MED EIBY Holding (BSME) F-1/ARegistration statement (foreign) (amended)

As filed with the U.S. Securities and Exchange Commission on December 20, 2024.

Registration No. 333-270018

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 7

TO

FORM F-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MED EIBY HOLDING CO., LIMITED

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

8th Floor, Yifang Building, No. 315 Shuangming Avenue,

Dongzhou Community, Guangming Street, Guangming District,

Shenzhen, Guangdong, People’s Republic of China, 518107

0755- 26416184
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

800-221-0102

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

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 an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company þ

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. ¨

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, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

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

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS, DATED DECEMBER 20, 2024

4,000,000 Ordinary Shares

MED EIBY HOLDING CO., LIMITED

This is an initial public offering, or the “offering,” of 4,000,000 ordinary shares, par value US$0.000002 per share (each, an “Ordinary Share,” and, collectively, the “Ordinary Shares”) of MED EIBY Holding Co., Limited, a Cayman Islands exempted company with limited liability whose principal place of business is in Shenzhen, the People’s Republic of China, on a firm commitment basis.

Throughout this prospectus, unless the context indicates otherwise, the terms “we,” “our,” and “our Company,” only refers to MED EIBY Holding Co., Limited, the Cayman Islands holding company; the term “the WFOE” or “our WFOE” refers to Beijing Agamemnon Technology Service Co., Ltd, a limited liability company organized under the laws of the People’s Republic of China (the “PRC”); the terms “Shenzhen Bestman,” or “the VIE” refers to Shenzhen Bestman Precision Instrument Co., Ltd., a limited liability company organized under the laws of the PRC; the term “Nanjing Yonglei” refers to Nanjing Yonglei Medical Products Import and Export Trade Co., Ltd., a PRC wholly-owned subsidiary of the VIE; the term “Shenzhen Xingcheng” refers to Zhiyun Technology Co., Ltd., a PRC wholly-owned subsidiary of the VIE, which company does not have any business operations as of the date of this prospectus; and the term “the PRC operating entities” refers, collectively, to the VIE and its operating subsidiary, Nanjing Yonglei.

Prior to this offering, there has been no public market for our Ordinary Shares. We expect that the initial public offering price of our Ordinary Shares will be in the range of $4.00 to $6.00 per Ordinary Shares. Currently no public market exists for the Ordinary Share.

We expect to list the Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “BSME.” At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq.

Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 23 to read about factors you should consider before buying our Ordinary Shares.

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. The Ordinary Shares offered in this offering are shares of our offshore holding company instead of shares of the VIE or its subsidiaries in China. As a holding company with no material operations of our own, the majority of our operations are conducted through the PRC operating entities. Due to PRC legal restrictions on foreign ownership in certain internet-related businesses we may explore and operate in the future, we do not have any equity ownership of the VIE. We control and receive the economic benefits of the business operations of the VIE and its subsidiaries through certain contractual arrangements (the “VIE Agreements”) which enable us to consolidate the financial results of the VIE and its subsidiaries in our consolidated financial statements for accounting purposes only because we met the conditions under the United States generally accepted accounting principles, or U.S. GAAP, to consolidate the VIE.

Under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes, because pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to our WFOE, while WFOE has the power to direct the activities of the VIE that can significantly impact the VIE’s economic performance, has the obligation to absorb the expected losses of the VIE, and has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and, ultimately, the Company. As such, the Company is deemed to be the primary beneficiary of the VIE for accounting purposes and must consolidate the VIE because it met the conditions under U.S. GAAP to consolidate the VIE.

The VIE structure involves unique risks to investors and the VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. Through the VIE Agreements among our WFOE, the VIE, and Shenzhen Bestman’s shareholders (the “VIE Shareholders”), we are regarded as the primary beneficiary of Shenzhen Bestman and its subsidiaries for accounting purposes, and, therefore, we are able to consolidate the financial results of Shenzhen Bestman and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

However, the VIE structure cannot completely replicate a foreign investment in China-based companies, as the investors will not, and may never directly, hold equity interests in the PRC operating entities. Instead, the VIE structure provides contractual exposure to foreign investment in us. The VIE Agreements may not be as effective as direct ownership in providing operational control over Shenzhen Bestman and its subsidiaries. See “Risk Factors — Risks Related to Our Corporate Structure — If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiaries, and our Ordinary Shares may decline in value or become worthless.” For a description of the VIE contractual arrangements, see “Corporate History and Structure — Our VIE Agreements.” As a result of our use of the VIE structure, you may never directly hold equity interests in the VIE and its subsidiaries.

Because we do not directly hold equity interests in the VIE and its subsidiaries, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including but not limited to, regulatory review of overseas listing of PRC companies through special purpose vehicles, and the validity and enforcement of our VIE Agreements. Further, given that PRC laws and regulations governing the validity of the VIE Agreements are uncertain and the relevant government authorities and the PRC courts have broad discretion in interpreting these laws and regulations, if the PRC government authorities or the PRC courts deems that our contractual arrangements with the VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. We are also subject to the risks and uncertainties about any future actions of the PRC government in this regard that could disallow the VIE structure, or deem the VIE Structure to be illegal, either in whole or in part, which would likely result in a loss of our consolidated VIE and cause a material change or disruption in our operations, and the value of our Ordinary Shares may depreciate significantly or become worthless. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. See “Risk Factors — Risks Relating to Doing Business in the PRC” and “Risk Factors — Risks Related to our Corporate Structure.”

All of the PRC operating entities’ operations are located in “mainland China,” that is, excluding the Hong Kong Special Administrative Region (“Hong Kong”) and the Macau Special Administrative Region (“Macau”). As at the date of this prospectus, we do not have any Macau subsidiary and our sole Hong Kong subsidiary, MED BESTMAN Holding Co., Limited (“HK Bestman”), has historically been and will continue to be designated as an investment holding company only and we do not intend it to conduct any business operations through such entity.

Hong Kong was established as a special administrative region of the PRC in accordance with Article 31 of the Constitution of the PRC. The Basic Law of the Hong Kong Special Administrative Region of the PRC (the “Basic Law”) was adopted and promulgated on April 4, 1990 and became effective on July 1, 1997, when the PRC resumed the exercise of sovereignty over Hong Kong. Pursuant to the Basic Law, Hong Kong is authorized by the National People’s Congress of the PRC to exercise a high degree of autonomy and enjoy executive, legislative, and independent judicial power, under the principle of “one country, two systems,” and the PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to national defense, foreign affairs, and other matters that are not within the scope of autonomy of Hong Kong). While the National People’s Congress of the PRC has the power to amend the Basic Law, the Basic Law also expressly provides that no amendment to the Basic Law shall contravene the established basic policies of the PRC regarding Hong Kong. As a result, national laws of the PRC not listed in Annex III of the Basic Law do not apply to our Hong Kong subsidiary, HK Bestman. However, there is no assurance that certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future, will not be applicable to HK Bestman due to change in the current political arrangements between mainland China and Hong Kong or other unforeseeable reasons. The application of such laws and regulations may have a material adverse impact on HK Bestman, as relevant authorities may impose fines and penalties upon HK Bestman, delay or restrict the repatriation of the proceeds from this offering into mainland China and Hong Kong, and any failure by us to fully comply with any such new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or in extreme cases, become worthless.

As of the date of this prospectus, no cash transfer nor transfer of other assets has occurred among our Company, our subsidiaries, and the consolidated VIE. As of the date of this prospectus, none of our subsidiaries or consolidated VIE have made any dividends or distributions to our Company. As of the date of this prospectus, neither we nor any of our subsidiaries have ever paid dividends or made distributions to U.S. investors. See “Prospectus Summary — Selected Consolidated Financial Schedule of Med Eiby Holding Co., Limited parent, VIE and Non-VIE.” We intend to retain most, if not all, of our available funds and any future earnings after this offering to the development and growth of our business. We do not expect to pay dividends or to distribute earnings or settle amounts owed under the VIE agreements in the foreseeable future after this offering. In the future, cash proceeds raised from overseas financing activities, including this offering, may be transferred by us to our WFOE via capital contribution or shareholder loans, as the case may be. However, any proceeds we transfer to our WFOE, either as a shareholder loan or as an increase in registered capital, are subject to approval by, registration with, or information reporting to, relevant governmental authorities in mainland China. Pursuant to the relevant PRC regulations on Foreign Invested Enterprises in China, capital contributions to our mainland China subsidiary are subject to the information report with the Ministry of Commerce, or MOFCOM, or its respective local branches and registration with a local bank authorized by the State Administration of Foreign Exchange, or the SAFE. In addition, any foreign loan procured by our WFOE cannot exceed statutory limits and is required to be registered with the SAFE or its respective local branches. Any medium or long-term loan to be provided by us to the VIE must be registered with the National Development and Reform Commission, or NDRC, and the SAFE or its local branches. Further, we are subject to governmental control of currency conversion and, in certain cases, the control of the remittance of currency out of China. As a result, such governmental control may limit our ability to utilize our revenues effectively. The approval by the SAFE is required to use cash generated from the operations of our mainland China subsidiary and VIE to pay off their respective debts in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside mainland China in a currency other than Renminbi. See “Risk Factors — Risks Related to Doing Business in China — PRC regulation of loans to and direct investment in the PRC operating entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of this offering, to make loans or additional capital contributions to our WFOE, which could materially and adversely affect our liquidity and our ability to fund and expand our business” and “Risk Factors — Risks Related to Doing Business in China — Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.”

In addition, our Ordinary Shares may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act (the “HFCAA”) if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable to inspect our auditors for three consecutive years beginning in 2022. Our auditor, Marcum Asia CPAs LLP, is headquartered in New York, New York, and has been inspected by the PCAOB on a regular basis, and was not included in the list of PCAOB Identified Firms in the PCAOB Determination Report issued in December 16, 2021. If trading in our Ordinary Shares is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares and trading in our Ordinary Shares could be prohibited. On August 26, 2022, China Securities Regulatory Commission, or the CSRC, the Ministry of Finance of the PRC (the “MOF”), and the PCAOB signed a Statement of Protocol (the “Protocol”), governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the U.S. Securities and Exchange Commission (the “SEC”), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 29, 2022, President Biden signed into law the Accelerating Holding Foreign Companies Accountable Act as a part of the legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”), amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiating new investigations, as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA, if necessary. See “Risk Factors — Risks Related to This Offering and the Ordinary Shares — Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.”

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 by the Chinese government expanding the categories of industries and companies whose foreign securities offerings are subject to government review 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. See “Risk Factors — Risks Related to Doing Business in China — There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. The Chinese government may choose to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.”

Our business is subject to various government regulations and regulatory interference in China. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Furthermore, recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas. The Chinese government recently 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 Chinese-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. Pursuant to 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 need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies have been emphasized. Subsequently, on December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures”, collectively with the Draft Administrative Provisions, the “Draft Rules Regarding Overseas Listing”), which stipulate that Chinese-based companies, or the issuer, shall fulfill the filing procedures after the issuer makes an application for initial public offering and listing in an overseas market, and certain overseas offering and listing such as those that constitute a threat to or endanger national security, as reviewed and determined by competent authorities under the State Council in accordance with law, may be prohibited under the Draft Rules Regarding Overseas Listing. On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to administrative penalties; (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies. Based on the foregoing, since we did not obtain the approvals from the SEC and Nasdaq for this offering and listing prior to March 31, 2023, the effective date of the Trial Measures, we are required to complete necessary filing procedures with the CSRC pursuant to the Trial Measures.

Furthermore, on February 24, 2023, the CSRC revised the Provisions on Strengthening the Management of Confidentiality and Archives Related to the Overseas Issuance of Securities and Overseas Listing by Domestic Companies which were issued in 2009, or the Archives Rules. The revised Archives Rules came into effect on March 31, 2023 together with the Trial Measures. As is consistent with the Trial Measures, the revised Archives Rules will expand their application to cover indirect overseas offering and listing, by stipulating that a domestic company which plans to publicly disclose or provide to relevant individuals or entities, including securities companies, securities service providers and overseas regulators, any documents and materials containing state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level. In addition, on December 28, 2021, the Cyberspace Administration of China published the Measures for Cybersecurity Review, or Cybersecurity Review Measures, which stipulate that if an operator has personal information of over one million users and intends to be listed in a foreign country, it must be subject to the cybersecurity review.

As of the date of this prospectus, except for the Trial Measures, we believe, without relying on the opinions of any legal counsels, neither we nor the PRC operating entities are directly subject to those regulatory actions or statements currently in effect, as neither we nor the PRC operating entities have implemented any monopolistic behaviors and, neither we nor the PRC operating entities possess personal information of more than one million users in our business operations, and our business does not involve the collection of data that affects or may affect national security, implicates cybersecurity, or involves any type of restricted industry, or involve any other types of restricted industry. However, since those regulatory actions or statements are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, and, if any, the potential impact such modified or new laws and regulations will have on our daily business operation, ability to accept foreign investments and listing of our securities on a U.S. or other foreign exchange.

As advised by Han Kun Law Offices, our PRC counsel, as of the date of this prospectus, (1) we are subject to the Trial Measures for filing procedures with the CSRC, since we did not obtain the approvals from SEC and Nasdaq for this offering and listing prior to March 31, 2023, the effective date of the Trial Measures; and (2) since these statements and regulatory actions by the PRC government are newly published and there exists uncertainty with respect to their requirements and implementation, it is highly uncertain what the potential impact such modified or new laws and regulations will have on our or the PRC operating entities’ daily business operation, the ability to accept foreign investments and listing on U.S. exchanges. As of the date of this prospectus, we have submitted the application with the CSRC for this offering, as required by the Trial Measures. The filing application is currently under CSRC’s review and we have not yet received CSRC’s approval, as of the date of this prospectus. This offering is contingent upon the approval from the CSRC. We cannot assure you that we will be able to complete such filings with the CSRC pursuant to the Trial Measures in a timely manner or even at all. Any failure by us to comply with such filing requirements under the Trial Measures may result in an order to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities.

The Standing Committee of the National People’s Congress (the “SCNPC”) or other PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that require our Company, the VIE or its subsidiary to obtain regulatory approval from Chinese authorities before listing in the U.S. Although as of the date of this prospectus, our Company, the VIE and its subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have any of them received any inquiry, notice or sanction in such respect, it is uncertain whether or when we might be required to obtain permission from any PRC governmental authority to list our shares overseas, and even if such permission is obtained, whether it will be later denied or rescinded, which could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors and could cause the value of our Ordinary Shares to significantly decline or be worthless. See “Risk Factors — Risks Related to Our Corporate Structure.”

We are an “emerging growth company” under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company.”

Following the completion of this offering, our founder, Mr. Yong Bai, will beneficially own 9,870,477 Ordinary Shares, representing 51.95% of the total voting power of our issued and outstanding share capital immediately following the completing of this offering. As such, we will be deemed to be a “controlled company” under Nasdaq listing rules 5615(c). However, even if we are deemed to be a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq listing rules. See “Risk Factors” and “Management — Controlled Company.”

This prospectus does not constitute, and there will not be, an offering of securities to the public in the Cayman Islands.

The Underwriter is selling 4,000,000 Ordinary Shares in this offering on a firm commitment basis. The Underwriter is obligated to take and pay for all of the Ordinary Shares if any such Ordinary Shares are taken. There is no over-allotment option granted to the Underwriter in connection with this offering.

The Underwriter expects to deliver the Ordinary Shares against payment in U.S. dollars to purchasers on or about         , 2025.

Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Prospectus dated         , 2025

TABLE OF CONTENTS

About this Prospectus

We and the Underwriter have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Ordinary Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. For the avoidance of doubt, no offer or invitation to subscribe for Ordinary Shares is made to the public in the Cayman Islands. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

Conventions that Apply to this Prospectus

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

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our Ordinary Shares discussed under “Risk Factors,” before deciding whether to buy our Ordinary Shares. This prospectus contains information from an industry report commissioned by us and prepared by Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. (Frost & Sullivan), an independent research firm, to provide information regarding our industry and market position in China.

Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented giving effect to a forward split of our ordinary shares at a ratio of 500-for-1 share and additional share issuances to our existing shareholders approved by our shareholders and board of directors on February 22, 2023.

Our Corporate Structure

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, the majority of our operations are conducted through the PRC operating entities in mainland China pursuant to the VIE Agreements. The VIE Agreements were entered into by and among our WFOE, the VIE, and the VIE’s shareholders (together the “VIE Shareholders,” and each a “VIE Shareholder”) and include the Powers of Attorney, Equity Pledge Agreement, Exclusive Business Cooperation Agreement, Exclusive Option Agreement, and a Spousal Consent Letter. Due to PRC legal restrictions on foreign ownership in certain internet-related businesses we may explore and operate in the future, we do not have any equity ownership of the VIE. We control and receive the economic benefits of the VIE’s business operations through the VIE Agreements, and we consolidate the VIE for accounting purposes only because we met the conditions under U.S. GAAP to consolidate the VIE. Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to our WFOE, while WFOE has the power to direct the activities of the VIE that can significantly impact the VIE’s economic performance, has the obligation to absorb the expected losses of the legal entity, and has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and, ultimately, the Company. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes and must consolidate the VIE. However, the VIE Agreements have not been tested in a court of law and may not be effective in providing control over the VIE. We are, therefore, subject to risks due to the uncertainty of the interpretation and application of the laws and regulations of the PRC regarding the VIE and the VIE structure. For a description of the VIE Agreements, see “Corporate History and Structure — Our VIE Agreements.” See also “Risk Factors – Risks Related to Our Corporate Structure —We rely on contractual arrangements with the VIE and the VIE Shareholders for a large portion of our business operations. These arrangements may not be as effective as direct ownership in providing operational control. Any failure by the VIE or the VIE Shareholders to perform their obligations under such contractual arrangements would have a material and adverse effect on our business.” and “Risk Factors — Risks Related to Our Corporate Structure — If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiaries, and our Ordinary Shares may decline in value or become worthless.”

Our Ordinary Shares in this offering are shares of our offshore holding company in the Cayman Islands instead of shares of the operating entities. The VIE structure provides contractual exposure to foreign investment in China-based companies where Chinese law prohibits direct foreign investment in the operating companies. As a result, you may never directly hold equity interests in the operating entities.

The following diagram illustrates our corporate structure, including our significant subsidiary, the VIE and its subsidiaries, as of the date of this prospectus and upon the completion of this offering based on proposed number of 4,000,000 Ordinary Shares being offered. For more detail on our corporate history, please refer to “Corporate History and Structure.”

As more stringent criteria have been imposed by the SEC and the PCAOB recently, our securities may be prohibited from trading if our auditor cannot be fully inspected. On December 16, 2021, the PCAOB issued its determination that the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, and the PCAOB included in the report of its determination a list of the accounting firms that are headquartered in mainland China or Hong Kong. This list does not include our auditor, Marcum Asia CPAs LLP. While our auditor is based in the U.S. and is registered with PCAOB and subject to PCAOB inspection, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause our securities to be delisted from the stock exchange. On August 26, 2022, CSRC, the MOF, and the PCAOB signed a Protocol, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 29, 2022, President Biden signed into law the Accelerating Holding Foreign Companies Accountable Act as a part of the Consolidated Appropriations Act, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiating new investigations, as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA, if necessary. See “Risk Factors — Risks Related to This Offering and the Ordinary Shares — Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.”

Risks associated with our corporate structure and VIE contractual arrangements

Because we do not directly hold equity interests in the VIE and its subsidiaries, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including but not limited to, regulatory review of overseas listing of PRC companies through special purpose vehicles, and the validity and enforcement of our VIE Agreements. We are also subject to the risks and uncertainties about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations, and the value of our Ordinary Shares may depreciate significantly or become worthless. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. See “Risk Factors — Risks Related to Our Corporate Structure — We rely on contractual arrangements with the VIE and the VIE Shareholders for a large portion of our business operations. These arrangements may not be as effective as direct ownership in providing operational control. Any failure by the VIE or the VIE Shareholders to perform their obligations under such contractual arrangements would have a material and adverse effect on our business.” and “Risk Factors — Risks Related to Our Corporate Structure — If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiaries, and our Ordinary Shares may decline in value or become worthless.”

We are the primary beneficiary of Shenzhen Bestman and its subsidiaries for accounting purposes, and, therefore, we are able to consolidate the financial results of Shenzhen Bestman and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. The contractual arrangements may not be as effective as direct ownership in providing operational control. For instance, the VIE and the VIE Shareholders could breach their contractual arrangements with us by, among other things, failing to conduct its operations in an acceptable manner or taking other actions that are detrimental to our interests. The VIE Shareholders may not act in the best interests of our Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the contractual arrangements with the VIE. In the event that the VIE or the VIE Shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. In addition, even if legal actions are taken to enforce such arrangements, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. See “Risk Factors — Risks Related to Our Corporate Structure — We rely on contractual arrangements with the VIE and the VIE Shareholders for a large portion of our business operations. These arrangements may not be as effective as direct ownership in providing operational control. Any failure by the VIE or the VIE Shareholders to perform their obligations under such contractual arrangements would have a material and adverse effect on our business.”

Our business is subject to various government regulations and regulatory interference in China. As of the date of this prospectus, except as disclosed in this prospectus and except for those permissions and approvals that would not be reasonably expected to have a material adverse effect on our business operation, the PRC operating entities have obtained all material permissions and approvals required by Chinese authorities for our business operation under the current applicable laws in effect, including (i) business licenses; (ii) PRC medical device production and operation licenses; (iii) Class I and II medical device qualifications, including record filings for Class I products and registration certificates for Class II products; (iv) internet drug information service qualification licenses; (v) foreign trade business operators registrations; (vi) medical device advertisement approvals; (vii) value-added telecommunications business permit (information service business (internet information service only)); and (viii) hygiene licenses for enterprises producing disinfection products and relevant record filings for such products. As of the date of this prospectus, the PRC operating entities have developed a mobile application named “WristAnkle,” and plan to launch vascular health management services to customers through such mobile app, which may be categorized as information service businesses. Shenzhen Bestman acquired 100% of the equity interests in Shenzhen Xingcheng on October 12, 2024, and Shenzhen Xingcheng acquired a value-added telecommunications business permit on August 8, 2024. As of the date of this prospectus, the PRC operating entities are in the process of testing the mobile app and improving its functions and features, and no vascular health management services are provided through the app, nor has revenue been generated from the app. As of the date of this prospectus, the PRC operating entities do not have a specific timeline as to the official launch of vascular health management services. See also “Corporate History and Structure.”

As advised by our PRC counsel, except for remaining uncertainties regarding whether we are subject to the cybersecurity review, other than those requisite for a domestic company in China to engage in the businesses similar to ours and those related to the Trial Measures, our Company, the VIE and its subsidiaries are not required to obtain any permission from Chinese governmental authorities, including the CSRC or any other governmental authorities that is required to approve our current business operations in China based on the laws and regulations currently in effect as of the date of this prospectus. However, if our Company, the VIE and its subsidiaries do not receive or maintain the approvals, or we inadvertently conclude that such approvals are not required, or applicable laws, regulations, or interpretations change such that our Company, the VIE and its subsidiaries are required to obtain approvals in the future, we may be subject to investigations by competent governmental authorities, fines or penalties, ordered to suspend our relevant operations and rectify any non-compliance, prohibited from engaging in relevant business or conducting any offering, and these risks could result in a material adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Furthermore, given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas, we cannot assure you we may receive or maintain applicable permissions, approvals with respect to the filing procedures for our operations and to offer the securities being registered to foreign investors. As of the date of this prospectus, our Company, the VIE and its subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have any of them received any inquiry, notice or sanction in such respect. It is uncertain whether or when we might be required to obtain permission from any PRC governmental authority to list our shares overseas, and even if such permission is obtained, whether it will be later denied or rescinded, which could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors and could cause the value of our Ordinary Shares to significantly decline or be worthless. See “Risk Factors — Risks Related to Our Corporate Structure — The SCNPC or PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that require us, our subsidiaries, the VIE or its subsidiary to obtain regulatory approval from Chinese authorities before or after listing in the U.S.” and “Risk Factors — Risks Related to Our Corporate Structure — If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiaries, and our Ordinary Shares may decline in value or become worthless.”

On December 24, 2021, the CSRC released the Draft Administrative Provisions and the Draft Filing Measures, both of which had a comment period that expired on January 23, 2022. The Draft Administrative Provisions and Draft Filing Measures regulate the administrative system, record-filing management, and other related rules in respect of the direct or indirect overseas issuance of listed and traded securities by “domestic enterprises”. The Draft Administrative Provisions specify that the CSRC has regulatory authority over the “overseas securities offering and listing by domestic enterprises”, and requires “domestic enterprises” to complete filing procedures with the CSRC if they wish to list overseas. On February 17, 2023, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC; any failure to comply with such filling procedures may result in administrative penalties, such as order to rectify, warnings, and fines. On February 24, 2023, the CSRC revised the Archives Rules issued in 2009. The revised Archives Rules came into effect on March 31, 2023. In the overseas listing activities of domestic companies, domestic companies, as well as securities companies and securities service institutions providing relevant securities services thereof, should establish a sound system of confidentiality and archival work, shall not disclose state secrets, or harm the state and public interests.

As advised by our PRC counsel, except for remaining uncertainties regarding whether we are subject to the cybersecurity review, as of the date of this prospectus and based on the laws and regulations currently in effect, we are not required to obtain any other permission from any PRC governmental authorities to offer securities to foreign investors, except that we are subject to the Trial Measures for filing procedures with the CSRC, since we did not obtain the approvals from SEC and Nasdaq for this offering and listing prior to March 31, 2023, the effective date of the Trial Measures. We have submitted the application with the CSRC for this offering, as required by the Trial Measures. The filing application is currently under CSRC’s review and we have not yet received CSRC’s approval, as of the date of this prospectus. This offering is contingent upon the approval from the CSRC. We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings, including this offering. As of the date of this prospectus, we have not received any inquiry, notice, warning, sanction or regulatory objection to this offering from the CSRC or other PRC governmental authorities. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities, including, but not limited to, the Trial Measures. Although we endeavor to comply with all the applicable laws and regulations, if the PRC operating entities (i) do not receive or maintain applicable permissions or approvals for our operation and to offer the securities being registered to foreign investors, or (ii) inadvertently conclude that such permissions or approvals are not required, or applicable laws, regulations, or interpretations change and the PRC operating entities are required to obtain permissions or approvals in the future, the PRC operating entities’ business operation may be materially affected and\or we may lose our consolidated VIE, which conducts the PRC operating entities’ manufacturing operations, holds significant assets and accounts for significant revenues, and have to modify such structure to comply with regulatory requirements. There can be no assurance that we or the PRC operating entities can achieve this without material disruption to the PRC operating entities’ business. Therefore, it may 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. See “Risk Factors — Risks Related to Our Corporate Structure — The SCNPC or PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that require us, our subsidiaries, the VIE or its subsidiary to obtain regulatory approval from Chinese authorities before or after listing in the U.S.,” “Risk Factors — Risks Related to Our Corporate Structure — Additional compliance procedures may be required in connection with this offering, due to the promulgation of the Trial Measures, the new filing-based administrative rules for overseas offering and listing by domestic companies in China, which could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors and could cause the value of our Ordinary Shares to significantly decline or become worthless,” and “Risk Factors — Risks Related to Our Corporate Structure — If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiaries, and our Ordinary Shares may decline in value or become worthless.”

As the Trial Measures and the revised Archives Rules were newly published, it remains unclear on how they will be interpreted, amended and implemented by CSRC and relevant PRC governmental authorities. Thus, substantial uncertainties exist with respect to their interpretation and implementation regarding such laws and regulations. Furthermore, we are required to complete the filing procedures with the CSRC in connection with this offering, and we cannot assure you that we will be able to complete such filing procedures with the CSRC pursuant to the Trial Measures in a timely manner, or at all. Any failure by us to comply with such filing procedures could impact our operations materially and adversely, and 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.

As of the date of this prospectus, except for our ongoing communications with the CSRC regarding the filing procedures under the Trail Measures, our Company, the VIE and its subsidiaries have not received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other PRC governmental authorities. However, it is still uncertain how the potential impact such modified or new laws and regulations will have on the daily operations of the PRC operating entities, the ability to accept foreign investments and list on a U.S. exchange.

Our Mission

Our mission is to become a world-leading medical device manufacturer and provide high-quality medical devices to protect human health.

Overview

The PRC operating entities are a provider and manufacturer of Class I and II medical devices. Specifically, Nanjing Yonglei exports Class I and II medical devices and Shenzhen Bestman manufactures Class I and II medical devices.

Shenzhen Bestman has Class I and II medical devices qualifications, including record filings for Class I products, registration certificates for Class II products, and medical device production and operation licenses in mainland China.

Class I, II, and III medical devices are defined by the National Medical Products Administration of China according to their risk levels under the Regulations on the Supervision and Administration of Medical Devices (2021 Revision), Article 6 of which sets out as follows:

The National Medical Products Administration of the State Council, or the NMPA, is responsible for developing the classification rules for medical devices and maintaining catalogues of classified devices. Based on information on the production, distribution and use of medical devices, the NMPA analyzes and evaluates the risk levels of medical devices and adjusts the classification rules and classification catalogues.

The PRC operating entities have provided hospitals, pharmacies, medical equipment companies, and individual customers for over 20 years with more than 567,000 Class I and Class II medical device products for domestic and international sales.

Shenzhen Bestman mainly manufactures and sells Class I and II medical devices under its own brands. Specifically, Shenzhen Bestman mainly focuses on the manufacturing, sales and distributions of its own-produced medical devices, such as fetal dopplers, fetal/maternal monitors, ultrasonic vascular doppler detectors, vine finders, and feeding pumps, etc.

Nanjing Yonglei mainly sells Class I and II medical devices manufactured by Shenzhen Bestman and other medical devices sourced from other Chinese manufacturers to its overseas customers. Specifically, Nanjing Yonglei focuses on exporting medical devices.   

The PRC operating entities sell their products both domestically and internationally. Besides significant domestic sales in China, the PRC operating entities’ export sales have expanded to more than 100 countries across the world. In 2003, Shenzhen Bestman obtained an ISO-9001 certificate and, in 2005, it received an ISO-13485 certificate. As of the date of this prospectus, both the ISO-9001 and ISO-13485 certificates are effective. The current effective ISO-13485 certificate will expire on September 27, 2024, and the current effective ISO-9001 certificate will expire on September 14, 2027.

In addition, Shenzhen Bestman’s product, fetal doppler (models: BF-500B, BF-500+, and BF500++), received United States Food and Drug Administration’s, or the FDA’s, approvals in 2010. The most recent registration renewal was in October 2022 and will be valid through December 31, 2023.

Our Sales Ecosystem

The PRC operating entities’ distribution network covers major global markets. Internationally, the PRC operating entities mainly export medical devices through exporting distributors. Currently, the PRC operating entities cooperate with 1,646 exporting distributors, who are responsible for distributing their products to end users across the world.

Our Revenue Model

The PRC operating entities generate revenues through: 1) manufacturing and sales of Class I and II medical devices under their own brands, i.e. the brands owned by Shenzhen Bestman; and 2) resales of Class I, II and III medical devices sourced from other manufacturers. For the fiscal year ended June 30, 2024, the PRC operating entities recognized $3,280,403 in revenues, of which Shenzhen Bestman’s own brand sales accounted for 38%, and the resales of sourced medical devices from other manufactures accounted for 62%. For the fiscal year ended June 30, 2023, the PRC operating entities recognized $3,319,339 in revenues, of which Shenzhen Bestman’s own brand sales accounted for 50%, and the resales of sourced medical devices from other manufactures accounted for 50%.

The PRC operating entities’ medical devices reach end users both domestically and internationally. For fiscal years ended June 30, 2024, our total sales to domestic direct end users and domestic distributor customers accounted for 27% of our revenues. For the fiscal year ended June 30, 2024, our sales to overseas distributing customers accounted for 73% of our revenues. For the fiscal year ended June 30, 2023, our total sales to domestic direct end users and domestic distributor customers accounted for 40% of our revenues. For the fiscal year ended June 30, 2023, our sales to overseas distributing customers accounted for 60% of our revenues.

The PRC operating entities’ overseas distributors are mainly from Cameroon and Senegal. For the fiscal year ended June 30, 2024, revenue contributed by distributors from Cameroon accounted for 24%, and revenue contributed by distributors from Senegal accounted for 17%. For the fiscal year ended June 30, 2023, revenue contributed by distributors from Cameroon accounted for 24%, revenue contributed by distributors from Senegal accounted for 12%. Nigeria used to be one of our main sources of overseas distributors. But during the fiscal year ended June 30, 2024, there were only less than 10% of our revenue contributed by the distributors there.

The PRC operating entities sell medical devices through their direct sales force, including ecommerce platforms, and distributors. For the fiscal year ended June 30, 2024, the PRC operating entities’ sales through direct sales channels accounted for 3% of our revenues, and the sales through distributors accounted for 97% of our revenue, of which domestic distributors accounted for 24%, and exporting distributors accounted for 73% of our revenues. For the fiscal year ended June 30, 2023, the PRC operating entities’ sales through direct sales channels accounted for 4% of our revenues, and the PRC operating entities’ sales through distributors accounted for 96% of our revenues, of which domestic distributors accounted for 36%, and exporting distributors accounted for 60% of our revenues. 

Competitive Strengths

We believe that the following strengths contribute to our success and are the differentiating factors that set us apart from our peers:

Our Growth Strategies

We will continue to adhere to our business principle of providing high-quality and safe products to our consumers. We believe that our pursuit of this goal will lead to sustainable growth driven by our capacity expansion based on market demand, enabling us to solidify our position in the industry, and create long-term value for shareholders and employees. We intend to pursue the following strategies:

Our Securities

On February 22, 2023, our shareholders and board of directors approved a forward split of our outstanding Ordinary Shares at a ratio of 500-for-1 share. Unless otherwise indicated, all references to Ordinary Shares, options to purchase Ordinary Shares, share data, per share data, and related information have been retroactively adjusted, where applicable, in this prospectus to reflect the forward split of our Ordinary Shares and the additional share issuances to our existing shareholders as if they had occurred at the beginning of the earlier period presented.

On April 2, 2024, our board of directors approved a share allotment of an aggregate of 2,319,000 Ordinary Shares to a total of 13 shareholders. See “Description of Share Capital — History of Share Capital” and “Item 7 — Recent Sales of Unregistered Securities.”

Summary of Significant Risk Factors

An investment in our Ordinary Shares is subject to a number of risks, including risks relating to the business and industry of the PRC operating entities, risks related to our corporate structure, risks related to doing business in China, and risks related to our Ordinary Shares and this offering. You should carefully consider all of the information in this prospectus before making an investment in the Ordinary Shares. The following list summarizes some, but not all, of these risks. Please read the information in the section titled “Risk Factors” for a more thorough description of these and other risks. These risks are discussed more fully in the section titled “Risk Factors” beginning on page 23 of this prospectus.

Risks Related to the Business and Industry of the PRC Operating Entities

Risks and uncertainties related to the business and industry of the PRC operating entities include, but are not limited to, the following. For more detailed discussion of these risks, see “Risk Factors — Risks Related to the Business and Industry of the PRC Operating Entities” from pages 24 to 41.

Risks Related to Our Corporate Structure

We are also subject to risks and uncertainties related to our corporate structure, including, but not limited to, the following. For a more detailed discussion, see “Risk Factors — Risks Related to Our Corporate Structure” from pages 41 to 48.

Risks Related to Doing Business in China

Our PRC operating entities are based in China and have substantially all of their operations in China, and therefore, we face risks and uncertainties relating to doing business in the PRC in general, including, but not limited to, the following. For a more detailed discussion, see “Risk Factors — Risks Related to Doing Business in China” from pages 49 to 63.

Risks Related to the Ordinary Shares and This Offering

In addition to the risks described above, we are subject to general risks and uncertainties relating to this offering and the trading market, including, but not limited to, the following. For a more detailed discussion, see “Risk Factors — Related to the Ordinary Shares and This Offering” from pages 63 to 70.

In addition, we face risks and uncertainties related to our corporate structure, including risks associated with our contractual relationship with Shenzhen Bestman, the VIE, which is based on contractual arrangements rather than equity ownership.

We also face other challenges, risks and uncertainties that may materially adversely affect our business, financial condition, results of operations and prospects. You should consider the risks discussed in “Risk Factors” and elsewhere in this prospectus before investing in our Ordinary Shares.

Our VIE Agreements

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, the majority of our operations are conducted through the PRC operating entities in China pursuant to the VIE Agreements. The VIE Agreements were entered into by and among our WFOE, the VIE, and the VIE’s shareholders and include the Powers of Attorney, an Equity Pledge Agreement, an Exclusive Business Cooperation Agreement, an Exclusive Option Agreement, and a Spousal Consent Letter. Due to PRC legal restrictions on foreign ownership in certain internet-related businesses we may explore and operate in the future, we do not have any equity ownership of the VIE. We control and receive the economic benefits of the VIE’s business operations through the VIE Agreements, and we consolidate the VIE for accounting purposes only because we met the conditions under U.S. GAAP to consolidate the VIE. Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to our WFOE, while WFOE has the power to direct the activities of the VIE that can significantly impact the VIE’s economic performance, has the obligation to absorb the expected losses of the VIE, and has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and ultimately, the Company. As such, under the U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes and must consolidate the VIE. We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and, as a result, the value of our Ordinary Shares may depreciate significantly or become worthless. For a description of our corporate structure and VIE contractual arrangements, see “Corporate History and Structure.” See also “Risk Factors – Risks Related to Our Corporate Structure.”

The following is a summary of the VIE Agreements.

Powers of Attorney. Under the Powers of Attorney, dated January 28, 2022, executed by each VIE Shareholder, accepted by our WFOE and acknowledged by the VIE, each of the VIE Shareholder irrevocably authorized our WFOE or its designee, to (i) convene, hold and attend shareholders’ meetings of the VIE, (ii) exercise all voting rights of the VIE Shareholder with respect to all matters to be discussed and voted on in the shareholders’ meetings of the VIE, (iii) exercise all voting rights of the VIE Shareholder under the PRC laws promulgated from time to time, and (iv) exercise all voting rights of the VIE Shareholder in accordance with law and the articles of association of the VIE. The powers of attorney will remain effective until the shareholders are no longer registered VIE Shareholders.

Equity Pledge Agreement. On January 28, 2022, the VIE Shareholders and our WFOE entered into an equity pledge agreement. Under this agreement, the VIE Shareholders pledged their equity interests in the VIE to our WFOE to secure the performance of their obligations under the exclusive option agreement and the power of attorney, and the VIE’s payment obligations under the exclusive business cooperation agreement as described below. Without our WFOE’s prior written consent, the VIE Shareholders shall not transfer the equity interests pledged thereunder or create any other pledge or encumbrance on such equity interests during the term of the equity interest pledge agreement. The equity interest pledge agreements remain effective unless otherwise terminated by our WFOE in the event of material breach by the VIE, or terminated pursuant to other agreements entered into among all parties to the Equity Pledge Agreement.

Spousal Consent. The spouse of Mr. Huaye Bai agreed, via spousal consent, to the execution of the “Transaction Documents” which consist of: (a) an Equity Pledge Agreement entered into by and between our WFOE and the VIE Shareholders; (b) an Exclusive Option Agreement entered into by and among the VIE Shareholders, the VIE, and our WFOE; (c) the Powers of Attorney issued to our WFOE, and the disposal of the operating rights or the assets for the business of Shenzhen Bestman held by Mr. Huaye Bai and registered in his name.

The spouse of Mr. Huaye Bai further undertakes not to make any assertions in connection with the operating rights and assets of Shenzhen Bestman which are held by Mr. Huaye Bai. The spouse confirms that Mr. Huaye Bai can perform his obligations under the Transaction Documents and further amend or terminate the Transaction Documents without her authorization or consent. The spouse undertakes to execute all necessary documents and take all necessary actions to ensure appropriate performance of the Transaction Documents.

The spouse of Mr. Huaye Bai also undertakes that if she obtains any operating rights and assets of Shenzhen Bestman which are held by Mr. Huaye Bai for any reasons, she shall be bound by the Transaction Documents entered into between Mr. Huaye Bai and our WFOE (as amended time to time) and comply with the obligations thereunder as an operator of Shenzhen Bestman. For this purpose, upon our WFOE’s request, she shall sign a series of written documents in substantially the same format and content as the Transaction Documents (as amended from time to time).

Exclusive Business Cooperation Agreement. On January 28, 2022, the VIE and our WFOE entered into an exclusive service agreement (the “Exclusive Business Cooperation Agreement”), pursuant to which agreement our WFOE will be the exclusive provider of services and support required by the VIE, including technical support and marketing services, services related to the development and manufacturing of medical devices, information technology and consulting services, the development, maintenance and update of computer system, hardware and database. Without our WFOE’s written consent, the VIE shall not accept any technology consulting and services covered by the Exclusive Business Cooperation Agreement from any third party. The VIE agrees to pay service fees to our WFOE on annual basis. The service fees for each year shall consist of a management fee and a fee for services provided, which shall be reasonably determined by our WFOE pursuant to the factors set out in the Exclusive Business Cooperation, such as the complexity and difficulty of the services provided by our WFOE, seniority of and time consumed by the employees of our WFOE, specific contents, scope and value of the services provided by our WFOE, the market price of the same type of services, and operation conditions of the VIE. Also, the amount of services fees may be set forth in the relevant contracts separately executed by the VIE and our WFOE. If our WFOE transfers or licenses technology to the VIE, develops software or other technology entrusted by the VIE, or leases equipment or properties to the VIE, then the technology transfer price, license price, development fees or rent shall be determined by our WFOE and the VIE separately based on the actual situations and/or set forth in the relevant contracts separately executed by the VIE and WFOE. The Exclusive Business Cooperation Agreement will remain effective for 30 years from the date of its execution and will automatically be extended for another 30 years upon the initial expiration date, unless otherwise terminated by our WFOE on such expiration date upon prior written notice or earlier terminated pursuant to other agreements entered into among all parties to the Exclusive Business Cooperation Agreement.

Exclusive Option Agreement. On January 28, 2022, the VIE Shareholders, the VIE and our WFOE entered into an exclusive option agreement (the “Exclusive Option Agreement), pursuant to which the VIE Shareholders granted our WFOE an irrevocable and exclusive right to purchase, or designate one or more persons to purchase, at its discretion, all or part of the equity interests in the VIE held by the VIE Shareholders for RMB10 (the “Base Price”), which Base Price was calculated on pro rata basis in the event of purchasing part of the equity interests. If the lowest price permitted under PRC law exceeds the Base Price, the amount exceeding the Base Price shall be promptly donated by the VIE Shareholders to our WFOE or any other person designated by our WFOE. The Exclusive Option Agreement further provides that the VIE Shareholders shall not dispose of or encumber any of their equity interests in the VIE without the prior written consent of our WFOE, and the VIE shall not dispose of or transfer any of its assets or income or distribute any dividends to the VIE Shareholders in any manner. The Exclusive Option Agreement will remain effective unless the equity interests held by its shareholders have been transferred or assigned to WFOE or any other person designated by WFOE.

In the opinion of Han Kun Law Offices, our PRC legal counsel:

However, we have been advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. Accordingly, the PRC regulatory authorities may take a view that is contrary to, or otherwise different from, the above opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to VIE structure will be adopted or if adopted, what they would provide. PRC laws and regulations governing the validity of the VIE Agreements are uncertain and the relevant government authorities have broad discretion in interpreting these laws and regulations. See “Risk Factors — Risks Related to Our Corporate Structure — We rely on contractual arrangements with the VIE and the VIE Shareholders for a large portion of our business operations. These arrangements may not be as effective as direct ownership in providing operational control. Any failure by the VIE or the VIE Shareholders to perform their obligations under such contractual arrangements would have a material and adverse effect on our business” and “Risk Factors — Risks Related to Our Corporate Structure — If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiaries, and our Ordinary Shares may decline in value or become worthless.”

Transfer of Cash or Assets

Dividend Distributions

As of the date of this prospectus, no cash transfer or transfer of other assets have occurred between our Company, our subsidiaries, and consolidated VIE. As of the date of this prospectus, none of our subsidiaries or consolidated VIE have made any dividends or distributions to our Company. As of the date of this prospectus, neither we nor any of our subsidiaries have ever paid dividends or made distributions to U.S. investors. We intend to retain most, if not all, of our available funds and any future earnings after this offering to the development and growth of our business. We do not expect to pay dividends in the foreseeable future after this offering. In the future, cash proceeds raised from overseas financing activities, including this offering, may be transferred by us to our WFOE via capital contribution or shareholder loans, as the case may be.  

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will rely on dividends and other distributions on equity from the VIE to our WFOE in accordance with the VIE agreements for cash requirements, including the funds necessary to pay dividends and other cash contributions to our shareholders.

According to the Foreign Investment Law of the PRC and its implementing rules, which jointly established the legal framework for the administration of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into or out of China its contributions, profits, capital earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any foreign currency, and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency. According to the Company Law of the PRC and other Chinese laws and regulations, our WFOE may pay dividends only out of its respective accumulated profits as determined in accordance with Chinese accounting standards and regulations. In addition, our WFOE is required to set aside at least 10% of its accumulated after-tax profits, if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Where the statutory reserve fund is insufficient to cover any loss our WFOE incurred in the previous financial year, its current financial year’s accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be distributed to us as dividends. At its discretion, our WFOE may allocate a portion of its after-tax profits based on Chinese accounting standards to a discretionary reserve fund. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

Renminbi is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of our WFOE to use its potential future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability of our WFOE to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The renminbi is currently convertible under the “current account,” which includes dividends and trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and foreign currency debt, including loans we may secure for our onshore subsidiary. Currently, our WFOE may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the State Administration of Foreign Exchange of China (“SAFE”) by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by SAFE for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on currency exchange may limit our ability to utilize revenues generated in renminbi to fund our business activities outside of China or pay dividends in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries. See “Risk Factors — Risks Related to Doing Business in China — We may rely on dividends and other distributions on equity paid by our WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of our WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business” for a detailed discussion of the Chinese legal restrictions on the payment of dividends and our ability to transfer cash within our organization. In addition, if we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and, as a result, may be subject to PRC withholding tax at a rate of up to 10.0%.

In order for us to pay dividends to our shareholders, we will rely on payments made from the VIE to our WFOE in accordance with the VIE arrangements, and the distribution of payments from our WFOE to HK Bestman, and in turn to Heketuoer BVI and finally to the Company as dividends. Certain payments from the VIE to our WFOE are subject to PRC taxes, including VAT.

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a mainland China project. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in mainland China project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our WFOE to HK Bestman. As of the date of this prospectus, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. HK Bestman intends to apply for the tax resident certificate when our WFOE plans to declare and pay dividends to HK Bestman. See “Risk Factors — Risks Related to Doing Business in China — We may rely on dividends and other distributions on equity paid by our WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of our WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.”

In addition, Heketuoer BVI may be considered a non-resident enterprise for tax purposes, so that any dividends our Hong Kong subsidiary pays to Heketuoer BVI may be regarded as Hong Kong-sourced income and as a result may be subject to Hong Kong taxation law. See “Taxation — Hong Kong Taxation.”

Selected Consolidated Financial Schedule of Med Eiby Holding Co., Limited parent, VIE and Non-VIE

The following tables present selected consolidated financial information of Med Eiby Holding Co., Limited, Non-VIE subsidiaries, WFOE and VIE and Nanjing Yonglei for the fiscal year ended June 30, 2024 and 2023. Non-VIE subsidiaries include Heketuoer BVI, HK Bestman and Xuan Wu Holding.

SELECTED CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION

SELECTED CONSOLIDATED BALANCE SHEET INFORMATION

SELECTED CONSOLIDATED STATEMENTS OF CASH FLOWS INFOMRATION

Implications of Being an Emerging Growth Company

As a company with less than US$1.235 billion in revenues during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As long as we remain an emerging growth company, we may rely on exemptions from some of the reporting requirements applicable to public companies that are not emerging growth companies. In particular, as an emerging growth company, we:

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth company. The JOBS Act provides that we would cease to be an “emerging growth company” at the end of the fiscal year in which the fifth anniversary of our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, herein referred to as the Securities Act, occurred, if we have more than $1.235 billion in annual revenues, have more than $700 million in market value of our Ordinary Share held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

Coronavirus (COVID-19) Update 

On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the outbreak of the novel strain of coronavirus, later named COVID-19, a “Public Health Emergency of International Concern (PHEIC),” and later on March 11, 2020, a global “pandemic.” The COVID-19 pandemic led governments across the globe to impose a series of measures intended to contain its spread, including border closures, travel bans, quarantine measures, social distancing, and restrictions on business operations and large gatherings. From 2020 to the middle of 2022, COVID-19 vaccination programs have been greatly promoted around the globe, however several types of COVID-19 variants emerged in different parts of the world and caused temporary lockdowns. Restrictions had been re-imposed from time to time in certain cities to combat sporadic outbreaks of COVID-19 in the PRC from early 2020 through December 2022. For example, in early 2022, the Omicron variant of COVID-19 was identified in China, especially in Shenzhen and Shanghai city, Jilin Province and Beijing, where strict lockdowns were imposed. In addition, in the second half of 2022, some cities, including Guangzhou, Shenzhen and Beijing, remained under lockdown from time to time due to the spread of Omicron and the zero-COVID measures taken by the local governments.

Due to the rapidly expanding nature of COVID-19 pandemic and the zero-COVID measures taken by the local governments from early 2020 through December 2022, and because substantially all of the PRC operating entities’ business operations and workforce are concentrated in the PRC, we believe that COVID-19 pandemic has impacted, and will likely continue to impact, the PRC operating entities’ business, results of operations, and financial condition. The potential further impact on the results of operations will also depend on future developments and information that may emerge regarding the duration and severity of COVID-19 and the actions taken by governmental authorities and other entities to contain COVID-19 or to mitigate its impacts, almost all of which are beyond our control.

The impacts of COVID-19 on the PRC operating entities’ business, financial condition, and results of operations as of the date of this prospectus include, but are not limited to, the following:

The PRC operating entities’ operations may be further affected by COVID-19. China continuously optimized and adjusted COVID-19 prevention and control measures with the aim of protecting health, and lifted most of the travel restrictions and quarantine requirements in December 2022. The selling prices and the sales volume of epidemic prevention products decreased accordingly, due to the recovery from COVID-19 overseas and the decrease in the demand of pandemic-related products. As of the date of this prospectus, the impacts of COVID-19 on the supply chain have diminished, which benefits the PRC operating entities’ export business. However, in the meantime, the United States has been raising interest rates, resulting in an appreciation of U.S. dollars. Consequently, there has been a decline in the PRC operating entities’ customer purchases, as the export purchase prices are denominated in U.S. dollars. In addition, COVID-19 has resulted in volatility in some global financial markets, which could increase the Company’s cost of capital or limit its ability to access financing when needed. Broader impacts of the COVID-19 also include inflationary pressure, which may impact the costs of the PRC operating entities’ manufacturing of products. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Major Factors Affecting Our Results of Operations.” The extent to which COVID-19 impacts the PRC operating entities’ business in the future will depend on future developments and further government actions. Any future impact on the results of operations of the PRC operating entities will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by government authorities and other entities to contain the spread or treat its impact, almost all of which are beyond our and the PRC operating entities’ control. Given the general slowdown in economic conditions globally and volatility in the capital markets, we cannot assure you that we will be able to maintain the growth rate we have experienced or projected. We will continue to closely monitor the situation throughout 2024 and beyond.

Foreign Private Issuer Status

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

Corporate Information

The PRC operating entities’ principal executive offices are located at 8th Floor, Yifang Building, No.315 Shuangming Avenue, Dongzhou Community, Guangming Street, Guangming District, Shenzhen, Guangdong, the People’s Republic of China, 518107. Our telephone number at this address is +86 (755) 26416184. Our registered office in the Cayman Islands is located at the offices of Tricor Services (Cayman Islands) Limited, Second Floor, Century Yard, Cricket Square, P.O. Box 902, Grand Cayman, KY1-1103, Cayman Islands, and the phone number of our registered office is +1 (345) 743 1702.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our corporate website is https://www.szbestman.com. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Cogency Global Inc., 122 East 42nd Street, 18th Floor, New York, NY 10168.

Notes on Prospectus Presentation

We have made rounding adjustments to reach some of the figures included in this prospectus. Consequently, numerical figures shown as totals in some tables may not be arithmetic aggregations of the figures that precede them.

Our business is conducted by the VIE, Shenzhen Bestman and its subsidiary, Nanjing Yonglei, in the PRC, using Renminbi, or RMB, the currency of mainland China. We do not own any equity shares in the VIE, and consolidate the VIE for accounting purposes only because we met the conditions under U.S. GAAP to consolidate the VIE.  For a description of the business of our consolidated VIE and its subsidiaries and a summary of the contractual arrangements, see “Corporate History and Structure — Our VIE Agreements.” See also “Risk Factors — Risks Related to Our Corporate Structure” for certain risks related to the contractual arrangements. 

Our consolidated financial statements are presented in U.S. dollars. In this prospectus, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars).

For clarification, this prospectus follows the English naming convention of first name followed by last name, regardless of whether an individual’s name is Chinese or English. For example, the name of our Chairman will be presented as “Yong Bai,” even though, in Chinese, Mr. Yong Bai’s name is presented as “Bai Yong.”

THE OFFERING

RISK FACTORS

An investment in our Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Ordinary Shares, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of our Ordinary Shares to decline, resulting in a loss of all or part of your investment. The risks described below and in the documents referenced above are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in our Ordinary Shares if you can bear the risk of loss of your entire investment.

Risks Related to the Business and Industry of the PRC Operating Entities

The PRC operating entities’ operating history may not be indicative of their future growth or financial results and they may not be able to sustain their historical growth rates.

The PRC operating entities’ operating history may not be indicative of their future growth or financial results. There is no assurance that the PRC operating entities will be able to grow their revenues in future periods. Our operating entities’ growth rates may decline for any number of possible reasons, and some of them are beyond our operating entities’ control, including decreasing customer demand, increasing competition, declining growth of the medical device industry in general, emergence of alternative business models, or changes in government policies or general economic conditions. Our operating entities will continue to expand their sales network and product offerings to bring greater convenience to their customers and to increase their customer base and number of transactions. However, the execution of our operating entities’ expansion plan is subject to uncertainty and the total number of items sold and number of transacting customers may not grow at the rate our operating entities expect for the reasons stated above. If our operating entities’ growth rates decline, investors’ perceptions of our operating entities’ business and prospects may be adversely affected and the market price of our common stock could decline accordingly.

Failure to maintain the quality and safety of the PRC operating entities’ products could have a material and adverse effect on our financial condition and results of operations.

The quality and safety of the PRC operating entities’ products, whether self-manufactured and out-sourced, are critical to the PRC operating entities’ success. As a medical device manufacturer with a history of over 20 years, quality and safety are always the PRC operating entities’ core values as medical devices are directly used for human body and thus essential to the human health. The PRC operating entities pay close attention to quality control, monitoring each step in the process from procurement to production and from warehouse to delivery. Yet, maintaining consistent product quality depends significantly on the effectiveness of the PRC operating entities’ quality control system, which in turn depends on a number of factors, including, but not limited to, the design of the PRC operating entities’ quality control system, employee training to ensure that the PRC operating entities’ employees adhere to and implement such quality control policies and procedures, and the effectiveness of monitoring any potential violation of such quality control policies and procedures. There can be no assurance that the PRC operating entities’ quality control system will always prove to be effective.

In addition, the quality of the products or services provided by the PRC operating entities’ suppliers or business partners is subject to factors beyond the PRC operating entities’ control, including the effectiveness and the efficiency of their quality control systems, among others. There can be no assurance that the PRC operating entities’ suppliers or business partners may always be able to adopt appropriate quality control systems and meet the PRC operating entities’ stringent quality control requirements in respect of the products or services they provide. Any failure of the PRC operating entities’ suppliers or business partners to provide satisfactory products or services could harm the PRC operating entities’ reputation and adversely impact the PRC operating entities’ operations. In addition, the PRC operating entities may be unable to receive sufficient compensation from suppliers and business partners for the losses caused by them.

As of the date of this prospectus, the PRC operating entities are unaware of any material quality deficiencies with respect to their operations or any of their suppliers or business partners.

Any failure to maintain effective quality control over the PRC operating entities’ products could materially adversely affect the PRC operating entities’ business.

The quality of the PRC operating entities’ products is critical to the success of the PRC operating entities’ business, and such quality, to a large extent, depends on the effectiveness of the PRC operating entities’ quality control system. The PRC operating entities have developed a rigorous quality control system that enables them to monitor each stage of the production process.

However, the PRC operating entities still cannot eliminate all risks of errors, defects or failures. The PRC operating entities may fail to detect or cure defects as a result of a number of factors, many of which are outside their control, including, but not limited to:

Failure to detect quality defects in the PRC operating entities’ products could result in patient injury, customer dissatisfaction, or other problems that could seriously harm the PRC operating entities’ reputation and business, expose the PRC operating entities to liability, and adversely affect our revenues and profitability. Relevant PRC laws and regulations were formulated to strengthen the administration of rules pertaining to product quality, as well as to clarify the rules on product liability, protect consumers and maintain social and economic order. Products offered for sales in China must meet the relevant quality and safety standards. Violations of state or industrial standards for health, safety and any other related violations may result in civil liabilities and penalties, such as compensation for damages, fines, suspension or termination of business, as well as the confiscation of products illegally produced for sales and the sales proceeds of such products.

On January 9, 2018 and September 6, 2021, Shenzhen Bestman was fined RMB30,000 (approximately $4,661) and RMB35,000 (approximately $5,462), respectively, by the Shenzhen Administration for Market Regulation, for producing medical devices that did not fully meet quality standard requirements. In December 2018, Shenzhen Bestman was ordered by the Guangdong Provincial Drug Administration to stop production for rectification between December 2018 and February 2019, due to non-compliance with medical device quality specifications, and was fined RMB30,000 (approximately $4,661) by the Shenzhen Administration for Market Regulation for conducting manufacturing activities of medical devices during the above period. As of the date of the prospectus, Shenzhen Bestman has paid the monetary penalties and taken necessary measures to rectify the defects that occurred during the production of their products, including updating the internal management procedures. In addition, Shenzhen Bestman voluntarily recalled certain medical devices they manufactured because of quality control concerns.

The PRC operating entities’ products are subject to various laws and regulations relating to medical devices with various requirements in details, including, but not limited to, the registration and filings of medical devices, the production and operation license, the production and quality management. Although the PRC operating entities endeavor to stay in compliance with such laws and regulations, we cannot assure you that the PRC operating entities comply with relevant laws and regulations at all times. Any such failure may have a material and adverse effect on our business, financial condition and results of operations.

As of the date of the prospectus, the PRC operating entities are not aware of any other investigations, prosecutions, disputes, claims or other proceedings in respect of quality issues, nor have the PRC operating entities been penalized additionally or can foresee any penalty to be made by any related PRC government authorities.

We may experience significant liability claims or complaints from customers, litigation, and regulatory investigations and proceedings relating to medical device safety, or adverse publicity involving the PRC operating entities’ products, which could adversely affect our financial condition and results of operations.

The PRC operating entities face an inherent risk of liability claims or complaints from their customers. Although, the PRC operating entities take those complaints and claims seriously and endeavor to reduce such complaints by implementing various remedial measures, the PRC operating entities cannot assure you that they can successfully prevent or address all complaints as and when they occur.

Any complaints or claims against the PRC operating entities, even if meritless and unsuccessful, may divert management’s attention and other resources from the PRC operating entities’ business and adversely affect the PRC operating entities’ business and operations. Customers may lose confidence in the PRC operating entities and their brand, which may adversely affect the PRC operating entities’ business and results of operations. Furthermore, negative publicity including, but not limited to, negative online reviews on social media and crowd-sourced review platforms, industry findings, or media reports related to medical device quality and safety, public health concerns, illness, injuries, whether or not accurate, and whether or not concerning the PRC operating entities’ products, can adversely affect our business, results of operations and reputation.

The PRC operating entities face potential legal liability due to the nature of their business. For example, customers could assert legal claims against the PRC operating entities in connection with personal injuries or illness related to the use of medical devices the PRC operating entities sold. The PRC government, media outlets, and public advocacy groups have been increasingly focused on customer protection in recent years. Selling defective products may expose the PRC operating entities to liabilities associated with customer protection laws. In addition, in certain cases, as the manufacturer of the products, the PRC operating entities may be responsible for compensation on a customer’s loss, even if such loss is not directly caused by the PRC operating entities. Thus, the PRC operating entities may also be held liable if their suppliers or other business partners fail to comply with applicable product quality and safety rules and regulations. Although the PRC operating entities may have the responsible parties for indemnity, the PRC operating entities’ reputation could still be adversely affected.

These claims and lawsuits could also divert management’s time and attention away from the PRC operating entities’ business and result of operations, regardless of the merits of the claims. In some instances, the PRC operating entities may elect or be forced to pay substantial damages if the PRC operating entities are unsuccessful in their efforts to defend against these claims, which could harm our financial condition and results of operations. In addition, the PRC operating entities’ directors, management and employees may from time to time be subject to litigation and regulatory investigations and proceedings or otherwise face potential liability and expense in relation to medical device quality and safety, commercial, labor, employment, securities or other matters, which could also adversely affect the PRC operating entities reputation and results of operations. We do not carry business liability insurance or disruption insurance insuring the potential losses as aforementioned. See “Risk Factor — Risks Related to the Business and Industry of The PRC Operating Entities — The PRC operating entities have no business liability or disruption insurance, which could expose them to significant costs and business disruption.”

As of the date of this prospectus, the PRC operating entities are not aware of any warning, investigations, prosecutions, disputes, claims or other proceedings in respect of customer rights protection, nor have the PRC operating entities been punished or can foresee any punishment to be made by any PRC government authorities or any in any overseas jurisdiction.

The PRC operating entities face the risk of fluctuations in the cost, availability, and quality of raw materials, which could adversely affect our results of operations.

The cost, availability, and quality of the principle raw materials, such as electronic component, power adapters, transformers, printed circuit boards (PCB), dry cells, and plastic shells are essential factors in the PRC operating entities’ operations. After years of development, the PRC operating entities have established long-term cooperative relationships with many raw material suppliers, who provide favorable pricing for certain raw materials. However, if the cost of raw materials increases due to policy changes, significant market price fluctuation, or any other reason, the PRC operating entities business and results of operations could be adversely affected. 

Lack of availability of raw materials, whether due to shortages in supply, delays or interruptions in processing, failure of timely delivery, or otherwise, could interrupt the PRC operating entities’ operations and adversely affect our financial results.

Defective raw materials or raw materials with quality deficiencies could subject the PRC operating entities to product liability claims or legal actions, which circumstances the PRC operating entities are not insured and which could adversely affected our financial conditions and results of operations. See “Risk Factor — Risks Related to the Business and Industry of The PRC Operating Entities — The PRC operating entities have no business liability or disruption insurance, which could expose them to significant costs and business disruption.”

A significant interruption in the PRC operating entities’ suppliers and other business partners could potentially disrupt the PRC operating entities’ operations.

The PRC operating entities have limited control over the operations of their third-party suppliers and other business partners. Any significant interruption in such suppliers and business partners’ operations may have an adverse impact on the PRC operating entities operations. For example, significant interruptions in the operations of the suppliers’ manufacturing facilities could cause delay or termination of shipment of the raw materials to the PRC operating entities, which in turn, may cause delay or termination of manufacture and shipment of ordered products to the customers, resulting in damage to the PRC operating entities’ customer relationships. If the PRC operating entities are unable to adequately address the impact of the interruptions of operations of their third-party suppliers, the PRC operating entities’ business operations and financial results may be materially and adversely affected.

Although the PRC operating entities believe that they could establish alternate sources from other suppliers for most of the raw materials, there can be no assurance that such replacement suppliers will provide the raw materials that are needed by the PRC operating entities in the quantities requested, at the quality required, or at the prices that the PRC operating entities are willing to pay. Any shortage in materials, deficiency in quality or any increase in prices could adversely affect the PRC operating entities’ reputation, financial conditions and results of operations.

The PRC operating entities do not have long term contracts with their suppliers and the suppliers can reduce order quantities or terminate their sales to the PRC operating entities.

The PRC operating entities do not have long term contracts with their suppliers. Their suppliers can reduce the quantities of products they sell to the PRC operating entities, or cease selling products to the PRC operating entities. Such reductions or terminations could have a material adverse impact on the PRC operating entities’ revenues, profits and financial condition, even if the PRC operating entities maintain an alternative suppliers list.

The PRC operating entities depend on the supply of raw materials and key component parts, and any adverse changes in such supply or the costs of raw materials may adversely affect the PRC operating entities’ operations.

For the fiscal year ended June 30, 2024, the most significant supplier represented approximately 52% of the PRC operating entities’ total purchases. For the fiscal year ended June 30, 2023, the most significant supplier represented approximately 48% of the PRC operating entities’ total purchases. The PRC operating entities do not enter into long-term contracts with their suppliers. Although the PRC operating entities believe that the raw materials needed in their operations are easy to source, if any of their significate suppliers ceases to supply key raw materials to them and if they need alternative sources for key component parts for any other reason, these component parts may not be immediately available to them. Even if the PRC operating entities remain on an alternative supplier list, the production of these components may still be delayed. The PRC operating entities may not be able to find an adequate alternative supplier on commercially acceptable terms. An inability to obtain the raw materials for the manufacture of the products might require the PRC operating entities to delay shipments of products, harm customer relationships or may force the PRC operating entities to curtail or cease operations.

Increases in labor costs in the PRC may adversely affect the PRC operating entities’ business and profitability and failure to comply with PRC labor laws may subject us to penalties.

China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage levels for the PRC operating entities’ employees have also increased in recent years. The PRC operating entities expect that their labor costs, including wages and employee benefits, will continue to increase. Unless the PRC operating entities are able to pass on these increased labor costs to their clients by increasing prices for their products, their profitability and results of operations may be materially and adversely affected.

In addition, the PRC operating entities have been subject to stricter regulatory requirements with respect to labor contracts with their employees and the payment of various statutory employee benefits, including pensions, housing fund deposits, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance to designated government agencies for the benefit of their employees. Pursuant to the PRC Labor Contract Law, or the “Labor Contract Law,” that became effective in January 2008 and its amendments that became effective in July 2013 and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation, and unilaterally terminating labor contracts. In the event that the PRC operating entities decide to terminate some of their employees or otherwise change their employment or labor practices, the Labor Contract Law and its implementation rules may limit the PRC operating entities’ ability to effect those changes in a desirable or cost-effective manner, which could adversely affect the PRC operating entities’ business and results of operations.

Companies operating in mainland China are required to participate in various government-sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and must contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of employees up to a maximum amount specified by the local government from time to time at locations where the employees are based. The PRC operating entities failed to make full contributions to social insurance and housing provident funds for their employees. Such failure to make full contributions to social insurance and to comply with applicable PRC labor-related laws regarding housing funds may subject the PRC operating entities to late payment penalties and other fines or labor disputes, and the PRC operating entities could be required to make up the contributions for these plans, which may adversely affect the PRC operating entities’ financial condition and results of operations.

The interpretation and implementation of labor-related laws and regulations are still constantly evolving, which may be further amended from time to time. Due to the constant evolution of the labor-related laws, we cannot assure you that the PRC operating entities’ current employment practices will not violate any future labor-related laws and regulations in China, which may subject the PRC operating entities to labor disputes or government investigations. If the PRC operating entities are deemed to have violated relevant labor laws and regulations, the PRC operating entities could be required to provide additional compensation to their employees, and our business, financial condition and results of operations could be materially and adversely affected.

If the PRC operating entities are unable to build and maintain a sufficient sales and distribution network to meet increasing demand of their products, their ability to execute on their business plan as outlined in this prospectus will be impaired.

The PRC operating entities sell their products through their direct sales force and distribution channel. As of the date of this prospectus, they have 21 employees in their sales department, 1,988 distributors for domestic sales and 1,843 distributors for overseas sales. For the fiscal year ended June 30, 2024, the direct sales force contributed 3% to the PRC operating entities’ revenues and distributors contributed 97% to the PRC operating entities’ revenues. For the fiscal year ended June 30, 2023, the direct sales force contributed 4% to the PRC operating entities’ revenues, and distributors contributed 96% to the PRC operating entities’ revenues.

As of the date of this prospectus, Shenzhen Bestman has six (6) regional special distributors, one (1) regional exclusive distributor in Sichuan and Chongqing, and one (1) international exclusive distributor in Indonesia. Shenzhen Bestman plans to expand the numbers of the domestic regional exclusive distributors in the future. In view of Shenzhen Bestman’s business development needs, Shenzhen Bestman retains some regional special distributors. Compared to the regional exclusive distributors, although the regional special distributors have the rights to sell certain products of Shenzhen Bestman in a particular territory, they have no exclusive rights to sell Shenzhen Bestman’s products in their territory. Accordingly, in one defined territory, there could be more than one regional special distributor selling Shenzhen Bestman’s products.

Although the PRC operating entities’ sales and distribution ability satisfy the current business needs, it might become insufficient to meet demand as the PRC operating entities continue to grow their business. To mitigate such risk, the PRC operating entities intend to invest their internally generated cash from operations and capital to be raised to add additional teams to their direct sales force, in order to expand their geographic reach with new distribution channels into other provinces within China and overseas. If the PRC operating entities’ planned efforts to expand their direct sales force and distribution channels are not effective, their ability to execute on their business plan and to realize continued growth will be impaired.

The PRC operating entities may face competition from, and they may be unable to compete successfully against, new entrants and established companies with greater resources.

The medical device industry is intensely competitive and includes thousands of companies both domestically and internationally. As more medical device companies seek to outsource more of the design, prototyping, and manufacturing of their products, the PRC operating entities will face increasing competitive pressures to grow their business in order to maintain their competitive position, and they may encounter competition from, and lose customers to, other companies with design, technological and manufacturing capabilities similar to them. Some of the PRC operating entities’ potential competitors may have greater name recognition, greater operating revenues, larger customer bases, longer customer relationships, and greater financial, technical, personnel and marketing resources than the PRC operating entities. If the PRC operating entities are unsuccessful in competing with their competitors for their existing and prospective customers’ business, the PRC operating entities’ financial condition and results of operation may be adversely affected.

Increased competition may further reduce the PRC operating entities’ market share and profitability and require them to increase their sales and marketing efforts and capital commitment in the future, which could negatively affect the PRC operating entities’ results of operations. Although the PRC operating entities are continuously growing their customer base, there is no assurance that they will be able to continue to do so in the future against current or future competitors, and such competitive pressures may have a material adverse effect on the PRC operating entities’ business, financial condition, and results of operations.

The continuing development of the PRC operating entities’ products depends upon their strong working relationships with their distributors.

The research, development, marketing, and sales of the PRC operating entities’ current products and potential new and improved products or future product indications for which the PRC operating entities receive regulatory clearance or approval depend upon the PRC operating entities’ working relationships with its distributors. See “Research and Development.” The PRC operating entities rely on those professionals to provide them with their knowledge and experience regarding the research, development, marketing and sales of its products.

Distributors assist the PRC operating entities in marketing and sales, as well as collecting customers’ feedback and advice related to the PRC operating entities products. If the PRC operating entities cannot maintain strong working relationships with these professionals and continue to receive their advice and input, the development, improvement and marketing of the PRC operating entities’ products could suffer, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, the PRC operating entities have only entered into written distribution agreements with a limited number of regional domestic distributors. They rely upon short-form order sheets to memorialize agreements with their overseas distributors, pursuant to which, the overseas distributors make their orders, on an as-needed basis. Accordingly, at any time, the distributors can reduce the quantities of products they order from the PRC operating entities, or cease purchasing products from the PRC operating entities. Such reductions or terminations could have a material adverse impact on the PRC operating entities’ revenues, profits and financial condition.

Technological changes may adversely affect the sales of the PRC operating entities’ products and may cause their products to become obsolete.

The medical device market is characterized by extensive research and development and rapid technological changes. Technological progress or new developments in the medical device industry could adversely affect sales of the PRC operating entities’ products. The PRC operating entities’ products could be rendered obsolete due to future innovations by their competitors, which would have a material adverse effect on the PRC operating entities’ business, financial condition, and results of operations.

The PRC operating entities depend on a few major customers with whom they do not enter into long-term contracts, the loss of any of which could cause a significant decline in the PRC operating entities’ revenues.

For the fiscal year ended June 30, 2024, the PRC operating entities’ top three customers accounted for 24%, 17% and 10%, respectively, of revenues for such period. The PRC operating entities had two significant customers which accounted for greater than 10% of their total revenue for the fiscal year ended June 30, 2023. For the fiscal year ended June 30, 2023, the PRC operating entities’ top two customers accounted for 23% and 12%, respectively, of revenues for such periods.

The PRC operating entities do not enter into long-term agreements with their customers. They rely upon short-form order sheets to memorialize agreements with their customers, pursuant to which customers make their orders on an as-needed basis. The customers can reduce the quantities of products from the PRC operating entities, or cease purchasing products from the PRC operating entities. Such reductions or terminations could have a material adverse impact on the PRC operating entities’ revenues, profits and financial condition. The loss of any of their major customers, or a significant reduction in sales to any such customers, would adversely affect the PRC operating entities’ profitability.

We expect that the PRC operating entities will continue to depend on a relatively small number of customers for a significant portion of their net revenue. Their ability to maintain close and satisfactory relationships with their customers is important to the ongoing success and profitability of their business. Their ability to attract potential customers is also critical to the success of their business. If any of their significant customers reduces, delays or cancels its orders for any reason, or the financial condition of any of their key customers deteriorates, the PRC operating entities’ business could be seriously harmed. Similarly, a failure to manufacture sufficient quantities of products to meet the demands of these customers may cause the PRC operating entities to lose customers, which may affect adversely the profitability of their business as a result. Furthermore, if the PRC operating entities experience difficulties in the collection of their accounts receivables from their major customers, the results of operation may be materially and adversely affected.

Consolidation in the medical device industry could have an adverse effect on the PRC operating entities’ revenues and results of operations.

Many medical device companies are consolidating to create new companies with greater market power. As the medical device industry consolidates, competition to provide goods and services to industry participants will become more intense. These industry participants may use their market power to negotiate price concessions or reductions for their products making them more desirable than the PRC operating entities’ products. If the PRC operating entities reduce their prices because of consolidation in the healthcare industry, their revenues would decrease accordingly, which could have a material adverse effect on the PRC operating entities’ business, financial condition, and results of operations.

The PRC operating entities may fail to effectively develop and commercialize new products, which would materially and adversely affect their business, financial condition, and results of operations.

The medical device market is developing rapidly and related technology trends are constantly evolving. This results in frequent introduction of new products, short product life cycles and significant price competition. Consequently, the PRC operating entities’ future success depends on their ability to anticipate technology development trends and identify, develop, and commercialize in a timely and cost-effective manner new and advanced products that their customers demand. Whether the PRC operating entities are successful in developing and commercializing new products is determined by their ability, among other things, to:

We cannot assure you that the PRC operating entities can effectively develop and commercialize new products. In the event the PRC operating entities fail to develop and commercialize new products, it would materially and adversely affect their business, financial condition, and results of operations.

If the PRC operating entities fail to identify, acquire and develop other products, they may be unable to grow their business.

As a significant part of the PRC operating entities’ growth strategy, they intend to develop and commercialize additional products through their research and development program or by acquiring additional technologies and patents from third parties. The success of this strategy depends largely upon the PRC operating entities’ ability to identify, select and acquire the technologies and patents on terms that are acceptable to them.

Any patents and technology the PRC operating entities identify or acquire may require additional development efforts prior to commercial manufacturing and sales, including approval or clearance by the applicable regulatory authorities. All products are prone to the risks of failure inherent in medical device product development, including the possibility that the products will not be shown to be sufficiently safe and effective for approval or clearance by regulatory authorities. In addition, we cannot assure you that any such products that are approved or cleared will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace.

If the PRC operating entities are unable to develop suitable new products through internal research programs or by obtaining patents or technologies from third parties, it could have a material adverse effect on the PRC operating entities’ business, financial condition, and results of operations.

If the PRC operating entities are not able to implement their strategies to achieve their business objectives, their business operations and financial performance will be adversely affected.

The PRC operating entities’ business plan and growth strategies are based on currently prevailing circumstances and the assumption that certain circumstances will or will not occur. However, there are uncertainties involved in various stages of development, and there is no assurance that the PRC operating entities will be successful in implementing their strategies or that their strategies, even if implemented, will lead to the successful achievement of their objectives. If the PRC operating entities are not able to successfully implement their strategies, their business operations and financial performance will be adversely affected.

We or the PRC operating entities may undertake mergers, acquisitions or investments to expand the PRC operating entities’ business, which may pose risks to our business and dilute the ownership of our existing shareholders, and we or the PRC operating entities may not realize the anticipated benefits of these mergers, acquisition or investments.

As part of our growth strategy, we or the PRC operating entities may evaluate opportunities to acquire or invest in other businesses or existing businesses, and expand the breadth of markets we and the PRC operating entities can address or enhance our market position. Specifically, we plan to use a portion of proceeds from this offering for, potential acquisition of, or investment in, businesses in the medical device manufacturing field. See “Use of Proceeds.” On March 23, 2022, Shenzhen Bestman entered into a framework cooperation agreement with Tiantang Group, a Ugandan company, and Mr. Zhigang Zhang, the legal representative of Tiantang Group (the “Framework Agreement”). The material terms of the Framework Agreement include, among other things, (i) the project: the parties will establish a joint venture company in Uganda before April 2022*, (ii) the scope of cooperation: the scale of construction (the specific provisions for funds to be invested shall be subject to a separate agreement to be entered into later by the parties); (iii) the cooperation mode and share distribution: Tiantang Group will own 15% shares of the joint venture company and Shenzhen Bestman will own 85% shares of the joint venture company; (iv) termination: the agreement may only be terminated by mutual agreement of the parties, upon material breach, or upon an event of force majeure; and (v) dispute resolution: any disputes shall be submitted to the People's Court of the respective locations of the parties. Due to the early COVID-19 pandemic policy adopted by the Chinese government, the parties did not form the joint venture company in April 2022, as originally contemplated.

*On August 7, 2022, the parties entered into a Supplemental Agreement and changed the timeline for the establishing of the joint venture company from “before April 2022” to a date the parties will agree to “at their earliest convenience.” However, due to a change in business development strategies and goals, on July 10, 2023, Shenzhen Bestman terminated the Framework Agreement with Tiantang Group. Shenzhen Bestman expects to seek other opportunities to acquire or invest in other businesses and expand its African markets. As of the date of this prospectus, no specific business target has been identified.

Shenzhen Bestman expects to invest approximately $1.5 million into expanding its African markets.

Mergers, investments or acquisitions that we or the PRC operating entities may enter into in the future entail a number of risks that could materially and adversely affect the PRC operating entities’ business, operating and financial results, including, among others:

Our failure to address these risks successfully may have a material adverse effect on our financial condition and results of operations. Accordingly, we cannot assure you that Shenzhen Bestman will successfully establish the joint venture company, or, if it is established, such joint venture company will make revenue in the future. Any such acquisition or investment will likely require a significant amount of capital investment, which would decrease the amount of cash available for working capital or capital expenditures. In addition, if we use our equity securities to pay for acquisitions, the value of your Ordinary Shares may be diluted. If we borrow funds to finance acquisitions, such debt instruments may contain restrictive covenants that can, among other things, restrict us from distributing dividends.

If capital resources required for our planned growth or development are not available, we may be unable to successfully implement our business strategy.

Historically, the PRC operating entities have been able to finance their capital expenditures through cash flow from their operating activities and financing activities, including long-term and short-term borrowings. The PRC operating entities’ ability to expand their market position will continue to largely depend on their ability to obtain sufficient cash flow from operations as well as external funding. We expect to make capital expenditures in connection with the development of the PRC operating entities’ business, including investments in connection with new capacity, opportunities to acquire or invest in other businesses or existing businesses, technological upgrades and the enhancement of capacity value. Our results of operations may be affected adversely if we do not have the capital resources to complete our planned growth, or if our actual expenditures exceed planned expenditures for any number of reasons, including changes in:

If adequate funds are not available on satisfactory terms at appropriate times, we may have to curtail our planned growth, which could result in a loss of customers, adversely affect our ability to successfully implement our business strategy and limit the growth of our business.

The PRC operating entities’ future success depends on the continuing efforts of their senior management team and other key personnel, and the business may be harmed if the PRC operating entities lose their services.

The PRC operating entities’ future success depends heavily upon the continuing services of the members of their senior management team and other key personnel, in particular, Mr. Yong Bai, our and the PRC operating entities’ chairman of the board, or “Chairman,” and Chief Executive Officer. In addition, because of the importance of research and development to the PRC operating entities’ business, the PRC operating entities’ team of engineers plays a key role in the PRC operating entities’ operations. If one or more of the PRC operating entities’ senior executives or other key personnel, including key engineers, are unable or unwilling to continue in their present positions, the PRC operating entities may not be able to replace them easily or at all, and their business may be disrupted and financial condition and results of operations may be materially and adversely affected. Competition for senior management and key personnel is intense, the pool of qualified candidates is very limited, and the PRC operating entities may not be able to retain the services of their senior executives or key personnel, or attract and retain high-quality senior executives or key personnel in the future. As is customary in the PRC, the PRC operating entities do not have insurance coverage for the loss of their senior management team or other key personnel.

In addition, if any member of the PRC operating entities’ senior management team or any of their other key personnel joins a competitor or forms a competing company, the PRC operating entities may lose clients, sensitive trade information, and key professionals and staff members.

If the PRC operating entities fail to adopt new technologies to evolving customer needs or emerging industry standards, their business may be materially and adversely affected.

To remain competitive, the PRC operating entities must continue to stay abreast of the constantly evolving industry trends and to enhance and improve their technology accordingly. The PRC operating entities’ success will depend, in part, on their ability to identify, develop or acquire leading technologies useful in their business. There can be no assurance that the PRC operating entities will be able to use new technologies effectively or meet customer’s requirements. If the PRC operating entities are unable to adapt in a cost-effective and timely manner in response to changing market conditions or customer preferences, whether for technical, legal, financial or other reasons, their business may be materially and adversely affected.

Changes to the PRC operating entities’ payment terms with both customers and suppliers may materially adversely affect our operating cash flows.

The PRC operating entities may experience significant pressure from their suppliers to reduce the number of days of their accounts payable. At the same time, the PRC operating entities may experience pressure from their customers to extend the number of days before paying their accounts receivable. Any failure to manage the PRC operating entities’ accounts payable and accounts receivable may have a material adverse effect on our business, financial condition and results of operations.

If the PRC operating entities are unable to collect account receivables from their customers, their results of operations and cash flows could be adversely affected.

The PRC operating entities’ business depends on their ability to successfully obtain payment from customers of the amounts they owe the PRC operating entities for products sold. As of June 30, 2024, the PRC operating entities’ accounts receivable balance amounted to $1,494,851. As of June 30, 2023, the PRC operating entities’ accounts receivable balance amounted to $1,230,198. If the PRC operating entities are unable to collect their accounts receivable on a timely and consistent basis, however, our cash flows and access to operating capital could be adversely affected.

If the PRC operating entities fail to manage their inventory effectively, their operations and financial condition may be materially and adversely affected.

If the PRC operating entities fail to manage their inventory effectively, they may be subject to a heightened risk of inventory obsolescence, a decline in inventory value, and significant inventory write-downs or write-offs. As of June 30, 2024, the PRC operating entities’ inventory balance amounted to $291,783. For the fiscal year ended June 30, 2024, the write-down made for inventory of the PRC operating entities was nil. As of June 30, 2023, the PRC operating entities’ inventory balance amounted to $371,137. For the fiscal year ended June 30, 2023, the write-down made for inventory of the PRC operating entities was nil.

Economic recessions could have a significant, adverse impact on the PRC operating entities’ business.

The PRC operating entities’ revenues are generated from sales of medical devices, both domestically and internationally, and the PRC operating entities anticipate that revenues from such sales will continue to constitute their sole source of revenues in the near future.  The PRC operating entities’ sales and earnings can also be affected by changes in the general economy.

The medical device industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns in business cycles of customers, interest rate fluctuations, and other economic factors beyond the PRC operating entities’ control. Deterioration in the economic environment subjects the PRC operating entities’ business to various risks, which may have a material and adverse impact on the PRC operating entities’ operating results and cause the PRC operating entities to not reach their long-term growth goals. A downturn in the economy could affect the discretionary spending power of customers and, in turn, depress the number of orders for the PRC operating entities’ products, which would have a material adverse effect on our business, financial condition and results of operations.  

Any disruption of the operation of the PRC operating entities or the operation of the PRC operating entities’ suppliers could materially and adversely affect the PRC operating entities’ business and results of operations.

Currently, the PRC operating entities’ products are primarily produced at their factory located in Shenzhen, China. The products also rely on the PRC operating entities’ suppliers to provide raw materials and components. Nevertheless, natural disasters or other unanticipated catastrophic events, including storms, fires, explosions, earthquakes, terrorist attacks and wars, as well as changes in governmental planning for the land where the PRC operating entities’ factory or their suppliers’ factories are located could significantly impair the PRC operating entities’ ability to manufacture products and operate their business. Catastrophic events could also destroy the inventories stored in and those suppliers' factories. The occurrence of any catastrophic event could result in the temporary or long-term closure of manufacturing facilities, and may severely disrupt the PRC operating entities’ business operations.

In addition, the PRC operating entities’ and their suppliers’ factories are subject to fire control and environmental inspections and regulations. As of the date of this prospectus, we cannot assure you that all the factories are in strict compliance with such fire control and environmental inspections and regulations based on our knowledge. If such facilities fail to rectify and pass the fire control and environmental inspections or comply with relevant fire control and environmental requirements relating to production activities in a timely manner, they may be subject to fines, rectification, suspension and closure, which may materially and adversely affect the production at the PRC operating entities’ factories and in turn may impact their business. In the event of any changes in the PRC laws and/or regulations and/or government policies on environmental protection and more stringent requirements are imposed on the PRC operating entities’ and their suppliers, the PRC operating entities’ may have to incur extra costs and expenses to comply with such requirements and the PRC operating entities’ business and results of operations may be adversely affected.

In addition, such facilities are also subject to health and safety laws and regulations imposed by the PRC governmental authorities to ensure a healthy and safe production environment. Failure to comply with the existing and future health and safety laws and regulations could subject the PRC operating entities to monetary damages and fines, disruption to production plans, suspension of their operations, which may in turn materially and adversely affect the PRC operating entities’ business operations. On May 6, 2021, Shenzhen Bestman was inspected by the Emergency Management Bureau of Shenzhen Guangming District for the establishment of an accident and potential danger investigation and management system. While Shenzhen Bestman passed the on-site inspection without any further administrative penalties, we cannot assure you that the PRC operating entities’ production will not be disrupted due to any health and safety inspection activities. Furthermore, if any on-site personnel at such facilities is suspected of having any communicable diseases, such as COVID-19, such facilities may be subject to temporary closure and quarantine requirements, which may in turn materially and adversely affect the PRC operating entities’ business operations.

Furthermore, the PRC operating entities’ factories are located on leased properties. Though such leases are renewable upon expiration, the PRC operating entities’ ability to renew existing leases upon their expiration is crucial to the PRC operating entities’ production activities, operations and profitability. If the PRC operating entities are unable to negotiate for a renewal of the relevant leases, they may be forced to relocate their production bases and it may be difficult and costly to replace or relocate the facilities and equipment on a timely basis. If the PRC operating entities fail to address the risks mentioned above, their production will be materially and adversely affected. See also “Risk Factors — Risks Related to the Business and Industry of the PRC operating entities — The PRC operating entities are subject to risks relating to their leased properties.”

If the PRC operating entities or their suppliers experience any unanticipated disruptions, the PRC operating entities’ production will be severely disrupted, which may in turn materially and adversely affect the PRC operating entities’ business, financial condition and results of operations.

The PRC operating entities are subject to risks relating to their leased properties.

The PRC operating entities lease real properties from third parties primarily for their production facilities and offices in China, and such lease agreements for these properties have not been registered with the PRC governmental authorities as required by PRC law. Although the failure to do so does not in itself invalidate the leases, the PRC operating entities may be ordered by the PRC government authorities to rectify such noncompliance and, if such noncompliance is not rectified within a given period of time, the PRC operating entities may be subject to fines imposed by PRC government authorities ranging from RMB1,000 (approximately US$144.20) and RMB10,000 (approximately US$1,442) for each lease agreement that has not been registered with the relevant PRC governmental authorities.

As of the date of this prospectus, we are not aware of any claim or challenge brought by any third parties concerning the use of the PRC operating entities leased properties without obtaining proper ownership proof. If the PRC operating entities’ lease agreements are determined to be null and void by third parties who are the real owners of such leased real properties, the PRC operating entities could be required to vacate the properties, in the event of which the PRC operating entities could only initiate the claim against the lessors under relevant lease agreements for indemnities for their breach of the relevant leasing agreements. We cannot assure you that suitable alternative locations are readily available on commercially reasonable terms, or at all, and if the PRC operating entities are unable to relocate their facilities, equipment, offices and employees in a timely manner, their operations may be interrupted.

The PRC operating entities may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt the PRC operating entities’ business and have a material adverse effect on our financial condition and results of operations.

The PRC operating entities’ success depends, in large part, on their ability to use and develop their technology and know-how without infringing third party intellectual property rights. As the PRC operating entities increase their product sales internationally, and as litigation becomes more common in PRC, the PRC operating entities face a higher risk of being the subject of claims for intellectual property infringement, invalidity or indemnification relating to other parties’ proprietary rights. The PRC operating entities’ current or potential competitors, many of which have substantial resources and have made substantial investments in competing technologies, may have or may obtain patents that will prevent, limit or interfere with the PRC operating entities’ ability to make, use or sell their products in either China or other countries, including the United States and other countries in Asia. The validity and scope of claims relating to medical device technology patents involve complex scientific, legal and factual questions and analysis and, as a result, may be highly uncertain. In addition, the defense of intellectual property suits, including patent infringement suits, and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of the PRC operating entities’ technical and management personnel. Furthermore, an adverse determination in any such litigation or proceedings to which the PRC operating entities may become parties could cause them to:

each of which could effectively prevent the PRC operating entities from pursuing some or all of their business and result in their customers or potential customers deferring or limiting their purchase or use of the PRC operating entities’ products, which could have a material adverse effect on our financial condition and results of operations.

The PRC operating entities may not be able to prevent others from unauthorized use of their intellectual property, which could harm their business and competitive position.

The PRC operating entities rely on a combination of trademark, fair trade practice, patent, copyright and trade secret protection laws in China, as well as confidentiality procedures and contractual provisions, to protect their intellectual property rights. The PRC operating entities enter into confidentiality agreements with their employees that include terms identifying all employee-developed intellectually property as service inventions belonging to the PRC operating entities. In addition, the PRC operating entities strive to remain current in their annual patent fee payments. The PRC operating entities regard their trademark, patents, know-how, proprietary technologies, and similar intellectual property as critical to their success. The PRC operating entities may become an attractive target to intellectual property attacks in the future with the increasing recognition of their brand. Any of the PRC operating entities’ intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide the PRC operating entities with competitive advantages. In addition, there can be no assurance that (i) all of the PRC operating entities’ intellectual property rights will be adequately protected, or (ii) the PRC operating entities’ intellectual property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Intellectual property protection may not be sufficient in China. Confidentiality agreements may be breached by counterparties, and there may not be adequate remedies available to the PRC operating entities for any such breach. Accordingly, the PRC operating entities may not be able to effectively protect their intellectual property rights or to enforce their contractual rights in China. In addition, policing any unauthorized use of the PRC operating entities’ intellectual property is difficult, time-consuming and costly and the steps they have taken may be inadequate to prevent the misappropriation of their intellectual property.

In the event that the PRC operating entities resort to litigation to enforce their intellectual property rights, such litigation could result in substantial costs and a diversion of their managerial and financial resources. We can provide no assurance that the PRC operating entities will prevail in such litigation. In addition, the PRC operating entities’ trade secrets may be leaked or otherwise become available to, or be independently discovered by, their competitors. Any failure in protecting or enforcing the PRC operating entities’ intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact the PRC operating entities’ business and operating results.

The U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies, including recently-imposed tariffs affecting certain products manufactured in China. It is unknown whether and to what extent new tariffs (or other new laws or regulations) will be adopted, or the effect that any such actions would have on the PRC operating entities or their industry and customers. As the PRC operating entities continue to sell their products internationally in the future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for the PRC operating entities’ products, impact the competitive position of the PRC operating entities’ products or prevent the PRC operating entities from being able to sell products in certain countries. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse effect on the PRC operating entities’ business, financial condition, and results of operations.

The PRC operating entities have no business liability or disruption insurance, which could expose them to significant costs and business disruption.

The insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related insurance products. The PRC operating entities do not have any business liability or disruption insurance to cover their operations. The PRC operating entities have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for them to have such insurance. Any uninsured risks may result in substantial costs and the diversion of resources, which could adversely affect the PRC operating entities’ results of operations and financial condition.

The PRC operating entities are subject to product liability exposure. Any product liability claims or potential safety-related regulatory actions could damage the PRC operating entities’ reputation and materially and adversely affect their business, financial condition, and results of operations.

The PRC operating entities’ main products are medical devices used in the monitoring of patients, and the manufacture and sales of these products expose the PRC operating entities to potential product liability claims if the use of these products causes or are alleged to have caused personal injuries or other adverse effects. Any product liability claim or regulatory action could be costly and time-consuming to defend. If successful, product liability claims may require the PRC operating entities to pay substantial damages. Furthermore, the PRC operating entities do not carry any product liability or professional liability insurance. A product liability claim or potential safety-related regulatory action, with or without merit, could result in significant negative publicity and materially and adversely affect the marketability of the PRC operating entities’ products and reputation, as well as our business, financial condition and results of operations.

Moreover, a material design, manufacturing or quality failure or defect in the PRC operating entities’ products or other safety issues or heightened regulatory scrutiny, whether manufactured or otherwise sourced, could give rise to a product recall by and\or result in increased product liability claims.

Additionally, we can provide no assurance that all of the products the PRC operating entities manufacture or source will be in complete in compliance with the local rules or regulation in the countries where the PRC operating entities sell their products. If any of the authorities in the countries where the PRC operating entities sell their products determine that such products fail to conform to product quality and safety requirements, the PRC operating entities could be subject to regulatory action. In the PRC, a violation of PRC product quality and safety requirements may subject the PRC operating entities to confiscation of earnings, penalties, an order to cease sales of the violating product or an order to cease operations pending rectification. Furthermore, if the violation is determined to be serious, the PRC operating entities’ business license to manufacture or sell affected products could be suspended or revoked.

If the PRC operating entities do not obtain substantial additional financing, including the financing sought in this offering, their ability to execute on their business plan as outlined in this prospectus will be impaired.

The PRC operating entities’ plans for business expansion and development are dependent upon their raising significant additional capital, including the capital sought in this offering. The PRC operating entities’ plans call for significant new investments in research and development, marketing, expanded production capacity, and working capital for raw materials and other items. Management estimates that our capital needs for expanding our research and development department and management department, including, but not limited to, hiring high-end medical device talents and management personnel with international and professional backgrounds, will be approximately US$12 million. Although the PRC operating entities expect the proceeds of this offering and net earnings to substantially fund their planned growth and development, the management will be required to properly and carefully administer and allocate these funds. Should the PRC operating entities’ capital needs be higher than estimated, or should additional capital be required after the close of this offering, they will be required to seek additional investments, loans or debt financing to fully pursue their business plans. Such additional investment may not be available to the PRC operating entities in sufficient amounts or on terms which are favorable or acceptable. Should the PRC operating entities be unable to meet their full capital needs, their ability to fully implement their business plan will be impaired.

Pandemics and epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt the PRC operating entities’ delivery and operations, which could materially and adversely affect their business, financial condition, and results of operations.

Global pandemics, epidemics in China or elsewhere in the world, or fear of the spread of contagious diseases, such as Ebola virus disease (EVD), coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9 flu, and avian flu, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt the PRC operating entities’ business operations, reduce or restrict the PRC operating entities’ supply of products, incur significant costs to protect their employees and facilities, or result in regional or global economic distress, which may materially and adversely affect the PRC operating entities’ business, financial condition, and results of operations. Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical uncertainty could have a similar adverse effect on the PRC operating entities’ business, financial condition, and results of operations. Any one or more of these events may impede the PRC operating entities’ production and delivery efforts and adversely affect their sales results, whether short-term or for a prolonged period of time, which could materially and adversely affect the PRC operating entities’ business, financial condition, and results of operations. 

Since late December 2019, the outbreak of a novel strain of coronavirus, later named COVID-19 has spread globally. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the outbreak a “Public Health Emergency of International Concern (PHEIC),” and later on March 11, 2020, a global “pandemic.” The COVID-19 pandemic has led governments across the globe to impose a series of measures intended to contain its spread, including border closures, travel bans, quarantine measures, social distancing, and restrictions on business operations and large gatherings. From 2020 to the middle of 2022, COVID-19 vaccination programs have been greatly promoted around the globe, however several types of COVID-19 variants have emerged in different parts of the world and caused temporary lockdowns. Restrictions had been re-imposed from time to time in certain cities to combat sporadic outbreaks of COVID-19 in the PRC from early 2020 through December 2022. For example, in early 2022, the Omicron variant of COVID-19 was identified in China, especially in Shenzhen and Shanghai city, Jilin Province and Beijing, where strict lockdowns were imposed. In addition, in the second half of 2022, some cities, including Guangzhou, Shenzhen and Beijing, remained under lockdown for discrete periods of time due to measures to contain the spread of Omicron and the zero-COVID measures taken by the local governments.

Due to the rapidly expanding nature of COVID-19 pandemic and the zero-COVID measures taken by the local governments from early 2020 through December 2022, and because substantially all of the PRC operating entities’ business operations and workforce are concentrated in the PRC, we believe that COVID-19 has impacted, and will likely continue to impact, the PRC operating entities’ business, results of operations, and financial condition. The potential further impact on the results of operations will also depend on future developments and information that may emerge regarding the duration and severity of COVID-19 and the actions taken by governmental authorities and other entities to contain COVID-19 or to mitigate its impacts, almost all of which are beyond our control.

The impacts of COVID-19 on the PRC operating entities’ business, financial condition, and results of operations as of the date of this prospectus include, but are not limited to, the following:

The PRC operating entities’ operations may be further affected by the COVID-19. China continuously optimized and adjusted COVID-19 prevention and control measures with the aim of protecting health, and lifted most of the travel restrictions and quarantine requirements in December 2022. The selling prices and the sales volume of epidemic prevention products decreased accordingly due to the recovery from the COVID-19 overseas and the decrease in the demand of pandemic-related products. As of the date of this prospectus, the impacts of the COVID-19 on the supply chain have diminished, which benefits the PRC operating entities’ export business. However, in the meantime, the United States has been raising interest rates, resulting in an appreciation of U.S. dollars. Consequently, there has been a decline in the PRC operating entities’ customer purchases, as the export purchase prices are denominated in U.S. dollars. In addition, the COVID-19 has resulted in volatility in some global financial markets, which could increase the Company’s cost of capital or limit its ability to access financing when needed. Broader impacts of the COVID-19 also include inflationary pressure, which may impact the costs of the PRC operating entities’ manufacturing of products. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Major Factors Affecting Our Results of Operations.” The extent to which the COVID-19 impacts the PRC operating entities’ business in the future will depend on future developments and further government actions. Any future impact on the results of operations of the PRC operating entities 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 spread or treat its impact, almost all of which are beyond our and the PRC operating entities’ control. Given the general slowdown in economic conditions globally and volatility in the capital markets, we cannot assure you that we will be able to maintain the growth rate we have experienced or projected. We will continue to closely monitor the situation throughout 2024 and beyond.

The PRC operating entities are also vulnerable to natural disasters and other calamities. The PRC operating entities cannot assure you that they are adequately protected from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks, or similar events. Any of the foregoing events may give rise to interruptions, damage to the PRC operating entities property, delays in production, breakdowns, system failures, technology platform failures, or internet failures, which could cause the loss or corruption of data or malfunctions of the PRC operating entities’ manufacturing facilities, as well as adversely affect their business, financial condition, and results of operations.

The PRC operating entities’ international sales are subject to a variety of risks that could adversely affect their profitability and operating results.

The PRC operating entities sell medical devices internationally. For the fiscal year ended June 30, 2024, the PRC operating entities’ international sales accounted for 73% of their revenues. For the fiscal year ended June 30, 2023, the PRC operating entities’ international sales accounted for 60% of their revenues. Although the PRC operating entities take measures to minimize risks inherent to their international sales, the following risks may have a negative effect on their profitability and operating results, impair the performance of the PRC operating entities’ foreign sales or otherwise disrupt their business:

The PRC operating entities are subject to a variety of environmental laws that could be costly for them to comply with, and the PRC operating entities could incur liability if they fail to comply with such laws or if they are responsible for releases of contaminants to the environment.

The PRC operating entities are all located in China. The manufacturing of their products will generate waste papers, plastics or other kinds of solid waste. Chinese laws impose various environmental controls on the management, handling, generation, manufacturing, transportation, storage, use and disposal of solid waste and other materials used or generated in the manufacturing of the PRC operating entities’ products. Although the solid waste generated in the manufacturing by the PRC operating entities is recycled, collected and disposed of by qualified waste disposal organizations, and the PRC operating entities believe that they are in compliance with the existing environmental laws, if the PRC operating entities fail to comply with any present or future environmental laws, they could be subject to fines, corrective action, other liabilities or the suspension of production.

The PRC operating entities are attentive to environmental protection and related management concerns and have formulated a systematic environmental protection management system in the treatment of solid waste in accordance with national requirements. However, changes in environmental laws may result in costly compliance requirements or otherwise subject the PRC operating entities to future liabilities, which could adversely impact their operating results.

In addition, with the implementation of the PRC operating entities’ business plan, their pollutant emissions may increase, resulting in the increase of the environmental protection spending and the difficulty of environmental protection management, which could have an adverse effect on the PRC operating entities’ financial conditions and results of operations.

As of the date of this prospectus, the PRC operating entities are not aware of any investigations, prosecutions, disputes, claims or other proceedings in respect of environmental protection, nor have any of them been punished or can any of them foresee any punishment to be made by any PRC environmental administration authorities.

Failure to keep up with the changes in domestic industry policies or standards could have a material and adverse effect on the PRC operating entities’ reputation, financial condition, and results of operations.

The medical devices the PRC operating entities manufacture and sell are closely related to human health, which is subject to strict supervision by relevant PRC authorities. The related national government authorities have issued a series of regulatory guidelines and industry policies to ensure the healthy development of the industry. In recent years, as China further deepens the reform of its medical and health system, relevant government departments have successively implemented a series of regulations and policies regarding industry standards, bidding, price formation mechanisms, circulation systems and other related fields, which have brought wide and profound impact on the livelihood and development of pharmaceutical companies.

In April 2016, the General Office of the State Council issued the Notice on Key Tasks for Deepening the Reform of the Pharmaceutical and Healthcare System in 2016, proposing to actively encourage the implementation of the “two-invoice system” in pilot cities for comprehensive reform of public hospitals. In December 2016, the Medical Reform Office of the State Council and seven other authorities promulgated the Opinions on the Implementation of the “two-invoice system” in Drug Procurement by Public Medical Institutions (for trial implementation), which means that the “two invoice system” has been officially launched and will be further promoted nationwide. Under the “two-invoice system,” invoices are issued once when pharmaceutical products are sold from manufacturers to wholesalers. Then, invoices are issued again when wholesalers resell the products to hospitals. This is aimed at shortening the circulation links and reducing hospital procurement costs. Under the “two-invoice system,” consumable products manufacturers with brand recognition and economies of scale could increase their coverage of terminals. At the same time, the “two-invoice system” also presents consumable products manufacturers with higher requirements for the construction and optimization of marketing channels. Manufacturers will need to grow their marketing teams, expand sales networks and improve refined service capabilities.

The deepening of the reform of the domestic pharmaceutical industry and the strengthening of supervision may affect the PRC operating entities’ business plan and profitability in the domestic market. If the PRC operating entities fail to adapt to the changes in industry policies timely, it could materially and adversely affect their business, financial condition, and results of operations.

The PRC operating entities’ success depend on their technology research and development talents and the PRC operating entities cannot assure their retention.

The PRC operating entities’ success partly depends upon the retention of their professional technology research and development talents (“R&D Talents”). As enterprises in the medical device industry, the PRC operating entities have a professional R&D Talents team comprised of 15 employees as of the date of this prospectus, who have expertise in the fields of network application platforms, application software, embedded software, and hardware circuits, and have extensive industry experience. There can be no assurance that the existing R&D Talents will be adequate or qualified to carry out the PRC operating entities’ strategies, or that they will be able to hire or retain new R&D Talents to carry out their strategies. The loss of one or more of the R&D Talents, or the failure to attract and retain additional R&D Talents, could have a material adverse effect on our business, financial condition and results of operations.

In addition, if the PRC operating entities fail to establish a competitive incentive mechanism in terms of career prospects, salary, benefits and working environment, they may face the risk of instability in the scientific research team, which could adversely affect their long-term development.

If the PRC operating entities’ employees or customers are involved in improper medical device sales transactions, it could adversely affect the PRC operating entities’ reputation, financial conditions and results of operations.

The PRC operating entities have established and improved their internal control system against unfair business practices, to prevent, minimize and\or eliminate employees and customers improper behaviors in the medical device sales transactions, including unauthorized rebates. There can be no assurance that the PRC operating entities’ existing internal control system will be adequate to prevent, minimize and/or eliminate such improper transactions, that the PRC operating entities will be able to effectively implement their internal control polices, or that they will be able to perfect their internal control system to eliminate such improper transactions. If any individual employees or downstream customers have improper business practices in the purchase and sales of medical devices, the PRC operating entities may be identified by the relevant regulatory authorities as a violator of relevant laws and regulations and thus included in the blacklist of commercial records, which could adversely affect the PRC operating entities’ reputation, financial conditions and results of operations.

If the PRC operating entities fail to timely renew their medical device licenses or registration certificates, it could adversely affect their reputation, financial conditions, and results of operations.

As medical device manufacturers located in mainland China, all of the PRC operating entities manufacturing and sales activities must comply with relevant Chinese laws and regulations. Pursuant to the Administrative Measures for the Registration and Record Filing of Medical Devices promulgated on August 26, 2021 and effective on October 1, 2021, as amended from time to time, Class I medical devices are subject to record administration with Class II and Class III medical devices subject to registration administration. The PRC operating entities are in the business of manufacturing and sales of Class I and II medical devices. Such record administration requirements and licenses are subject to periodic reviews and renewals by the relevant government authorities, and the standards of such reviews and renewals may change from time to time. There can be no assurance that the relevant authorities will approve the PRC operating entities’ renewal applications in the future. Any failure by the PRC operating entities to obtain the necessary renewals and otherwise maintain all the licenses, permits and certificates required for the PRC operating entities’ business at any time could disrupt the PRC operating entities’ business, which could have a material adverse effect on our business, financial condition and operating results. If, as a result of any change in the interpretation or implementation of existing laws and regulations or the implementation of new laws and regulations, the PRC operating entities are required to obtain additional licenses, permits or certificates, we cannot assure you that the PRC operating entities will be successful in obtaining these licenses, permits or certificates in a timely manner or at all. The PRC operating entities’ manufacturing facilities and products are subject to regular inspections, examinations, audits or reviews by the relevant government authorities. In the event that any of the PRC operating entities’ products or facilities fail any inspections, examinations, audits or reviews, they may be ordered to suspend or cease production and sales of such products and be subject to fines or other penalties. If the PRC operating entities fail a quality system review or inspection or if any corrective action plan is considered to be insufficient, their manufacturing process could be delayed or suspended.

As of the date of this prospectus, the medical devices manufactured or sold by the PRC operating entities are current in the recording or registration.

The PRC operating entities are subject to governmental regulations and other legal obligations related to privacy, information security, and data protection, and any security breaches, and our actual or perceived failure to comply with our legal obligations could harm our brand and business.

The PRC operating entities generate, collect, store and process a large amount of transactional and statistical data, including certain personal and other sensitive data from our distributors and customers. The PRC operating entities face risks inherent in handling large volumes of data and in securing and protecting such data. In particular, the PRC operating entities face a number of data-related challenges related to their business operations, including: (i) protecting the data in and hosted on their system and cloud servers, including protecting against attacks on their system and cloud servers by external parties or fraudulent behavior by their employees; (ii) addressing concerns related to privacy and sharing, safety, security and other factors; and (iii) complying with applicable laws, rules and regulations relating to the collection, use, and disclosure or security of personal information, including any requests from regulatory and government authorities relating to such data.

Although the PRC operating entities have taken steps to protect such data, their security measures could be breached. As of the date of this prospectus, the PRC operating entities have not experienced any material breach of their cybersecurity system or measures. As techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, the PRC operating entities may be unable to anticipate these techniques or may not timely implement adequate preventative measures. Any accidental or willful security breaches or other unauthorized access to the PRC operating entities’ system and cloud servers could cause confidential information to be accessed, stolen and used for illegal or unauthorized purposes. Security breaches or unauthorized access to confidential information could also expose the PRC operating entities to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in the PRC operating entities’ technology infrastructure are exposed and exploited, their relationships with end-users, distributors, retailers, manufacturers or suppliers could be severely damaged, they could incur significant liability, and their business and operations could be adversely affected.

Risks Related to Our Corporate Structure

We control and receive the economic benefits of the business operations of the VIE through the VIE Agreements among our WFOE, the VIE and the VIE’s Shareholders to operate our business solely because we met the conditions for consolidation of the VIE under U.S. GAAP for accounting purpose; however, the VIE Agreements have not been tested in a court of law and are subject to significant risks, as set forth in the following risk factors.

We rely on contractual arrangements with the VIE and the VIE Shareholders for a large portion of our business operations. These arrangements may not be as effective as direct ownership in providing operational control. Any failure by the VIE or the VIE Shareholders to perform their obligations under such contractual arrangements would have a material and adverse effect on our business.

We are a Cayman Islands exempted company and our mainland China subsidiary, namely our WFOE, is a foreign-invested enterprise. We have relied, and expect to continue relying, on contractual arrangements with the VIE and the VIE Shareholders to operate our business in China. We conduct our operations in the PRC mainly through the PRC operating entities pursuant to the VIE Agreements. The VIE Agreements are designed so that the operations of the VIE are solely for the benefit of WFOE and, ultimately, the Company. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes only and must consolidate the VIE because we met the conditions under the U.S. GAAP to consolidate the VIE.

For a description of these contractual arrangements, see “Corporate History and Structure — Our VIE Agreements.” The revenues contributed by the PRC operating entities constituted substantially all of our net revenues for the fiscal years ended June 30, 2024 and 2023.

The VIE Agreements may not be as effective as direct ownership in providing operational control. For example, the VIE and the VIE Shareholders could breach their contractual arrangements with us by, among other things, failing to conduct its operations in an acceptable manner or taking other actions that are detrimental to our interests. If we had direct ownership of the VIE, we would be able to exercise our rights as a shareholder to effect changes in the Board of Directors of the VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by the VIE and the VIE Shareholders of their obligations under such contractual arrangements to exercise operational control for accounting purposes. The VIE Shareholders may not act in the best interests of our Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the contractual arrangements with the VIE.

If the VIE or the VIE Shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. For example, if the VIE Shareholders refuse to transfer their equity interest in the VIE to us or our designee if we exercise the purchase option pursuant to the VIE Agreements, or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations. In addition, if any third parties claim any interest in such shareholders’ equity interests in the VIE, our ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements may be impaired. If these events or other disputes between the VIE Shareholders and third parties were to impair our contractual relationship with the VIE, our ability to consolidate the financial results for accounting purposes of the VIE and its subsidiaries would be affected, which would in turn result in a material adverse effect on our business, operations and financial condition.

All of the VIE Agreements are governed by and interpreted in accordance with PRC law, and disputes arising from the VIE Agreements between us and the VIE will be resolved through arbitration in China. These disputes do not include claims arising under United States federal securities law and thus the arbitration provisions do not prevent our shareholders from pursuing claims under United States federal securities law. The legal system in mainland China is not as developed as in some other jurisdictions, such as the United States. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. As a result, uncertainties in the legal system could limit our ability to enforce the VIE Agreements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC law, awards by arbitrators are final, which means parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award enforcement proceedings, which would require additional expenses and delay. In the event we are unable to enforce the VIE Agreements, or if we suffer significant delays or other obstacles in the process of enforcing the VIE Agreements, our ability to conduct business may be negatively affected.

If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiaries, and our Ordinary Shares may decline in value or become worthless.

Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to variable interest entities. There are currently no relevant laws or regulations in the PRC that prohibit companies whose entity interests are within the PRC from listing on overseas stock exchanges. According to our PRC counsel, based on its understandings of the relevant PRC laws and regulations, (i) the ownership structures of the VIE in China and the WFOE, our wholly-owned subsidiary in China, are currently not in violation of applicable PRC laws and regulations currently in effect; and (ii) each of the contracts among the WFOE, the VIE, and the VIE shareholders is legal, valid, binding, and enforceable in accordance with its terms and applicable PRC laws. Our PRC counsel, however, has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations, and that the VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. Accordingly, the PRC regulatory authorities may ultimately take a view contrary to the opinion of our PRC counsel. It is uncertain whether any new PRC laws or regulations relating to VIE structures will be adopted or, if adopted, what they would provide.

If our corporate structure and contractual arrangements are deemed by the relevant regulators that have competent authority, to be illegal, either in whole or in part, we may lose the consolidated VIE, which conducts our manufacturing operations, holds significant assets and accounts for significant revenues, and have to modify such structure to comply with regulatory requirements. However, there can be no assurance that we can achieve this without material disruption to our business. Further, if our corporate structure and contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violations, including:

Furthermore, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to our corporate structure and contractual arrangements. Occurrence of any of these events could materially and adversely affect our business, financial condition and results of operations and the market price of our Ordinary Shares. In addition, if the imposition of any of these penalties or a requirement to restructure our corporate structure causes us to lose the rights to direct the activities of our consolidated VIE or our right to receive their economic benefits for accounting purposes, we would no longer be able to consolidate the financial results of such VIE in our consolidated financial statements for accounting purpose, which may cause the value of our securities to significantly decline or even become worthless.

The VIE Shareholders may have actual or potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to our WFOE, while WFOE has the power to direct the activities of the VIE, which can significantly impact the VIE’s economic performance and has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and, ultimately, the Company. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes and must consolidate the VIE because it met the conditions under U.S. GAAP to consolidate the VIE. We refer to the VIE Shareholders as its nominee shareholders because, although they remain the holders of equity interests on record in the VIE, pursuant to the terms of the Powers of Attorney, each such VIE Shareholder has irrevocably authorized our Company to exercise his rights as a shareholder of the VIE. As of the date of this prospectus, we are not aware of any conflicts between the VIE Shareholders and us. However, the VIE Shareholders may have actual or potential conflicts of interest with us in the future. These VIE Shareholders may refuse to sign or breach, or cause the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE, which would have a material and adverse effect on our ability to receive economic benefits from it for accounting purposes. For example, these VIE Shareholders may be able to cause our agreements with the VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these VIE Shareholders will act in the best interests of our Company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between these VIE Shareholders and our Company. If we cannot resolve any conflict of interest or dispute between us and these VIE Shareholders, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

We may lose the ability to use and enjoy assets held by the VIE that are material to the operation of certain portions of our business if the entity goes bankrupt or becomes subject to a dissolution or liquidation proceeding.

As part of our contractual arrangements with the VIE, the entity holds certain assets that are material to the operation of certain portions of our business for accounting purposes, including permits, domain names and most of our intellectual property rights. If the VIE goes bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. Under the contractual arrangements, the VIE may not, in any manner, sell, transfer, mortgage or dispose of its assets or legal or beneficial interests in the business without our prior consent. If the VIE undergoes a voluntary or involuntary liquidation proceeding, any independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

Contractual arrangements in relation to the VIE may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIE owe additional taxes, which could negatively affect our financial condition and the value of your investment.

Under the applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities within ten years after the taxable year when the transactions are conducted. We could face material and adverse tax consequences if the PRC tax authorities determine that the VIE contractual arrangements were not entered into on an arm’s-length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the income of the VIE in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by the VIE for PRC tax purposes, which could in turn increase their tax liabilities without reducing our WFOE’s tax expenses for accounting purposes. In addition, the PRC tax authorities may impose late payment fees and other penalties on the VIE for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if the tax liabilities of the VIE increase or if it is required to pay late payment fees and other penalties.

Our directors and officers currently own an aggregate of 69.80% of the total voting power of our outstanding Ordinary Shares, and will own 55.11% immediately after the completion of this offering.

Currently, our directors and officers collectively own an aggregate of 69.80% of the total voting power of our outstanding Ordinary Shares. Our directors and officers will collectively own an aggregate of 55.11% of the total voting power of our outstanding Ordinary Shares immediately after the completion of this offering. These beneficial owners could have significant influence on determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions. In cases where their interests are aligned and they vote together, these beneficial owners will also have the power to prevent or cause a change in control. Without the consent of some or all of these shareholders, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. The interests of these beneficial owners may differ from the interests of our other shareholders. The concentration in the ownership of our Ordinary Shares may cause a material decline in the value of our Ordinary Shares. For more information regarding our beneficial owners and their affiliated entities, see “Principal Shareholders.”

You may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.

Cayman Islands law provides shareholders with only limited rights to convene a general meeting and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our amended and restated memorandum and articles of association allow our shareholders holding shares representing in aggregate not less than 10 percent of our voting share capital in issue, to convene a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance notice of at least 21 clear days is required for the convening of our annual general meetings and at least 14 clear days’ notice any other general meeting of our shareholders. For these purposes, “clear days” means that period excluding (a) the day when the notice is given or deemed to be given and (b) the day for which it is given or on which it is to take effect. A quorum required for a meeting of shareholders consists of at least one shareholder (in person or by proxy), holding shares that represent not less than one-third / majority of the outstanding shares carrying the right to vote at such general meeting.

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands exempted company and the majority of our assets are located in the PRC. All of our current operations are conducted in the PRC. In addition, a majority of our current officers and directors (including Yong Bai, Yufang Li, Wei Fang, Yee Man Yung, and Yu Guo) are nationals and residents of mainland China or Hong Kong and a majority of them (including Yong Bai, Yufang Li, Wei Fang, Yee Man Yung, and Yu Guo) are currently located in mainland China or Hong Kong. Lei Lei is currently living in Canada. The majority of the assets of these persons are located in China. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Since the majority of our officers' and directors' reside in mainland China or Hong Kong, it may make it even more difficult to enforce any judgments obtained from foreign courts against such persons compared to other non-U.S. jurisdictions. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to seek recognition and/or enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and the PRC, see “Enforceability of Civil Liabilities.”

The SCNPC or PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that require us, our subsidiaries, the VIE or its subsidiary to obtain regulatory approval from Chinese authorities before or after listing in the U.S.

We are subject to certain legal and operational risks associated with the operations of our PRC operating entities in China. PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes in the operations of the VIE and Nanjing Yonglei, significant depreciation of the value of our Ordinary Shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to variable interest entities, data security, and anti-monopoly concerns. As of the date of this prospectus, our Company, the VIE and its subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have any of them received any inquiry, notice or sanction.

On August 8, 2006, six Governmental Agencies, namely, the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and the SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and were amended on June 22, 2009. The M&A Rules require that among other things, that the Ministry of Commerce, or MOFCOM, be notified in advance of any change of control transaction in which a foreign investor acquires control of a PRC domestic enterprise and involves following circumstances: (i) any important industry is concerned; (ii) such transaction involves factors that impact or may impact national economic security; or (iii) such transaction will lead to a change of control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. The M&A Rules also requires offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, to obtain the approval of CSRC prior to publicly listing their securities on an overseas stock exchange.

Under the current PRC laws and regulations, we do not expect that this offering will trigger MOFCOM pre-notification under the above-mentioned circumstances or any review by other PRC government authorities. However, the application of the M&A Rules remains unclear. If CSRC approval is required, it is uncertain whether it would be possible for us to obtain the approval, and any failure to obtain or delay in obtaining CSRC approval for this offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies. According to our PRC counsel, Han Kun Law Offices, based on their understanding of the current PRC laws, rules and regulations that the CSRC’s approval under the M&A Rules may not be required for our proposed initial public offering and proposed listing on Nasdaq, given that: (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours in this prospectus are subject to this regulation, and (ii) we did not establish our mainland China subsidiary through merger with or acquisition of PRC domestic companies as defined in the M&A Rules.

However, our PRC counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as we do.

Recently, 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. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. On July 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review for public comments, which require, among others, in addition to any “operator of critical information infrastructure,” any “data processor” controlling personal information of no less than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. Later on December 28, 2021, the Measures for Cybersecurity Review (2021 version) were promulgated and became effective on February 15, 2022, which provide that any “online platform operators” controlling personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. The Measures for Cybersecurity Review (2021 version) further elaborated the factors to be considered when assessing the national security risks of the relevant activities. On November 14, 2021, the Cyberspace Administration of China published the Network Internet Data Protection Draft Regulations (draft for comments), which 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. We do not believe we are among the “operator of critical information infrastructure”, “data processor”, “online platform operators” or “data handler” as mentioned above, however, the Measures for Cybersecurity Review (2021 version) were newly adopted and the Network Internet Data Protection Draft Regulations (draft for comments) is in the process of being formulated and it is unclear on how they will be interpreted, amended and implemented by the relevant PRC governmental authorities.

On February 17, 2023, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023, and subjects us to certain compliance requirements. See “Risk Factors —  Risks Related to Our Corporate Structure — Additional compliance procedures may be required in connection with this offering, due to the promulgation of the Trial Measures, the new filing-based administrative rules for overseas offering and listing by domestic companies in China, which could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors and could cause the value of our Ordinary Shares to significantly decline or become worthless.”

The Measures for Cybersecurity Review (2021 version) was newly adopted, the Network Internet Data Protection Draft Regulations (draft for comments) is in the process of being formulated and the Opinions remain unclear on how they will be interpreted, amended and implemented by the relevant PRC governmental authorities. Thus, substantial uncertainties exist with respect to its interpretation and implementation regarding such laws and regulations. Furthermore, we are required by the Trial Measures to complete the filing procedures with the CSRC in connection with this offering, and we cannot assure you that we will be able to complete such filings in a timely manner, or at all. Any failure by us to comply with such filing procedures could impact our operations materially and adversely, and 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.

Furthermore, our Company, the VIE and its subsidiaries, and our investors may face uncertainty about future actions by the government of China that could significantly affect the VIE and its subsidiaries’ financial performance and operations, including the enforceability of the contractual arrangements constituting the VIE Agreements. We cannot assure you that the PRC government will not initiate possible governmental actions or scrutiny to us, which could substantially affect our operation and the value of our Ordinary Shares may depreciate quickly. As of the date of this prospectus, neither our Company nor the VIE has received nor was denied permission from Chinese authorities to list on U.S. exchanges under the PRC laws and regulations currently in effect. However, there is no guarantee that our Company or the VIE will receive, or not be denied, permission from Chinese authorities to list on U.S. exchanges in the future. China’s economic, political and social conditions, as well as interventions and influences of any government policies, laws and regulations are uncertain and could have a material adverse effect on our business.

Additional compliance procedures may be required in connection with this offering, due to the promulgation of the Trial Measures, the new filing-based administrative rules for overseas offering and listing by domestic companies in China, which could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors and could cause the value of our Ordinary Shares to significantly decline or become worthless.

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC; if a domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for an initial public offering in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies. Based on the foregoing, since we did not obtain the approvals from the SEC and Nasdaq for this offering and listing prior to March 31, 2023, the effective date of the Trial Measures, we are required to complete necessary filing procedures with the CSRC pursuant to the Trial Measures.

On February 24, 2023, the CSRC revised the Provisions on Strengthening the Management of Confidentiality and Archives Related to the Overseas Issuance of Securities and Overseas Listing by Domestic Companies, or the Archives Rules issued in 2009. The revised Archives Rules came into effect on March 31, 2023. In the overseas listing activities of domestic companies, domestic companies, as well as securities companies and securities service institutions providing relevant securities services thereof, should establish a sound system of confidentiality and archival work, shall not disclose state secrets, or harm the state and public interests. Where a domestic company provides or publicly discloses to the relevant securities companies, securities service institutions, overseas regulatory authorities and other entities and individuals, or provides or publicly discloses through its overseas listing entity, any document or material involving any state secret or any work secret of any governmental agency, it shall report to the competent authority for approval in accordance with the law, and submit to the secrecy administration department for filing. Securities companies and securities service organizations shall comply with the confidentiality and archive management requirements, and keep the documents and materials properly. Securities companies and securities service institutions that provide domestic enterprises with relevant securities services for overseas issuance and listing of securities shall keep the working papers they compile (such as the records of working plan and procedure, evidence and supporting materials related to the services which are obtained and prepared by the aforementioned service providers) within the territory of the PRC. If such working papers need to be taken abroad, approval shall be obtained in accordance with relevant provisions.

As of the date of this prospectus, we have submitted the application with the CSRC for this offering, as required by the Trial Measures. The filing application is currently under CSRC’s review and we have not yet received CSRC’s approval, as of the date of this prospectus. This offering is contingent upon the approval from the CSRC. We cannot assure you that we will be able to get the clearance of filing procedures under the Trial Measures on a timely basis, or at all. Any failure by us to fully comply with new regulatory requirements, including but limited to the failure to complete the filing procedures with the CSRC if required, may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or become worthless.

To the extent cash in the business is in mainland China or Hong Kong or business may be conducted by a mainland China or Hong Kong entity, such funds may not be available to fund operations or for other use outside of mainland China/Hong Kong, as applicable, due to interventions in, or the imposition of restrictions and limitations on, the ability of the Company, the Company’s subsidiaries, or the VIE by the PRC government to transfer cash.

Relevant PRC laws and regulations permit companies in mainland China to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, each of the companies in mainland China 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. Companies in mainland China are also required to further set aside a portion of their after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at their discretion. These reserves are not distributable as cash dividends. See “Risk Factors — Risks Related to Doing Business in China — We may rely on dividends and other distributions on equity paid by our WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of our WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.” If the Company is considered a tax resident enterprise of the PRC for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax. See “Risk Factors — Risks Related to Doing Business in China — If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and holders of our Ordinary Shares.”

The PRC government also imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The majority of our and the PRC operating entities’ income is received in Renminbi and shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange as long as certain procedural requirements are met. Approval from appropriate government authorities is required if Renminbi is converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders. See “Risk Factors — Risks Related to Doing Business in China — Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.”

As of the date of this prospectus, there are no restrictions or limitations imposed by the Hong Kong government nor under laws in Hong Kong on the transfer of capital within, into, and out of Hong Kong (including funds from Hong Kong to mainland China), except for the transfer of funds involving money laundering, terrorist financing or criminal activity(ies). However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. Pursuant to the Basic Law, the PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to national defense, foreign affairs, and other matters that are not within the scope of autonomy of Hong Kong). While the National People’s Congress of the PRC has the power to amend the Basic Law, the Basic Law also expressly provides that no amendment to the Basic Law shall contravene the established basic policies of the PRC regarding Hong Kong. As a result, national laws of the PRC not listed in Annex III of the Basic Law do not apply to our Hong Kong subsidiary. However, there is no assurance that our Hong Kong subsidiary will not become subject to PRC laws or regulations as a result of any significant change in the current political arrangements between mainland China and Hong Kong or any other unforeseeable reasons, in which event our Hong Kong subsidiary could be subject to similar government controls on the convertibility of foreign currency and the remittance of currency out of Hong Kong as described above.

As a result of the above, to the extent cash in the business is in mainland China or Hong Kong or business may be conducted by a mainland China or Hong Kong entity, such funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong, as applicable, due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the VIE by the competent government to transfer cash.

Risks Related to Doing Business in China

Changes in China’s economic, political or social conditions, as well as possible interventions and influences of any government policies and actions, could have a material adverse effect on our business and operations and the value of our Ordinary Shares.

All of our operations are conducted through the PRC operating entities located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic, social conditions and government policies in China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, 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 payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to a reduction in demand for the products of the PRC operating entities and adversely affect our competitive position. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. In addition, in the past the PRC government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.

Furthermore, our Company, the VIE and its subsidiaries, and our investors may face uncertainty about future actions by the government of China that could significantly affect the VIE and its subsidiaries’ financial performance and operations, including the enforceability of the contractual arrangements that constitute the VIE Agreements. We cannot assure you that the PRC government will not initiate possible governmental actions or scrutiny to us, which could substantially affect our operation and the value of our Ordinary Shares may depreciate quickly.

Our business is subject to various government regulations and regulatory interference in China. If we or the PRC operating entities do not receive, complete, or maintain necessary approvals or filings, or we or the PRC operating entities inadvertently conclude that such approvals or filings are not required, or there is a change in the applicable laws, regulations, or interpretations such that we or the PRC operating entities need to make filings or obtain approvals in the future, it may have a material adverse effect on our business and results of operations, 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 become worthless.

Our business is subject to various government regulations and regulatory interference in China. If we or the PRC operating entities do not receive, complete or maintain necessary approvals or filings, or we or the PRC operating entities inadvertently conclude that such approvals or filings are not required, or there is a change in the applicable laws, regulations, or interpretations such that we or the PRC operating entities need to make filings or obtain approvals in the future, we or the PRC operating entities may be subject to (i) investigations by competent regulatory authorities, (ii) fines or penalties, (iii) orders to suspend the PRC operating entities’ operations and to rectify any non-compliance, or (iv) prohibitions from engaging in relevant businesses and even securities offerings.

However, given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practices by relevant governmental authorities, if the relevant governmental authorities consider that the PRC operating entities are operating without proper approvals, licenses or permits, or if the relevant governmental authorities promulgate new laws and regulations that require additional approvals or licenses or impose additional restrictions on the operation of any part of our business and we or the PRC operating entities are not able to obtain such approvals, licenses or permits or adjust our business model in a timely manner or at all, they have the power, among other things, to levy fines, confiscate our income, revoke or the PRC operating entities’ business licenses, and require the PRC operating entities to discontinue their relevant business. Any of these actions by the relevant governmental authorities may have a material adverse effect on our business and results of operations, 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 become worthless.

Uncertainties with respect to the PRC legal system could adversely affect us.

We conduct our business primarily through the PRC operating entities. Our operations in the PRC are governed by PRC laws and regulations. The PRC operating entities are subject to laws and regulations applicable to foreign investment in PRC. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. In addition, any new or changes in PRC laws and regulations related to foreign investment in PRC could affect the business environment and our ability to operate our business in PRC. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and the enforcement of these laws, regulations and rules involves uncertainties.

In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in PRC. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in PRC may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce contracts we have entered into and could materially and adversely affect our business and results of operations. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. Such unpredictability towards our contractual, property and procedural rights could adversely affect our business and impede our ability to continue our operations.

In addition, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including, but not limited to, regulatory review of overseas listing of PRC companies through special purpose vehicles, and the validity and enforcement of our VIE Agreements. We are also subject to the risks and uncertainties about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations, and the value of our Ordinary Shares may depreciate significantly or become worthless.

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. The Chinese government may choose to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.

Substantially all of the PRC operating entities’ operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. The PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence the PRC operating entities’ operations at any time, which are beyond our control. Therefore, any such action may adversely affect our or the PRC operating entities’ operations and could completely limit or hinder our ability to offer or continue to offer securities to you and cause the value of such securities to significantly decline or be worthless.

In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we and the PRC operating entities may not be aware of our or their violation of these policies and rules until after the occurrence of the violation. 

Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection the PRC operating entities enjoy than in more developed legal systems. These uncertainties may impede the PRC operating entities’ abilities to enforce the contracts they have entered into and could materially and adversely affect their business, financial condition and results of operations.

Recently, 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, 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. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions remain unclear on how the law will be interpreted, amended and implemented by the relevant PRC governmental authorities, but the Opinions and any related implementing rules to be enacted may subject the PRC operating entities’ to compliance requirements in the future.

On July 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review for public comments, which required that, among others, in addition to “operator of critical information infrastructure”, any “data processor” controlling personal information of no less than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities.

On November 14, 2021, the Cyberspace Administration of China released the Network Internet Data Protection Draft Regulations (draft for public comments) and accepted public comments until December 13, 2021. The Network Internet Data Protection Draft Regulations provide that data processors refer to individuals or organizations that autonomously determine the purpose and the manner of processing data. If a data processor that processes personal data of more than one million users intends to list overseas, it shall apply for a cybersecurity review. In addition, data processors that process important data or are listed overseas shall carry out an annual data security assessment on their own or by engaging a data security services institution, and the data security assessment report for the prior year should be submitted to the local cyberspace affairs administration department before January 31 of each year. On December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and took effect on February 15, 2022, which iterates that any “online platform operators” controlling personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. As of the date of this prospectus, based on the facts that (i) the PRC operating entities possess personal information of less than one million users in the PRC, and thus, do not qualify as a critical information infrastructure operator or possess any core data or important data of the PRC or any information, which affects or may affect national security of the PRC; and (ii) neither we nor the PRC operating entities have been informed by any governmental authority of mainland China of any requirement to file for a cybersecurity review, we believe that, without relying on the opinions of any legal counsels, neither we nor any of our PRC operating entities are subject to the cybersecurity review with respect to the offering of our securities or the business operations of our PRC operating entities. However, Measures for Cybersecurity Review (2021 version) was recently adopted and the Network Internet Data Protection Draft Regulations (draft for comments) is in the process of being formulated and the Opinions remain unclear on how they will be interpreted, amended and implemented by the relevant PRC governmental authorities.

There remain uncertainties as to when the final measures will be issued and take effect, how they will be enacted, interpreted or implemented, and whether they will affect us and the PRC operating entities. If we inadvertently conclude that the Measures for Cybersecurity Review (2021 version) do not apply to us, or applicable laws, regulations, or interpretations change and it is determined in the future that the Measures for Cybersecurity Review (2021 version) become applicable to us or the PRC operating entities, we and the PRC operating entities may be subject to review when conducting data processing activities, and may face challenges in addressing its requirements and make necessary changes to our internal policies and practices. We and the PRC operating entities may incur substantial costs in complying with the Measures for Cybersecurity Review (2021 version), which could result in material adverse changes in the PRC operating entities business operations and financial position. If we or the PRC operating entities are not able to fully comply with the Measures for Cybersecurity Review (2021 version), our ability to offer or continue to offer securities to investors may be significantly limited or completely hindered, and our securities may significantly decline in value or become worthless. 

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC. Based on the foregoing, since we did not obtain the approvals from the SEC and Nasdaq for this offering and listing prior to March 31, 2023, the effective date of the Trial Measures, we are required to complete necessary filing procedures with the CSRC pursuant to the Trial Measures. As of the date of this prospectus, we have submitted the application with the CSRC for this offering, as required by the Trial Measures. The filing application is currently under CSRC’s review and we have not yet received CSRC’s approval, as of the date of this prospectus. This offering is contingent upon the approval from the CSRC. We cannot assure you that we will be able to get the clearance of filing procedures under the Trial Measures on a timely basis, or at all. Any failure by us to comply with such filing requirements under the Trial Measures may result in an order to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. As the laws and regulations are relatively new, substantial uncertainties exist with respect to its interpretation and implementation regarding such laws and regulations. Furthermore, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we or the PRC operating entities obtain their approvals for this offering and any follow-on offering, we or the PRC operating entities may be unable to obtain such approvals, which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

Uncertainties regarding the enforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the risk that 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, could result in a material change in our or the PRC operating entities’ operations, financial performance and/or the value of our Ordinary Shares or impair our ability to raise money.

The PRC government exerts substantial influence over the manner in which the PRC operating entities’ conduct their business activities. The PRC government may also intervene or influence the PRC operating entities’ operations and this offering at any time, which could result in a material change in the PRC operating entities’ operations and our Ordinary Shares could decline in value or become worthless.

As of the date of this prospectus, except for the Trial Measures and remaining uncertainties regarding whether we are subject to the cybersecurity review, neither we nor the PRC operating entities are currently explicitly required under applicable laws and regulations in effect to obtain approval from Chinese authorities to list on U.S exchanges. If we are not able to complete such filing procedures with the CSRC pursuant to the Trial Measures, or if our holding company or any of the PRC operating entities are required to obtain any additional approval in the future and are later denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange or continue to offer securities to investors, which events would materially affect the interest of the investors and cause the value of our securities to significantly decline or become worthless.

The Chinese government has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The PRC operating entities’ ability to operate in China may be harmed by changes in its laws and regulations, including, but not limited to, those laws and regulations relating to the manufacture and distribution of medical devices, foreign trade, foreign currency exchange, taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on the PRC operating entities’ part to ensure their 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 or 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 the PRC operating entities to divest themselves of any interest they then hold in their operations in China.

For example, the Chinese cybersecurity regulator announced on July 2, 2021, that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company’s app be removed from smartphone app stores. Similarly, the PRC operating entities’ business segments may be subject to various government and regulatory interference in the regions in which they operate. The PRC operating entities could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. The PRC operating entities may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

Furthermore, it is uncertain when and whether the PRC operating entities 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 subsequently denied or rescinded. The PRC operating entities’ operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to their business or industry. Recent statements by the Chinese government indicating an intent, and the PRC government may take actions, to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, which 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 become worthless.

Substantial uncertainties exist with respect to the interpretation and implementation of newly enacted PRC Foreign Investment Law and its Implementation Rules and how they may impact the viability of our current corporate structure, corporate governance, and operations.

On March 15, 2019, the PRC National People’s Congress approved the PRC Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law, and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. On December 26, 2019, the PRC State Council approved the Implementation Rules of Foreign Investment Law, which came into effect on January 1, 2020. The PRC Foreign Investment Law and its Implementation Rules embody an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since the PRC Foreign Investment Law is relatively new, substantial uncertainties exist with respect to its interpretation and implementation and future actions with respect to such laws and regulations promulgated thereunder 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.

The VIE structure has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in China. See “Risk Factors — Risks Related to Our Corporate Structure” and “Corporate History and Structure.” Under the PRC Foreign Investment Law, “foreign investment” refers to the investment activities directly or indirectly conducted by foreign individuals, enterprises or other entities in China. Although it does not explicitly classify contractual arrangements as a form of foreign investment, there is no assurance that foreign investment via contractual arrangement would not be interpreted as a type of indirect foreign investment activities in the future. In addition, the definition contains a catch-all provision providing that investments made by foreign investors through other methods specified in laws or administrative regulations or other methods prescribed by the State Council, which leaves leeway for future laws, administrative regulations or provisions promulgated by the State Council to provide for contractual arrangements as a method of foreign investment. Given the foregoing, it is uncertain whether our contractual arrangements will be deemed to be in violation of the market entry clearance requirements for foreign investment under the PRC laws and regulations.

The PRC Foreign Investment Law specifies that foreign investments shall be conducted in line with the “negative list” issued by the State Council. A foreign invested enterprise under PRC law, or an FIE, would not be allowed to make investments in prohibited industries in the “negative list,” while the FIE must satisfy certain conditions stipulated in the “negative list” for investment in restricted industries. Although the medical device industry, in which the PRC operating entities operate, is currently not subject to the foreign investment restrictions or prohibitions set forth on the “negative list,” it is uncertain whether the medical device industry will be subject to the “negative list” to be issued in the future. Moreover, the PRC Foreign Investment Law does not indicate what actions must be taken by existing companies with a VIE structure to obtain the market entry clearance if such structure would be deemed as a method of foreign investment. If the VIE structure would be deemed as a method of foreign investment, and any of our business operation would fall in the “negative list,” and if the interpretation and implementation of the PRC Foreign Investment Law and the final “negative list” mandate further actions, such as market entry clearance granted by the PRC Ministry of Commerce, to be completed by companies with an existing VIE structure like us, we face uncertainties as to whether such clearance can be timely obtained, or at all. There are uncertainties as to how the PRC Foreign Investment Law would be further interpreted and implemented. We cannot assure you that the interpretation and implementation of the PRC Foreign Investment Law made by the relevant governmental authorities in the future will not materially impact the viability of our current corporate structure, corporate governance and business operations in any aspect.

We may rely on dividends and other distributions on equity paid by our WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of our WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.

We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity from our WFOE for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and for services of any debt we may incur. Our WFOE’s ability to distribute dividends in turn depends on the payment it receives from the VIE as service fees pursuant to certain contractual arrangements among our WFOE, the VIE and the VIE Shareholders entered into to comply with certain restrictions under PRC law on foreign investment. For more information on such contractual arrangements, see “Corporate History and Structure — Our VIE Agreements.”

According to the Foreign Investment Law of the PRC and its implementing rules, which jointly established the legal framework for the administration of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into or out of China its contributions, profits, capital earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any foreign currency, and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency. According to the Company Law of the PRC and other Chinese laws and regulations, our WFOE may pay dividends only out of its respective accumulated profits as determined in accordance with Chinese accounting standards and regulations. In addition, our WFOE is required to set aside at least 10% of its accumulated after-tax profits, if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Where the statutory reserve fund is insufficient to cover any loss our WFOE incurred in the previous financial year, its current financial year’s accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be distributed to us as dividends. At its discretion, our WFOE may allocate a portion of its after-tax profits based on Chinese accounting standards to a discretionary reserve fund. Any limitation on the ability of our WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business

Renminbi is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of our WFOE to use its potential future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability of our WFOE to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The renminbi is currently convertible under the “current account,” which includes dividends and trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and foreign currency debt, including loans we may secure for our onshore subsidiary. Currently, our WFOE may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE”) by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by SAFE for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on currency exchange may limit our ability to utilize revenues generated in renminbi to fund our business activities outside of China or pay dividends in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.

In response to the persistent capital outflow and the RMB’s depreciation against U.S. the dollar in the fourth quarter of 2016, the People’s Bank of China and the SAFE have implemented a series of capital control measures over recent 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 People’s Bank of China issued the Circular on Further Clarification of Relevant Matters Relating to offshore RMB Loans Provided by Domestic Enterprises, or the PBOC Circular 306, on November 22, 2016, which provides that offshore RMB loans provided by a domestic enterprise to offshore enterprises that it holds equity interests in shall not exceed 30% of the domestic enterprise’s ownership interest in the offshore enterprise. The PBOC Circular 306 may constrain our WFOE’ ability to provide offshore loans to us. The PRC government may continue to strengthen its capital controls and our WFOE’s dividends and other distributions may be subjected to tighter scrutiny in the future. Any limitation on the ability of our WFOE to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Under the Enterprise Income Tax Law and related regulations, dividends, interests, rent or royalties payable by a foreign invested enterprise, such as our WFOE, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax. Undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 are exempted from any withholding tax. The Cayman Islands, where our Company is incorporated, does not have such a tax treaty with China. Hong Kong has a tax arrangement with China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the PRC enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. If our WFOE declares and distributes profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our Company.

Fluctuations in exchange rates could have a material adverse impact on our results of operations and the value of your investment.

The conversion of the Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

Significant fluctuation of the Renminbi may have a material adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

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

Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

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. We receive a significant portion of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from our mainland China subsidiary to fund any cash and financing requirements we may have. 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 State Administration of Foreign Exchange, or 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 mainland China subsidiary in China may be used to pay dividends to our Company.

However, approval from or registration with appropriate government 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 mainland China subsidiary and VIE 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.

In light of the recent flood of capital outflows of China due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped up scrutiny of major outbound capital movement, including overseas direct investment. More restrictions and substantial vetting process have been put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement on a timely basis or at all, it may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. 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 the Ordinary Shares.

PRC regulation of loans to and direct investment in the PRC operating entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of this offering, to make loans or additional capital contributions to our WFOE, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Any funds we transfer to our WFOE, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on Foreign Investment Enterprises (“FIEs”) in China, capital contributions to our mainland China subsidiary are subject to the information report with the MOFCOM or their respective local branches and registration with a local bank authorized by the SAFE. In addition, any foreign loan procured by our WFOE cannot exceed statutory limits and is required to be registered with SAFE or its respective local branches. Any medium or long-term loan to be provided by us to the VIE must be registered with the National Development and Reform Commission, or NDRC, and the SAFE or its local branches. We may not be able to complete such registrations on a timely basis, with respect to future capital contributions or foreign loans by us to our WFOE. If we fail to complete such registrations, our ability to use the proceeds of this offering, and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect on June 1, 2015, revised on December 30, 2019 and March 23, 2023, respectively. SAFE Circular 19 launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEs from using the Renminbi fund converted from their foreign exchange capital for expenditure beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. The SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, effective in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from foreign currency to Renminbi on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including, but not limited to, foreign currency capital and foreign debts) on a self-discretionary basis which applies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its non-affiliated entities. As this circular is relatively new, there remains uncertainty as to its interpretation and application and any other future foreign exchange related rules. Violations of these Circulars could result in monetary or other penalties. SAFE Circular 19 and SAFE Circular 16 may limit our ability to use Renminbi converted from the net proceeds of this offering, to fund the establishment of new entities in China by the VIE, to invest in or acquire any other PRC companies through our WFOE, or to establish new consolidated VIE in China, which may adversely affect our business, financial condition and results of operations.

On October 23, 2019, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment. However, since the SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent banks will carry this out in practice.

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, if at all, with respect to future loans made by us to our WFOE or with respect to future capital contributions made by us to our WFOE. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we receive from our initial public 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.   

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our WFOE to liability or penalties, limit our ability to inject capital into our  WFOE, limit our WFOE’s ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. If our shareholders who are PRC residents or entities fail to make the required registration or to update the previously filed registration, our WFOE may be prohibited from distributing their profits and any proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our WFOE.

We have requested PRC residents who we know hold a direct or indirect interest in the Company to make the necessary applications, filings and registrations as required under SAFE Circular 37, and we have confirmed that all of these shareholders have completed the initial foreign exchange registrations with relevant banks. We cannot assure you, however, that all of these individuals may continue to make the required filings or updates in a timely manner, or at all. We can provide no assurance that we are or will in the future continue to be informed of identities of all PRC residents holding a direct or indirect interest in our Company. Any failure or inability by such individuals to comply with SAFE regulations may subject us to fines or legal sanctions, restrict our cross-border investment activities, and limit our WFOE’s ability to distribute dividends to us. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

In addition, on February 13, 2015, the SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

It may be difficult for overseas regulators to conduct investigations or collect evidence within China.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “Risk Factors — Risks related to the Ordinary Shares and this Offering — You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law” for risks associated with investing in us as a Cayman Islands company.”

The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

Among other things, the M&A Rules adopted by six PRC regulatory agencies in 2006 and amended in 2009, established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. Such regulation requires, among other things, that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2008 and revised on September 18, 2018, are triggered. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of National People’s Congress, which became effective in 2008 and revised on August 1, 2022, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by State Administration for Market Regulation, or the SAMR, the successive authority of MOFCOM, before they can be completed. In addition, the security review rules issued by the State Council that became effective in September  2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses, which may be subject to SAMR merger review. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Recently, 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 Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirements in the future. As these opinions were recently issued, official guidance and interpretation of the opinions remain unclear in several respects at this time. Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all.

If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and holders of our Ordinary Shares.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body” within the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular applies only to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board customers or senior executives habitually reside in the PRC.

We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that MED EIBY Holding Co., Limited is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from interest or dividends we pay to our noteholders and shareholders that are non-resident enterprises, including the holders of our Ordinary Shares. In addition, non-resident enterprise noteholders and shareholders (including holders of our Ordinary Shares) may be subject to PRC tax at a rate of 10% on gains realized on the sales or other disposition of the Ordinary Shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed to be a PRC resident enterprise, dividends paid to our non-PRC individual shareholders (including the holders of Ordinary Shares) and any gain realized on the transfer of the Ordinary Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the Ordinary Shares.

The PRC operating entities may be liable for improper use or appropriation of personal information provided by their customers and any failure to comply with PRC laws and regulations over data security could result in materially adverse impact on our business, results of operations, our listing on Nasdaq, and this offering.

The business of the PRC operating entities involves collecting and retaining certain internal and customer data. The PRC operating entities also maintain information about various aspects of their operations as well as regarding their employees. The integrity and protection of customer, employee and company data is critical to our business. The customers and employees of the PRC operating entities expect that we will adequately protect their personal information. The PRC operating entities are required by applicable laws to keep strictly confidential the personal information that they collect, and to take adequate security measures to safeguard such information.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal information obtained in performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. The legal consequences of violation of the Cyber Security Law include penalties of warning, confiscation of illegal income, suspension of related business, winding up for rectification, shutting down the websites, and revocation of business licenses or relevant permits.

The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the Cyberspace Administration of China, the Ministry of Industry and Information Technology, and the Ministry of Public Security, have been increasingly focused on regulation in data security and data protection.

The PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in China, including the Cyberspace Administration of China, the Ministry of Public Security and the State Administration for Market Regulation, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. In April 2020, the Chinese government promulgated Cybersecurity Review Measures, which came into effect on June 1, 2020. According to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security.

Further, the Measures for Cybersecurity Review (2021 version) issued by the Cyberspace Administration of China and which became effective on February 15, 2022, include the following key changes:

Currently, the Measures for Cybersecurity Review (2021 version) was newly adopted, and its implementation provisions and explanations remain substantially uncertain and may be subject to change. If the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals or ex-post record-filings for this offering and any follow-on offering, we may become subject to enhanced cybersecurity review. Certain internet platforms in China have been reportedly subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this prospectus, as a manufacturer of medical devices through the PRC operating entities in China, we do not possess personal information of more than one million users in the PRC, and do not qualify as a critical information infrastructure operator or possess any core data or important data of the PRC or any information, which affects or may affect national security of the PRC, and we have not been informed by any PRC governmental authority of any requirement that we file for a cybersecurity review. 

However, if we are deemed to be a critical information infrastructure operator or a company that is engaged in data processing and holds personal information of more than one million users, we could be subject to PRC cybersecurity review.

As there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we could be subject to cybersecurity review, and if so, we may not be able to pass such review in relation to this offering. In addition, we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business and website closure, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations. For instance, Shenzhen Bestman did not file a record with relevant governmental authorities regarding its provision of certain non-commercial information services through a mobile application program, “Bestman,” which program was a mobile tool that permitted the medical device users to obtain their own data generated by themselves when using their medical device without data storage or transmission through the internet. As of the date of this prospectus, this mobile application program has been removed from the app store and Shenzhen Bestman has terminated the operations at its own option. However, if relevant governmental authorities determine that this mobile application program or Shenzhen Bestman breached any laws and regulations regarding internet information services or internet drug information services, penalties such as warnings, orders to make corrections within a specified time, or orders to shut down such mobile application program may be imposed, pursuant to the Measures for the Administration of Internet Information Services, the Administrative Measures on Internet Drug Information Services, the Measures for the Administrative Provisions on Mobile Internet Applications Information Services, and other applicable PRC laws and regulations. As of the date of this prospectus, we have not been involved in any investigations on cybersecurity review initiated by the Cyber Administration of China or related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect. We believe that we are in compliance with the aforementioned regulations and policies that have been issued by the Cyber Administration of China.

On October 29, 2021, the Cyberspace Administration of China published the Draft Outbound Data Transfer Security Assessment Measures (the “Draft Outbound Data Transfer Security Assessment Measures”), which specify the circumstances in which data handlers providing data outbound shall apply for outbound data transfer security assessment with the Cyberspace Administration, including, among others, the operator of critical information infrastructure provide personal information outbound collected and generated by them. On November 14, 2021, the Cyberspace Administration of China published the Network Internet Data Protection Draft Regulations (draft for comments), which 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. The Measures for Cybersecurity Review (2021 version) and the Draft Outbound Data Transfer Security Assessment Measures were newly adopted, and the Network Internet Data Protection Draft Regulations (draft for comments) are in the process of being formulated. We do not know whether the regulations will be adopted or how such regulations will affect us and our listing on Nasdaq. In the event that the Cyberspace Administration of China determines that we are subject to these regulations, we may be required to delist from Nasdaq and we may be subject to fines and penalties.

On June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which became effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information.

If the implementation of the Measures for Cybersecurity Review (2021 version), the Draft Outbound Data Transfer Security Assessment Measures and/or the Network Internet Data Protection Draft Regulations (draft for comments) mandates clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all. As of the date of this prospectus, we do not expect that the current PRC laws on cybersecurity or data security would have a material adverse impact on our business operations and this offering. However, as uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we will comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. We may also become subject to fines and/or other sanctions and the costs of compliance with, and other burdens imposed by such laws and regulations may limit the use and adoption of our products, which may have material adverse effect on our business, operations and financial condition.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the prospectus based on foreign laws.

We are an exempted company incorporated under the laws of the Cayman Islands, we conduct all of our operations in China and the majority of our assets are located in mainland China. In addition, the majority of our current officers and directors (including Yong Bai, Yufang Li, Wei Fang, Yee Man Yung, and Yu Guo) are nationals and residents of mainland China or Hong Kong and the majority of them (including Yong Bai, Yufang Li, Wei Fang, Yee Man Yung, and Yu Guo) are currently located in mainland China or Hong Kong. As a result, it may be difficult for you to effect service of process upon us or those persons inside China. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, as none of them currently resides in the United States or has substantial assets located in the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.

The recognition and enforcement of foreign judgments 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. China does not have any treaties or other forms of written arrangement with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts 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 the Cayman Islands.

It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with its counterparts of another country or region to monitor and oversee cross-border securities activities, such regulatory cooperation with the securities regulatory authorities in the U.S. may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the PRC State Council and the competent departments of the PRC State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.   

The enactment of Hong Kong National Security Law could impact our Hong Kong holding subsidiary.

On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offences — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, U.S. President Donald Trump signed the HKAA into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on eleven individuals, including HKSAR chief executive Carrie Lam. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions may directly affect the foreign financial institutions as well as any third parties or customers dealing with any foreign financial institution that is targeted. It is difficult to predict the full impact of the Hong Kong National Security Law and HKAA on Hong Kong and companies located in Hong Kong. If our Hong Kong subsidiary is determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, our business operations, financial position and results of operations could be materially and adversely affected.

Risks Related to This Offering and the Ordinary Shares

The initial public offering price of our Ordinary Shares may not be indicative of the market price of our Ordinary Shares after this offering. In addition, an active, liquid and orderly trading market for our Ordinary Shares may not develop or be maintained, and our share price may be volatile.

Prior to the completion of this offering, our Ordinary Shares were not traded on any market. Any active, liquid and orderly trading market for our Ordinary Shares may not develop or be maintained after this offering. Active, liquid and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors’ purchase and sales orders. The market price of our Ordinary Shares could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our Ordinary Shares, you could lose a substantial part or all of your investment in our Ordinary Shares. The initial public offering price will be determined by us, based on numerous factors and may not be indicative of the market price of our Ordinary Shares after this offering. Consequently, you may not be able to sell our Ordinary Shares at a price equal to or greater than the price paid by you in this offering.

The following factors could affect our share price:

The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Ordinary Shares. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and harm our business, operating results and financial condition.

Our Ordinary Shares have never been publicly traded, and, as such, the price of our Ordinary Shares may fluctuate substantially.

Before this initial public offering, there was no public market for our Ordinary Shares. The initial public offering price for our Ordinary Shares will be determined through negotiations between the underwriters and us and may vary substantially from the market price of our Ordinary Shares following this offering. An active public trading market may not develop after completion of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other products, technologies or businesses using our Ordinary Shares as consideration. Furthermore, if our Ordinary Shares are approved for listing on Nasdaq, there can be no guarantee that we will continue to satisfy the continued listing standards of Nasdaq. If we fail to satisfy the continued listing standards, we could be de-listed, which would have a negative effect on the price of our Ordinary Shares and impair your ability to sell your shares.

Following this offering, the market price of our Ordinary Shares may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including:

In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. Broad market and industry factors may significantly affect the market price of our Ordinary Shares, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our Ordinary Shares shortly following this offering. If the market price of our Ordinary Shares after this offering does not ever exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

In addition, in the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business, results of operations, financial condition and reputation. These factors may materially and adversely affect the market price of our Ordinary Shares.

You will experience immediate and substantial dilution.

The initial public offering price of our shares is substantially higher than the pro forma net tangible book value per share of our Ordinary Shares. Assuming the completion of the offering, if you purchase shares in this offering, you will incur immediate dilution of approximately $4.37 per share or approximately 87.40% from the assumed offering price of $5.00 per share, which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, and after deducting estimated underwriter fees and discounts and estimated offering expenses payable by us. Accordingly, if you purchase shares in this offering, you will incur immediate and substantial dilution of your investment. See “Dilution.”

Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on a price appreciation of the Ordinary Shares for a return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the Ordinary Shares as a source for any future dividend income.

A sale or perceived sales of a substantial number of our Ordinary Shares may cause the price of our Ordinary Shares to decline.

If our shareholders sell substantial amounts of our Ordinary Shares in the public market, the market price of our Ordinary Shares could fall. Moreover, the perceived risk of this potential dilution could cause shareholders to attempt to sell their shares and investors to short our Ordinary Shares. These sales also make it more difficult for us to sell equity-related securities in the future at a time and price that we deem reasonable or appropriate.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding the Ordinary Shares, the market price for the Ordinary Shares and trading volume could decline.

The trading market for our Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If industry or securities analysts decide to cover us and in the future downgrade our Ordinary Shares, the market price for our Ordinary Shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our Ordinary Shares to decline.

There can be no assurance that we will not be a passive foreign investment company (“PFIC”) for United States federal income tax purposes for any taxable year, which could subject United States holders of our Ordinary Shares to significant adverse United States federal income tax consequences.

A non-United States corporation will be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such taxable year is passive income or (ii) at least 50% of the value of its assets (based on average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. Based on the current and anticipated value of our assets and the composition of our income assets, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year ended June 30, 2021 or in the foreseeable future. However, the determination of whether or not we are a PFIC according to the PFIC rules is made on an annual basis and will depend on the composition of our income and assets and the value of our assets from time to time. Therefore, changes in the composition of our income or assets or value of our assets may cause us to become a PFIC. The determination of the value of our assets (including goodwill not reflected on our balance sheet) may be based, in part, on the quarterly market value of Ordinary Shares, which is subject to change and may be volatile.

The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether we are or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain Internal Revenue Service, or IRS, guidance relating to the classification of assets as producing active or passive income. Such regulations guidance is potentially subject to different interpretations. If due to different interpretations of such regulations and guidance the percentage of our passive income or the percentage of our assets treated as producing passive income increases, we may be a PFIC in one or more taxable years.

If we are a PFIC for any taxable year during which a United States person holds Ordinary Shares, certain adverse United States federal income tax consequences could apply to such United States person. For more information see “Taxation — Material U.S. Federal Income Tax Consequences — Passive Foreign Investment Company.”

Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.

On December 18, 2020, the former U.S. president signed into law the HFCAA. In essence, the HFCAA requires the SEC to prohibit foreign companies from listing securities on U.S. securities exchanges if a company retains a foreign accounting firm that cannot be inspected by the PCAOB for two consecutive years. On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA which became effective on January 10, 2022. The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection.

On September 22, 2021, the PCAOB adopted a new rule related to its responsibilities under the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether it 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. The new rule became effective on November 4, 2021. On December 16, 2021, the PCAOB issued a report notifying the SEC of its determinations (the “PCAOB Determination Report”) that they are unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong. The report sets forth lists identifying the registered public accounting firms headquartered in mainland China and Hong Kong, respectively, that the PCAOB is unable to inspect or investigate completely.  

This lack of PCAOB inspections of audit work performed in the PRC prevents the PCAOB from regularly and fully evaluating audit work of any auditors that was performed in the PRC. As a result, investors may be deprived of the full benefits of PCAOB inspections, and thus may lose confidence in our and the PRC operating entities reported financial information and procedures and the quality of our and the PRC operating entities’ financial statements. 

Our auditor, Marcum Asia CPAs LLP, or Marcum Asia, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Marcum Asia CPAs LLP, is headquartered in New York, New York, and has been inspected by the PCAOB on a regular basis  and was not included in the list of PCAOB Identified Firms in the PCAOB Determination Report issued in December 16, 2021.

On August 26, 2022, the CSRC, the MOF, and the PCAOB signed a Protocol, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 29, 2022, President Biden signed into law the Accelerating Holding Foreign Companies Accountable Act as a part of the Consolidated Appropriations Act, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiating new investigations, as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA, if necessary. There can be no assurance that we will be able to comply with requirements imposed by U.S. regulators if there is a significant change to current political arrangements between mainland China and Hong Kong, or if any component of our auditor’s work papers become located in mainland China in the future. Delisting of our Ordinary Shares would force holders of our Ordinary Shares to sell their Ordinary Shares. The market price of our Ordinary Shares could be adversely affected as a result of anticipated negative impacts of these executive or legislative actions upon, regardless of whether these executive or legislative actions are implemented and regardless of our actual operating performance.

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

We are classified as an “emerging growth company” under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things, (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (iii) provide certain disclosure regarding executive compensation required of larger public companies, or (iv) hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.235 billion of revenues in a fiscal year, have more than $700 million in market value of our Ordinary Shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such 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 have elected to take advantage of the extended transition period. As a result of this election, our future financial statements may not be comparable to other public companies that comply with the public company effective dates for these new or revised accounting standards.

To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our Ordinary Shares to be less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile.

If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Ordinary Shares may be materially and adversely affected.

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our consolidated financial statements as of and for the fiscal years ended June 30, 2023 and 2024, and balance sheet data as of June 30, 2023 and 2024, we and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies. The material weaknesses identified included (i) a lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements; (ii) a lack of formal internal controls over financial closing and reporting processes; and (iii) a lack of independent directors and an audit committee. Following the identification of the material weaknesses and control deficiencies, we plan to continue to take remedial measures including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and (iv) appointing independent directors, establishing an audit committee, and strengthening corporate governance. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

Upon the completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. 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, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, 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. 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 the Ordinary 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 Ordinary Shares may not be able to remain listed on the Nasdaq Capital Market.

Certain data and information in this prospectus were obtained from third-party sources and were not independently verified by us.

We have engaged Frost & Sullivan to prepare a commissioned industry report that analyzes the PRC medical device industry. The report is entitled “Market Study of Global Ultrasonic Vascular Doppler Detector, Fetal Monitor, Fetal Doppler, Blood and Infusion Warmer, Infrared Mammography, Intelligent Disinfection Vehicle industry” (the “Frost & Sullivan report”). Information and data relating to the PRC medical device industry included in this prospectus have been derived from Frost & Sullivan’s report. Statistical data included in the Frost & Sullivan report also include projections based on a number of assumptions. The PRC medical device industry may not grow at the rate projected by market data, or at all. Any failure of the PRC medical device industry to grow at the projected rate may have a material adverse effect on our business and the market price of our Ordinary Shares. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.

We have not independently verified the data and information contained in the Frost & Sullivan report or any third-party publications and reports Frost & Sullivan has relied on in preparing its report. Data and information contained in such third-party publications and reports may be collected using third-party methodologies, which may differ from the data collection methods used by us. In addition, these industry publications and reports generally indicate that the information contained therein is believed to be reliable, but do not guarantee the accuracy and completeness of such information.

As a foreign private issuer, we are not subject to certain U.S. securities law disclosure requirements that apply to a domestic U.S. issuer, which may limit the information publicly available to our shareholders.

As a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and therefore there may be less publicly available information about us than if we were a U.S. domestic issuer. For example, we are not subject to the proxy rules in the United States and disclosure with respect to our annual general meetings will be governed by Cayman Islands legal requirements. 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 and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors and principal shareholders purchase or sell our Ordinary Shares.

We will be a “controlled company” within the meaning of the Nasdaq listing rules, and may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.

Following this offering, our founder, Mr. Yong Bai, will continue to own more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to rely on the “controlled company” exemptions under the Nasdaq listing rules even if we are deemed to be a “controlled company,” we could elect to rely on these exemptions in the future. If we were to elect to rely on the “controlled company” exemptions, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing standards.

As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq listing standards that allow us to follow Cayman Islands law for certain governance matters. Certain corporate governance practices in the Cayman Islands may differ significantly from corporate governance listing standards as, except for general fiduciary duties and duties of care, Cayman Islands law has no corporate governance regime which prescribes specific corporate governance standards. Currently, we do not intend to rely on home country practice with respect to our corporate governance after we complete with this offering. However, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would have under corporate governance listing standards applicable to U.S. domestic issuers.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.

Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England. Decisions of the Privy Council (which is the final Court of Appeal for British Overseas Territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal, are generally of persuasive authority but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority.

The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions the Companies Act (Revised) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Differences in Corporate Law.”

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of our Ordinary Shares are directly or indirectly held by residents of the U.S. and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq listing rules. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.

Our management team lacks experience in managing a U.S.-listed company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial conditions, and results of operations.

Our current management team lacks experience in managing a company publicly traded in the U.S., interacting with public company investors and complying with the increasingly complex laws pertaining to U.S.-listed public companies. Prior to the completion of this offering, we mainly operate our businesses as a private company in the PRC. As a result of this offering, our Company will become subject to significant regulatory oversight and reporting obligations under the U.S. federal securities laws and the scrutiny of securities analysts and investors, and our management currently has no experience in complying with such laws, regulations and obligations. Our management team may not successfully or efficiently manage our transition to becoming a U.S.-listed public company. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial conditions and results of operations.

We have broad discretion in the use of the net proceeds from our initial public offering and may not use them effectively.

To the extent (i) we raise more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) we determine that the proposed uses set forth in that section are no longer in the best interests of our Company, we cannot specify with any certainty the particular uses of such net proceeds that we will receive from our initial public offering. Our management will have broad discretion in the application of such net proceeds, including working capital, possible acquisitions, and other general corporate purposes, and we may spend or invest these proceeds in a way with which our shareholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest the net proceeds from our initial public offering in a manner that does not produce income or that loses value.

The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies.

Upon completion of this offering, we will be a public company in the United States. As a public company, we will be required to file periodic reports with the SEC upon the occurrence of matters that are material to our Company and shareholders. Although we may be able to attain confidential treatment of some of our developments, in some cases, we will need to disclose material agreements or results of financial operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with our Company. Similarly, as a U.S. public company, we will be governed by U.S. laws that our competitors, which are mostly private Chinese companies, are not required to follow. To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public company status could affect our results of operations.

Certain existing shareholders have substantial influence over our Company and their interests may not be aligned with the interests of our other shareholders.

Upon the completion of this offering, our directors and officers will collectively own an aggregate of 55.11% of the total voting power of our outstanding Ordinary Shares. As a result, they have substantial influence over our business, including significant corporate actions such as mergers, consolidations, election of directors and other significant corporate actions.

They may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our Company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our Company and may reduce the price of the Ordinary Shares. These actions may be taken even if they are opposed by our other shareholders, including those who purchase Ordinary Shares in this offering. In addition, the significant concentration of share ownership may adversely affect the trading price of the Ordinary Shares due to investors’ perception that conflicts of interest may exist or arise. For more information regarding our principal shareholders and their affiliated entities, see “Principal Shareholders.”

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,” “Our Business” and “Regulation.” 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 are subject to various and significant risks and uncertainties, including those which are beyond our control. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. 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 thoroughly read this prospectus and the documents that we refer to herein 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. We disclaim any obligation to update our forward-looking statements, except as required by law.

Industry Data and Forecasts

This prospectus contains data related to the PRC operating entities’ industry and market position in China and globally. This industry data includes projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The medical device industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on the PRC operating entities’ business and, accordingly, the market price of our Ordinary Shares. In addition, the rapidly changing nature of the medical device industry subjects any projections or estimates relating to the growth prospects or future condition of the PRC operating entities’ operations to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately US$16.93 million after deducting underwriting discounts and estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of US$5.00 per Ordinary Share, which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus.

We plan to use the net proceeds of this offering as follows in the order of priority:

On March 23, 2022, Shenzhen Bestman entered into the Framework Agreement with Tiantang Group, a Ugandan company and Mr. Zhigang Zhang, the legal representative of Tiantang Group. The material terms of the Framework Agreement include, among other things, (i) the project: the parties will establish a joint venture company in Uganda before April 2022*, (ii) the scope of cooperation: the scale of construction (the specific provisions for funds to be invested shall be subject to a separate agreement to be entered into later by the parties); (iii) the cooperation mode and share distribution: Tiantang Group will own 15% shares of the joint venture company and Shenzhen Bestman will own 85% shares of the joint venture company; (iv) termination: the agreement may only be terminated by mutual agreement of the parties, upon material breach, or upon an event of force majeure; and (v) dispute resolution: any disputes shall be submitted to the People's Court of the respective locations of the parties. Due to the early COVID-19 pandemic policy adopted by the Chinese government, the parties did not form the joint venture company in April 2022, as originally contemplated.

*On August 7, 2022, the parties entered into a Supplemental Agreement and changed the timeline for the establishment of the joint venture company from “before April 2022” to a date the parties will agree to “at their earliest convenience.” However, due to a change in business development strategies and goals, on July 10, 2023, Shenzhen Bestman terminated the Framework Agreement with Tiantang Group. Shenzhen Bestman intends to seek other opportunities to acquire or invest in other businesses and expand its African markets. As of the date of this prospectus, no specific business target has been identified yet.

Shenzhen Bestman expects to invest approximately $1.5 million in expanding its African markets.

Mergers, investments or acquisitions that we or the PRC operating entities may enter into in the future entail a number of risks that could materially and adversely affect the PRC operating entities’ business, operating and financial results. We cannot assure you that such mergers, investments, or acquisitions will be successfully completed or, if they are completed, there is no assurance that such mergers, investments, or acquisitions will generate revenue for us in the future. See “Risk Factor — Risks Related to the Business and Industry of the PRC operating entities — We or the PRC operating entities may undertake mergers, acquisitions or investments to expand the PRC operating entities’ business, which may pose risks to our business and dilute the ownership of our existing shareholders, and we or the PRC operating entities may not realize the anticipated benefits of these mergers, acquisition or investments.” In addition, if, for any reason, the anticipated proceeds are not sufficient to fund all the proposed purposes, we intend to seek capital investment from institutional investors or obtain short-term or long-term borrowings. If we are unable to obtain sufficient financing, we intend to adjust or downscale our plans for expanding spaces and service offerings and potential strategic investments and acquisitions. See “Risk Factor — Risks Related to the Business and Industry of the PRC operating entities — If capital resources required for our planned growth or development are not available, we may be unable to successfully implement our business strategy.”

The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions. The foregoing represents our intentions as of the date of this prospectus based upon our current plans and business conditions to use and allocate the net proceeds of this offering. However, our management will have significant flexibility and discretion in applying the net proceeds of this offering. Unforeseen events or changed business conditions may result in application of the proceeds of this offering in a manner other than as described in this prospectus.

As an offshore holding company, under PRC laws and regulations, we are only permitted to use the net proceeds of this offering to provide loans or make capital contributions to our mainland China subsidiary or to provide loans to the VIE. Provided that we make the necessary registrations with government authorities and obtain the required governmental approvals, we may extend inter-company loans or make additional capital contributions to our mainland China subsidiary to fund their capital expenditures or working capital requirements.

We may not be able to make such registrations or obtain such approvals in a timely manner, or at all. See “Risk Factors — Risks Related to Doing Business in China — PRC regulation of loans to and direct investment in the PRC operating entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of this offering, to make loans or additional capital contributions to our mainland China subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

DIVIDEND POLICY

We have not previously declared or paid cash dividends. We do not have any plan to declare or pay any cash dividends on our Ordinary Shares in the foreseeable future after this offering. We intend to retain most, if not all, of our available funds and future earnings to operate and expand our business.

Our Board of Directors has complete discretion as to whether to distribute dividends. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our Board of Directors. In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely that we may only pay dividends out of profits or share premium, and provided that in no circumstances may a dividend be paid if it would result in us being unable to pay our debts as they fall due in the ordinary course of business. 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 our Board of Directors may deem relevant.

We are an exempted company with limited liability incorporated in the Cayman Islands. We rely principally on dividends distributed by our WFOE and payments from our operating entities for our cash requirements, including distribution of dividends to our shareholders. Dividends distributed by our mainland China subsidiary are subject to PRC taxes.

In addition, PRC regulations may restrict the ability of our mainland China subsidiary to pay dividends to us and only allow a PRC company to pay dividends out of its accumulated distributable after-tax profits as determined in accordance with its articles of association and the PRC accounting standards and regulations. See “Risk Factors — Risks Related to Doing Business in China — We may rely on dividends and other distributions on equity paid by our WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of our WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.” and “Regulation — Regulations Relating to Dividend Distribution.”

To the extent we pay any dividends on our Ordinary Shares, we will pay those dividends which are payable in respect of our Ordinary Shares to the depositary, as the registered holder of such Ordinary Shares, and the depositary then will pay such amounts to the holders of our Ordinary Share, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See “Description of Share Capital.” Cash dividends on our Ordinary Shares, if any, will be paid in U.S. dollars.

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2024, which is presented on:

You should read this table in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus: 

A $1.00 increase in the assumed initial public offering price of $5.00 per Ordinary Share, which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, would increase each of additional paid-in capital, total shareholders’ equity and total capitalization by $3.7 million, assuming the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated expenses payable by us.

DILUTION

If you invest in our Ordinary Shares, your interest will be diluted for each Ordinary Share you purchase to the extent of the difference between the initial public offering price per Ordinary Share and our net tangible book value per Ordinary Share after this offering. Dilution results from the fact that the initial public offering price per Ordinary Share is substantially in excess of the net tangible book value per Ordinary Share attributable to the existing shareholders for our presently outstanding Ordinary Shares.

Our net tangible book value as of June 30, 2024 was negative $5,911,684, or negative $0.39 per Ordinary Share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as adjusted for the offering) from the initial public offering price per Ordinary Share and after deducting the estimated discounts to the Underwriter and the estimated offering expenses payable by us.

After giving effect to our sales of 4,000,000 Ordinary Shares offered in this offering, based on the initial public offering price of $5.00 per Ordinary Share, which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, and after the deduction of the estimated discounts to the Underwriter and the estimated offering expenses payable by us, our as adjusted net tangible book value as of June 30, 2024, would have been $11,904,468, or $0.63 per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of $1.02 per Ordinary Share, and an immediate dilution of $4.37 per Ordinary Share to investors purchasing Ordinary Shares in this offering. The as adjusted information discussed above is illustrative only.

The following table illustrates such dilution:

The following table summarizes, on a pro forma as adjusted basis as of June 30, 2024, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares purchased from us, the total consideration paid and the average price per Ordinary Share and per Ordinary Share paid before deducting underwriting discounts and estimated offering expenses payable by us.

The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the Ordinary Shares and other terms of this offering determined at pricing.

ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands in order to enjoy the following benefits associated with being a Cayman Islands exempted company:

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include:

Our constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, among us, our officers, directors and shareholders, be arbitrated.

We conduct substantially all of our operations in China, and substantially all of our assets are located in mainland China. The majority of our directors and officers (including Yong Bai, Yufang Li, Wei Fang, Yee Man Yung, and Yu Guo) are nationals of mainland China or Hong Kong and the majority of them (including Yong Bai, Yufang Li, Wei Fang, Yee Man Yung, and Yu Guo) are currently located in mainland China. Lei Lei is currently living in Canada. Additionally, substantially all of their assets are located in China. As a result, it may be difficult or impossible for a shareholder to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for shareholder to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our executive officers and directors. Since the majority of our officers' and directors' residences are in mainland China, it may make it even more difficult to enforce any judgments obtained from foreign courts against such persons compared to other non-U.S. jurisdictions.

We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

Ogier (Cayman) LLP, our counsel as to Cayman Islands law, and Han Kun Law Offices, our counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether the courts in the Cayman Islands and the PRC, respectively, would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) in original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the civil liability provisions of the federal securities laws of the United States or any state in the United States so far as the liabilities imposed by those provisions are penal in nature.

We have been advised by our Cayman Islands legal counsel, Ogier (Cayman) LLP, that the courts of the Cayman Islands are unlikely (i) to recognize, or enforce against us, judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits, based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive, given by a court of competent jurisdiction (the courts of the Cayman Islands will apply the rules of Cayman Islands private international law to determine whether the foreign court is a court of competent jurisdiction), and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

Han Kun Law Offices has further advised us that the PRC Civil Procedures Law governs the recognition and enforcement of foreign judgments. PRC courts may recognize and enforce foreign judgments in accordance with 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 agreements with the United States or the Cayman Islands 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 determine that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States or the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against us in the PRC, 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 China in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our Ordinary Shares, to establish a connection to China for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

CORPORATE HISTORY AND STRUCTURE

Corporate History

MED EIBY Holding Co., Limited, or MED EIBY Holding, was incorporated on June 25, 2021 as an exempted company with limited liability in the Cayman Islands. On July 8, 2021, Heketuoer BVI was incorporated in the BVI as a business company with limited liability, which is a wholly owned subsidiary of MED EIBY. On July 16, 2021, we incorporated HK Bestman in Hong Kong as a wholly owned subsidiary of Heketuoer BVI.

On January 24, 2022, we incorporated our WFOE, a PRC limited liability company. Our WFOE is a wholly owned subsidiary of HK Bestman and has entered into certain contractual arrangements with the VIE and the VIE Shareholders. See “Corporate History and Structure — Our VIE Agreements.”

On March 29, 2022, we incorporated our wholly owned subsidiary, Xuan Wu Holding Co., Limited, in the BVI (“Xuan Wu Holding”). We planned to use Xuan Wu Holding as a holding Company for the Uganda joint venture company. However, due to a change in business development strategies and goals, on July 10, 2023, Shenzhen Bestman terminated the Framework Agreement with Tiantang Group. As of the date of this prospectus, Xuan Wu Holding has not conducted any operations.

On February 22, 2023, our shareholders and board of directors approved a forward split of our outstanding ordinary shares at a ratio of 500-for-1 share.

On October 12, 2024, Shenzhen Bestman acquired 100% of the equity interests in Shenzhen Xingcheng from Wei Wang, its seller, as a result of which Shenzhen Xingcheng became a wholly owned subsidiary of Shenzhen Bestman. As of the date of this prospectus, Shenzhen Xingcheng does not have any business operations. Through Shenzhen Xingcheng, we intend to explore certain internet-related businesses in the future, though no concrete plans have been finalized as of the date of this prospectus. We selected Shenzhen Xingcheng as the vehicle for conducting internet-related businesses in the future because it holds a value-added telecommunications business permit for information service businesses, which is a required permit for conducting internet-related businesses in the PRC.

We conduct our operations in the PRC mainly through the PRC operating entities pursuant to the VIE Agreement. The VIE Agreements are designed so that the operations of the VIE are solely for the benefit of WFOE and ultimately, the Company. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes only and must consolidate the VIE because we met the conditions under U.S. GAAP to consolidate the VIE.

For more details, including risks associated with the VIE structure, see the section of this prospectus captioned “Risk Factors — Risks Related to Our Corporate Structure.”

Corporate Structure

The following diagram illustrates our corporate structure, including our significant subsidiaries, the VIE and its significant subsidiary, as of the date of this prospectus:

Our VIE Agreements

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, the majority of our operations are conducted through the PRC operating entities in China pursuant to the VIE Agreements. The VIE Agreements were entered into by and among our WFOE, the VIE, and the VIE’s shareholders and include the Powers of Attorney, Equity Pledge Agreement, Exclusive Business Cooperation Agreement, Exclusive Option Agreement, and a Spousal Consent Letter. Due to PRC legal restrictions on foreign ownership in certain internet-related businesses we may explore and operate in the future, we do not have any equity ownership of the VIE. We control and receive the economic benefits of the VIE’s business operations through the VIE Agreements, and we consolidate the VIE for accounting purposes only because we met the conditions under U.S. GAAP to consolidate the VIE. Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to our WFOE, while WFOE has the power to direct the activities of the VIE that can significantly impact the VIE’s economic performance, has the obligation to absorb the expected losses of the VIE, and has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and ultimately, the Company. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes and must consolidate the VIE. We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and, as a result, the value of our Ordinary Shares may depreciate significantly or become worthless. For a description of our corporate structure and VIE contractual arrangements, see “Corporate History and Structure — Our VIE Agreements.” See also “Risk Factors – Risks Related to Our Corporate Structure.”

The following is a summary of the VIE Agreements.

Powers of Attorney. Under the Powers of Attorney, dated January 28, 2022 executed by each VIE Shareholder, accepted by our WFOE and acknowledged by the VIE, each of the VIE Shareholder irrevocably authorized our WFOE or its designee, to (i) convene, hold and attend shareholders’ meetings of the VIE, (ii) exercise all voting rights of the VIE Shareholder with respect to all matters to be discussed and voted on in the shareholders’ meetings of the VIE, (iii) exercise all voting rights of the VIE Shareholder under the PRC laws promulgated from time to time, and (iv) exercise all voting rights of the VIE Shareholder in accordance with law and the articles of association of the VIE. The powers of attorney will remain effective until the shareholders are no longer registered VIE Shareholders.

Equity Pledge Agreement. On January 28, 2022, the VIE Shareholders and our WFOE entered into an equity pledge agreement. Under this agreement, the VIE Shareholders pledged their equity interests in the VIE to our WFOE to secure the performance of their obligations under the exclusive option agreement and the power of attorney, and the VIE’s payment obligations under the exclusive business cooperation agreement as described below. Without our WFOE’s prior written consent, the VIE Shareholders shall not transfer the equity interests pledged thereunder or create any other pledge or encumbrance on such equity interests during the term of the equity interest pledge agreement. The equity interest pledge agreements remain effective unless otherwise terminated by our WFOE in the event of material breach by the VIE, or terminated pursuant to other agreements entered into among all parties to the Equity Pledge Agreement.

Spousal Consent. The spouse of Mr. Huaye Bai, agreed, via spousal consent, to the execution of the “Transaction Documents” including: (a) The Equity Pledge Agreement entered into by and between our WFOE and the VIE Shareholders; (b) The Exclusive Option Agreement entered into by and among the VIE Shareholders, VIE, and our WFOE; (c) the Powers of Attorney issued to our WFOE, and the disposal of the operating rights or the assets for the business of Shenzhen Bestman held by Mr. Huaye Bai and registered in his name.

The spouse of Mr. Huaye Bai further undertakes not to make any assertions in connection with the operating rights and assets of Shenzhen Bestman which are held by Mr. Huaye Bai. The spouse confirms that Mr. Huaye Bai can perform his obligations under the Transaction Documents and further amend or terminate the Transaction Documents without her authorization or consent. The spouse undertakes to execute all necessary documents and take all necessary actions to ensure appropriate performance of the Transaction Documents.

The spouse also undertakes that if she obtains any operating rights and assets of Shenzhen Bestman which are held by Mr. Huaye Bai for any reasons, she shall be bound by the Transaction Documents entered into between Mr. Huaye Bai and the our WFOE (as amended time to time) and comply with the obligations thereunder as an operator of Shenzhen Bestman. For this purpose, upon our WFOE’s request, she shall sign a series of written documents in substantially the same format and content as the Transaction Documents (as amended from time to time).

Exclusive Business Cooperation Agreement. On January 28, 2022, the VIE and our WFOE entered into an exclusive service agreement. Under this agreement, our WFOE will be the exclusive provider of services and support required by the VIE, including technical support and marketing services, services related to the development and manufacturing of medical devices, information technology and consulting services, the development, maintenance and update of computer system, hardware and database. Without our WFOE’s written consent, the VIE shall not accept any technology consulting and services covered by this agreement from any third party. The VIE agrees to pay service fees in an amount equivalent to all of its net income to our WFOE on annual basis. The service fees for each year shall consist of a management fee and a fee for services provided, which shall be reasonably determined by our WFOE pursuant to the factors set out in the Exclusive Business Cooperation, such as the complexity and difficulty of the services provided by our WFOE, seniority of and time consumed by the employees of our WFOE, specific contents, scope and value of the services provided by our WFOE, the market price of the same type of services, and operation conditions of the VIE. Also, the amount of services fees may be as set forth in the relevant contracts separately executed by the VIE and our WFOE. If our WFOE transfers or licenses technology to the VIE, develops software or other technology is entrusted by the VIE, or leases equipment or properties to the VIE, then the technology transfer price, license price, development fees or rent shall be determined by our WFOE and the VIE separately based on the actual situations and/or set forth in the relevant contracts separately executed by the VIE and WFOE. The Exclusive Business Cooperation Agreement will remain effective for 30 years from the execution of such Exclusive Business Cooperation Agreement, and will automatically be extended for another 30 years upon each expiration date, unless otherwise terminated by our WFOE on the expiration date upon prior written notice or terminated pursuant to other agreements entered into among all parties to the Exclusive Business Cooperation Agreement.

Exclusive Option Agreement. On January 28, 2022, the VIE Shareholders, the VIE and our WFOE entered into an exclusive option agreement. Pursuant to the agreement, the VIE Shareholders granted our WFOE an irrevocable and exclusive right to purchase, or designate one or more persons to purchase, at its discretion, all or part of the equity interests in the VIE held by the VIE Shareholder RMB 10 (“Base Price”), or the Base Price calculated on pro rata basis in the event of purchasing part of the equity interests. If the lowest price permitted under PRC law exceeds the Base Price, the amount exceeding the Base Price shall be promptly donated by the VIE Shareholders to our WFOE or any other person designated by our WFOE. Without the prior written consent of our WFOE, the VIE Shareholders shall not dispose of or encumber any of their equity interests in the VIE, and the VIE shall not dispose of or transfer any of its assets or income or distribute any dividends to the VIE Shareholders in any manner. The Exclusive Option Agreement will remain effective unless the equity interests held by its shareholders have been transferred or assigned to WFOE or any other person designated by WFOE.

In the opinion of Han Kun Law Offices, our PRC legal counsel:

However, we have been advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of future PRC laws, regulations, rules and policies. Accordingly, the PRC regulatory authorities may take a view that is contrary to or otherwise different from the above opinion of our PRC legal counsel. It is also uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fails to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Risk Factors — Risks Related to Our Corporate Structure — We rely on contractual arrangements with the VIE and the VIE Shareholders for a large portion of our business operations. These arrangements may not be as effective as direct ownership in providing operational control. Any failure by the VIE or the VIE Shareholders to perform their obligations under such contractual arrangements would have a material and adverse effect on our business.”

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented giving effect to a forward split of our ordinary shares at a ratio of 500-for-1 share and additional share issuances to our existing shareholders approved by our shareholders and board of directors on February 22, 2023.

Overview

The PRC operating entities are providers and manufacturer of Class I and II medical devices. Nanjing Yonglei exports Class I, Class II and Class III medical devices and Shenzhen Bestman manufactures Class I and Class II medical devices. In PRC, Class I medical devices are those devices with low-level risks and whose safety and effectiveness can be ensured through routine administration and are subject to record-filing administration. Class II medical devices are those devices with moderate risks that must be strictly controlled and regulated to ensure their safety and effectiveness. Class III medical devices are those devices with relatively high risks that must be strictly controlled and regulated through special measures to ensure their safety and effectiveness.

Shenzhen Bestman has Class I and II medical device qualifications, including record filings for Class I products, registration certificates for Class II products, and medical device production and operation licenses in mainland China.

Shenzhen Bestman has four product categories: (i) ultrasonic doppler devices, (ii) warmer and syringe destroyer products, (iii) epidemic prevention products, and (iv) health screening products. Shenzhen Bestman produces a range of more than 35 medical devices across these categories. Currently, products of Shenzhen Bestman mainly include a fetal doppler series, fetal/maternal monitor series, ultrasonic vascular doppler detector series, breast self-check mammography apparatus, blood and infusion warmers series, vein finder series, syringe destroyer series, enteral nutrition pumps, medical infrared thermometers, insulin refrigerator box, and intelligent disinfection vehicles.

Shenzhen Bestman has provided hospitals, pharmacies, medical equipment companies, and individual customers for over 20 years with more than 567,000 Class I and Class II medical device products. Shenzhen Bestman’s product, Ultrasonic Doppler peripheral blood vessel detector (model: BV-650) obtained the Medical Device Registration Certificate of the People's Republic of China approved by Guangdong Drug Administration on January 10, 2022. On July 15, 2022, Shenzhen Bestman obtained the approval for changing the product model (model: BV-650, BV-660T++ and BV-660T+). The registration certificate will expire on January 19, 2026.

Besides domestic sales in China, our export sales are extended to more than 100 countries across the world. In 2003, Shenzhen Bestman obtained an ISO-9001 certificate and in 2005, it received an ISO-13485 certificate. As of the date of this prospectus, both the ISO-9001 and ISO-13485 certificates are effective. The ISO-9001 certificate will expire on September 14, 2027 and the ISO-13485 certificate will expire on September 27, 2027.

In addition, Shenzhen Bestman’s product, fetal doppler (models: BF-500B, BF-500+, and BF500++), received United States Food and Drug Administration’s, or the FDA’s, approvals in 2010. The most recent registration renewal was in December 2023 and will be valid through December 31, 2024.

Shenzhen Bestman’s distribution network covers major global markets. Internationally, the PRC operating entities mainly export medical devices through exporting distributors. The PRC operating entities cooperate with 1,646 exporting distributors, who are responsible for distributing their products to end users across the world.

The PRC operating entities generate revenues through: 1) manufacturing and sales of medical devices under their own brands, and 2) resale of medical devices sourced from other manufacturers. For the fiscal years ended June 30, 2024 and 2023, the PRC operating entities recognized $3,280,403 and $3,319,339, respectively, in net revenues, of which Shenzhen Bestman’s own brand sales accounted for 38% and 50%, respectively, and the resales of medical devices from other manufactures accounted for 62% and 50%, respectively.

The PRC operating entities sell medical devices, both domestically and internationally. For the fiscal years ended June 30, 2024 and 2023, domestic sales accounted for 27% and 40%, respectively, and international sales accounted for 73% and 60%, respectively, of our total net revenues.

The PRC operating entities sell medical devices through both distributors and direct sales. For the fiscal years ended June 30, 2024 and 2023, the sales through direct sale channels accounted for 3% and 4%, respectively, and the sales through distributors accounted for 97% and 96%, respectively.

Major Factors Affecting Our Results of Operations

Our business and results of operations are affected by several general factors in the global markets and domestic market including, among others, economic, political and social conditions. Unfavorable changes in any of these general factors could adversely affect demand for the PRC operating entities’ products and materially and adversely affect our results of operations.

While our business is influenced by these general factors, our results of operations are more directly affected by the following company-specific factors.

The ability to maintain and expand international sales

The PRC operating entities sell medical devices internationally. For the fiscal years ended June 30, 2024 and 2023, the PRC operating entities’ international sales accounted for 73% and 60%, respectively, of their revenues. Their performance is affected by the risks including aging population, awareness of public health, the nature and guarantee scope of public medical plans, per capita disposable income and per capita gross domestic product (“GDP”) and other economic factors. The changes in foreign regulations, export duties, taxation, global shipping costs, exchange rates and limitations on imports or exports may also have influence to the PRC operating entities’ business.

The ability to lead competitive position maintained by high quality standard systems

The quality of the PRC operating entities’ products is critical to the success of our business, and such quality, to a large extent, depends on the effectiveness of the PRC operating entities’ quality control system. The PRC operating entities have developed a rigorous quality control system that enables them to monitor each stage of the production process. All of the PRC operating entities’ products, either self-manufactured or sourced elsewhere, fall within our quality control system subject to our quality inspection before delivery. The PRC operating entities’ customer support and sales support personnel provide training to their distributors and end-users. In addition, the PRC operating entities’ customer service center, located in Shenzhen, China, is currently staffed with eight representatives who assist our customers with technical support and maintenance. The PRC operating entities believe that their professional after-sale customer support enables them to develop and maintain customer trust and loyalty.

Impact of the COVID-19

The COVID-19 has had a severe and negative impact on the Chinese and the global economy. Whether this will lead to a continued downturn in the economy is still unknown.

The PRC operating entities’ operations may be further affected by the COVID-19. China continuously optimized and adjusted COVID-19 prevention and control measures with the aim of protecting health, and lifted most of the travel restrictions and quarantine requirements in December 2022. The selling prices and the sales volume of epidemic prevention products decreased accordingly, due to the recovery from the COVID-19 overseas and the decrease in the demand of COVID-related products for the years ended June 30, 2023. As of the date of this prospectus, the impacts of the COVID-19 on the supply chain have diminished, which benefits the PRC operating entities’ export business. The COVID-19 has resulted in volatility in some global financial markets, which could increase the Company’s cost of capital or limit its ability to access financing when needed. Broader impacts of the COVID-19 also include inflationary pressure, which may impact the costs of the PRC operating entities’ manufacturing of products. Accordingly, the Company cannot predict the ultimate impact of the COVID-19 on its business, financial condition and results of operations.

Impact of Russia-Ukraine War

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Since our raw and auxiliary materials are purchased from certified and qualified suppliers in China, their supply has been stable for many years and are easily sourced due to our geographical location. The prices of raw materials used in the PRC operating entities’ operations are not volatile and they, along with the supply chain, have not been impacted by the recent conflict between Russia and Ukraine.

Impact of foreign exchange fluctuation

The PRC operating entities derive a substantial portion of their revenues in US$. Foreign exchange rate fluctuations may adversely affect our business and performance. The exchange rates between US$ and RMB are subject to continuous movements affected by international political and economic conditions and changes in the PRC government’s economic and monetary policies. As the PRC operating entities derive a substantial portion of their revenues in US$ while a substantial portion of the costs are denominated in RMB, appreciation of RMB against US$, which is our reporting currency, will therefore directly decrease their profit margin if they are unable to increase the selling prices of their products accordingly. If the PRC operating entities increase the selling prices of their products as a result of the appreciation of the RMB against the relevant foreign currencies, there would result in a loss of price advantage in the markets.

In addition, we are subject to translation risks as our consolidated financial statements are reported in US$ while the financial statements of some operating subsidiaries are prepared in RMB, the currency of the primary economies in which the PRC operating entities’ operations are based. We recorded a currency translation gain of US$14,716 and US$324,464 for the fiscal years ended June 30, 2024 and 2023, respectively. Accordingly, we may incur currency translation losses or gains, due to translation of functional currency into the reporting currency, which may adversely affect our financial position and results of operations as well as cash flows.

Results of operations

Comparison of Results of Operations for the Fiscal Years Ended June 30, 2024 and 2023

The following table sets forth a summary of our consolidated results of operations for the years indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any years are not necessarily indicative of the results that may be expected for any future periods. 

Net revenues

The PRC operating entities generate revenues through: 1) manufacturing and sales of medical devices under their own brands, and 2) resale of medical devices from other manufacturers. For the fiscal years ended June 30, 2024 and 2023, our total net revenues were US$3,280,403 and US$3,319,339, respectively.

The following table sets forth our revenues by source of products for the periods indicated.

Our revenues decreased by 1.2% from US$3,319,339 for the fiscal year ended June 30, 2023 to US$3,280,403 for the year ended June 30, 2024. The decrease was mainly due to a decrease of US400,640 of self-manufactured products, partially offset by an increase of US$361,704 of resales in sourced medical devices from third party manufacturers.

For sales of self-manufactured products, the 24.2% decrease was primarily attributed to a decrease in sales of ultrasonic doppler devices and fetal dopplers, due to the decrease in hospital procurement demand.

For sales of resales of sourced medical devices, the 21.8% increase was primarily attributed to an increase in sales of injection-related products. The increase was primarily attributed to the commencement of sales of injection-related products to a new customer from Hong Kong, Alitom Medicare Ltd. (“ALITOM”), since March 2024. The revenue generated from this customer accounted for approximately 10% of the total net revenues for the fiscal year ended June 30, 2024. To fulfill the contact with this customer, we are responsible for delivering the products to the ship bound for the specified port of arrival and freight charges are added to the total amount of each sales confirmation. We do not enter into framework or individual sales agreements with this customer, and instead, upon receiving an order from this customer, we send them a sales confirmation, which specifies the names and models of the goods sold, quantity, price per unit, and total purchase price. The sales confirmation also specifies the payment schedule and delivery method.

Cost of revenues

Our cost of revenues primarily consists of the following components: (i) inventory costs of self-manufactured products and resales of sourced medical devices from third party manufacturers; (ii) freight costs incurred by the PRC operating entities for delivering products.

Our cost of revenues increased by 22.4% from US$1,793,776 for the fiscal year ended June 30, 2023 to US$2,196,015 for the fiscal year ended June 30, 2024, which was primarily attributable to an increase of sales volume of injection-related products to a new customer from Hong Kong for resale of sourced medical devices.

Gross profit and gross profit margin

Gross profit represents our net revenues less cost of revenues. Our gross profit margin represents our gross profit as a percentage of our net revenues.

Gross profit decreased by 28.9% from US$1,525,563 for the fiscal year ended June 30, 2023 to US$1,084,388 for the fiscal year ended June 30, 2024. This decrease was mainly due to a decrease in gross profit of our self-manufactured products during this period attributed to a decrease in hospital procurement demand, partially offset by an increase in gross profit of resales of sourced medical devices from third party manufacturers, attributed to an increase of sales volume.

The gross profit margin experienced a decrease, from 46.0% for the fiscal year ended June 30, 2023, to 33.1% for the fiscal year ended June 30, 2024, primarily due to i) a 21.8% increase in the resale of sourced medical devices from third-party manufacturers, which typically have lower margins, thereby impacting our overall gross profit margin negatively; ii) a decrease in sales volume of ultrasonic doppler devices with high profit margin due to decrease in hospital procurement demand. 

Selling expenses

Selling expenses primarily consist of: (i) salaries and benefits for the PRC operating entities’ sales and marketing personnel; (ii) rental and property management fees allocated to the PRC operating entities’ sales department; (iii) advertising and marketing expenses for promotion; and (iv) travelling expenses incurred by the PRC operating entities’ sales and marketing personnel for business purposes.

Our selling expenses decreased 12.5% from US$554,521 for the fiscal year ended June 30, 2023 to US$485,263 for the fiscal year ended June 30, 2024, primarily due to a decrease of US$71,913 of salaries and benefits for sales personnel, advertisement expenses and travelling expenses attributed to comprehensive cost control measures.

General and administrative expenses

General and administrative expenses primarily consist of: (i) salaries and benefits for the PRC operating entities’ administrative personnel; (ii) rental and property management fee; (iii) professional service fees; (iv) impairment losses of long-lived assets and prepayments; and (v) others, which primarily include staff training expenses, travelling expenses, depreciation and amortization expenses.

Our general and administrative expenses decreased by 9.9%, from US$1,254,210 for the fiscal year ended June 30, 2023 to US$1,129,526 for the fiscal year ended June 30, 2024, primarily due to a decrease of US$79,257 for the impairment of long-lived assets, a decrease of US$38,553 for the staff training expenses and travelling expenses attributed to comprehensive cost control measures, and a decrease of US$81,221 for the professional services fees for IPO listing, partly offset by an increase of US$172,820 for the provision for credit losses due to an increase in accounts receivable from African customers which are taking longer to collect as a consequence of foreign exchange restriction.

Research and development expenses

Research and development expenses primarily include: (i) salaries and benefits for research and development personnel; (ii) inspecting and testing expenses; (iii) rental and property management fees allocated to the research and development department; and (iv) others, which primarily include use of materials and depreciation expenses.

Our research and development expenses slightly increased by 2.6% from US$413,778 for the fiscal year ended June 30, 2023 to US$424,619 for the fiscal year ended June 30, 2024. We maintained stable research and development investment for our new products during such periods.

Interest expense

Interest expense was US$104,915 and US$70,613 for the fiscal years ended June 30, 2024 and 2023, respectively. The interest expense was mainly accrued from credit borrowing from a related company and banks in China. The increase of interest expense was attributed to the rise in bank loans.

Foreign currency exchange gain

We had a gain of US$23,591 and US$56,256 on foreign currency transactions between the US$ and the RMB for the fiscal years ended June 30, 2024 and 2023, respectively.

The gain recorded on the foreign currency transactions were due to the fluctuations of the value of RMB relative to the US$ over the respective periods.

Income taxes

Cayman Islands 

Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax is imposed.

BVI

Heketuoer and Xuan Wu Holding are incorporated in the British Virgin Islands (“BVI”). Under the current laws of the British Virgin Islands, Heketuoer and Xuan Wu Holding are not subject to tax on income or capital gains. In addition, dividend payments are not subject to withholdings tax in the BVI.

Hong Kong

Under the current Hong Kong Inland Revenue Ordinance, our Hong Kong subsidiary, MED BESTMAN Holding Co., Limited, is subject to 16.5% income tax on its taxable income generated from operations in Hong Kong. On December 29, 2017, Hong Kong government announced a two-tiered profit tax rate regime. Under the two-tiered tax rate regime, the first HK$2.0 million of assessable profits will be subject to an 8.25% tax rate and the remaining assessable profits will continue to be taxed at the existing 16.5% tax rate. The two-tiered tax regime which became effective from the assessment year of 2018/19, which was on or after April 1, 2018. The application of the two-tiered rates is restricted to only one nominated enterprise among connected entities. There are no assessable profits for the PRC operating entities’ Hong Kong subsidiary, HK Bestman, for the fiscal years ended June 30, 2024 and 2023.

PRC

Under the Enterprise Income Tax Law (“EIT Law”), FIEs and domestic companies are subject to Enterprise Income Tax (“EIT”) at a uniform rate of 25%.

EIT grants preferential tax treatment to certain High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for the HNTE status every three years. Shenzhen Bestman obtained the HNTE certificate in November 2018, and enjoyed a preferential income tax rate at 15% from 2018 to 2020. The HNTE certificate was renewed on December 23, 2021 with a three-year validity period. Thus, Shenzhen Bestman is eligible for a 15% preferential tax rate for a period of three years from calendar year 2021 to 2023 if all the criteria for HNTE status could be satisfied in the relevant years. In September 2024, Shenzhen Bestman re-applied for the HNTE certificate renewal and submitted renewal application documents to related government department, waiting for the final approval and public announcement by government department.

For qualified small and low-profit enterprises, from January 1, 2023 to December 31, 2027, 25% of the first RMB 3.0 million of the assessable profit before tax is subject to the tax rate of 20%. For the year ended June 30, 2024, there is a qualified small and low-profit enterprise in PRC, and thus it was eligible for the above preferential tax rate for small and low-profit enterprises.

We had an income tax expense of US$9,931 and US$34,059 for the fiscal year ended June 30, 2024 and 2023, respectively.

Net loss

As a result of the foregoing, our net loss increased by 48.0% from US$704,873 for the fiscal year ended June 30, 2023 to US$1,043,365 for the fiscal year ended June 30, 2024.

Liquidity and Capital Resources

Our business requires substantial amounts of cash to cover operating expenses, as well as to fund capital expenditures, working capital changes, interest payments on the PRC operating entities’ borrowing, lease payments, and to support tax payments. We have financed our capital requirements with borrowings from related parties, primarily from our Chairman of the Board of Directors and Chief Executive Officer, Mr. Yong Bai, and from bank loans.

For the fiscal years ended June 30, 2024 and 2023, we had net cash used in operating activities of US$864,743 and US$166,763, respectively. As of June 30, 2024 and 2023, we had cash and cash equivalent of US$222,926 and US$234,652. The PRC operating entities have financed their capital requirements with borrowings from related parties and bank loans which have historically been sufficient to meet its working capital requirements. The PRC operating entities had net cash provided by financing activities of US$561,201 and US$732,066 for the fiscal years ended June 30, 2024 and 2023, respectively.

Mr. Yong Bai provided liquidity support on the PRC operating entities’ demand in the form of interest-free borrowings. The maturity dates of the interest-free borrowings from Mr. Yong Bai were June 30, 2029. As of June 30, 2024, the principal amount outstanding of such loans is US$2,870,697. There are no restrictive covenants or termination provisions.

The Company has obtained approval for a RMB10,000,000 (approximately $1,384,121) revolving line of credit from China Everbright Bank, of which the Company has borrowed RMB10,000,000 (approximately $1,384,121) in August 2024 at an interest rate of 3% per annum, with a maturity date of August, 2027, without any special debt covenant terms, which was collateralized with property of Mr. Yong Bai. In addition, the Company has obtained approval for a RMB10,000,000 (approximately $1,384,121) revolving line of credit from Shenzhen Haosen Micro-Credit Loans Co., Ltd, a non-bank financial institution, and this line of credit has not been used and will expire in April, 2026 without any special debt terms. The interest rate is 6% per annum. Management concluded that the current assets and the available lines of credit will be sufficient to satisfy its obligations as they become due and will support the operations for one year from the issuance date of the consolidated financial statements. The Company will meet anticipated working capital requirements and capital expenditures within the next 12 months from the issuance date of the consolidated financial statements.

Cash Flows

Cash Flows for the Fiscal Year Ended June 30, 2024, compared to the Fiscal Year Ended June 30, 2023

The following table sets forth a summary of our cash flows for the periods indicated: