ineffective[764](index=764&type=chunk) - A material weakness in internal control over financial reporting was identified as of September 30, 2024, relating to a lack of accounting staff with appropriate knowledge of U.S. GAAP and SEC compliance Consequently, management concluded that internal control over financial reporting was not effective[767](index=767&type=chunk)[768](index=768&type=chunk) - To remediate the material weakness, the company plans to recruit qualified accounting personnel and implement regular U.S. GAAP training programs[769](index=769&type=chunk)[771](index=771&type=chunk) [ITEM 16. CORPORATE GOVERNANCE AND OTHER MATTERS](index=145&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section covers corporate governance, including the audit committee financial expert, adopted policies like a code of ethics and insider trading, principal accountant fees, and cybersecurity risk management Principal Accountant Fees (WWC, P.C.) | Fiscal Year Ended | Audit Fees ($) | | :--- | :--- | | September 30, 2024 | $240,000 | | September 30, 2023 | $190,000 | - The company has adopted insider trading policies, a compensation recovery policy, and a code of business conduct and ethics[615](index=615&type=chunk)[617](index=617&type=chunk)[785](index=785&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=147&type=section&id=Item%2018.%20Financial%20Statements) This section presents the audited consolidated financial statements for fiscal years ended September 30, 2024, 2023, and 2022, prepared under U.S. GAAP, including balance sheets, income statements, and cash flows Consolidated Balance Sheet Highlights (as of Sept 30) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Total Current Assets** | **$20,827,220** | **$22,152,678** | | Cash and cash equivalents | $6,557,605 | $1,596,096 | | Accounts receivable, net | $1,648,797 | $3,332,322 | | **Total Assets** | **$36,250,563** | **$29,958,901** | | **Total Current Liabilities** | **$20,180,190** | **$18,922,856** | | Short-term bank borrowings | $13,323,643 | $8,840,461 | | **Total Liabilities** | **$20,180,190** | **$18,972,986** | | **Total Equity** | **$16,070,373** | **$10,985,915** | Consolidated Statement of Income (Loss) Highlights (for year ended Sept 30) | Metric | 2024 ($) | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | :--- | | **Net Revenue** | **$11,506,440** | **$13,565,951** | **$19,711,290** | | **Gross Profit** | **$2,868,386** | **$4,142,984** | **$4,418,792** | | **Total Operating Expenses** | **($6,913,571)** | **($3,730,757)** | **($3,780,464)** | | **Net (Loss) Income** | **($3,540,409)** | **$63,383** | **$944,126** | | **Basic and Diluted (Loss) Earnings Per Share** | **($0.27)** | **$0.01** | **$0.07** | - Subsequent to the fiscal year-end, in December 2024, the company repaid a **$5.98 million** borrowing from China Citic Bank and authorized a new offering of up to **2.5 million** units In February 2025, shareholders approved an increase in authorized share capital and a re-classification into Class A and Class B ordinary shares[968](index=968&type=chunk)

Company Overview - WORK Medical Technology Group LTD is a supplier of medical devices in China, specializing in the development and manufacturing of Class I and II medical devices, as well as the sale of Class I and II disposable medical devices [5] - The company has a diverse product portfolio comprising 21 products, including customized and multifunctional masks and other medical consumables, sold in 34 provincial-level administrative regions in China and over 30 countries worldwide [5] - WORK Medical has registered 17 products with the U S Food and Drug Administration, enabling their entry into the U S market [5] MEDICA Trade Fair 2024 Participation - WORK Medical's subsidiary, Hangzhou Shanyou Medical Equipment Co Ltd, participated in the MEDICA Trade Fair 2024 held in Düsseldorf, Germany, from November 11 to November 14, 2024 [1] - The event attracted 5,800 exhibiting companies from 72 countries, providing a platform for Hangzhou Shanyou to showcase its products and enhance global brand visibility [1][2] - Hangzhou Shanyou showcased flagship products such as non-inflatable laryngeal masks, breathing circuits, and endotracheal tubes, demonstrating the company's technological advancements and over 20 years of expertise in the medical device industry [3] Strategic Goals and Insights - The participation in the MEDICA Trade Fair aligns with WORK Medical's strategic commitment to enhancing global brand visibility and competing internationally in the low- and medium-value medical devices and consumables sectors [1] - The event provided valuable insights into the specific needs of potential global customers, which are expected to guide the ongoing refinement of the company's product portfolio and R&D efforts [3] - WORK Medical aims to accelerate its internationalization, secure more global orders, and deliver enhanced value to shareholders by leveraging its production and scale advantages [4] Industry Context - The MEDICA Trade Fair 2024 included professional forums, conferences, and special shows on various medical-technological topics, highlighting the importance of innovation and industry trends in the medical device sector [2] - WORK Medical's participation underscores the growing importance of international trade fairs as platforms for showcasing technological advancements and engaging with global peers [1][3]