Haoxi Health Technology (HAO) Registration Filing summary

Company overview and business model

• Operates as an online marketing solution provider in China, primarily serving healthcare industry advertisers, offering one-stop services including planning, production, placement, and optimization of online ads, especially short video ads.

• Revenue is generated through customized marketing solutions delivered via mainstream online platforms such as Toutiao, Douyin, WeChat, and Weibo.

• Developed proprietary data analysis software, “Bidding Compass,” to optimize ad placements and improve campaign efficiency.

• The company is a Cayman Islands holding entity with operations conducted through its wholly owned PRC subsidiary, Haoxi Beijing.

Financial performance and metrics

• For the six months ended December 31, 2023, revenue was $23.50 million with net income of $0.76 million; for the same period in 2022, revenue was $9.16 million and net income $0.45 million.

• Fiscal year ended June 30, 2023, revenue was $28.23 million and net income $0.97 million; for 2022, revenue was $16.16 million and net income $0.24 million.

• Gross margin for the six months ended December 31, 2023 was 5.11%, down from 7.97% in the prior year period, mainly due to increased competition and customer rebates.

• Cash and cash equivalents as of December 31, 2023 were $1.11 million; net cash provided by operating activities for the six months ended December 31, 2023 was $0.30 million.

• The company has experienced significant revenue growth but also reports unstable operating revenue and expects continued increases in operating expenses.

Use of proceeds and capital allocation

• Net proceeds of approximately $11.4 million are expected from the offering, with 60% allocated to working capital and general corporate purposes, 30% for acquiring or investing in complementary technologies or businesses, and 10% for hiring experienced employees to improve internal controls and compliance.

• Plans to invest $2 million in R&D for Bidding Compass and recruit 20 new R&D engineers.