Beroni Group Limited (BNIGF) F-1/ARegistration statement (foreign) (amended)

As filed with the U.S. Securities and Exchange Commission on December 23, 2022

Registration No. 333-261752

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM F-1/A

Amendment No. 6

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

BERONI GROUP LIMITED

(Name of Issuer in Its Charter)

Chief Financial Officer

Beroni Group Limited

Level 16, 175 Pitt Street

Sydney NSW 2000

Australia

Telephone: +61 2 9159 1827

Email: peter.wong@beronigroup.com

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

The Crone Law Group P.C.

500 Fifth Ave, Suite 938

New York, NY 10110

Phone: (646) 861-7891

(Name, address, including zip code, and telephone number, including area code, of agent for service)

COPIES OF COMMUNICATIONS TO:

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards * provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

As of December 22, 2022 the market price of Beroni Group Limited on the OTCQX for our Ordinary Shares was $1.60 per share and the market price on the National Stock Exchange in Australia was AUD 0.99 per share.

* The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

The information in this prospectus is preliminary, not complete and may be changed. These securities may not be resold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion — Dated December 23, 2022

PROSPECTUS

[  ] Ordinary Shares

This is a firm commitment initial public offering of ordinary shares of Beroni Group Limited (the “Ordinary Shares”). Our Ordinary Shares are presently traded on the over-the-counter market and quoted on the OTCQX market under the symbol “BNIGF.” Our Ordinary Shares are also listed on the National Stock Exchange in Australia under the symbol “BTG.” We anticipate that the initial public offering price of our shares will be $     per share.

We intend to apply for listing of our Ordinary Shares on The Nasdaq Capital Market under the symbol “BRNI”. This offering will occur only if Nasdaq approves the listing of our Ordinary Shares.

We are an “emerging growth company” as defined in the Jumpstart Our Business Act of 2012, as amended, and, as such, will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 23 of this prospectus for more information.

As of December 22, 2022 the market price of Beroni Group Limited on the OTCQX for our Ordinary Shares was $1.60 per share and the market price on the National Stock Exchange in Australia was AUD 0.99 per share.

Beroni Group is an Australian holding company that conducts its operations through its wholly owned and majority owned subsidiaries. Our corporate structure does not contain any variable interest entities. Investors in this offering will receive Ordinary Shares in Beroni Group Limited, the Australian holding company, and will not hold direct investments in our Chinese operating companies, Tianjin Beroni Biotechnology Co., Ltd (Beroni Tianjin) which is a wholly owned subsidiary of Beroni Hong Kong Ltd and in turn, is wholly owned by the Australian holding company and Beroni Pharmaceuticals (Guangdong) Co., Ltd (Beroni Guangdong) which is majority (80%) owned by the Australian holding company. Beroni Tianjin is incorporated and domiciled in Tianjin, China where all its assets are held and its operations are conducted. Beroni Guangdong is newly established in Zhuhai, Guangdong, China on November 26, 2021 and intends to be dedicated to drug research and development business in the future, but currently has not actually carried out any R&D activities.

The structure of cash flows within our organization, and the applicable regulations, are as follows:

1. Our equity structure is a direct shareholding structure, that is, the overseas entity to be listed in the U.S., Beroni Group, directly controls Beroni Pharmaceuticals (Guangdong) Co. Ltd, Beroni Biotech Inc., Beroni Hong Kong Ltd, PENAO Pty Ltd. and Beroni USA Corp. Tianjin Beroni Biotechnology Co., Ltd is directly controlled by Beroni Hong Kong Ltd., See “Corporate History and Structure” for additional details.

2. Within our direct holding structure, the cross-border transfer of funds within our corporate group is legal and compliant with the laws and regulations of the PRC. After foreign investors’ funds enter the Company at the close of this Offering, the funds can be directly transferred to our PRC subsidiaries, Tianjin Beroni Biotechnology Co., Ltd, and Beroni Pharmaceuticals (Guangdong) Co. Ltd., or other future PRC subsidiaries through the WFOE structure.

3. If the Company intends to distribute dividends to its shareholders, the Company will transfer the dividends from the operating subsidiaries in accordance with the laws and regulations of the PRC and other countries. Then the subsidiaries will transfer the dividends to Beroni, and the dividends will be distributed from Beroni to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries or regions.

A summary of material funds transfers to date between Beroni Group and its subsidiaries is as follows:

Our PRC subsidiaries are subject to certain restrictions on currency exchange and certain capital controls imposed by the PRC government. The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. To the extent that our PRC subsidiaries generate revenues in RMB, the prior approval of the PRC’s SAFE may be required in some cases where RMB is to be converted into foreign currency and remitted out of China, which may limit our ability to utilize our revenues effectively.

Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends. However, approval from or registration with appropriate governmental authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies or to make other capital expenditure payments outside China in a currency other than RMB. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, the Company may not be able to pay dividends in foreign currencies to our shareholders, including holders of the Ordinary Shares. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ potential future dividends and other distributions may be subject to tightened scrutiny in the future.

Additionally, certain capital controls in the PRC may limit our PRC subsidiaries’ ability to pay dividends. Our PRC subsidiaries’ ability to distribute dividends is based upon its distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to its shareholder only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, according to the Company Law of the PRC (Amended in 2018) promulgated and became effective on October 26, 2018, our PRC subsidiaries are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. These reserves are not distributable as cash dividends. A company may discontinue the contribution when the aggregate sum of the statutory surplus reserve is more than 50% of its registered capital. In addition, the Comments Solicited for the Company Law (Draft Revision) was promulgated on December 24, 2021, although there are no significant changes in the provisions on capital control, it is still uncertain whether the effective version will contain more new rules.

The majority of the Company’s operations are located in China. China’s economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Further, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. Changes in any of these policies, laws and regulations could adversely affect the economy in China and could have a material adverse effect on our business. Any actions by the Chinese government to exert more oversight and control over this offering, or any of our business operations could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

The Chinese government may intervene or influence the operation of our PRC operating entities and may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our Ordinary Shares.

Recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers. Any future action or control by the Chinese government over offerings conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

Recently, the People’s Republic of China (“PRC” or “China”) government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. These statements and regulatory actions are new, however, it is highly uncertain how soon legislative or administrative regulation making bodies in China will respond to them, or what existing or new laws or regulations or detailed implementation rules and interpretations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business operations or our ability to accept foreign investments and continue to be listed on an U.S. exchange.

The audit report included in this prospectus was issued by UHY Haines Norton (“UHY”) an Australian based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. We have no intention of dismissing UHY in the future or of engaging any auditor not subject to regular inspection by the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities. If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate. In addition, under the HFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could result in our Ordinary Shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Pursuant to the HFCAA, the PCOAB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China, because a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition the PCOAB’s report identified the specific registered public accounting firms which are subject to these determinations. Our registered public accounting firm UHY is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination.

An investment in our securities is highly speculative, involves a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See “Risk Factors” beginning on page 13 of this prospectus.

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters may also purchase up to an additional 15% of Ordinary Shares from us at the public offering price, less than the underwriting discounts and commissions, within 45 days from the date of this prospectus to cover over-allotments, if any.

The underwriters expect to deliver the Shares against payment in U.S. dollars to purchasers on or about____________, 2022.

The date of this prospectus is [  ], 2022

Table of Contents

You should rely only on the information contained in this prospectus and in any related free-writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or any free-writing prospectus. We are offering to sell, and seeking offers to buy, the Ordinary Shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Ordinary Shares.

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Ordinary Shares and the distribution of this prospectus outside the United States.

Until and including __________, 2023 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in our Ordinary Shares. You should carefully read the entire prospectus. In particular, attention should be directed to the sections entitled “Risk Factors”, “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes thereto contained herein before making an investment decision.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

“AUD” refer to the legal currency of Australia;

“Beroni” are to Beroni Group Limited, the Australian holding company;

“Beroni Biotech” are to Beroni Biotech Inc., the wholly owned subsidiary of Beroni, incorporated and domiciled in Japan, where all its assets are held and its operations are conducted;

“Beroni Hong Kong”, are to Beroni Hong Kong Ltd, the wholly owned subsidiary of Beroni, incorporated and domiciled in Hong Kong, China, where all its assets are held and its operations are conducted;

“PENAO” are to PENAO Pty Ltd., the majority owned subsidiary of Beroni, incorporated and domiciled in Sydney Australia, where all its assets are held and its operations are conducted;

“Beroni USA” are to Beroni USA Corp, the wholly owned subsidiary of Beroni, incorporated and domiciled in Delaware, USA, where all its assets are held and its operations are conducted;

“Beroni Tianjin” are to Tianjin Beroni Biotechnology Co., Ltd, the wholly owned subsidiary of Beroni Hong Kong, and in turn, Beroni, incorporated and domiciled in Tianjin, China, where all its assets are held and its operations are conducted;

“Beroni Guangdong” are to Beroni Pharmaceuticals (Guangdong) Co., Ltd., which is directly controlled by Beroni, incorporated and domiciled in Zhuhai, Guangdong, China. Beroni Guangdong is newly established on November 26, 2021 and intends to be dedicated to drug research and development business in the future, but currently has not actually carried out any R&D activities.

“Beroni Group,” “we,” “us,” “our Company,” “the Company,” and “our” are to Beroni Group Limited, an Australian public company limited by shares, and its subsidiaries and consolidated entities;

“China” or the “PRC” are to the People’s Republic of China, including, for the purpose of this prospectus only, Hong Kong, and Macau;

“MOFCOM” are to the Ministry of Commerce of the PRC;

“Ordinary Share(s)” are our Ordinary Shares of no par value;

“Product Candidate” A pharmaceutical or biopharmaceutical substance in any phase of research and development between initial research and the completion of the clinical trials and market approval;

“SAFE” are to the State Administration of Foreign Exchange;

“US$,” “U.S. dollars,” “$” and “dollars” are to the legal currency of the United States;

“WFOE” are Wholly Foreign-Owned Enterprise.

“IFRS” are to International Financial Reporting Standards.

Our reporting currency is the AUD as we are incorporated in Australia and all of our revenues are denominated in AUD. This prospectus contains translations of AUD amounts into U.S. dollars at specific rates solely for the convenience of the reader. The conversion of AUD into U.S. dollars in this prospectus is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Unless otherwise noted, all translations from AUD to U.S. dollars and from U.S. dollars to AUD in this prospectus were made at a rate of US$0.7518 to AUD$1, the exchange rate on June 30, 2021 set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. We make no representation that any AUD or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or AUD, as the case may be, at any particular rate, the rates stated below, or at all.

The structure of cash flows within our organization, and the applicable regulations, are as follows:

1. Our equity structure is a direct shareholding structure, that is, the overseas entity to be listed in the U.S., Beroni Group, directly controls Beroni Pharmaceuticals (Guangdong) Co., Ltd, Beroni Biotech Inc., Beroni Hong Kong Ltd, PENAO Pty Ltd. and Beroni USA Corp. Tianjin Beroni Biotechnology Co., Ltd is directly controlled by Beroni Hong Kong Ltd.

Beroni Biotech is the wholly owned subsidiary of Beroni, incorporated and domiciled in Japan, where all its assets are held and its operations are conducted. Beroni Hong Kong is the wholly owned subsidiary of Beroni, incorporated and domiciled in Hong Kong, China, where all its assets are held and its operations are conducted. PENAO is the majority owned subsidiary of Beroni, incorporated and domiciled in Sydney Australia, where all its assets are held and its operations are conducted. Beroni USA Corp is the wholly owned subsidiary of Beroni, incorporated and domiciled in Delaware, USA, where all its assets are held and its operations are conducted. Tianjin Beroni Biotechnology Co., Ltd, the wholly owned subsidiary of Beroni Hong Kong, and in turn, Beroni, is incorporated and domiciled in Tianjin, China, where all its assets are held and its operations are conducted. Beroni Pharmaceuticals (Guangdong) Co., Ltd, directly controlled by Beroni, incorporated and domiciled in Zhuhai, Guangdong, China, intends to be dedicated to drug research and development business in the future, but currently has not actually carried out any R&D activities. See “Corporate History and Structure” for additional details.

2. Within our direct holding structure, the cross-border transfer of funds within our corporate group is legal and compliant with the laws and regulations of the PRC. After foreign investors’ funds enter the Company at the close of this Offering, the funds can be directly transferred to our PRC subsidiaries, Tianjin Beroni Biotechnology Co., Ltd, Beroni Pharmaceuticals (Guangdong) Co., Ltd or other future PRC subsidiaries through the WFOE structure.

3. If the Company intends to distribute dividends to its shareholders, the Company will transfer the dividends from the operating subsidiaries in accordance with the laws and regulations of the PRC and other countries. Then the subsidiaries will transfer the dividends to Beroni, and the dividends will be distributed from Beroni to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries or regions.

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 Company’s general policy, however, has been to keep funds within the entities where they are raised or generated in order to support the local entity’s operations. For example, if the funds are generated in a PRC subsidiary in China, then the Company’s general approach will be to use those funds to support the Chinese entity’s operations, with the exception of required funding for capital investments and clinical trials.

The Company does not have any contractual agreements in place with any of its partially or wholly owned subsidiaries that establishes control over said subsidiaries. The Company controls each of its subsidiaries by virtue of holding the majority of voting interest in that subsidiary.

The China Cybersecurity Law released in July 2021 requires platforms that contain data of 1 million or more users to undergo a cybersecurity review if they plan to list overseas. Beroni Tianjin and Beroni Guangdong do not collect and store consumer data as it does not have its own e-commerce platform. It also does not have more than 1 million users and, as such, is not required to undergo any review or obtain any form of permission.

Up to the issuance of this prospectus, the Draft Rules Regarding Overseas Listing have not yet come into effect, and Beroni Group Limited is an Australian holding company that conducts its operations through its wholly owned and majority owned subsidiaries and already listed on the National Stock Exchange in Australia and OTCQX in the USA. Our PRC subsidiaries have not been involved in the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Therefore, the Company is currently not required to seek permission or filing requirements from CSRC and the CAC.

We have two PRC subsidiaries, i.e. Beroni Tianjin and Beroni Guangdong. We also have another subsidiary in Hong Kong, China which has not carried on any business or operation since incorporation.

Beroni Tianjin, a biotechnology company, is mainly engaged in the following businesses:

Beroni Guangdong currently has not carried out any R&D activities. To sum up, based on the current business conducted by our PRC subsidiaries, the Company and our PRC subsidiaries: (i) are not required to obtain any other permissions from any PRC authorities to operate or issue our Ordinary Shares to foreign investors, (ii) are not subject to permission requirements from the CSRC, the CAC or any other entity that is required for approval of our PRC subsidiaries’ operations, and (iii) have not received or were denied such permissions by any PRC authorities.

Nevertheless, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Given the current PRC regulatory environment, it is uncertain when and whether the Company, will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. As of the date of this prospectus, our PRC subsidiaries have not received any inquiry, notice, warning, sanctions or regulatory objection to this offering from the CSRC or other PRC governmental authorities. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for our business operations in the future. If our PRC subsidiaries (i) do not receive or maintain required permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and our PRC subsidiaries are required to obtain such permissions or approvals in the future, our PRC subsidiaries could be subject to fines, legal sanctions or an order to suspend the our PRC subsidiaries’ business, which may materially and adversely affect the business, financial condition and results of our operations. As a result, the value of our securities could significantly decline or become worthless.

The majority of the Company’s operations are located in China. China’s economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Further, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. Changes in any of these policies, laws and regulations could adversely affect the economy in China and could have a material adverse effect on our business. Any actions by the Chinese government to exert more oversight and control over this offering, or any of our business operations could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

Pursuant to the Holding Foreign Companies Accountable Act (“HFCAA”), the Public Company Accounting Oversight Board (the “PCAOB”) issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations. Our registered public accounting firm, UHY Haines Norton (“UHY”), is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. Notwithstanding the foregoing, if the PCAOB is not able to fully conduct inspections of our auditor’s work papers of our China subsidiaries, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities may be prohibited under the HFCAA. Although the audit report included in this prospectus was issued by Australian auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection and our Ordinary Shares may be delisted or prohibited from trading.

Business Overview

Beroni Group Limited (“Beroni Group”) is a diversified global biopharmaceutical enterprise with subsidiaries in the US, Australia, China, Hong Kong and Japan. It is currently listed on National Stock Exchange of Australia (“NSX”) under the symbol “BTG” and traded on OTCQX (USA) under the symbol “BNIGF”.

The Company has two main business divisions:

* Abbreviations

SAMR = State Administration for Market Regulation (China)

NMPA = National Medical Products Administration (China)

GAC = General Administration of Customs (China)

BOC = Bureau of Commerce (China)

CCCM HPIE = China Chamber of Commerce for Import & Export of Medicines & Health Products

FDA EUR = FDA Emergency Use Authorization (USA)

CE Mark = CE Marking (European Union)

** Quality Accreditation - Beroni Tianjin has submitted its products to reputable and independent assessment companies for attestation of product quality. A test report is issued by the assessor after payment of the testing fee. Although such accreditation is not required for product commercialization, they are done to substantiate the product benefits claims.

In Australia, there is no IND system. The Therapeutic Goods Administration (TGA; the Australian RA/CA) uses a Clinical Trial Notification (CTN) process instead. The EC/IRB and RA/CA approvals (technically, an acknowledgement from the RA/CA) are obtained sequentially. First EC/IRB approval is required and then the CTN is submitted to the RA/CA. To complete a CTN various approvals are required: the sponsor, the EC/IRB and the study site’s RGO (to ensure the study is a good fit for their institution).

PENAO has successfully completed the CTN process prior to commencing the PENAO-01 clinical trial. There are no other INDs for any other clinical trials that are not in Australia as they are still at the pre-clinical stage. The Company will apply for IND at the appropriate time once clinical trials begin.

Strategy

Our vision is to develop and commercialize innovative drugs and therapies to address significant unmet medical needs worldwide and to improve overall human health. We also aim to develop, manufacture and commercialize a portfolio of new drugs and therapies for treatment of cancer and infectious diseases using the latest technologies. To achieve our vision, we will implement the following strategies:

Competitive Strengths

Research and Development

Our R&D plan includes:

We expect a number of important clinical and commercial milestone events to occur over the next 2 years:

We intend to devote a significant percentage of our resources, including a substantial portion of the proceeds of this offering, to the advancement of our four lead clinical candidates – PENAO Cancer Drug, Gamma Delta T Cell Therapy, DC Vaccine Therapy and COVID-19 Single-domain Antibody Medical Solution which are described in further detail in the Business Description Section.

Summary of Risk Factors

We are subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows and prospects. You should carefully consider these risks, including all of the risks discussed in the section entitled “Risk Factors” beginning on page 13 of this prospectus, before investing in our Ordinary Shares.

Beroni Group is an Australian-based issuer with the majority of its operations conducted in China. As such, the Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our Ordinary Shares.

For the six months ended June 30, 2022 and June 30, 2021, the Company incurred total comprehensive losses of AUD3.70 million and AUD1.17 million respectively, and net cash outflows from operations of AUD1.47 million and AUD1.88 million respectively. For the years ending December 31, 2021, December 31, 2020 and December 31, 2019, the Company incurred total comprehensive losses of AUD3.25 million, AUD5.25 million and AUD11.74 million respectively, and net cash outflows from operations of AUD1.35 million, AUD1.35 million and AUD3.52 million respectively. As of June 30, 2022, the Company held total cash and cash equivalents of AUD4.07 million. We expect to continue to incur losses and cash outflows for the foreseeable future as we continue to invest resources in expanding the research and development activities in support of the distribution of existing and new products. As a result, the continuing viability of the Company and its ability to continue as a going concern and meet its debts and commitments as they fall due are dependent on our ability to raise additional financing. We may seek additional financing, but there can be no assurance that we will be successful in this regard.

In June 2019, Beroni signed a shareholder agreement to acquire 40% of the total share capital of PENAO Pty Ltd with NewSouth Innovations Pty Limited (NSI) owning the other 60%. NSI is the subsidiary arm of the University of New South Wales. PENAO Pty Ltd is a company recently set up to take over from Cystemix Pty Ltd the development of the anti-cancer drug called PENAO for treatment of cancer tumours. In January 2021, PENAO Pty Ltd and NSI entered into a licensing agreement wherein it purchased license rights to the development of PENAO drug. In December 2020, Beroni and NSI agreed to vary the original shareholding agreement whereby through the issuance of shares and convertible notes, Beroni and NSI owns 60% and 40% respectively of the share capital of PENAO Pty Ltd. Under the shareholding variation agreement, when new shares are issued to Beroni and NSI upon additional payments from the former, convertible notes will also be issued to NSI which will automatically be converted to shares upon the occurrence of key milestone events.

Beroni has so far paid $2.35 million to NSI for this investment and will pay a further $7.5 million over the next 2 years. In the event Beroni is not able to pay the additional $7.5 million, then PENAO Pty Ltd can issue on the same terms to NSI the shares which were to be issued to Beroni and Beroni will grant NSI an option to purchase all of the shares then held by Beroni for the lesser of the following and at NSI’s sole discretion:

The China subsidiaries, Beroni Tianjin and Beroni Guangdong are wholly foreign owned enterprises (WFOE) and cash flows to and from the China subsidiaries are subject to the foreign exchange restrictions of China. The China regulations restrict the ability of our China subsidiaries to make dividends and other payments to the offshore parent company. China restrictions permit payments of dividends by our China subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with China accounting standards and regulations. Our China subsidiaries are also required under China laws and regulations to allocate at least 10% of their annual after-tax profits determined in accordance with China generally accepted accounting principles to a statutory general reserve fund until the amounts in such fund reach 50% of their registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our China subsidiaries to transfer funds to us outside the country could materially limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Since the initial public offering of Beroni Group in Australia, we have remitted A$500,000 (in June 2017) to our China subsidiary, Beroni Tianjin from the Australian holding company. Beroni Tianjin has, however, not paid any dividends or remitted other payments to the parent company or other subsidiaries due to the fact that it has not generated any after-tax profits after the Group was formed. Given the recent operating losses and the need to invest in other entities and clinical trials, Beroni Group has not declared or distributed any dividends to its shareholders. The Group has made cross-border payments between Australia, Japan and the USA for purposes of investment and working capital injection without restrictions and limitations.

The PRC government also imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Our PRC subsidiary, Beroni Tianjin receives revenues in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends to our Company. However, approval from or registration with appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future.

Recent Developments

Termination of Underwriting Relationship with Maxim Group

On October 10, 2022, Maxim Group, LLC (“Maxim”) delivered notice, effective as of the same date, to Beroni of the mutual termination of Maxim’s role as financial advisor and lead managing underwriter and book runner to Beroni.

Certain provisions of the Company’s engagement letter with Maxim appointing it as lead underwriter survive the termination thereof. These provisions include customary obligations with respect to use of information, indemnification, and contribution under the Maxim Engagement Letter. For example, (i) Maxim will be entitled to customary indemnification from Beroni, (ii) the interpretation of the engagement letter will be governed by, construed and enforced in accordance with the laws of the State of New York, (iii) the engagement of Maxim will not be deemed to be on behalf of, and is not intended to confer rights upon any shareholder, partner, member or other owner or security holder of Beroni or any other person not a party to the engagement agreement as against Maxim or any of its affiliates or any of their respective directors, officers, agents, employees or representatives, and (iv) disclosure obligations, in that Maxim may acquire information of interest to Beroni, which it shall have no obligation to disclose. Beroni does not expect any of the provisions of the engagement letter identified above to give rise to any material obligations of Beroni.

Following the termination, neither the Company nor Maxim has any obligation outstanding under the engagement letter. No fees are, or will be, due to Maxim in connection with this offering.

Corporate Information

Beroni Group Limited was incorporated on June 17, 2016 in Australia. It has subsidiaries in China, Hong Kong, Japan and USA. In addition, it has invested in 17.92% of the shares of Dendrix Inc, a stem cell therapy company based in Tokyo, Japan and 60% in the shares of PENAO Pty Ltd, an Australian company set up to develop a new anti-cancer drug.

Pursuant to the investment agreement the Company executed with Dendrix, Dendrix must support Beroni in its efforts to register the IPs in China, the USA and Europe. Beroni has subsequently registered the DC vaccine IP in China in its own name (under the application number CN201811103108) as we intend to use this IP technology to conduct clinical trials in both China and Japan. These clinical trials will not involve Dendrix, or require Dendrix’s approval, and there is minimal limitation on the Company’s ability to commercialize the product candidates.

The existing group structure of Beroni Group is illustrated below:

Our group share ownership structure is detailed below.

Our registered office in Australia is Level 16, 175 Pitt Street, Sydney NSW 2000, Australia. Our telephone number is +61 2 9159 1827.

Our China Tianjin office is located at Level 10, Building 11, Zhong Bei High Technology Industrial Park, Xiqing District, Tianjin 300380, People’s Republic of China. Our telephone number is +86 22 5995 5753.

Our Japan office is located at Level 32, Shinjuku Nomura Building, 1-26-2 Nishi Shinjuku Shinjuku-ku, Tokyo 163-0532 Japan. Our telephone number is +81 3 5322 2900.

Our USA office is located at 2083 Center Avenue #3A, Fort Lee, New Jersey 07024, United States of America. Our telephone number is +1 214 762 2888.

Our website is http://www.beronigroup.com. The information contained on our website is not a part of this prospectus.

The Offering

Summary Historical Consolidated Financial Data

Balance Sheet Data (Presented in AUD except share information)

(in thousands except share information)

Statements of Operations Data (Presented in AUD except share information)

Exchange Rate Information

Our financial statements are presented in AUD. The following table sets forth information concerning exchange rates between the AUD and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you.

(US$ per AUD 1)

Source: Reserve Bank of Australia

RISK FACTORS

Investing in our securities involves a high degree of risk. You should carefully consider and evaluate all of the information included and incorporated by reference or deemed to be incorporated by reference in this prospectus. Our business, results of operations or financial condition could be adversely affected by any of these risks or by additional risks and uncertainties not currently known to us or that we currently consider immaterial.

Risks Relating to Doing Business in China

Economic reforms adopted by the PRC government have had a positive effect on the economic development of the country. The reformed economic infrastructure and legal systems, however, may be subject to abrupt adjustments by the government. These adjustments, especially in the following areas, could either benefit or damage our operations and profitability:

The PRC economy differs from the economies of most member countries of the Organization for Economic Cooperation and Development, or the OECD, in many ways. As a result of these differences, we may not develop in the same way or at the same rate as might be expected if the PRC economy was similar to those of the OECD member countries.

Furthermore, due to the existence of unpublished rules and policies, and since newly issued PRC laws and regulations may have expected and unexpected retrospective effects, we may not be aware of a violation of certain PRC laws, regulations, policies or rules until after the event.

The audit report included in this prospectus was issued by UHY Haines Norton (“UHY”) an Australian-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. We have no intention of dismissing UHY in the future or of engaging any auditor not subject to regular inspection by the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities. If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate. In addition, under the HFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could result in our Ordinary Shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Pursuant to the HFCAA, the PCOAB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China, because a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition the PCOAB’s report identified the specific registered public accounting firms which are subject to these determinations. Our registered public accounting firm, UHY, is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination.

The audit report included in this prospectus was issued by UHY Haines Norton, an Australian-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. We have no intention of dismissing UHY in the future or of engaging any auditor not subject to regular inspection by the PCAOB. As an auditor of companies that are registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, our auditor is required under the laws of the Australia to undergo regular inspections to assess its compliance with the laws of the Australia and professional standards. If we were to engage a different auditor in the future, we would engage an auditor that is Australian-based and subject to full PCAOB inspection with all materials related to the audit of our financial statements accessible to the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. In such case, we will engage a new qualified and fully inspected auditor, which may result in us delaying or restating our financial statements.

The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities. If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate.

As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular mainland China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress which, if passed, would require the SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate the audit work performed by a foreign public accounting firm completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (“EQUITABLE”) Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from U.S. national securities exchanges such as the Nasdaq of issuers included on the SEC’s list for three consecutive years. It is unclear if this proposed legislation will be enacted. Furthermore, there have been recent deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets. On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (the “HFCAA”), which includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The U.S. House of Representatives passed the HFCAA on December 2, 2020, and the HFCAA was signed into law on December 18, 2020. Additionally, in July 2020, the U.S. President’s Working Group on Financial Markets issued recommendations for actions that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies and department with respect to Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors in the United States. In response, on November 23, 2020, the SEC issued guidance highlighting certain risks (and their implications to U.S. investors) associated with investments in China-based issuers and summarizing enhanced disclosures the SEC recommends China-based issuers make regarding such risks. On December 2, 2021, the SEC adopted final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year (as defined in the interim final rules) under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. Under the HFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could result in our Ordinary Shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the Board is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China, because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong.

Should the PCAOB be unable to fully conduct inspection of our auditor’s work papers of our PRC subsidiaries, it will make it difficult to evaluate the effectiveness of our auditor’s audit procedures or equity control procedures. Investors may consequently lose confidence in our reported financial information and procedures or quality of the financial statements, which would adversely affect us and our securities.

The majority of our operations are located in China and the bulk of our net revenues are derived from customers where the subsidiary is located in China. Accordingly, our business, financial condition, results of operations, prospects and certain transactions we may undertake may be subject, to a significant extent, to economic, political and legal developments in China.

China’s economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although China’s economy has been transitioning from a planned economy to a more market-oriented economy since the late 1970s, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China’s economic growth through allocating resources, controlling the incurrence and payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Changes in any of these policies, laws and regulations could adversely affect the economy in China and could have a material adverse effect on our business.

The PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation of financial and other resources. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce new measures that will have a negative effect on us. China’s social and political conditions may change and become unstable. Any sudden changes to China’s political system or the occurrence of widespread social unrest could have a material adverse effect on our business and results of operations. If the PRC government determines that the arrangements constituting part of our corporate structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, our Ordinary Shares may decline in value or become worthless if we are unable to assert our control rights over the assets of our PRC subsidiaries.

In China, for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside the PRC, is subject to the foreign exchange control.

To address the persistent capital outflow and the RMB’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China and the State Administration of Foreign Exchange (“SAFE”), have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or the SAFE Circular 3, issued on January 26, 2017, provides that the banks shall, when dealing with dividend remittance transactions from domestic enterprise to its offshore shareholders of more than US$50,000, review the relevant board resolutions, original tax filing form and audited financial statements of such domestic enterprise based on the principal of genuine transaction. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends and other distributions may be subject to tightened scrutiny in the future.

Any loans to our PRC subsidiaries in China, which is treated as a foreign-invested enterprise under PRC laws, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiaries in China to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of the SAFE. In addition, a foreign-invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign-invested enterprise shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities investments other than banks’ principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, the Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties.

On October 23, 2019, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28, which took effect on the same day. SAFE Circular 28, subject to certain conditions, allows foreign-invested enterprises whose business scope does not include investment, or the non-investment foreign-invested enterprises, to use their capital funds to make equity investments in China.

We are an Australian holding company conducting some of our operations in China through our PRC subsidiaries. We may make loans to our PRC subsidiaries subject to the approval from governmental authorities and limitation of amount, or we may make additional capital contributions to our PRC subsidiaries in China.

Any loans to our PRC subsidiaries in China, which is treated as a foreign-invested enterprise under PRC laws, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiaries in China to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of the SAFE. In addition, a foreign-invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign-invested enterprise shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities investments other than banks’ principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, the Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in China in actual practice. SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from this offering, to our PRC subsidiaries, which may adversely affect our liquidity and our ability to fund and expand our business in China.

On October 23, 2019, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28, which took effect on the same day. SAFE Circular 28, subject to certain conditions, allows foreign-invested enterprises whose business scope does not include investment, or the non-investment foreign-invested enterprises, to use their capital funds to make equity investments in China. Since SAFE Circular 28 was issued only recently, its interpretation and implementation in practice are still subject to substantial uncertainties.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, or at all, with respect to future loans to our PRC subsidiaries or future capital contributions by us to our PRC subsidiaries in China. As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiaries when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Our PRC subsidiary, Beroni Tianjin receives revenues in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends to our company. However, approval from or registration with appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our Ordinary Shares.

SAFE promulgated the SAFE Circular 37 on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37 and its implementing rules require PRC residents to register with banks designated by local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with the PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.”

We notified substantial beneficial owners of Ordinary Shares who we know are PRC residents of their filing obligation, and pursuant to the former SAFE Circular 75, we filed the above-mentioned foreign exchange registration on behalf of certain employee shareholders who we know are PRC residents. However, we may not be aware of the identities of all of our beneficial owners who are PRC residents. We do not have control over our beneficial owners, and there can be no assurance that all of our PRC-resident beneficial owners will comply with relevant SAFE regulations. The failure of our beneficial owners who are PRC residents to register or amend their SAFE registrations in a timely manner or the failure of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject the beneficial owners or our PRC subsidiaries to fines and legal sanctions.

Furthermore, since it is unclear how those SAFE regulations, and any future regulation concerning offshore or cross-border transactions, will be further interpreted, amended and implemented by the relevant PRC government authorities, we cannot predict how these regulations will affect our business operations or future strategy. Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to our company. These risks may have a material adverse effect on our business, financial condition and results of operations

We are subject to a variety of laws and regulations that involve matters important to, or may otherwise impact, our business, including, among others, provision of biomedical services, talent intermediary services, information security and censorship, foreign exchange and taxation. The introduction of new products and services may subject us to additional laws, regulations, or other government scrutiny.

These laws and regulations are continually evolving and may change significantly. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the rapidly evolving industry in which we operate. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. These laws and regulations may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products and services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected as well as the value of our Ordinary Shares.

Any actions that may be taken by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

On December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and became effective on February 15, 2022. Pursuant to Article 2 of Measures for Cybersecurity Review (2021 version), the purchase of network products and services by critical information infrastructure operator and the data processing activities carries out online platform operators, which affects or may affect national security, shall be subject to cybersecurity review in accordance with the present Measures. Pursuant to Article 7, an online platform operator who possesses the personal information of more than 1 million users shall declare to the Office of Cybersecurity Review for cybersecurity review.

On November 14, 2021, the CAC published the Network Internet Data Protection Draft Regulations (draft for comments). Article 13 of the Network Internet Data Protection Draft Regulations (draft for comments) reiterates that data handlers that process the personal information of more than one million users listing in a foreign country should apply for a cybersecurity review in compliance with relevant national regulations.

Beroni Tianjin does not have its own e-commerce platform. It sells products through third-party e-commerce platforms, such as JD.com, Tmall and WeChat. Therefore, Beroni Tianjin is not among the “operator of critical information infrastructure”, “data processor”, “online platform operators” or “data handler” as mentioned above. Beroni Guangdong has not started its business and its intended business scope does not contain e-commerce matter. Therefore, the business of our PRC subsidiaries does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. However, since the Measures for Cybersecurity Review (2021 version) just became effective on February 15, 2022, it is unclear on how it will be interpreted and implemented by the relevant PRC authorities. In addition, since the deadline for feedback of the Network Internet Data Protection Draft Regulations (draft for comments) is December 13, 2021 and the formal Network Internet Data Protection Regulations is not promulgated, it is unclear on how it will be amended by the relevant PRC authorities. As of the date of this prospectus, our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by the relevant PRC authorities, and has not received any requirements to obtain permissions from relevant PRC authorities to issue our Ordinary Shares to foreign investors or were denied such permissions by relevant PRC authorities.

On December 24, 2021, the CSRC released the Draft Rules Regarding Overseas Listing which stipulate that the China-based companies, or the issuer, shall fulfill the filing procedures within three working days after the issuer makes an application for initial public offering and listing in an overseas market. The required filing materials for an initial public offering and listing should include at least the following: record-filing report and related undertakings; regulatory opinions, record-filing, approval and other documents issued by competent regulatory authorities of relevant industries (if applicable); and security assessment opinion issued by relevant regulatory authorities (if applicable); PRC legal opinion; and prospectus.

Beroni Group Limited is an Australian holding company that conducts its operations through its wholly owned and majority owned subsidiaries and is already listed on the National Stock Exchange in Australia and OTCQX in the USA. Further, as of the date of this prospectus, the Draft Rules Regarding Overseas Listing have not yet gone into effect. Therefore, it is still uncertain how PRC governmental authorities will regulate overseas listing in general and whether PRC subsidiaries are required to obtain any specific regulatory approvals or to fulfill any record-filing requirements.

On December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and became effective on February 15, 2022. Pursuant to Article 2 of Measures for Cybersecurity Review (2021 version), the purchase of network products and services by critical information infrastructure operator and the data processing activities carries out online platform operators, which affects or may affect national security, shall be subject to cybersecurity review in accordance with the present Measures. Pursuant to Article 7, an online platform operator who possesses the personal information of more than 1 million users shall declare to the Office of Cybersecurity Review for cybersecurity review. On November 14, 2021, the CAC published the Network Internet Data Protection Draft Regulations (draft for comments). Article 13 of the Network Internet Data Protection Draft Regulations (draft for comments) reiterates that data handlers that process the personal information of more than one million users listing in a foreign country should apply for a cybersecurity review in compliance with relevant national regulations.

As of the date of this prospectus, our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and have not received any requirements to obtain permissions from any PRC authorities to issue our Ordinary Shares to non-PRC investors or were denied such permissions by any PRC authorities. However, given the current PRC regulatory environment, it is uncertain when and whether our PRC subsidiaries, will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded.

We conduct a majority part of our business through our operating subsidiaries in China. Our operating subsidiaries are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations, and rules are not always uniform, and enforcement of these laws, regulations, and rules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

The PRC government has exercised and continues to exercise substantial control over virtually every sector of the PRC economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property, and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy and any regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

Presently, our sales are mainly denominated in RMB, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or other payments in U.S. dollars. Although the PRC government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents at those banks in China authorized to conduct foreign exchange business. In addition, conversion of RMB for capital account items, including direct investments and loans, is subject to governmental approval and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the PRC regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.

Further, any significant change in the value of the Australian dollar may have a material adverse effect on the value of our products in U.S. dollars. More specifically, if we decide to convert our Australian dollars into U.S. dollars for any business purpose, appreciation of the U.S. dollar against the Australian dollar would have a negative effect on the U.S. dollar amount available to us. To the extent that we need to convert U.S. dollars we receive from our initial public offering into Australian dollars for our operations, appreciation of the Australian dollar against the U.S. dollar would have an adverse effect on the Australian dollar amount we would receive from the conversion. Consequently, appreciation or depreciation in the value of the Australian dollar relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. As a result of such foreign currency fluctuations, it could be more difficult to detect underlying trends in our business and results of operations.

The value of our Ordinary Shares will be indirectly affected by the foreign exchange rate among the U.S. dollar, AUD and RMB and between those currencies and other currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividends we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.

Since July 2005, RMB has no longer been pegged to U.S. dollars. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, RMB may appreciate or depreciate significantly in value against U.S. dollars in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

Currently, some of our raw materials and major equipment are imported. In the event that the U.S. dollars appreciate against RMB, our costs will increase. If we cannot pass the resulting cost increases on to our customers, our profitability and operating results will suffer. In addition, if our sales to international customers grow, we will be increasingly subject to the risk of foreign currency depreciation.

Our PRC subsidiary, Beroni Tianjin is still incurring operating losses at this stage. The PRC regulations restrict the ability of our PRC subsidiaries to make dividends and other payments to our offshore parent company and other subsidiaries. PRC legal restrictions permit payments of dividends by our PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries are also required under PRC laws and regulations to allocate at least 10.0% of their annual after-tax profits determined in accordance with PRC generally accepted accounting principles to a statutory general reserve fund until the amounts in such fund reach 50.0% of their registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiaries to transfer funds to us could materially limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Since the initial public offering of Beroni Group in Australia, we have remitted A$500,000 (in June 2017) to our China subsidiary from the Australian holding company. Beroni Tianjin has, however, not paid any dividends or remitted other payments to the parent company or other subsidiaries due to the fact that it has not generated any after-tax profits since the Group was formed. Given the recent operating losses and the need to invest in other entities and clinical trials, Beroni Group has not declared or distributed any dividends to its shareholders. The Group has made cross-border payments between Australia, Japan and the USA for purposes of investment and working capital injection without restrictions and limitations.

Pursuant to the Circular on Relevant Issues concerning Foreign Exchange Administration of Overseas Investment and Financing and Return Investments Conducted by Domestic Residents through Overseas Special Purpose Vehicle, or Circular 37, which was promulgated by SAFE, and became effective on July 4, 2014, (1) a PRC resident must register with the local SAFE branch before he or she contributes assets or equity interests in an overseas special purpose vehicle, or an Overseas SPV, that is directly established or controlled by the PRC resident for the purpose of conducting investment or financing; and (2) following the initial registration, the PRC resident is also required to register with the local SAFE branch for any major change, in respect of the Overseas SPV, including, among other things, a change in the Overseas SPV’s PRC resident shareholder, name of the Overseas SPV, term of operation, or any increase or reduction of the Overseas SPV’s registered capital, share transfer or swap, and merger or division.

We have requested the beneficial holders of our Ordinary Shares who are PRC residents to register with the relevant branch of SAFE in connection with their equity interests in us and our acquisitions of equity interests in our PRC subsidiaries pursuant to Circular 37 or the predecessor regulation of Circular 37, namely the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, as the case may be. Because of uncertainty over how Circular 37 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies.

In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 37. We also have little control over either our present or prospective direct or indirect shareholders or the outcome of such registration procedures.

SAT released a circular on December 15, 2009 that addresses the transfer of shares by nonresident companies, generally referred to as Circular 698. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Circular 698 has the effect of taxing foreign companies on gains derived from the indirect sale of a PRC company. Where a foreign investor indirectly transfers equity interests in a PRC resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction that has an effective tax rate of less than 12.5% or does not tax foreign income of its residents, the foreign investor must report this indirect transfer to the tax authority in charge of that PRC resident enterprise. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of avoiding PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC withholding tax at a rate of up to 10.0%.

Uncertainties exist on testing the reasonable commercial purpose. For example, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax rates in foreign tax jurisdictions. As a result, we may become at risk of being taxed under Circular 698 and the related SAT notices and we may be required to expend valuable resources to comply with Circular 698 and the related SAT notices or to establish that we should not be taxed under Circular 698 and the related SAT notices, which could have a material adverse effect on our financial condition and results of operations.

We are subject to the Foreign Corrupt Practice Act, or FCPA, and other U.S. laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the relevant statute, for the purpose of obtaining or retaining business. We have operations, agreements with third parties, and make most of our sales in China. PRC anti-corruption laws also strictly prohibit bribery of government officials. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents, or distributors, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents, or distributors may engage in conduct for which we might be held responsible. Particularly, most of the hospitals and inoculation centers in China are state-owned entities, whose employees may be recognized as foreign government officials for the purpose of FCPA. Therefore, any payments, expensive gifts or other benefits provided to an employee of the state-owned hospital or inoculation center may be deemed violation of FCPA. Violations of FCPA or PRC anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, prospects, operating results and financial condition. In addition, the U.S. government may seek to hold us liable for successor liability under FCPA violations committed by companies in which we invest or that we acquire.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or “JOBS Act”, and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We have not decided whether to take advantage of any or all of these exemptions. If we do take advantage of any of these exemptions, we do not know if some investors will find our Ordinary Shares less attractive as a result. The result may be a less active trading market for our Ordinary Shares and the price of our Ordinary Shares may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (the “Securities Act”) for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to “opt in” to such extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.

We will remain an “emerging growth company” until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed US$1.07 billion, (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”), which would occur if the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

We are incorporated in Australia, and more than 50 percent of our outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, we are a “foreign private issuer” as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Exchange Act. As a result, we are not subject to the same requirements as U.S. domestic issuers. As a foreign private issuer, we may take advantage of certain provisions in the NASDAQ listing rules that allow us to follow Australian law for certain corporate governance matters. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime.

We are also a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Risks Related to our Business

The requirements to obtain regulatory approval of the U.S. FDA and regulators in other jurisdictions can be costly, time-consuming, and unpredictable. If we or our collaborators are unable to obtain timely regulatory approval for our product candidates, our business may be substantially harmed.

The Company has positioned itself as an international biopharmaceutical enterprise dedicated to the innovation and commercialization of drugs and therapies to combat various global diseases such as cancer and infectious diseases. Its diversified portfolio now comprises a US FDA approved virus diagnostic kit, an e-commerce distribution network for the sale of pharmaceutical products and a development pipeline targeting oncology and cell therapies.

In the USA, the Company has been working on the commercialization of the diagnostic kit developed by Columbia University for detecting zika, dengue, chikungunya and west Nile viruses. The product is now ready for mass production and the Company intends to promote it to countries with severe outbreaks in the past few years.

The regulatory approval process is expensive, and the time and resources required to obtain approval from the FDA or other regulatory authorities in other jurisdictions to sell any product candidate is uncertain and approval may take years. Whether regulatory approval will be granted is unpredictable and depends upon numerous factors, including the discretion of the regulatory authorities. For example, governing legislation, approval policies, regulations, regulatory policies, or the type and amount of preclinical and clinical data necessary to gain approval may change during the course of a product’s clinical development and may vary among jurisdictions.

Further, regulatory requirements have changed frequently and may continue to change in the future. Any regulatory review committees and advisory groups and any contemplated new guidelines may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval limitations or restrictions. As we advance our products, we will be required to consult with these regulatory and advisory groups and comply with applicable guidelines. If we fail to do so, we may be required to delay or discontinue development of our products and therapies. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a product to market could decrease our ability to generate sufficient revenue to maintain our business.

Our products could fail to receive regulatory approval for many reasons, including the following:

Our inability to successfully research and develop new products could have an adverse effect on our future growth.

We believe that the successful development of products can be affected by many factors. Products that appear to be promising in the early phases of research and development may fail to be commercialized for various reasons, including the failure to obtain the necessary regulatory approvals. In addition, the research and development cycle for any new medicine is a relatively lengthy process. Also, we cannot guarantee that we will receive the necessary approvals from relevant authorities for the production of our newly developed products. Even if such products could be successfully commercialized, we cannot assure you that they will be accepted by the market as anticipated.

In China, as mandated by a National Medical Products Administration (NMPA) (formerly known as CFDA) notice promulgated on July 22, 2015, all pharmaceutical enterprises that are in the process of registration application are required to inspect the data from the clinical trials and report the inspection results to the NMPA and to withdraw the registration application should any deficiency surface from such inspection.

From July 22, 2015 to August 25, 2015, 1,622 registration applications underwent self-inspection, after which 67% continued with data submission, 20% were withdrawn, and 12% were accompanied by a request to waive the clinical trials.

The three typical reasons for application withdrawals include:

Given the uncovered quality issues and rising costs for clinical trials, certain small drug manufacturers may face increased difficulty in submitting new registration applications, which could accelerate the NMPA’s overall review process. We cannot assure you, however, that our registration applications will benefit from this new NMPA practice. The new product launches by Beroni Tianjin may be delayed or aborted and any forced or voluntary withdrawal of our other products in the process of registration application in the future should quality issues be uncovered from the inspection of the relevant clinical trial data. Such delay or abortion could have a material adverse effect on our results of operations, financial condition and prospects.

Risks associated with clinical trials

Clinical trials are expensive, time consuming and difficult to design and implement. Even if the results of our clinical trials are favorable, the clinical trials are expected to continue for several years and may take significantly longer to complete.

Regulatory authorities may suspend, delay or terminate the clinical trials at any time for various reasons, including, but not limited to:

any of which could have a material adverse effect on the Company’s business, results of operations and financial condition.

In addition, the outcome of early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.

It is difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval.

The clinical trial requirements of the US FDA and comparable foreign regulatory authorities and the criteria used by these regulators to determine safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of such product candidates. We, and our current collaborators, or any future collaborators, may never receive approval to market and commercialize our PENAO product candidate in Australia or other countries. Even if we or a collaborator obtain regulatory approval, the approval may be for disease indications or patient populations that are not as broad as we intended or desired and may require labeling that includes significant use or distribution restrictions or safety warnings

Our product candidate treats patients who are extremely ill, and patient deaths that occur in our clinical trials could negatively impact our business even if they are not shown to be related to our product candidates

In Australia, we are developing PENAO, which focusses on the treatment of cancer tumors. The patients who receive our product candidates are very ill due to their underlying diseases.

Generally, patients remain at high risk following their treatment with our product candidates and may more easily acquire infections or other common complications during the treatment period, which can be serious and life threatening. As a result, we may observe severe adverse outcomes during our Phase II trials for this product candidate, including patient death. If a significant number of study subject deaths were to occur, regardless of whether such deaths are attributable to our product candidate, our ability to obtain regulatory approval for the applicable product candidate may be adversely impacted and our business could be materially harmed.

Our inability to protect our systems and data from continually evolving cybersecurity risks or other technological risks, including as a result of breaches of our associated third parties, could affect our ability to conduct our business.

In conducting our business, we may process, transmit and store sensitive business information and personal information about our customers, vendors, and other parties. Some of this information is also processed and stored by our third-party service providers to whom we outsource certain functions and other agents, including our customers, which we refer to collectively as our associated third parties.

We may be a target of malicious third-party attempts to identify and exploit system vulnerabilities, and/or penetrate or bypass our security measures, in order to gain unauthorized access to our networks and systems or those of our associated third parties. In the context of the COVID-19 pandemic, the risk of such threats and attacks has increased, as virtual and remote working has become more widely used, and sensitive data is accessed by employees working in less secure, home-based environments. Such unauthorized access could lead to the compromise of sensitive, business, personal or confidential information. As a result, we proactively employ multiple methods at different layers of our systems to defend our systems against intrusion and attack and to protect the data we collect. However, we cannot be certain that these measures will be successful and will be sufficient to counter all current and emerging technology threats that are designed to breach our systems in order to gain access to confidential information. 

Risks Related to Commercialization of Our Products

Our future commercial success depends upon attaining significant market acceptance of our products, if approved, among physicians, patients and healthcare payors.

Even when product development is successful and regulatory approval has been obtained, our ability to generate significant revenue depends on the acceptance of our products by physicians, payors and patients. Many potential market participants have limited knowledge of, or experience with, diagnostic kit products, so gaining market acceptance and overcoming any safety or efficacy concerns may be more challenging than for more traditional therapies. Our efforts to educate the medical community and third-party payors on the benefits of our products may require significant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by the conventional therapies marketed by our competitors. We cannot assure you that our products will achieve the expected market acceptance and revenue if and when they obtain the requisite regulatory approvals. Alternatively, even if we obtain regulatory approval, that approval may be for indications or patient populations that are not as broad as intended or desired or may require labeling that includes significant will depend on a number of factors, including:

Market acceptance is critical to our ability to generate significant revenue. Any product candidate, if approved and commercialized, may be accepted in only limited capacities or not at all. If any approved products are not accepted by the market to the extent that we expect, we may not be able to generate significant revenue and our business would suffer.

Adverse economic conditions in our current markets, or internationally may harm our business, results of operations and financial condition.

Our principal activities are the sales of smoking control product (NicoBloc), air purifier, water filter, healthcare products and supplements, and cosmetics in China and Japan. Any future deterioration in the economy or the financial condition or performance of our customer base in these markets may materially and adversely affect our business, results of operations and financial condition. Any uncertainty arising out of economic conditions may affect our ability to manage normal relationships with our customers, suppliers and creditors and adversely affect our results of operations, cash flows and financial condition, or those of our customers, suppliers and creditors. Current or worsening economic conditions may adversely affect the ability of our customers to pay for our products and curtail their spending on healthcare generally. This could result in a decrease in the demand for our products, declining cash flows, longer sales cycles, slower adoption of new technologies and increased price competition. These conditions may also adversely affect certain of our suppliers, which could cause a disruption in our production capacities. Such reductions and disruptions could have a material adverse effect on our business operations. Additionally, our business may also be negatively affected by changes in economic conditions in other markets, particularly the United States and Europe, as well as by trends in the global economy. Geopolitical issues, such as recent trade conflicts, including uncertainty regarding trade tensions between the United States and China and resulting trade restrictions such as tariffs, have recently contributed to increasing uncertainties in global markets, and increases in protectionist trade policies more generally may also contribute to slower global macroeconomic growth. Epidemics such as virus outbreaks, including a further escalation of the recent outbreak of the novel coronavirus COVID-19, or seasonal influenza may also negatively affect economic conditions in the global economy. Because the components of our planning and forecasting depend upon estimates of economic activity in the markets that we serve, increasing economic uncertainties make it more difficult than usual to estimate our future revenue and required expenditures. If unexpected changes in economic conditions occur in the future, we may not be able to respond appropriately to the changing market conditions.

Ethical and other concerns surrounding the use of stem cells in cosmetics may negatively affect regulatory approval or public perception.

The use of stem cells has been the subject of considerable public debate, with many people voicing ethical, legal and social concerns related to their collection and use. Negative public attitudes toward stem cell therapy could also result in greater governmental regulation of stem cell therapies, which could harm our business. The use of these cells could give rise to ethical and social commentary adverse to us, which could harm the market demand for new products and depress the price of our Ordinary Shares.

Additional government-imposed restrictions on, or concerns regarding possible government regulation of, the use of stem cells in research, development and commercialization could also cause an adverse effect on us by harming our ability to establish important partnerships or collaborations, delaying or preventing the development of certain products and therapies and causing a decrease in the price of our Ordinary Shares or by otherwise making it more difficult for us to raise additional capital. For example, concerns regarding such possible regulation could impact our ability to attract collaborators and investors. Also, existing and potential government regulation of stem cells may lead researchers to leave the field of stem cell research altogether in order to assure that their careers will not be impeded by restrictions on their work. This may make it difficult for us to find and retain qualified scientific personnel.

Our operating and financing activities expose us to foreign currency exchange and interest rate risks, which may adversely affect our revenues and profitability.

We are exposed to risks of foreign currency exchange rate fluctuations, particularly for the Chinese RMB against the AUD. Our consolidated financial statements, which are presented in AUD, are affected by fluctuations in foreign exchange rates. Changes in exchange rates affect the value of our equity investments and monetary assets and liabilities arising from business transactions in foreign currencies. They also affect the costs and sales proceeds of products or services that are denominated in foreign currencies. Despite measures undertaken by us to reduce or mitigate foreign currency exchange risks, foreign exchange rate fluctuations may hurt our business, results of operations and financial condition. Despite measures undertaken by us to mitigate our exposure against interest rate fluctuations, such fluctuations, whether due to ordinary course market movements or actions by central banks, may increase our operational costs, reduce the value of our financial assets or increase the value of our liabilities.

We may not be able to carry on our business if we lose any of the required permits and licenses.

Beroni Tianjin is required to obtain from various PRC governmental authorities certain permits and licenses, including permits for manufacturing and GMP certificates for each of our production facilities, as well as distribution permits.

Beroni Tianjin has obtained permits and licenses and GMP certificates as well as MDMEL required for the manufacturing and sales of our products. Our permits and licenses are subject to periodic renewal and/or reassessment by the relevant PRC governmental authorities, and the compliance standards may be subject to change from time to time. We intend to apply for the renewal of such permits and licenses when required by applicable laws and regulations. However, we cannot guarantee that Beroni Tianjin will be able to renew such permits and licenses in a timely manner, or at all. If we are unable to renew our permits and licenses or fail an inspection which would impair our permits and licenses, our business, prospects, financial condition and results of operations may be materially and adversely affected.

In addition, any changes in compliance standards, or any new laws or regulations that may prohibit or restrict our business activities or increase our compliance costs may adversely affect our operations and profitability.

We do not have discretion to increase the prices of certain of our products, which are subject to the regional government tendering mechanism and/or reimbursement ceilings.

Prices of certain pharmaceutical products were subject to various price-related regulations. Effective on June 1, 2015, the NDRC removed the retail price ceilings for all drug products (except for anesthetics and category I antipsychotics) in China. However, even after the NDRC removed the price ceiling, the pricing of our products is still subject to provincial and local tendering mechanisms where we compete with other manufacturers in the price and quality of our products. In 2017, PRC central government implemented a series of healthcare reform measures, and regional governments adopted various forms of tendering policies accordingly. We have experienced significant delay in tendering progress in certain regions, primarily due to post-tender price negotiation at city-level hospitals. To date, the respective tendering in the two regional markets where we have the most presence has not been completed yet. Although currently there is no standardized tendering rule for plasma products across the country, some provinces may adopt a policy of on-line disclosure of tendering prices, which may narrow the differences in tenders among different provinces and make the tendering practice more uniform across the country. This may increase the price pressure since provinces intend to benchmark to the lowest nationwide prices.

In addition, retail prices of products fully or partially covered under the national insurance system are also affected by the reimbursement ceilings set out in the NDRL, which may be adjusted by the NDRC from time to time. A new edition of NDRL was launched in February 2017.

Because of the tender process and the reimbursement ceiling for certain of our products, we do not have discretion to increase the prices we charge our customers and distributors for such products above certain levels. We may not be able to increase our prices even if the cost of manufacturing our products increases as a result of increases in the cost of raw materials or other costs, and, our revenue and profitability would be adversely affected. If the margin of any of these products becomes prohibitively low, we may stop manufacturing such product, which may further adversely affect our revenue and profitability.

Our ability to increase the prices of our products is limited by general market conditions and intense competition.

Our pricing practices may also be affected by general market conditions and intense competition. To the extent the demand for our products declines or competition intensifies, we may decide to respond by reducing our prices in order to capture the declining market demand and maintain the competitiveness of our products. A change in our competitive environment could adversely affect our profitability and prospects” below. If the margin of any of our products becomes prohibitively low, we may stop manufacturing such product, which may further adversely affect our revenue and profitability.

Our financial position and operations may be materially and adversely affected if our product liability insurance does not sufficiently cover our liabilities.

The use of our products in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with our products and product candidates. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs.

In addition, regardless of merit or eventual outcome, product liability claims may result in:

The Product Quality Law of the PRC, or the Product Quality Law, was enacted in 1993 and revised in 2000. The Product Quality Law was enacted to protect the rights and interests of end-users and consumers and to strengthen the supervision and control of the quality of products. Under the Product Quality Law, manufacturers who produce defective products may be subject to fines and production suspension, and in severe cases, be subject to criminal liability and may have their business licenses revoked.

The PRC Law on the Protection of the Rights and Interests of Consumers, or the Consumers�� Rights Law, was enacted in 1993 to further protect the legal rights and interests of consumers in connection with the purchase or use of goods and services. All businesses, including our business, must observe and comply with the Consumers’ Rights Law.

The Tort Liability Law of the PRC was enacted in December 2009, which imposes liability on manufacturers for damages caused by defects in their products. If the defects are caused by third parties such as transporters or storekeepers, manufactures may be entitled to claim for indemnification or contribution from such third parties for making compensation to the customers.

If the products sold by Beroni Tianjin are found to be defective and our insurance coverage is insufficient to cover a successful claim against us, our financial position and operations may be materially and adversely affected.

We are subject to intense competition and may encounter increased competition from both local and overseas enterprises if PRC regulators relax the approval process for our products or international trade restrictions. A change in our competitive environment could adversely affect our profitability and prospects.

Beroni Tianjin faces intense competition from local and foreign entities that manufacture and sell products that compete with ours in China. These competitors may have more capital, better research and development resources, expanded manufacturing and marketing capabilities and more experience than we do. The biopharmaceutical manufacturing industry in China is highly regulated, and although we believe that compliance with the regulatory requirements pose a competitive barrier to enter into the Chinese market, over time, however, there may be new entrants. If the government relaxes these restrictions and allows more competitors to enter into the market, these competitors may have more capital, better research and development resources, more manufacturing and marketing capability and experience than us. Our operating results and financial condition may be adversely affected if competition intensifies, competitors reduce prices to gain market share, or competitors develop new products having comparable medicinal applications or therapeutic effects which are more effective or less costly than ours.

Beroni Tianjin also faces competition from imported products. In addition, we compete with foreign manufacturers that set up production facilities in China and compete directly with us. The increased supply of both domestic and foreign products in China may result in lower sales or lower prices for our products. We cannot assure you that we will remain competitive or that our profitability and prospects will not be adversely affected.

We depend heavily on key personnel, and turnover of key employees and senior management could harm our business.

Our success, to a certain extent, is attributable to the expertise and experience of our senior management and key research and technical personnel who carry out key functions in our operation. If we lose the service of any of our senior management or key research or technical personnel or fail to attract additional personnel with suitable experience and qualification, our business operations and research capability may be adversely affected.

Additionally, seven of our eight directors are non-residents of the United States. Four directors reside in China and three reside in Australia. Substantially all of their assets are located outside the United States. Beroni Tianjin and Beroni Guangdong are entities with local directors and management located in China. As a result, it may be difficult or impossible for you to enforce any judgments obtained from foreign courts against such persons and entities compared to other non-U.S. jurisdictions.

Future acquisitions may have an adverse effect on our ability to manage our business.

Selective acquisitions form part of our strategy to further expand our business. If we are presented with appropriate opportunities, we may acquire additional companies, products or technologies. Future acquisitions and the subsequent integration of new companies into ours would require significant attention from our management. The diversion of our management’s attention and any difficulties encountered in any integration process could have an adverse effect on our ability to manage our business. Future acquisitions would expose us to potential risks, including risks associated with the integration of new operations, technologies and personnel, unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, and potential loss of, or harm to, relationships with employees, customers and suppliers as a result.

We may lose our competitive advantage and our operations may suffer if we fail to prevent the loss or misappropriation of, or disputes over, our intellectual property or proprietary information.

We regard our intellectual property, particularly our patents and trade secrets, to be of considerable value and importance to our business and our success. We rely on a combination of patent, trademark and trade secret laws, as well as confidentiality agreements to protect our intellectual property rights. Failure to protect our intellectual property rights could harm our brands and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our patents and trade secrets, could result in the expenditure of significant financial and managerial resources.

A disruption in the supply of utilities, fire or other calamity at our manufacturing plant would disrupt production of our products and adversely affect our business.

The Nicobloc product sold by Beroni Tianjin is manufactured at our GMP facility in Tianjin, China. Other products that are sold are outsourced to various OEM manufacturers in China. For stem-cell cosmetic products, they are produced in Japan by a Japanese OEM manufacturer for Beroni customers in China and Japan. While we have not in the past experienced any calamities which disrupted production, any disruption in the supply of utilities, in particular, electricity or power supply, or any outbreak of fire, flood or other calamity resulting in significant damage at our facilities would severely affect our production and have a material adverse effect on our business, financial condition and results of operations.

We do not have insurance coverage for our products and our inventories of raw materials or business interruption. We cannot assure you that our insurance would be sufficient to cover all of our potential losses.

If we fail to establish and maintain proper internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

Pursuant to Section 404 of the Sarbanes-Oxley Act, we will be required to file a report by our management on our internal control over financial reporting. In addition, an attestation report on internal control over financial reporting issued by our independent registered public accounting firm may be required. While we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. The presence of material weaknesses in internal control over financial reporting could result in financial statement errors which, in turn, could lead to errors in our financial reports and/or delays in our financial reporting, which could require us to restate our operating results. We might not identify one or more material weaknesses in our internal controls in connection with evaluating our compliance with Section 404 of the Sarbanes-Oxley Act. Specifically, the Company did not maintain an adequate segregation of duties with respect to internal control over financial reporting, given we have limited accounting personnel to enable and sufficiently evidence an independent review of complex financial reporting matters. There is also a lack of sufficient documentation surrounding our key investment assets.

In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, we will need to expend significant resources and provide significant management oversight. Implementing any appropriate changes to our internal controls may require specific compliance training of our directors and employees, entail substantial costs in order to modify our existing accounting systems, take a significant period of time to complete and divert management’s attention from other business concerns. These changes may not, however, be effective in maintaining the adequacy of our internal control.

If we are unable to conclude that we have effective internal controls over financial reporting, investors may lose confidence in our operating results, the price of our shares could decline and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, the shares may not be able to remain listed on the Nasdaq Capital Market

We face risks related to health epidemics and other outbreaks, including the coronavirus (COVID-19), which may cause business disruptions, resulting in a material, adverse impact to our financial condition and results of operations.

In recent years, there have been outbreaks of epidemics in various countries, including China (SARS), Middle East (MERS) and U.S. (Swine Flu). Recently, there was an outbreak of a novel strain of coronavirus (COVID-19) in China, which has spread rapidly to many parts of the world, including the U.S. and Europe. In March 2020, the World Health Organization declared the COVID-19 a pandemic. The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of office buildings and facilities in many parts of the world.

Presently our revenues and our sales are mainly concentrated in China. Consequently, our results of operations will likely be adversely, and may be materially, affected, to the extent that the COVID-19 or any other epidemic harms the Chinese and global economy. Any potential impact to our results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19 and the actions taken by government authorities and other entities to contain the COVID-19 or treat its impact, almost all of which are beyond our control. Potential impacts include, but are not limited to, the following:

Because of the uncertainty surrounding the COVID-19 outbreak, the financial impact related to the outbreak of and response to the coronavirus cannot be reasonably estimated at this time, but our consolidated results for the first and second quarters of 2020 were adversely affected. Our total revenues in the last two quarters of 2020 have improved, and our total revenues in 2021 continued to improve over those in 2020 despite the global challenges posed by the recent outbreaks of the Delta/Omicron virus variants. But there is no guarantee that our total revenues will grow or remain at the similar level year over year in 2022 and beyond if the pandemic is prolonged.

In general, our business could be adversely affected by the effects of epidemics or pandemic, including, but not limited to, the COVID-19, avian influenza, severe acute respiratory syndrome (SARS), the influenza A virus, Ebola virus, or other outbreaks. In response to an epidemic or other outbreaks, government and other organizations may adopt regulations and policies that could lead to severe disruption to our daily operations, including temporary closure of our offices and other facilities. These severe conditions may cause us and/or our partners to make internal adjustments, including but not limited to, temporarily closing down business, limiting business hours, and setting restrictions on travel and/or visits with clients and partners for a prolonged period of time. Various impacts arising from a severe condition may cause business disruptions, resulting in a material, adverse impact to our financial condition and results of operations.

If we are unable to satisfy our repayment obligations under certain convertible notes, we may be subject to litigation for collection of the amount due, or shareholders may face substantial dilution upon conversion of these notes.

In May 2020, we issued convertible promissory notes to one Japanese investor in the total principal amount of $2,073,600. These notes, which do not bear interest, are convertible to our Ordinary Shares at a conversion price of $1.728 per share. The notes were originally due in May of 2021, but the maturity date has been extended by agreement until May 2022 with an additional 5% shares to be issued to the investor upon conversion.

If we are unable to repay these notes in full on or before the extended maturity date, we may be subject to collection litigation. In the alternative, the noteholder may choose to exercise their conversion rights under the notes. If the notes were converted in their entirety, a total of approximately 1,260,000 Ordinary Shares would be issuable to the noteholder, resulting in substantial dilution to our existing shareholders.

Subsequently on May 16, 2022, the Japanese investor has agreed to extend the maturity date to the official date of listing of the Company on the Nasdaq stock market and to convert all the convertible notes to Ordinary Shares upon maturity.

In January 2022, we issued convertible promissory notes to one Chinese investor for $500,000. These notes, which do not bear interest, are convertible to our Ordinary Shares at a conversion price of $7 per share. Conversion may occur at any time between the date of issue and the maturity date. The maturity date is one year and upon maturity, the Company must convert all convertible notes which are not yet converted to shares. The conversion price for the convertible notes has a price protection that if, upon the listing of the Company on the Nasdaq Stock Market or the New York Stock Exchange, the initial public offering price is lower than the US$7 conversion price, then the Company must issue such number of additional shares to the investor that would have been issued if the convertible notes were issued at the initial public offering price instead of the conversion price. The conversion of these notes would result in further dilution to our existing shareholders.

If we are unable to make certain required milestone payments under our Shareholders Agreement with NewSouth Innovations Pty Limited (NSI) and PENAO Pty Ltd, our licensing rights to the PENAO cancer drug candidate could be jeopardized.

In June 2019, Beroni signed a shareholder agreement to acquire 40% of the total share capital of PENAO Pty Ltd with NewSouth Innovations Pty Limited (NSI) owning the other 60%. NSI is the subsidiary arm of the University of New South Wales. PENAO Pty Ltd is a company recently set up to take over from Cystemix Pty Ltd the development of the anti-cancer drug called PENAO for treatment of cancer tumours. In January 2021, PENAO Pty Ltd and NSI entered into a licensing agreement wherein it purchased license rights to the development of PENAO drug. In December 2020, Beroni and NSI agreed to vary the original shareholding agreement whereby through the issuance of shares and convertible notes, Beroni and NSI owns 60% and 40% respectively of the share capital of PENAO Pty Ltd. Under the shareholding variation agreement, when new shares are issued to Beroni and NSI upon additional payments from the former, convertible notes will also be issued to NSI which will automatically be converted to shares upon the occurrence of key milestone events.

Beroni has so far paid $2.35 million to NSI for this investment and will pay a further $7.5 million over the next 2 years. In the event Beroni is not able to pay the additional $7.5 million, then PENAO Pty Ltd can issue on the same terms to NSI the shares which were to be issued to Beroni and Beroni will grant NSI an option to purchase all of the shares then held by Beroni for the lesser of the following and at NSI’s sole discretion:

If we are unable to satisfy our payment obligations under the Shareholders Agreement when due, our ownership of PENAO Pty Ltd, and by extension, our licensing rights to the PENAO cancer drug candidate, could be jeopardized.

Risks Relating to Doing Business in Japan

Japan is an emerging market in terms of revenue, and our current business and future growth could be materially and adversely affected if we experience a decline in engagement in Japan.

The Company sells stem-cell based cosmetic products and cell therapies through its subsidiary in Japan. Japan is an emerging market in terms of revenue. We generated 2.2%, 0.5% and 0.4% of our revenues in Japan in 2018, 2019 and 2020 respectively. In late 2019, our Japanese subsidiary sold stem-cell cosmetics worth about AUD 740,000 to our Chinese subsidiary which, in turn, sold them to the Chinese consumers in 2020.

As we move forward, we expect to derive a larger portion of our revenues from Japan in the near future. Our continuing growth will be dependent, at least in part, on maintaining or increasing revenues from consumers. In recent quarters, our consumer growth rate in Japan has slowed. Our current business and future growth could be materially and adversely affected if we experience a continued decline in consumers and engagement in Japan. Due to the importance of the Japanese market to our business, we are also subject to macroeconomic risks specific to Japan.

In 2018, Beroni invested JPY100 million (AUD1.22 million) into a capital fund; the Youtokukai Foundation which was set up to fund the establishment and development of the Tokyo Ginza International Medical Clinic to be operated by Youtokukai, a medical group based in Japan specializing in regenerative medicine technology such as gene therapy, immune cell therapy, and stem cell therapy. The investment was to be fully redeemed after 30 June 2021. Due to the investment terms not being met by Youtokukai, Beroni has decided to withdraw from this investment and is seeking a refund for the full payment. In January 2020, Beroni has obtained a court injunction against Youtokukai to repay JPY130 million over 14 months. The repayment is guaranteed by a medical doctor of Youtokukai. Despite the court injunction, Youtokukai has missed the first 2 payments in January and February 2020. In view of the uncertainty of recovery and market condition in Japan, Beroni has decided to make a 100% credit loss provision against the debt. Any subsequent repayments received from Youtokukai will be taken as a reversal of expected credit loss provision.

Pursuant to a share subscription agreement signed with Dendrix Inc. on 8 April 2018, Beroni acquired 10,000 Ordinary Shares at an issue price of 20,000 Japanese Yen (JPY) per share, for a total investment of 200 million JPY (approximately AUD2.43 million dollars), representing 17.92% of the total share capital of Dendrix Inc. (Beroni did not subscribe to the second issue of 10,000 Ordinary Shares in Dendrix Inc. as provided in the share subscription agreement due to the latter company not fulfilling the pre-conditions for the second subscription.) Dendrix Inc. is a company based in Tokyo, Japan and was established in December 2012 to provide immune cell culture for treatment against malignant tumors. Due to a downturn in business, our investment in Dendrix Inc. has declined to a fair value of AUD1.30 million. Nevertheless, Beroni will continue to work with Dendrix Inc. to develop the cell therapy business in Japan. Subsequently in 2021, having considered its business prospects, we have decided to fully write off our investment in Dendrix Inc.

Risks Relating to our Ordinary Shares

The market price of our Ordinary Shares is volatile, leading to the possibility of its value being depressed at a time when you want to sell your holdings.

The market price of our Ordinary Shares is volatile, and this volatility may continue. Numerous factors, many of which are beyond our control, may cause the market price of our Ordinary Shares to fluctuate significantly. These factors include, among others:

Securities class action litigation is often instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs to us and divert our management’s attention and resources. Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies. For example, in July 2008, the securities markets in the United States, China and other jurisdictions experienced the largest decline in share prices since September 2001. These market fluctuations may adversely affect the price of our Ordinary Shares and other interests in our Company at a time when you want to sell your interest in us.

An active trading market for our Ordinary Shares may not develop or be liquid enough for you to sell your Ordinary Shares quickly or at market price.

If an active public market in the United States for the Ordinary Shares does not develop after this offering, the market price and liquidity of the Ordinary Shares may be adversely affected. While we intend to apply for the listing of the Ordinary Shares on NASDAQ, a liquid public market in the United States for the Ordinary Shares may not develop or be sustained after this offering. The price at which the Ordinary Shares are traded after this offering may decline below the initial public offering price, which means you may experience a decrease in the value of your Ordinary Shares regardless of our operating performance or prospects. In the past, following periods of volatility in the market price of a company’s securities, shareholders often instituted securities class action litigation against that company. If we were involved in a class action suit, it could divert the attention of senior management and, if adversely determined, could have cause us significant financial harm.

Investors purchasing the Ordinary Shares will suffer immediate and substantial dilution.

We may also issue additional Ordinary Shares and other securities in the future that may result in further dilution of your Ordinary Shares. See “Dilution” for a calculation of the extent to which your investment will be diluted.

The dual listing of our Ordinary Shares following this offering may adversely affect the liquidity and value of the Ordinary Shares.

Following this offering and after the Ordinary Shares are listed on NASDAQ, our Ordinary Shares will continue to be listed on the NSX. We cannot predict the effect of this dual listing on the value of our Ordinary Shares. However, the dual listing of our Ordinary Shares may dilute the liquidity of these securities in one or both markets and may impair the development of an active trading market for the Ordinary Shares in the United States. The trading price of the Ordinary Shares could also be adversely affected by trading in our Ordinary Shares on the NSX.

As a foreign private issuer, we are permitted to file less information with the SEC than a company incorporated in the United States. Accordingly, there may be less publicly available information concerning us than there is for companies incorporated in the United States.

As a foreign private issuer, we are exempt from certain rules under the Exchange Act, that impose disclosure requirements as well as procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as a company that files as a U.S. company whose securities are registered under the Exchange Act, nor are we required to comply with the SEC’s Regulation FD, which restricts the selective disclosure of material non-public information. Accordingly, there may be less information publicly available concerning us than there is for a company that files as a domestic issuer.

Stock prices of companies with business operations primarily in China have fluctuated widely in recent years, and the trading prices of our Ordinary Shares are likely to be volatile, which could result in substantial losses to investors.

The trading prices of our Ordinary Shares are likely to be volatile and could fluctuate widely in response to factors beyond our control. For example, if one or more of the industry analysts or ratings agencies who cover us downgrades us or our ordinary share, or publishes unfavorable research about us, the price of our Ordinary Shares may decline. If one or more of these analysts or agencies cease to cover our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Ordinary Shares or trading volume to decline. In addition, the performance and fluctuation of the market prices of other China-based, U.S.-listed healthcare companies may affect the volatility in the price of and trading volume for our Ordinary Shares. In recent years, a number of PRC-based companies have listed their securities or are in the process of preparing for listing their securities, on U.S. stock markets. Some of these companies have experienced significant volatility, including significant price declines following their initial public offerings. The trading performances of the securities of these PRC-based companies’ securities at the time of or after their offerings may affect the overall investor sentiment towards PRC-based companies listed in the United States and consequently may affect the trading performance of our Ordinary Shares. These broad market and industry factors may significantly affect the market price and volatility of our Ordinary Shares, regardless of our actual operating performance.

In addition to market and industry factors, the price and trading volume for our Ordinary Shares may be highly volatile for specific business reasons. Any of these factors may result in large and sudden changes in the volume and price at which our Ordinary Shares will trade. We cannot assure you that these factors will not occur in the future again. In the past, following periods of volatility in the market price of a company’s securities, shareholders have often instituted securities class action litigation against that company. If we were involved in a class action lawsuit, it could divert the attention of senior management, and, if adversely determined, could have a material adverse effect on our business, financial condition and results of operations.

Risks Relating to Doing Business in Australia

Anti-takeover provisions in our constitution and our right to issue preference shares could make a third-party acquisition of us difficult

Some provisions of our Constitution may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that only require one-third of our board of directors to be elected annually and, subject to the Corporations Act and NSX Listing Rules, authorize our board of directors to issue an unlimited number of shares of capital stock and preference shares in one or more series and to designate the price, rights, preferences, privileges, conditions or restrictions (whether in regard to dividend, voting, return of capital or otherwise) of such preference shares as set out in our Constitution or in a Special Resolution. In addition, the NSX Listing Rules prevent a company from issuing more than 15% of its issued capital in a 12 month period without obtaining shareholders approval.

Australian takeover laws may discourage takeover offers being made for us or may discourage the acquisition of a large number of shares

We are incorporated in Australia and are subject to the takeover laws of Australia. Among other things, we are subject to the Corporations Act, 2001 (Corporations Act). Subject to a range of exceptions, the Corporations Act prohibits the acquisition of a direct or indirect interest in our issued voting shares if the acquisition of that interest will lead to a person’s voting power in us increasing to more than 20%, or increasing from a starting point that is above 20% and below 90%. Australian takeover laws may discourage takeover offers being made for us and may discourage the acquisition of a significant position in our Ordinary Shares. This may have the ancillary effect of entrenching our board of directors and may deprive or limit our shareholders’ opportunity to sell their Ordinary Shares and may further restrict the ability of our shareholders to obtain a premium from such transactions.

Our constitution and Australian laws and regulations applicable to us may adversely affect our ability to take actions that could be beneficial to our shareholders

As an Australian company, we are subject to different requirements than a corporation organized under the laws of the United States. Our Constitution as well as the Corporations Act set out various rights and obligations that are unique to us as an Australian company. These requirements may operate differently than those of many US companies. Prior to investing in the Ordinary Shares, you should carefully review the summary of these matters set out under the section, “Description of Share Capital” as well as our Constitution, which is included as an annexure to this registration statement to which this prospectus forms a part.

Australian companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of the ability to protect their interests

Australian companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedure and defenses that may be available in respect to any such action, may result in the rights of shareholders of an Australian company being more limited than those of shareholders organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred.

You may have difficulty enforcing judgments against us.

We are a company incorporated under the laws of Australia. The majority of our current operations are conducted in China. In addition, most of our directors and officers are nationals and residents of countries other than the United States and substantially all the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to effect service of process within the United States against the Company or its directors or to enforce against them any of the judgments, including those obtained in original actions or in actions to enforce judgements of the U.S Courts, predicated upon the civil liability provisions of the federal or state securities laws of the United States.

Australian courts are unlikely to recognize or enforce against us judgements of courts in the United States based on certain liability provisions of U.S. securities law and to impose liabilities against us, in original actions brought in Australia, based on certain liability provisions of US Securities laws that are penal in nature. There is no statutory recognition in Australia of judgements obtained in the United States, although the courts of Australia may recognize and enforce the non-penal judgement of a foreign court of competent jurisdiction without retrial on the merits, upon being satisfied about all the relevant circumstances in which that judgment was obtained.

There is also uncertainty as to whether the PRC courts would recognize or enforce judgments of U.S. courts. Although recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law, recognition and enforcement of a foreign judgment by PRC courts depend on treaties or reciprocity between China and the country where the judgment is made. The recognition and enforcement of foreign judgments in China are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. The PRC does not have any treaties or other forms of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in Australia. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC laws against a company in the PRC for disputes if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

In addition, it will be difficult for U.S. shareholders to originate actions against us in the PRC in accordance with PRC laws because we are incorporated under the laws of Australia and it will be difficult for U.S. shareholders, by virtue only of holding our Ordinary Shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

We do not intend to pay dividends for the foreseeable future.

For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our Ordinary Shares. Accordingly, investors must be prepared to rely on sales of their Ordinary Shares after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our Ordinary Shares. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of NASDAQ. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

As an Australian company, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from NASDAQ corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy under NASDAQ corporate governance listing standards.

As an Australian company listed on NASDAQ, we are subject to NASDAQ corporate governance listing standards. However, NASDAQ rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in Australia, which is our home country, may differ significantly from NASDAQ corporate governance listing standards. For example, neither the Corporations Act nor our Constitution requires a majority of our directors to be independent and we could include non-independent directors as members of our compensation committee and nominating committee, and our independent directors would not necessarily hold regularly scheduled meetings at which only independent directors are present. Except as disclosed in “Item Schedule 1 6(b) of our Corporate Governance Plan”, we have not taken any exemption from the NASDAQ corporate governance rules to follow our home country practices. However, if we choose to follow any home country practice in the future, our shareholders may be afforded less protection than they otherwise would under NASDAQ corporate governance listing standards applicable to U.S. domestic issuers.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Regulation” and other sections in this prospectus. You should thoroughly read this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of our Ordinary Shares. In addition, the rapidly changing nature of the shared workspace and consulting services marketplace industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately US$   million after deducting underwriting discounts and commissions, expense allowance, and the estimated offering expenses payable by us and based upon an assumed initial public offering price of $   per Ordinary Share (excluding any exercise of the underwriters’ over-allotment option).

We currently intend to use the net proceeds from this offering as follows:

Our expected use of net proceeds from this offering represents our current intentions based on our present plans and business condition and are subject to change as our plans and business conditions evolve. The amounts and timing of our actual use of net proceeds will vary depending on numerous factors, including the progress of our clinical development of our product candidates, including our ongoing clinical trials. As a result, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering or the amounts that we will actually spend on the uses set forth above. Our management will have broad discretion in the application of the net proceeds from this offering.

Subject to satisfaction of the use of proceeds mentioned above, and at the discretion of management, we may utilize the offering proceeds to pay the remainder of the purchase price of $9.2 million to Medicine Plus Co., Ltd.

We expect that we will continue to raise additional funds beyond this offering in order to continue to advance our growing pipeline. We may seek to raise capital through public or private equity or debt financing, government or other third-party grants or funding and profits generated from our commercial business or a combination of these approaches.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. See “Risk Factors—Risks Related to Our Ordinary Shares and This Offering—You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income or increase the price of our Ordinary Shares.”

Approximately $[  ] million of the proceeds will be immediately remitted to Beroni Tianjin following the completion of this offering to fund our clinical trials in China. However, in using the proceeds of this offering, we are permitted under PRC laws and regulations as an offshore holding company to provide funding to our wholly foreign-owned subsidiary in China only through loans or capital contributions subject to the approval of government authorities and limit on the amount of capital contributions and loans. Subject to satisfaction of applicable government registration and approval requirements, we may extend inter-company loans to our wholly foreign-owned subsidiary in China or make additional capital contributions to our wholly-foreign-owned subsidiary to fund its capital expenditures or working capital. For an increase of registered capital of our wholly foreign-owned subsidiary, we need to file documentation with MOFCOM or its local counterparts. If we provide funding to our wholly foreign-owned subsidiary through loans, the risk-weighted balance for cross-border financing shall not exceed the upper limit of the risk-weighted balance for cross-border financing. Such loans must be filed with SAFE or its local branches and update such loan and equity-related information annually. Even though the WFOE may settle the loan at will, we cannot assure you that we will be able to settle on a timely basis due to foreign control policies in China, if at all. PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

DIVIDENDS AND DIVIDEND POLICY

We have not previously declared, or paid cash dividends and we have no plan to declare or pay any dividends in the near future on our Ordinary Shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

We are incorporated in Australia. We rely principally on dividends from our overseas subsidiaries (including our PRC subsidiaries) for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See “PRC Laws and Regulations Relating to Foreign Exchange—Dividend Distribution.”

Our board of directors has discretion as to whether to distribute dividends, subject to applicable laws. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. [Cash dividends on our Ordinary Shares, if any, will be paid in U.S. dollars.]

EXCHANGE RATE INFORMATION

The Australian dollar is convertible into U.S. dollars at freely floating rates. There are no legal restrictions on the flow of Australian dollars between Australia and the United States. Any remittances of dividends or other payments by us to persons in the United States are not and will not be subject to any exchange controls.

Our consolidated financial statements are prepared and presented in Australian dollars.

The table below sets forth for the periods identified the number of U.S. dollars per Australian dollar as published by the Reserve Bank of Australia. We make no representation that any Australian dollar or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Australian dollars, as the case may be, at any particular rate, the rates stated below, or at all.

(US$ per AUD 1)

Source: Reserve Bank of Australia

CAPITALIZATION AND INDEBTEDNESS

The following tables set forth our capitalization and indebtedness as of June 30, 2022:

The adjustments reflected below are subject to change and are based upon available information and certain assumptions that we believe are reasonable. Total shareholders’ equity and total capitalization following the completion of this offering are subject to adjustment based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

DILUTION

If you invest in our Ordinary Shares, you will incur immediate dilution since the initial public offering price per share you will pay in this offering is more than the net tangible book value per ordinary share immediately after this offering.

The net tangible book value of our Ordinary Shares as of June 30, 2022 was AUD5,931,356 or $4,086,111, or $0.053 per share, based on 76,638,372 Ordinary Shares outstanding as of June 30, 2022. Net tangible book value represents the amount of our total assets reduced by the amount of our total liabilities, net intangible assets and deferred offering costs, divided by the total number of Ordinary Shares outstanding. Tangible assets equal our total assets less net intangible assets, total liabilities and deferred offering costs.

The dilution in net tangible book value per share to new investors, represents the difference between the amount per share paid by purchasers of shares in this offering and the pro forma net tangible book value per share immediately after completion of this offering. After giving effect to the sale of the [  ] shares being sold pursuant to this offering at $[  ] per share and after deducting underwriting discounts and commissions payable by us in the amount of $[  ] million, non-accountable expense allowance payable by us in the amount of $______ million, and estimated offering expenses in the amount of approximately $_____, our pro forma net tangible book value would be approximately $[  ] million or $[  ] per share of Ordinary Shares. This represents an immediate increase in net tangible book value of $[  ] per share to existing shareholders and an immediate decrease in net tangible book value of $[  ] per share to new investors purchasing the shares in this offering.

The following table illustrates this per share dilution:

A $1.00 increase in the assumed initial public offering price would increase our pro forma net tangible book value after this offering by approximately $[  ] per share, and increase dilution to new investors by approximately $[  ] per share, after deducting the underwriting discounts and commissions, non-accountable expense allowance, and estimated offering expenses payable by us. An increase of 100,000 Ordinary Shares in the number of Ordinary Shares we are offering would increase our pro forma net tangible book value after this offering by approximately $[  ] per share, and would decrease dilution to new investors by approximately $[  ] per share, assuming the assumed initial public offering price per ordinary share, as set forth on the cover page of this prospectus remains the same, and after deducting the estimate underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us. The pro forma information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

The following table sets forth, on an as adjusted basis as of June 30, 2022, the difference between the number of Ordinary Shares purchased from us, the total cash consideration paid, and the average price per share paid by our existing shareholders and by new public investors before deducting underwriting discounts and commissions, non-accountable expense allowance, and estimated offering expenses payable by us, using an assumed initial public offering price of $[  ] per ordinary share:

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated statements of comprehensive income data for the six months ended June 30, 2022 and 2021 and the selected consolidated statement of financial position data as of June 30, 2022 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus and have been prepared on the same basis as the audited financial statements. The selected consolidated statements of comprehensive income data for the years ended December 31, 2019, 2020 and 2021, selected consolidated balance sheet data as of December 31, 2019, 2020 and 2021 and selected consolidated statements of cash flow data for the years ended December 31, 2019, 2020 and 2021 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with IFRS (International Financial Reporting Standards). Our historical results are not necessarily indicative of results expected for future periods. You should read this Selected Consolidated Financial Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus. This discussion contains certain forward-looking statements that involve risk and uncertainties. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the Section entitled “Risk Factors”, and other documents we file with the Securities and Exchange Commission. Historical results are not necessarily indicative of future results.

Overview

Beroni Group is an international biopharmaceutical enterprise dedicated to the innovation and commercialization of drugs and therapies to combat various global diseases such as cancer and infectious diseases. Its diversified portfolio is comprised of FDA / CE approved virus diagnostic kits, an e-commerce distribution network for the sale of pharmaceutical products and a developing pipeline targeting oncology and cell therapies. It is listed on the National Stock Exchange of Australia and traded on the OTC markets in the USA.

Since the founding of the predecessor company in China in 2014, Beroni Group has grown into an innovative biopharmaceutical company with business operations in Australia, China, USA and Japan. In addition to our commercial business in China, Japan and USA, we have assembled a growing pipeline of drug/therapy candidates in the fields of oncology, cell therapy and infectious diseases.

Basis of presentation

Our consolidated statements of operations data for the six months ended June 30, 2022 and 2021 and our consolidated statement of financial position data as of June 30, 2022 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus and have been prepared on the same basis as the audited financial statements. Our consolidated statement of operations data for the years ended December 31, 2021, December 31, 2020 and 31 December 2019 and our consolidated statement of financial position data as of December 31, 2021, December 31, 2020 and December 31, 2019 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements have been prepared in accordance with IFRS.

Key Factors Affecting our Results

We believe our ability to successfully develop drug candidates will be the primary factor affecting our long-term competitiveness, as well as our future growth and development. Developing high quality drug candidates requires a significant investment of resources over a prolonged period of time, and a core part of our strategy is to continue making sustained investments in this area. We also believe our ability to successfully commercialize our drug candidates will generate new revenue sources from the sales of the drug candidates.

In recent years, we have incurred operating losses due to our expansion into new markets and investment in new research and development programs. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we expand our commercial activities and continue further with our research and development programs in preclinical development and clinical trials for our product candidates.

As a result, we will need substantial additional funding to support our continued operations and pursue our growth strategy. Until we can generate significant revenue from our pharmaceutical product sales, we expect to finance our operations through a combination of public or private equity offerings and debt financings.

Results of Operations

Comparison of the Six Months Ended June 30, 2022 and 2021

Revenue

Our revenue is derived from the sale of pharmaceutical, health and cosmetic products which are smoking control products (NicoBloc), air purifiers, water filters, cosmetics, healthcare products, stem-cell therapies and viral diagnostic products. More than 90% of our sales are done through Beroni China. The products are sold on e-commerce websites and through third-party agents in China. We are making efforts to generate more sales and create new products in our existing markets in China and Japan. We are also working on establishing an international market for the sales of our diagnostic kit products.

Sales revenue in the first 6 months of 2022 has decreased by 55% compared to the same period last year. The sales in this period have been significantly affected by the COVID-19 lockdowns in various cities in China which have disrupted supply chains and forced factories to halt operations. Although there are signs that China’s economy has started to recover in the second half of 2022, the pressure on consumption may persist for a while. Nevetheless, the Company will continue to promote its products and increase its sales despite the challenging economic circumstances in China.

Cost of Sales

Our cost of sales are production-related costs such as materials, direct wages, QC costs, rental and utility expenses, and payments to third-party manufacturers.

Gross Profit

The gross profit margin has deteriorated from 87% to 62% in this period due to the drop in sales of the health supplements and cosmetic products which are highly profitable with gross margins exceeding 80%.

Other Income

Other income mainly represents the estimated R&D tax incentive of A$153,439 refundable from the Australian government for the PENAO drug development program for the half year ended June 30, 2022. The R&D tax incentive for the previous period was approved by the Australian government in August 2021. The R&D tax incentive application for this period has been submitted to the Australian government in September 2022.

Selling and Distribution Expenses

Our selling and distribution expenses comprise sales personnel’s salaries, sales commissions, advertising and promotion expenses, freight and packaging expenses and travel costs.

General and Administrative Expenses

General and administrative expenses consist mainly general wages and salaries, directors’ fees, office rents, legal and consultancy fees, insurance, listing fees, general research and development expenses, share-based compensation payments, depreciation and amortization, and impairment losses on receivables and prepayments. Every year, we grant shares to directors, management and scientists as recognition of their contributions. These share-based awards are measured at the grant date fair value and recognized as an expense immediately if no vesting conditions are required. For shares issued to non-employees such as advisors and consultants, they are accounted for based on the fair value at grant date which is normally the date on which the counterparty’s performance is completed. The expense is recognized in the same manner as if we had paid cash for the services provided by the non-employees.

The increase in general and administrative expenses is mainly due to the following:

Comparison of the Years Ended December 31, 2021 and 2020

Revenue

Sales revenue has increased by 22.5% from AUD1,793,565 in 2020 to AUD2,196,766 in 2021 despite the ongoing COVID-19 pandemic and the social restrictions imposed in many parts of the world. This year continues to be a challenging one amid the slow recovery in the global economy. The improvement in sales is a result of the Company launching new products in the last 2 years to increase its market base. The COVID-19 test kits are the biggest contributor to the increase in sales as their sales have risen from AUD150,700 in 2020 to AUD954,628 in 2021. Health supplements have almost doubled in sales in 2021, up from AUD287,747 to AUD459,623. Other products such as Nicobloc and cosmetic products have, however, declined in sales.

Cost of Sales

Our cost of sales are production-related costs such as materials, direct wages, QC costs, rental and utility expenses, and payments to third-party manufacturers.

Gross Profit

The higher gross profit in 2021 is mainly attributed to the increase in sales of the viral diagnostic kits which fetched a high margin of more than 80%, whereas in 2020, the bulk of the cosmetics sales were stem-cell cosmetics which were sold at a much lower margin due to the higher cost of sales of the imported goods from Japan. Sales of the stem cell cosmetics have decreased in 2021. In general, the gross margin of the Company’s products averaged between 70% and 80%.

Other Income

The increase in other income is due to the AUD457,863 R&D tax rebate received or receivable from the Australian government to support the PENAO drug research in Australia. The R&D tax incentive application was approved by the Australian government in August 2021. The other income received in 2020 mainly represents business grants or subsidies provided by the local government in China during the pandemic lockdown.

Selling and Distribution Expenses

Our selling and distribution expenses comprise sales personnel’s salaries, sales commissions, advertising and promotion expenses, freight and packaging expenses and travel costs.

General and Administrative Expenses

The decrease in general and administrative expenses in 2021 is mainly due to the lower share-based compensation expense in 2021 compared to that in 2020. In 2020, 2,390,000 shares valued at AUD1 per share were issued to directors, senior managers and scientists incurring total share-based compensation expense of AUD2,390,000. In 2021, the Company embarked on a new share options plan and a total of 21,351,000 share options was granted to the management and scientific teams. The cost of the share options (based on its fair value) is allocated over a 3-year vesting period. An estimated cost of AUD1,362,735 was allocated to the 2021 financial year.

The AUD507,753 impairment gains on trade and other receivables in 2021 is mainly explained by the improvement in the recovery of the long outstanding debts owed by the agents and customers of the Chinese subsidiary.

Other Comprehensive Income / (Loss)

Included in other comprehensive loss in 2021 is a write-off of the remaining value of AUD1.30 million of the investment in the Japanese affiliate, Dendrix Inc. Beroni management, having reviewed the latest financial statements of Dendrix Inc. noted that the company has shown a significant deterioration in its 2021 financial performance resulting in a negative shareholders’ equity. Given the negative equity and the worsening financial results, it was decided to fully impair the value of the investment in Dendrix Inc.

Comparison of the Years Ended December 31, 2020 and 2019

Revenue

Sales revenue has slightly increased from AUD1.70 million in 2019 to AUD1.79 million in 2020 despite the outbreak of the pandemic and the lockdown in many parts of the world. China was under lockdown from February to May in 2020 and our sales in China in the first half plummeted to only AUD0.32 million. Japan also was affected when a state of emergency was declared nationwide in April and May 2020.

As the Chinese economy opened up in the second half, our sales showed a major turnaround and the Company was able to achieve sales of AUD1.48 million in this period. The launch of a few products in China helped increase the overall sales:

Gross Profit

Gross profit has decreased from AUD1.27 million to AUD0.71 million. This is mainly attributed to the reduced margin of the sales of the stem-cell cosmetics. These products were sold at a much lower margin compared to the other products, the average gross margin of which hovers around the 75% mark.

Other Income

Other income represents business grants or subsidies provided by the local government in China.

Selling and Distribution Expenses

Our selling and distribution expenses comprise sales personnel’s salaries, sales commissions, advertising and promotion expenses, freight and packaging expenses and travel costs.

General and Administrative Expenses

A large portion of the general and administrative expenses is related to the issuance of shares to directors, senior managers and scientists. In June 2020, 2,390,000 shares valued at AUD1 per share were issued to directors, senior managers and scientists incurring total share-based compensation expense of AUD2.39 million. Other more significant general and administrative expenses include wages and salaries of AUD0.64 million, research and development expenses of AUD0.42 million and accounting, and audit, legal and consulting fees of AUD0.88 million.

Impairment Gains / (Losses) on Receivables and Prepayments

As most of the provision for expected credit losses on receivables and prepayments had already been made in 2019 and 2018, no further provision was required in 2020. There was a small reversal of the expected credit losses made in the previous two years.

The impairment losses on receivables and prepayments totalling AUD5.10 million in 2019 was due to:

Share of Loss of Investment in Associate

This is related to our 40% share of the operating loss of our equity investment in PENAO Pty Ltd before the increase of our shareholding to 60% after a restructuring in December 2020.

PENAO Pty Ltd incurred a net operating loss of AUD0.20 million in 2020.

Fair Value Gain on Revaluation of Investment in Associate

The fair value gain is a remeasurement of the investment in PENAO Pty Ltd, the cancer drug development company based in Australia when Beroni increased its shareholding from 40% to 60% in December 2020.

Realized Foreign Exchange Loss

A foreign exchange loss of AUD0.44 million was realized when the funds raised from the issue of USD-denominated convertible notes to Japanese investors in May 2020 were subsequently transferred from Japan to Australia as the AUD dollar appreciated significantly against the USD in the second half of the year.

Net Loss from Discontinued Operations

The net loss from discontinued operations is related to the disposal of our shareholding interest in Beroni Japan in October 2020.

Other Comprehensive Income / (Loss)

The other comprehensive loss in 2019 is mostly due to the decline in fair value of the investment in the Japanese affiliate, Dendrix Inc. Beroni management had performed an independent appraisal of the value of the intangible assets of Dendrix in 2020 and after taking into account its tangible assets as well, determined that its fair value had declined and proposed to write down the investment value by AUD1.1 million.

Liquidity and Capital Resources

We have historically funded our operations primarily from private placements of our Ordinary Shares, issuance of convertible notes which are converted into Ordinary Shares and net cash proceeds from our commercial operations. As of June 30, 2022, we had cash and cash equivalents of AUD4.07 million. Cash and cash equivalents are invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation, and consist primarily of cash in banks and on hand and short-term deposits with an original maturity of three months or less, which are stated at fair value.

We have raised funds from the issuance of convertible notes totaling USD2.0736 million in May 2020 with a one-year maturity and a convertible share price of USD1.728. In May 2021, these convertible notes were extended for another 6 months until November 2021 and in November 2021, the convertible noteholder agreed to extend them a further 6 months until May 2022, with an additional 5% shares to be issued to the investor upon conversion. Subsequently in May 2022, the convertible noteholder agreed to extend the maturity date to the official date of listing of the Company on the Nasdaq stock market and to convert all outstanding convertible notes to Ordinary Shares upon maturity.

In January 2022, we raised another USD0.5 million from the issuance of 5,000 convertible notes to a Chinese investor. Each note entitles the holder to convert to a fixed number of shares by dividing the face value USD100 of the note by the conversion price of US$7 per share. Conversion may occur at any time between the date of issue and the maturity date. The maturity date is one year and upon maturity, the Company must convert all convertible notes which are not yet converted to shares. The conversion price for the convertible notes has a price protection that if, upon the listing of the Company on the Nasdaq Stock Market or the New York Stock Exchange, the initial public offering price is lower than the US$7 conversion price, then the Company must issue such number of additional shares to the investor that would have been issued if the convertible notes were issued at the initial public offering price instead of the conversion price.

Cash Flows

The following table summarizes the primary sources and uses of cash for each period presented:

Operating Activities

We derive cash flows from operations primarily from the sale of products and services rendered. Our cash flows from operating activities are significantly influenced by our use of cash for operating expenses and working capital to support the business. We have historically experienced negative cash flows from operating activities as we have invested in the development of our technologies and manufacturing capabilities, and expansion into new markets, as well as for general research and development activities.

Net cash used in operating activities for the six months ended June 30, 2022 was AUD1.47 million, comprising a loss before tax of AUD3.61 million, non-cash adjustments of AUD1.99 million, and a net positive change in assets and liabilities of AUD0.15 million. Non-cash items primarily included depreciation and amortization. The net positive change in assets and liabilities was primarily due to a decrease in trade receivables and an increase in trade payables and other current liabilities.

Net cash used in operating activities for the year ended December 31, 2021 was AUD1.35 million, comprising a loss before tax of AUD2.88 million, non-cash adjustments of AUD1.97 million, and a net negative change in assets and liabilities of AUD0.44 million. Non-cash items primarily included depreciation and amortization, share-based compensation expenses, shares issued to service provider and unrealized foreign exchange gain or loss. The net negative change in assets and liabilities was primarily due to an increase in trade receivables and inventories.

Net cash used in operating activities for the year ended December 31, 2020 was AUD1.35 million, comprising a loss before tax of AUD5.21 million, non-cash adjustments of AUD2.68 million, and a net positive change in assets and liabilities of AUD1.18 million. Non-cash items primarily included depreciation and amortization, fair value gain on revaluation of investment in associate, share-based compensation expenses, share of loss of associate and unrealized foreign exchange gain or loss. The net positive change in assets and liabilities was primarily due to a decrease in trade receivables and inventories and an increase in payables and liabilities.

Net cash used in operating activities for the year ended December 31, 2019 was AUD3.52 million, comprising a loss before tax of AUD10.43 million, non-cash adjustments of AUD2.74 million, and a net positive change in assets and liabilities of AUD4.17 million. Non-cash items primarily included depreciation and amortization, impairment losses on receivables, share-based compensation expenses and share of loss of associate. The net positive change in assets and liabilities was primarily due to a decrease in receivables and prepayments offset by an increase in trade inventories.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2022 was AUD0.68 million, which was mainly attributable to our investments in plant, property and equipment. 

Net cash used in investing activities for the year ended December 31, 2021 was AUD0.02 million, which was mainly attributable to our investments in fixed assets and intangible assets.

Net cash used in investing activities for the year ended December 31, 2020 was AUD0.72 million, which was mainly attributable to our additional investment into the PENAO research program and the payments for patent costs associated with the ArboViroPlex rRT-PCR test kit license.

Net cash used in investing activities for the year ended December 31, 2019 was insignificant.

Financing Activities

Our primary financing activities consist of issuances of share capital, proceeds from borrowings and convertible notes and payments of finance lease liabilities.

During the six months ended June 30, 2022, we generated cash from financing activities of AUD0.53 million, primarily from the net proceeds from the issuance of new convertible notes of AUD0.69 million.

During the year ended December 31, 2021, we generated cash from financing activities of AUD2.12 million, primarily from the net proceeds from the issuance of convertible notes of AUD2.35 million in May 2021 which were later converted to Ordinary Shares in December 2021.

During the year ended December 31, 2020, we generated cash from financing activities of AUD3.89 million, primarily from private placements of AUD0.29 million and net proceeds from the issuance of convertible notes of AUD3.88 million, and partially offset by the payment of finance lease liabilities in the amount of AUD0.24 million.

During the year ended December 31, 2019, we generated cash from financing activities of AUD0.78 million, primarily from proceeds from the issuance of shares in the amount of AUD0.78 million and proceeds from borrowings in the amount of AUD0.12 million, partially offset by the payment of finance lease liabilities in the amount of AUD0.12 million.

Contractual Obligations

Operating leases represent lease agreements for our offices in China and USA which will expire from 2022 to 2027.

Contingent liabilities

PENAO Pty Ltd

In June 2019, Beroni signed a shareholder agreement to acquire 40% of the total share capital of PENAO Pty Ltd with NewSouth Innovations Pty Limited (NSI) owning the other 60%. NSI is the subsidiary arm of the University of New South Wales. PENAO Pty Ltd is a company recently set up to take over from Cystemix Pty Ltd the development of the anti-cancer drug called PENAO for treatment of cancer tumours. In January 2021, PENAO Pty Ltd and NSI entered into a licensing agreement wherein it purchased license rights to the development of PENAO drug. In December 2020, Beroni and NSI agreed to vary the original shareholding agreement whereby through the issuance of shares and convertible notes, Beroni and NSI owns 60% and 40% respectively of the share capital of PENAO Pty Ltd. Under the shareholding variation agreement, when new shares are issued to Beroni and NSI upon additional payments from the former, convertible notes will also be issued to NSI which will automatically be converted to shares upon the occurrence of key milestone events.

Beroni has so far paid AUD2.35 million to NSI for this investment and will pay a further AUD7.5 million over the next 2 years. In the event Beroni is not able to pay the additional AUD7.5 million, then PENAO Pty Ltd can issue on the same terms to NSI the shares which were to be issued to Beroni and Beroni will grant NSI an option to purchase all of the shares then held by Beroni for the lesser of the following and at NSI’s sole discretion:

Beroni Tianjin

A claim for RMB1.4 million (approximately AUD 280,000) compensation was lodged by the deceased estate of a shareholder in the later part of 2020 against Beroni Tianjin. The claimant challenged that the share subscription agreement entered into between the Chinese subsidiary and the deceased shareholder in the pre-IPO period before Beroni Group Limited was listed on the National Stock Exchange of Australia was not valid and thereby sought a return of the share subscription money. Beroni Tianjin has strongly defended against the claim and provided evidence that the share subscription agreement was valid and effective.

In December 2020, the Chinese court issued a judgement dismissing the validity of the claim. After the court ruling, in February 2021, the deceased’s estate lodged an appeal. The first appeal hearing was conducted on April 29, 2021. Subsequently in August 2021, the appeal court having considered the case, dismissed the ruling of the first trial and requested a retrial. The first retrial was held on June 2, 2022 and later on 4 July 2022, the Chinese court issued a judgement rejecting the claim again and ruling in favour of the Chinese subsidiary. The claimant has however lodged a further appeal and a court hearing was attended by Beroni on 18 November 2022. The outcome of this hearing is pending.

Medicine Plus

In June 2018, Beroni entered into an agreement to acquire 100% of Medicine Plus Co., Ltd (“Medicine Plus”), a pharmaceutical company based in Osaka, Japan for JPY1.178 billion (about AUD14.37 million) via a combination of cash and shares. In October 2018, Beroni issued 2,067,900 shares at AUD1.75 to the owners of Medicine Plus as partial settlement for the acquisition of the company. The original settlement price of AUD14.37 million agreed in June 2018 was increased by 10% to approximately AUD15.81 million in October 2018 as a result of the owners of Medicine Plus agreeing to extend the settlement date to April 2019. However, the cash portion of the settlement has yet to be completed and Beroni’s management still intends to raise cash from the capital markets to complete this acquisition. Due to the long delay in the settlement, the cost of the shares issued to the owners of Medicine Plus have been recognised as an expense in the income statement in the 2019 financial year. In the event that the acquisition can be completed, the shares expense will be reversed accordingly. Beroni has no other financial commitments with respect to this acquisition.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Currency Risk

We are subject to currency risk, as our income and expenditures are denominated in Renminbi (RMB), AUD, US$ and Japanese Yen (Yen). As such, we are exposed to exchange rate fluctuations between these currencies. We aim to match the cash inflows with cash outflows for each currency where possible, and we do not hedge the exposure. More than 90% of our current sales are received in RMB and our expenses are incurred mainly in RMB and AUD. If we increase sales of our products in other countries, we would expect to have significant increases in cash balances, revenues and sales and marketing expenses denominated in the currency of the other countries. At present, we expect the majority of our development and operating expenses to remain denominated in AUD and RMB.

We publish our consolidated financial statements in AUD. Revenue and expenses incurred in RMB, US$ and Yen will be translated into AUD when they are reported in our consolidated financial statements. As a result, any substantial future appreciation or decline of these currencies against the AUD could have a material effect on our revenue and profitability. As an example, if the RMB weakens by 10% against the AUD, cash and cash equivalents as of December 31, 2020 would decrease by AUD0.25 million, or 5.3%, and as of December 31, 2021 would decrease by AUD0.28 million, or 4.9%.

INDUSTRY

This prospectus includes information with respect to market and industry conditions and market share from third-party sources or based upon estimates using such sources when available. We believe that such information and estimates are reasonable and reliable. We also believe the information extracted from publications of third-party sources has been accurately reproduced. However, we have not independently verified any of the data from third-party sources. Similarly, our internal research is based upon our understanding of industry conditions, and such information has not been verified by any independent sources.

BUSINESS

Beroni Group Limited was incorporated in Australia on June 17, 2016. Beroni Group Limited is an international biotechnological company with business presence in Australia, China, Japan and the United States. Our overall strategic goal is to become a world’s leading enterprise in the biotechnology, life sciences, and environmental science industries. And our vision is to develop and commercialize innovative drugs and therapies to address significant unmet medical needs worldwide and to improve overall human health. To realize our vision, we have adopted a bifurcated business model, as follows:

Based on this approach, our business model is organized into four core businesses:

Strategy

Our vision is to develop and commercialize innovative drugs and therapies to address significant unmet medical needs worldwide and to improve overall human health. We aim to develop, manufacture and commercialize a portfolio of new drugs and therapies for treatment of cancer and infectious diseases using the latest technologies. The critical components of our strategy include:

Key product candidates focusing on cancer and infectious diseases treatments

Identify and develop additional product candidates through clinical development in order to expand our pipeline

Strengthen our competitive position in developing innovative drugs and therapies

Expand our e-commerce business by growing our portfolio of pharmaceutical and health products

Identify strategic merger, acquisition and alliance opportunities in new markets like EU and Middle East to expand our global footprint

Develop a culture of scientific excellence to drive future innovation

Our Competitive Strengths

Experienced management team

We have built a seasoned management team with industry experience and expertise. We work closely with some of the top scientists and universities in the world to develop new and innovative therapies and drugs.

International Business Presence

We have business presence in 4 countries namely USA, China, Japan and Australia. USA, China and Japan are the 3 largest biopharmaceutical markets in the world. While Australia may not be as large as the other 3 markets, it is home to some of the world’s leading scientists, physicians and healthcare professionals and boasts a world-class medical research and healthcare infrastructure. We have access to renowned scientists, universities and pharmaceutical companies in these markets and have already established several strategic alliances to enhance our clinical development, manufacturing and commercial capabilities.

Established E-commerce Distribution Network

We have established an e-commerce distribution network in Japan and China for sale of a diverse range of pharmaceutical and healthcare products. We hope to use future profits generated from the e-commerce business to support our ongoing edge clinical trials. We aim to expand our commercial business to other markets in the next few years and establish ourselves as a truly global enterprise.

Innovative Portfolio of Product Candidates

We are developing a robust pipeline of innovative product candidates addressing immuno-oncology and treatment of infectious diseases including COVID-19. We aim to seek commercial success in regenerative medicine and treatment of infectious diseases.

GMP Accreditation

Our ability to develop, control and optimize our manufacturing process for our existing products is a core strategic pillar. Beroni Tianjin operates a GMP (Good Manufacturing Practice) facility in China whereby we use it to manufacture one of our key anti-smoking products, Nicobloc. For products outsourced to third party manufacturers, Beroni Tianjin uses only those which have GMP-certified manufacturing facilities.

Strategic Alliances

We have established strategic alliances to provide clinical development, manufacturing and commercial capabilities. Our key alliances are highlighted below:

Our Products

The Company sells a wide range of pharmaceutical and healthcare products in China and Japan. In China, its principal activities are the sales of its smoking control product (“NicoBloc”), air purifier (“Fogibloc”), water filter, cosmetics, health supplements whilst in Japan, it sells stem-cell based cosmetic products and cell therapies.

In addition, Beroni owns license rights granted by the US-based Columbia University to distribute the FDA-approved diagnostic kit, CII-ArboViroPlex rRT-PCR assay. According to the FDA EUA approval list, this is the only ZIKA EUA approved detection kit that can simultaneously differentiate between ZIKA and three other viruses, which are either closely related to ZIKA or could cause similar symptoms. The Company is now in the process of commercializing the diagnostic kit.

During the coronavirus pandemic, two new products, the SARS-Cov-2 antibody test kit and the SARS-CoV-2 antigen test kit were developed and are being marketed to several countries, including the UK, EU and Japan. The test kits are CE certified.

Our other products are mostly classified as health foods or everyday use products, which have been registered with the relevant regulators in China or Japan. These products have also been certified by independent testing organizations attesting their quality and effectiveness.

Our pharmaceutical products are tabulated as follows:

* Abbreviations

SAMR = State Administration for Market Regulation (China)

NMPA = National Medical Products Administration (China)

GAC = General Administration of Customs (China)

BOC = Bureau of Commerce (China)

CCCM HPIE = China Chamber of Commerce for Import & Export of Medicines & Health Products

FDA EUR = FDA Emergency Use Authorization (USA)

CE Mark = CE Marking (European Union)

Beroni Tianjin has submitted its products to reputable and independent assessment companies for attestation of product quality. A test report is issued by the assessor after payment of the testing fee. Although such accreditation is not required for product commercialization, they are done to substantiate the product benefits claims.

Products shown above include NicoBloc, Beifeiqin, Beifeili, Beilemei, CII-ArboViroPlex rRT-PCR Assay, SARS-CoV-2 IgG/IgM Antibody Detection Kit, Kenbido Skin Repair Fluid and ODd Beroni Beauty Facial Mask

NicoBloc fluid is a smoking cessation/harm reduction product which stops tar and nicotine from reaching the smoker while the smoker continues to smoke normally. NicoBloc fluid (which was also previously called the “Accu Drop” and the “Rosen Fluid”) originated from a project started by the late William Rosen in the US in the late 1980’s. In 1995 the product was trialled in the Irish corporate sector as the Rosen Program and the first UK program started in 1998.

One drop can trap approximately 30%, two drops 60% and three drops approximately 90% of tar and nicotine. Using as directed, smokers are able to gradually wean themselves off nicotine addiction and reduce consumption until they are ready to stop smoking altogether without experiencing the severe withdrawal symptoms usually associated with quitting smoking.

Based on the results of a test program conducted by Beroni Tianjin in 2015 involving some 2,000 volunteer participants

NicoBloc fluid represents a unique product offering in the smoking cessation marketplace. Furthermore, it does not require the smoker to consume nicotine in order to cease or reduce their smoking habit but rather it delivers a stepped reduction (initially 33% less, then 66% and finally up to 99% less) in nicotine, a drug more addictive than cocaine through a patented 100% natural fluid formula. The reduction in tar is also critical, as tar is the primary cause of 90% of all lung cancers in the world as well as emphysema and other lung conditions. No other product offers this joint reduction proposition in the marketplace today.

Nicobloc fluid has the following advantages:

Our strategy is to position NicoBloc fluid as a fast-moving consumer good via both pricing and mass accessibility within the general retail environment. On a pricing front, NicoBloc fluid represents a cost-effective solution which is priced to significantly lower a target customer’s cost of trial and repeat. In terms of accessibility, the natural, non-drug, non-prescription nature of NicoBloc fluid facilitates mass distribution in general retail and pharmacies.

The feature comparability of nicotine replacement therapy is set out below.