Haoxi Health(US:HAO)2025-10-20 20:15Business Operations - The operating entity served approximately 2,000 advertisers since its incorporation in 2018, with 473, 543, and 393 advertiser customers in the fiscal years ended June 30, 2025, 2024, and 2023, respectively [24]. - The majority of advertisers are healthcare companies, with 414, 471, and 341 healthcare companies served in the same fiscal years [24]. - The operating entity's revenue generation is primarily through one-stop online marketing solutions, particularly online short video marketing solutions [24]. - The company is focused on reducing costs and increasing efficiency for its advertisers, responding to the growing demand for personalized services in the healthcare sector [24]. - A substantial majority of the company's revenue is derived from online marketing services provided to healthcare industry advertisers, which are dependent on maintaining relationships with these advertisers [129]. - The company may face challenges in maintaining relationships with advertisers, which could adversely affect revenue and profitability [145]. - The company is subject to PRC laws that restrict the payment of dividends, requiring companies to set aside at least 10% of after-tax profits for statutory reserves [124]. - The company may experience net cash outflow from operating activities, impacting its ability to maintain sufficient net cash inflows [140]. Financial Performance - Total revenue decreased by $15.72 million, or 32.39%, to $32.80 million for the fiscal year ended June 30, 2025, compared to $48.52 million for the fiscal year ended June 30, 2024 [146]. - The company served 473 advertiser customers in the fiscal year ended June 30, 2025, which is a decrease of 70 customers from the previous fiscal year [146]. - Net income for the fiscal year ended June 30, 2025, was $3.88 million, an increase of $2.58 million from $1,292,054 for the fiscal year ended June 30, 2024 [146]. - The five largest customers accounted for 27.32%, 21.06%, and 36.81% of total revenue for the fiscal years ended June 30, 2025, 2024, and 2023, respectively [144]. - The average revenue per customer increased from $66,489 for the fiscal year ended June 30, 2022, to $71,830 for the fiscal year ended June 30, 2023 [175]. - Revenue generated from online marketing and digital advertising services increased by $12,072,284 from the fiscal year ended June 30, 2022, to the fiscal year ended June 30, 2023 [175]. - Revenue generated from online marketing and digital advertising services decreased to $32,804,336 for the fiscal year ended June 30, 2025 [175]. Regulatory Environment - The PRC Foreign Investment Law, effective January 1, 2020, introduces uncertainties regarding foreign investment regulations that may impact the operating entity's business [26]. - The company is not currently subject to cybersecurity reviews under the Cybersecurity Review Measures, as its business does not involve processing users' personal information [26]. - The CSRC's filing requirements could impose risks, including fines ranging from RMB 1 million to RMB 10 million for non-compliance, potentially affecting the company's ability to offer securities [27]. - The company has not received any inquiries or sanctions regarding its overseas listing from the CSRC or other PRC authorities as of the report date [30]. - The company is monitoring regulatory developments related to overseas listings and may face significant uncertainties regarding compliance with new regulations [86]. - The PRC government may strengthen oversight over overseas offerings and foreign investments, potentially impacting the company's operations and securities offerings [54]. - The interpretation and implementation of the PRC Foreign Investment Law remain uncertain, which could affect the company's corporate governance and business operations [56]. Investment and Capital Structure - The company completed the required filing procedures for its initial public offering (IPO) on September 14, 2023, as mandated by the CSRC's Overseas Listing Trial Measures [27]. - The company completed its IPO on January 30, 2024, raising total gross proceeds of $11,040,000 from the sale of 2,760,000 Class A Ordinary Shares [141]. - The follow-on offering on September 20, 2024, generated gross proceeds of $12,000,000 from the sale of 4,000,000 units, each priced at $3.00 [141]. - Future issuances of Class A Ordinary Shares could result in substantial dilution for existing shareholders, adversely affecting the market price [201]. - The anticipated public float may lead to extreme volatility in the trading price of Class A Ordinary Shares, making it difficult for investors to assess their value [200]. - The company does not intend to pay dividends for the foreseeable future [221]. - Future earnings are intended to be retained to finance business operations and expansion [221]. Risks and Challenges - The company faces risks related to the PRC government's influence over business operations, which could materially affect financial conditions and results [37]. - The company may face difficulties in transferring cash or assets out of the PRC due to government restrictions, impacting liquidity and operational funding [33]. - The company is exposed to risks from its reliance on a major supplier, Ocean Engine, and any deterioration in this relationship could adversely affect financial performance [38]. - The company may face challenges in maintaining relationships with media partners, which could adversely affect its access to advertising channels and revenue [136]. - The company may incur substantial costs to comply with new cybersecurity regulations, which could materially affect its business operations and financial position [52]. - The company may face litigation risks due to increased visibility from public disclosures, which could harm its business and operating results [217]. Internal Controls and Governance - The company has identified material weaknesses in its internal controls over financial reporting (ICFR), including a lack of experienced staff and monitoring mechanisms [207]. - The CEO, Mr. Zhen Fan, holds 75.14% of the voting rights due to the dual-class share structure, which may lead to decisions not aligned with the interests of other shareholders [212]. - The company plans to implement remedial measures for identified weaknesses in ICFR, which may incur significant costs but may not fully resolve the issues [210]. - The company is still in the process of obtaining liability insurance for its directors and officers, which may be more expensive due to public company status [218].