WORK Medical Technology Group LTD 6-K, filed Aug 25, 2025
WORK Medical Technology Group LTD (WOK)
About this 6-K
WORK Medical Technology Group LTD filed this 6-K on August 25, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August
Commission File Number:
Floor 23, No. 2 Tonghuinan Road
Xiaoshan District, Hangzhou City, Zhejiang Province, The People’s Republic of China
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Explanatory Note
WORK Medical Technology Group LTD, a Cayman Islands company (the “Company”), is furnishing its unaudited financial statements and notes for the six months ended March 31, 2025. The financial statements and notes are attached as Exhibit 99.1 to this report. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended March 31, 2025 is attached as Exhibit 99.2 to this report.
1
Exhibit Index
| Exhibit No. | Description | |
| 99.1 | Unaudited Consolidated Financial Statements and Notes of WORK Medical Technology Group LTD for the Six Months Ended March 31, 2025 and 2024 | |
| 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| 101. INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WORK Medical Technology Group LTD | ||
| Date: August 25, 2025 | By: | /s/ Shuang Wu |
| Name: | Shuang Wu | |
| Title: | Chief Executive Officer | |
3
Exhibit 99.1
WORK MEDICAL TECHNOLOGY GROUP LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars, except for otherwise noted)
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Cash deposited in escrow account | ||||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Amounts due from related parties | ||||||||
| Advance to suppliers | ||||||||
| Loans to third parties | ||||||||
| Prepaid expenses and other current assets, net | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets | ||||||||
| Deferred tax assets, net | ||||||||
| Advance to suppliers for equipment | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Short-term bank borrowings | $ | $ | ||||||
| Accounts payable | ||||||||
| Deferred revenue | ||||||||
| Amount due to related parties | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Lease liabilities, current | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Lease liabilities, non-current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 16) | ||||||||
| Shareholders’ equity | ||||||||
| $ | $ | |||||||
| Class A ordinary shares (par value of $ | ||||||||
| Class B ordinary shares (par value of $ | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total equity | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-1
WORK MEDICAL TECHNOLOGY GROUP LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
(In U.S. dollars, except for otherwise noted)
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
(Unaudited) | (Unaudited) | |||||||
| Net revenue from third parties | $ | $ | ||||||
| Net revenue from related parties | ||||||||
| Cost of revenue from third parties | ( | ) | ( | ) | ||||
| Cost of revenue from related parties | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling expenses | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Research and development expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Other income(expense): | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Government subsidies | ||||||||
| Other income, net | ||||||||
| Total other income | ||||||||
| (Loss) income before income tax expense | ( | ) | ||||||
| Income tax benefit (expense) | ( | ) | ||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Net (loss) income attributable to non-controlling interest | ( | ) | ||||||
| Net income attributable to ordinary shareholders | $ | $ | ||||||
| Other comprehensive (loss) income: | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Total comprehensive (loss) income | ( | ) | ||||||
| Total comprehensive (loss) income attributable to non-controlling interests | ( | ) | ||||||
| Total comprehensive (loss) income attributable to holders of ordinary shares | $ | ( | ) | $ | ||||
| Weighted average number of ordinary shares | ||||||||
| Basic and Diluted | ||||||||
| Basic and diluted earnings per ordinary share | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
WORK MEDICAL TECHNOLOGY GROUP LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
SIX MONTHS ENDED MARCH 31, 2024 AND 2025
(In U.S. dollars, except for share and per share data, or otherwise noted)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Additional | other | Total | Non- | |||||||||||||||||||||||||||||||||||||
| Ordinary Shares | Subscription | paid-in | Statutory | Retained | comprehensive | shareholder’s | controlling | Total | ||||||||||||||||||||||||||||||||
| Share | Amount | receivable | capital | reserves | earnings | loss | equity | interest | equity | |||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 (unaudited) | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Additional | other | Total | Non- | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary Shares | Ordinary Shares | Ordinary Shares | Subscription | paid-in | Statutory | Retained | comprehensive | shareholder’s | controlling | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Share | Amount | Share | Amount | Share | Amount | receivable | capital | reserves | earnings | loss | equity | interest | equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Re-designation of authorized ordinary shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income/(loss) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 (unaudited) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
WORK MEDICAL TECHNOLOGY GROUP LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | ( | ) | ( | ) | ||||
| Proceed from disposal of property, plant and equipment | ||||||||
| Purchases of other non-current assets | ( | ) | ||||||
| Loans to related parties | ( | ) | ( | ) | ||||
| Repayments from related parties | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short-term borrowings | ||||||||
| Repayments of short-term borrowings | ( | ) | ( | ) | ||||
| Proceeds from interest-free loans from related parties | ||||||||
| Repayments of interest-free loans to related parties | ( | ) | ||||||
| Repayments of interest-free loans to third parties | ( | ) | ||||||
| Repayments from interest-free loans to third parties | ||||||||
| Payment of offering cost | ( | ) | ||||||
| Loans from a related party | ||||||||
| Repayments of loans from a related party | ( | ) | ||||||
| Repayments of interest-bearing loans to third parties | ( | ) | ( | ) | ||||
| Repayments of interest-bearing loans from third parties | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes | ( | ) | ||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash, cash equivalents, at the beginning of the period | ||||||||
| Cash, cash equivalents, at the end of the period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Income taxes paid | ||||||||
| Interest paid | ||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION: | ||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES |
WORK Medical Technology Group LTD (the “Company,” “Work
Cayman,” or “WORK”) was incorporated under the law of the Cayman Islands on
History of the Group and Reorganization
The Company conducts its operations through its PRC subsidiary Hangzhou Shanyou Medical Equipment Co., Ltd. (“Hangzhou Shanyou”) and its subsidiaries.
In preparation for its IPO, the Group completed a reorganization on May 6, 2022 (the “Reorganization”), which involved the following steps:
| ● | on November 10, 2021, Work (Hangzhou) Medical Treatment Technology Co., Ltd. (“Work Hangzhou”) was established by Baiming Yu and his spouse, Liwei Zhang, who were the ultimate shareholders of Work Hangzhou; |
| ● | on January 17, 2022, Hangzhou Shanyou newly issued |
| ● | on March 1, 2022, Work Cayman was incorporated and (indirectly) issued ordinary shares at par value $ |
| ● | on March 15, 2022, Work Medical Technology Group Limited (“Work BVI”) was incorporated in the British Virgin Islands as a wholly owned subsidiary of the Company; |
| ● | on April 19, 2022, Work Medical Technology Group (China) Limited (“Work Medical Technology” or “Work HK”) was incorporated in Hong Kong as a wholly owned subsidiary of Work BVI; |
| ● | on April 28, 2022, Work Age (Hangzhou) Medical Treatment Technology Co., Ltd. (“WFOE” or “Work Age”) was established as a wholly owned subsidiary of Work HK in the PRC; and |
| ● | on May 6, 2022, WFOE acquired |
On February 21, 2022, Hangzhou Shanyou entered
into a share purchase agreement to purchase
Immediately before and after share issuances and transfer of Work Cayman, Work Hangzhou acquired Hangzhou Shanyou, and WFOE acquired Work Hangzhou. The ultimate shareholders in these entities, who are Baiming Yu and his spouse, Liwei Zhang, did not change. Accordingly, the Reorganization has been treated as a corporate restructuring of entities under common control. Thus, the current capital structure has been retroactively presented in prior periods as if such structure existed at that time, and the entities are presented on a combined basis for all periods to which such entities were under common control.
F-5
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.) |
The unaudited condensed consolidated financial statements reflect the activities of the Group and each of the following entities:
| Name | Date of incorporation/ acquisition | Place of incorporation | Percentage of effective ownership | Principal activities | ||||
| Subsidiaries | ||||||||
| Work BVI | ||||||||
| Work Medical Technology | ||||||||
| Work Age | ||||||||
| Work Hangzhou | ||||||||
| Hangzhou Shanyou | ||||||||
| Hangzhou Hanshi | ||||||||
| Shanghai Saitumofei Medical Treatment Technology Co., Ltd. (“Shanghai Saitumofei”)* | ||||||||
| Hunan Saitumofei Medical Treatment Technology Co., Ltd (“Hunan Saitumofei”)* | ||||||||
| Hangzhou Woli Medical Treatment Technology Co., Ltd (“Hangzhou Woli”) | ||||||||
| Shanghai Chuqiang Medical Equipment Co., Ltd. (“Shanghai Chuqiang”) | ||||||||
| Hangzhou Youshunhe Technology Co., Ltd. (“Hangzhou Youshunhe”) | ||||||||
| Huangshan Saitumofei Medical Treatment Technology Co., Ltd.* | Saitumofei |
| * | On
July 27, 2022, Work Hangzhou acquired
On May 24,
2024, Work Hangzhou and the other original shareholders of Shanghai Saitumofei (collectively, the “Original Shareholders”)
entered into a Capital Injection Agreement with Tunxi District Huangshan City Leading Industry Incubation Fund Ltd. (“Huangshan
Fund”). According to the agreement, Huangshan Fund agreed to invest RMB |
F-6
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Basis of presentation and principles of consolidation |
The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements include the unaudited condensed consolidated financial statements of the Company and its subsidiaries. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s September 30, 2024 audited financial statements. The results of operations for the period ended March 31, 2025 are not necessarily indicative of the operating results for the full year.
All inter-company balances and transactions
are eliminated upon consolidation. For consolidated subsidiaries where the Group’s ownership in the subsidiary is less than
| (b) | Accounts receivable, net |
Accounts receivable are stated at the original amount less an allowance for credit losses.
Accounts receivable are recognized in the period when the Group has provided goods to its customers and when its right to consideration is unconditional. On October 1, 2023, the Group adopted ASU 2016-13, “Financial Instruments — Credit Losses (Accounting Standards Codification (“ASC”) Topic 326): Measurement on Credit Losses on Financial Instruments,” including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”). ASC 326 introduces an approach based on expected losses to estimate the allowance for doubtful accounts, which replaces the previous incurred loss impairment model. The Group’s estimation of allowance for credit losses considers factors such as historical credit loss experience, age of receivable balances, subsequent collection, current market conditions, reasonable and supportable forecasts of future economic conditions, as well as an assessment of receivables due from specific identifiable counterparties to determine whether these receivables are considered at risk or uncollectible.
The Group evaluates its accounts receivable for expected credit losses on a regular basis. The Group maintains an estimated allowance for credit losses to reduce its accounts receivable to the amount that it believes will be collected. The Group considers factors in assessing the collectability of its receivables, such as the age of the amounts due, the customer’s payment history, creditworthiness and other specific circumstances related to the accounts. The Group adjusts the allowance percentage periodically when there are significant differences between estimated bad debts and actual bad debts. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted.
(c) Advance to suppliers
Advance to suppliers refers to advances for purchase of materials and trading products, which is applied against accounts payable when the materials or trading products are received. The Group reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Group would provide allowance for such amount in the period when it is considered impaired. Advance to suppliers as of March 31, 2025 and September 30, 2024 primarily consisted of prepayments for purchasing raw materials and trading products.
(d) Government subsidies
Government subsidies are recognized as other income when received and all the conditions for their receipt have been met. The government subsidies were paid by cash and have no defined rules and regulations to govern the criteria necessary for the Group to enjoy the benefits.
For the six months ended March 31,
2025 and 2024, the Group received government subsidies of $
| (e) | Revenue recognition |
The Group recognizes revenues pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, the Group recognizes revenue to depict the transfer of promised services to customers in an amount that reflects the consideration to which the Group expects to receive in exchange for those services, reduced by value-added tax (“VAT”). Net revenues are presented net of tax and surcharges. The following five steps are applied to achieve that core principle:
| Step 1: | Identify the contract with the customer |
F-7
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| Step 2: | Identify the performance obligations in the contract |
| Step 3: | Determine the transaction price |
| Step 4: | Allocate the transaction price to the performance obligations in the contract |
| Step 5: | Recognize revenue when the company satisfies a performance obligation |
Revenue from sales of self-manufactured masks and medical devices
The Group sells products to different distributor customers and direct-end user customers, primarily of sales of self-manufactured masks and medical devices. The Group does not accept returns of products or offer refunds for its customers after the expiration of quality objection periods. The Group usually offers a seven-day quality objection period and any quality deficiencies are determined by the testing of a third-party institution.
The Group grants credit sales for customers and the credit period varies among different customers. The Group normally grants the customers 30 to 180 days to complete their payments after the credit sales, and the length of the credit period is dependent on the customer’s creditworthiness and its transaction experience with the Group. The Group makes its judgment taking all of the facts and circumstances into account, including the PRC subsidiaries’ customary business practices and the knowledge of the customer, in determining whether it is probable that the PRC subsidiaries will collect substantially all of the consideration to which they will be entitled in exchange for the goods or services that the PRC subsidiaries expect to transfer to the customer.
The Group identifies one performance obligation in this business, which is to transfer control of a product to a distributor customer or direct-end user customer upon delivery of the product to the designated place. The revenue is recognized at a point in time when the Group satisfies the performance obligation by transferring the control of the promised product to distributor customers or direct-end user customers. The Group presents the revenue generated from its sales of products on a gross basis as the Group acts as a principal.
Revenue from commodity trading
The Group identifies one performance obligation in commodity trading, which is to transfer control of a product to a customer upon delivery of the product to the designated place. Revenue from commodity trading is recognized on a net basis or gross basis based on whether the Group arranges the provision of products through third parties and control the specified products provided by the third parties before that products are transferred to the customers. The revenue is recognized at a point in time when the Group satisfies performance obligations by arranging the transfer of a promised product to a customer. When the Group acted as an agent, the revenue is measured at fixed consideration which is determined as the difference between the sales price that the Group expects to receive in exchange for arranging promised products to the customer and the settlement price with the third-party suppliers. When the Group acted as a principal, the revenue is measured at fixed consideration which is the sales price that the Group expects to receive in exchange for arranging promised products.
Shipping and handling activities are considered to be fulfilment activities rather than promised services and are not, therefore, considered to be separate performance obligations. The Group’s sales terms provide no right of return outside of a standard quality policy and returns are generally not significant.
Geographic information
The following table disaggregates the Group’s revenue by geographic market for the six months ended March 31, 2025 and 2024:
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
(Unaudited) | (Unaudited) | |||||||
| China domestic market | $ | $ | ||||||
| Overseas market | ||||||||
| Net revenue | $ | $ | ||||||
F-8
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Revenue by product categories
The following table disaggregates the Group’s revenue product categories for the six months ended March 31, 2025 and 2024:
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Medical devices(1) | $ | $ | ||||||
| Masks | ||||||||
| Commodity trading(2) | ||||||||
| Net revenue | $ | $ | ||||||
| (1) |
| (2) |
Contract balances
Payment terms are established on the Group’s pre-established credit requirements based upon an evaluation of customers’ credit. Contract assets are recognized within the related accounts receivable.
The contract liabilities consist of
deferred revenue, which represents the billings or cash received for goods in advance of revenue recognition and is recognized as revenue
when all the Group’s revenue recognition criteria are met. The Group’s deferred revenue was $
Other than deferred revenue, the Group had other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheets as of March 31, 2025 and September 30, 2024.
Contract costs
The Group applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. For the six months ended March 31, 2025 and 2024, the Group did not have any significant incremental costs of obtaining contracts with customers incurred and/or costs incurred in fulfilling contracts with customers within the scope of ASC Topic 606, that shall be recognized as an asset and amortized to expenses in a pattern that matches the timing of the revenue recognition of the related contract.
| (e) | Recent accounting pronouncements |
The Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the amendment is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. The Group is currently evaluating the impact of adoption of this standard on its unaudited condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires new disclosures to disaggregate prescribed natural expenses underlying any income statement caption. The ASU 2024-03 is effective for annual periods in fiscal years beginning after December 15, 2026, and interim periods thereafter. Early adoption is permitted. The ASU 2024-03 applies on a prospective basis for periods beginning after the effective date. However, retrospective application to any or all prior periods presented is permitted. The Group is currently evaluating the impact of adoption of this standard on its unaudited condensed consolidated financial statements.
Recent accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption. The Group does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its unaudited condensed consolidated financial position, results of operations, cash flows or disclosures.
F-9
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 3. | ACCOUNTS RECEIVABLE, NET |
Accounts receivable, net consisted of the following:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
(Unaudited) | ||||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit loss | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
A credit loss of $
| For the Six Months Ended March 31, 2025 | For the Six Months Ended March 31, 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Balance at the beginning of the period | $ | $ | ||||||
| Current period addition | ||||||||
| Write-off | ||||||||
| Reversal | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Balance at the end of the period | $ | $ | ||||||
| 4. | INVENTORIES, NET |
Inventories consisted of the following:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Work in progress | $ | $ | ||||||
| Finished goods | ||||||||
| Raw materials | ||||||||
| Less: impairment | ||||||||
| Inventories, net | $ | $ | ||||||
Impairment provided for the inventories
was $
| For the Six Months Ended March 31, 2025 | For the Six Months Ended March 31, 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Balance at the beginning of the period | $ | $ | ||||||
| Current period addition | ||||||||
| Reduction | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Balance at the end of the period | $ | $ | ||||||
F-10
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 5. | LOANS TO THIRD PARTIES, NET |
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Loans to third parties(1) | $ | $ | ||||||
| Provision of credit losses | ( | ) | ( | ) | ||||
| Loans to third parties, net | $ | $ | ||||||
| (1) |
On July 26, 2024, the Group entered
into an agreement with Hangzhou Bota, to extend a loan of RMB
On September 28, 2024, the Group entered
into an agreement with Elefun Group, to provide a borrowing facility of $
On October 6, 2024, the Group entered
into an agreement with Mylar Industrial, to provide a borrowing facility of $
The remaining loans to several third
parties for their daily operations are due within
| 6. | PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET |
Prepaid expenses and other current assets consisted of the following:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Prepaid expenses(1) | ||||||||
| Receivables from third parties(2) | ||||||||
| Others | ||||||||
| Provision of credit losses | ( | ) | ( | ) | ||||
| Total prepaid expenses and other current assets, net | $ | $ | ||||||
| (1) |
| (2) |
F-11
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 7. | PROPERTY, PLANT AND EQUIPMENT, NET |
Property, plant and equipment, net consisted of the following:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
(Unaudited) | ||||||||
| Property and buildings | $ | $ | ||||||
| Machinery and equipment | ||||||||
| Vehicle | ||||||||
| Office and electric equipment | ||||||||
| Buildings improvement | ||||||||
| Subtotal | ||||||||
| Less: impairment | ||||||||
| Less: accumulated depreciation | ||||||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation expenses were $
impairment was recognized for the six months ended March 31, 2025 and 2024.
| 8. | INTANGIBLE ASSETS, NET |
Intangible assets, net consisted of the following:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Land use rights | $ | $ | ||||||
| Digital factory operation management system | ||||||||
| Patent | ||||||||
| Mask customization system | ||||||||
| Subtotal | ||||||||
| Less: accumulated amortization | ||||||||
| Intangible assets, net | $ | $ | ||||||
Amortization expenses were $
The following table presents future amortization as of March 31, 2025:
| Amount | ||||
For the remainder of the year ending September 30, 2025 | $ | |||
| Year ending September 30, | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| $ | ||||
F-12
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 9. | ACCRUED EXPENSES AND OTHER LIABILITIES |
Accrued expenses and other liabilities consisted of the following:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
(Unaudited) | ||||||||
| Other taxes payable | $ | $ | ||||||
| Payroll payable | ||||||||
| Other payable | ||||||||
| Total accrued expenses and other liabilities | $ | $ | ||||||
| 10. | TAXATION |
Cayman Islands
The Group is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Group is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.
Hong Kong
According to Tax (Amendment) (No. 3)
Ordinance 2018 published by Hong Kong government, since September 1, 2018, under the two-tiered profits tax rate regime, the profits tax
rate for the first HKD
PRC
The Group’s subsidiaries in mainland
China are all subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income
tax laws and regulations. The EIT rate for the Group’s operation in mainland China was
Hangzhou Shanyou was qualified as a
“high and new technology enterprise strongly supported by the State” in November 2017, which status was renewed in December
2023, and, thus, entitles Hangzhou Shanyou to an EIT rate of
For qualified small and low-profit
enterprises, from January 1, 2023 to December 31, 2027,
The income tax provision consisted of the following:
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Current income tax expense | $ | ( | ) | $ | ( | ) | ||
| Deferred income tax benefit | ||||||||
| Total income tax benefit (expense) | $ | $ | ( | ) | ||||
A reconciliation between the Group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate is as follows:
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| (Loss) income before income tax expense | $ | ( | ) | $ | ||||
| Income tax expense computed at statutory EIT rate of | ( | ) | ||||||
| Reconciling items: | ||||||||
| Effect of preferred tax rate | ( | ) | ( | ) | ||||
| Additional deduction for R&D expenses | ( | ) | ( | ) | ||||
| Change in valuation allowance | ( | ) | ||||||
| Tax effect of non-deductible items | ||||||||
| Income tax (benefit) expense | $ | ( | ) | $ | ||||
| Effective tax rate | % | % | ||||||
F-13
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 10. | TAXATION (cont.) |
Deferred tax assets/liabilities
As of March 31, 2025 and September 30, 2024, the significant components of the deferred tax assets and deferred tax liabilities are summarized below:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Deferred tax assets: | ||||||||
| Allowance for credit loss | $ | $ | ||||||
| Inventories write-down | ||||||||
| Lease Liabilities | ||||||||
| Net operating loss carry forwards | ||||||||
| Deferred tax assets, gross | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Right-of-use assets | ||||||||
| Depreciation* | ||||||||
| Deferred tax liabilities | ||||||||
| Net deferred tax assets | $ | $ | ||||||
| * |
As of March 31, 2025, the Group had net operating loss carry forwards available to offset future taxable income, shown below:
| Expiration year | Amount | |||
| 2034 | $ | |||
Uncertain tax positions
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of March 31, 2025 and September 30, 2024, the Group did not have any significant unrecognized uncertain tax positions.
| 11. | SHORT-TERM BANK BORROWINGS |
As of March 31, 2025 and September 30, 2024, summary of short-term bank borrowings is as follows:
| Annual interest rate | Maturity date | March 31, 2025 (Unaudited) | September 30, 2024 | |||||||||
| Bank of Jiangsu | ||||||||||||
| $ | $ | |||||||||||
| Xiaoshan Rural Commercial Bank* | ||||||||||||
| Xiaoshan Rural Commercial Bank* | ||||||||||||
| Xiaoshan Rural Commercial Bank* | ||||||||||||
| Xiaoshan Rural Commercial Bank* | ||||||||||||
| $ | $ | |||||||||||
| China CITIC Bank** | ||||||||||||
| China CITIC Bank*** | ||||||||||||
| China CITIC Bank | ||||||||||||
| $ | $ | |||||||||||
| $ | $ | |||||||||||
Interest expenses were $
F-14
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 11. | SHORT-TERM BANK BORROWINGS (cont.) |
| * |
| ** |
| *** |
| 12. | RELATED PARTY TRANSACTIONS |
The following is a list of related parties which the Group has transactions with:
| No. | Name of Related Parties | Relationship with the Group | ||
| a | Baiming Yu | |||
| b | Liwei Zhang | |||
| c | Huiyu Chuanggu (Hangzhou) Equity Investment Fund Co., Ltd. (“Huiyu Chuanggu”) | |||
| d | Shuang Wu | |||
| e | Hangzhou Shuige Technology Co., Ltd (“Hangzhou Shuige”) | |||
| f | Hangzhou Qingniu Medical Instrument Co., Ltd (“Hangzhou Qingniu”) | |||
| g | Hangzhou Xiaoshan Ance Building Materials Firm (“Xiaoshan Ance”) | |||
| h | Ming Zhao | |||
| i | Qijia Yu |
Amounts due from related parties
Amounts due from related parties consisted of the following for the periods indicated:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Hangzhou Qingniu(1) | $ | $ | ||||||
| Huiyu Chuanggu(2) | ||||||||
| Baiming Yu(1) | ||||||||
| Hangzhou Shuige(1) | ||||||||
| Shuang Wu(3) | ||||||||
| Qijia Yu(4) | ||||||||
| Total | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
| (4) |
F-15
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 12. | RELATED PARTY TRANSACTIONS (cont.) |
Amounts due to related parties
Amounts due to related parties consisted of the following for the periods indicated:
| As March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Xiaoshan Ance(1) | $ | $ | ||||||
| Ming Zhao(3) | ||||||||
| Huiyu Chuanggu(2) | ||||||||
| Baiming Yu(3) | ||||||||
| Total | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
Related party transactions
| For the six months ended March 31, | ||||||||
| Nature | 2025 (Unaudited) | 2024 (Unaudited) | ||||||
| Loan to Hangzhou Shuige(1) | $ | $ | ||||||
| Repayment from Hangzhou Shuige(1) | ||||||||
| Loan from Hangzhou Shuige(2) | ||||||||
| Repayment to Hangzhou Shuige(2) | ||||||||
| Loan to Liwei Zhang(3) | ||||||||
| Repayment from Liwei Zhang(3) | ||||||||
| Repayment from Baiming Yu(4) | ||||||||
| Loan from Baiming Yu(2) | ||||||||
| Loan to Baiming Yu(1) | ||||||||
| Sales to Baiming Yu(5) | ||||||||
| Sales to Hangzhou Qingniu(5) | ||||||||
| Loan to Hangzhou Qingniu(1) | ||||||||
| Repayment from Hangzhou Qingniu(1&5) | ||||||||
| Purchase from Hangzhou Qingniu(6) | ||||||||
| Loan to Shuang Wu(1) | ||||||||
| Repayment from Shuang Wu(7) | ||||||||
| Reimbursement from Shuang Wu(7) | ||||||||
| Loan from Shuang Wu(2) | ||||||||
| Repayment to Shuang Wu(2) | ||||||||
| Advance to Huiyu Chuanggu(7) | ||||||||
| Reimbursement from Huiyu Chuanggu(7) | ||||||||
| Management service fee to Huiyu Chuanggu(8) | ||||||||
| Repayment to Huiyu Chuanggu for IPO costs paid on behalf of the Group (2) | ||||||||
| Advance to Qijia Yu(4) | ||||||||
| Reimbursement from Qijia Yu(4) | ||||||||
| Loan to Hangzhou Qingniu(1) | ||||||||
| (1) |
| (2) |
F-16
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 12. | RELATED PARTY TRANSACTIONS (cont.) |
| (3) |
| (4) |
| (5) |
| (6) |
| (7) |
| (8) |
| 13. | ORDINARY SHARES |
Ordinary Shares
The Company was established as an exempted
company under the laws of Cayman Islands on March 1, 2022. The authorized number of ordinary shares was
On April 6, 2023, the shareholders of
the Company unanimously passed resolutions effecting the subdivision of
On August 26, 2024 and August 29, 2024,
the Company closed its IPO and the sale of the over-allotment shares, respectively. The Company issued and sold a total of
On February 5, 2025, at the 2024
annual general meeting of shareholders (the “AGM”) of the Company, the shareholders of the Company passed resolutions to (i)
increase the Company’s authorized share capital; (ii) re-designate and re-classify the Company’s authorized share
capital; and (iii) adopt amended and restated memorandum and articles of association to reflect the share capital increase, the share
re-designation and re-classification, and the terms of the re-designated and re-classified shares of the Company. As a
result, immediately following the AGM, the Company’s authorized share capital was increased, and re-designated and re-classified from
$
Subscription receivable
As of March 31, 2025 and September 30,
2024, subscription receivable on the consolidated balance sheets represented the unrecovered consideration of
| 14. | STATUTORY SURPLUS RESERVES AND RESTRICTED NET ASSETS |
A significant portion of the Group’s operations are conducted through its PRC (excluding Hong Kong) subsidiaries, the Group’s ability to pay dividends is primarily dependent on receiving distributions of funds from our subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by our subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation to statutory reserves.
The Group is required to make appropriations
to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income
determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory
surplus reserve are required to be at least
As a result of these PRC laws and regulations,
the Group’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Group. As of March
31, 2025 and September 30, 2024, net assets restricted in the aggregate, which include paid-in capital and statutory reserve funds of
the Group’s subsidiaries, that are included in the consolidated net assets were $
F-17
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 15. | CONCENTRATION RISK |
Financial instruments that potentially expose the Group to concentrations risk consist primarily of accounts receivable. The Group conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Group evaluates its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Group conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
There was no single customer that accounted 10% or more of the Group’s total revenue for the six months ended March 31, 2025 and 2024.
The following table sets forth a summary of single customers who represented 10% or more of the Group’s total accounts receivable:
| As of March 31, 2025 | As of September 30, 2024 | |||||||
| (Unaudited) | ||||||||
| Percentage of the Group’s total accounts receivable | ||||||||
| Customer A | % | |||||||
| Customer B | % | |||||||
| Customer C | % | |||||||
| * |
The following table sets forth a summary of single suppliers who represented 10% or more of the Group’s total purchases:
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Percentage of the Group’s total purchase | ||||||||
| Supplier A | % | |||||||
| Supplier B | % | |||||||
| Supplier C | % | |||||||
| Supplier D | % | |||||||
| * | Represent percentage less than 10% |
The following table sets forth a summary of single suppliers who represented 10% or more of the Group’s total advance to suppliers:
| As of March 31, 2025 |
As of September 30, 2024 |
|||||||
| (Unaudited) | ||||||||
| Percentage of the Group’s advance to | ||||||||
| Supplier E | % | % | ||||||
| Supplier F | % | % | ||||||
| Supplier G | % | |||||||
| Supplier H | % | |||||||
| * | Represent percentage less than 10% |
F-18
WORK MEDICAL TECHNOLOGY GROUP LTD
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except share and per share data)
| 16. | COMMITMENTS AND CONTINGENCIES |
Commitments
As of March 31, 2025 and September 30, 2024, the Group has no material purchase commitments or significant leases.
Contingencies
In the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable. In the opinion of management, there were no material pending or threatened claims and litigation as of the issuance date of these unaudited condensed consolidated financial statements.
| 17. | SUBSEQUENT EVENTS |
On May 30, 2025 and June 5, 2025, the
Group borrowed $
On May 22, 2025, the Group closed its
underwritten follow-on offering and sale of
In April 2025, the Group entered into a non-binding letter of intent (“LOI”) with the shareholders of a third-party business to explore a potential acquisition opportunity. The LOI contemplates that, subject to completion of due diligence, negotiation and execution of a definitive agreement, satisfaction of customary closing conditions, and required approvals, the Group may acquire the target business for a purchase price to be determined, with a refundable advance deposit of million applied toward the purchase price if the transaction proceeds. If the transaction does not close, the deposit will be fully refunded.
In accordance with the counterparty’s payment arrangements, the deposit was processed through the Group’s Chief Executive Officer, acting solely as an intermediary, with the funds provided directly by the Group. The contemplated transaction remains at a preliminary stage, and there can be no assurance that a definitive agreement will be entered into or that the proposed acquisition will be consummated. Those provisions of the LOI that set forth the terms of the proposed transaction, including the contemplated consideration, are non-binding. The Group’s management has evaluated the arrangement and determined the deposit is fully recoverable under the current terms.
The Group has evaluated subsequent events from March 31, 2025 and as of August 25, 2025, and did not identify any subsequent events except those disclosed above that would have material financial impact or that required adjustment of the Group’s unaudited condensed consolidated financial statements.
F-19
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Highlights (all results compared to the prior fiscal period unless otherwise noted)
| ● | Revenues were $4.5 million, representing a decrease of 14.4% |
| ● | Gross margin was 34.4%, compared with 29.1% |
| ● | Net loss was $29,425, compared with net income of $0.2 million |
| ● | The Group has cash and cash equivalents of approximately $2.0 million as of March 31, 2025, compared to approximately $6.6 million as of September 30, 2024. |
Management Commentary
As of March 31, 2025, the market demand for masks is no longer at the level it was at the height of the COVID-19 pandemic, which has resulted in market saturation and a significant contraction in the Group’s mask business.
In response, the Company’s management adjusted its manufacturing focus and resource allocation, scaling down mask production while expanding investment in higher-value-added medical devices. To expand its business scale, retain existing customers, and secure new clients, the Group implemented competitive strategies, including moderate price reductions and extended credit terms. However, during the reporting period, revenue from the sales of medical devices declined slightly year-over-year, due to the combined effects of China’s healthcare reform and centralized procurement policies.
Apart from the strategies mentioned above, the Group has been investing in research and development (“R&D”) and forging comprehensive strategic partnerships with universities, hospitals, and research institutes. Leveraging its industrial resources and partners’ innovation capabilities, the Group is continuously enhancing its R&D strength, expanding its business, and seeking new growth opportunities through innovation. The proceeds from the follow-on offering that closed in May 2025 further enhanced the Group’s financial position, enabling the expansion of its businesses.
Based on management’s assessment of macroeconomic conditions and industry competition, along with the Group’s existing business segments and industrial and innovation resources, the following strategic adjustments have been confirmed:
1. Maintaining the current scale of mask business, leveraging existing production resources to generate stable and predictable cash flow.
2. Implementing strategies to drive growth in the medical device business, including:
- Bidding on medical device tenders to drive sales of our products;
- Participating in academic conferences and exhibitions to enhance our product visibility and brand recognition;
- Optimizing distributor networks by phasing out lower-performing distributors and fostering long-term partnerships with high-quality distributors selected based on order volume, sustainability, cooperation potential, and reputation.
3. Deepening strategic R&D collaborations with universities, hospitals, and research institutes to enhance proprietary technological capabilities, accelerate product registration and commercialization, and drive revenue and profit growth.
4. Pursuing equity investments in high-quality medical technology companies to expand business scope and create external growth opportunities.
Through the foregoing strategies, the Group intends to capitalize on emerging market trends while endeavoring to sustain and diversify growth.
As of the date of issuance of this report, the Company has an aggregate of 46,092,082 Class A ordinary shares and 7,592,500 Class B ordinary shares issued and outstanding.
Financial Review for the Six Months Ended March 31, 2025
Net revenue
| For the six months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Medical devices | $ | 4,196,880 | $ | 4,564,468 | ||||
| Masks | 309,962 | 566,549 | ||||||
| Commodity trading | 36,743 | 178,078 | ||||||
| Net revenue | $ | 4,543,585 | $ | 5,309,095 | ||||
Sales decreased by $765,510, or approximately 14.4%, to $4,543,585 for the six months ended March 31, 2025 from $5,309,095 for the six months ended March 31, 2024. The decrease was mainly due to the decline in demand for and average unit price of masks, medical devices and our traded commodity.
Sales of masks decreased by $256,587, or 45.3%, to $309,962 for the six months ended March 31, 2025 from $566,549 for the six months ended March 31, 2024. The decrease was mainly because the demand for and the sales volume of masks decreased for the six months ended March 31, 2025. To clear the existing inventory, we conduct price-reduction promotions. In the meantime, we have scaled back mask production and are gradually shifting away from this product line.
Medical devices are mainly anesthesia and respiratory medical devices. The sales of medical devices decreased by $367,588, or 8.1%, to $4,196,880 for the six months ended March 31, 2025 from $4,564,468 for the six months ended March 31, 2024. The decrease was mainly due to a slight decrease in both market demand and average unit price.
Commodity trading mainly involves trading in protective clothing, waterproof goggles, protective foot covers and raw materials of masks and medical devices. The revenue from commodity trading decreased by $141,335, or 79.4%, to $36,743 for the six months ended March 31, 2025 from $178,078 for the six months ended March 31, 2024. The decrease was mainly due to the decrease of market demand for and average unit price of the traded commodity.
Cost of revenue
Cost of revenue primarily includes the cost of materials, direct labor, overhead, and other related incidental expenses that are directly attributable to the principal operations of the PRC subsidiaries. Cost of revenue decreased by $784,828, or approximately 20.8%, to $2,981,288 for the six months ended March 31, 2025 from $3,766,116 for the six months ended March 31, 2024. The decrease in the cost of revenue exceeded the decrease in net revenue, primarily due to the reduction in sales proportion of masks. As for the negative gross profit of sales of masks, the decrease of sales proportion of masks led to a more significant reduction in cost of revenue compared to net revenue.
Gross profit
Gross profit increased by $19,318, or approximately 1.3%, to $1,562,297 for the six months ended March 31, 2025 from $1,542,979 for the six months ended March 31, 2024. Gross profit margin climbed to 34.4% for the six months ended March 31, 2025, as compared to 29.1% for the six months ended March 31, 2024. The increase of gross profit margin was primarily due to (i) the increased sales proportion of medical devices from 86.0% for the six months ended March 31, 2024 to 92.4% for the six months ended March 31, 2025, as these products generally have a higher profit margin, and (ii) the decreased sales proportion of masks with relative lower profit margin for the six months ended March 31, 2025.
2
Selling expenses
Our selling expenses primarily consist of salaries, welfare expenses as well as exhibition and sponsorship expenses. Our selling and marketing expenses decreased by $90,047, or approximately 8.2%, to $1,004,786 for the six months ended March 31, 2025 from $1,094,833 for the six months ended March 31, 2024. The decrease of the selling expenses was mainly due to (i) the decrease in sponsorship expenses, as no large-scale sponsorship activities were undertaken in the six months ended March 31, 2025, and were partially offset by (ii) the increase in salaries, due to higher headcount in the sales department to support the expansion of sales channels in the six months ended March 31, 2025.
General and administrative expenses
Our general and administrative expenses primarily consist of professional fees, salaries and welfare expenses, depreciation and amortization and office expenses. Our general and administrative expenses increased by $1,093,741, or approximately 140.8%, to $1,870,797 for the six months ended March 31, 2025 from $777,056 for the six months ended March 31, 2024, primarily due to the increase of professional fees and management service fees for improving our financial reporting capabilities following our transition to a public company.
R&D expenses
Our R&D expenses were incurred for the development of medical devices and technologies used for the manufacturing of medical devices. Our R&D expenses increased by $74,299, or approximately 41.6%, to $253,082 for the six months ended March 31, 2025 from $178,783 for the six months ended March 31, 2024. The increase primarily resulted from our ongoing investment in R&D on manufacturing technology for medical devices.
Other income/loss
The total net other income was $1,445,192 and $762,597 for the six months ended March 31, 2025 and 2024, respectively.
The net other income for the six months ended March 31, 2025 primarily consisted of (i) government subsidies income of $1,536,455; (ii) interest expense of $286,827; (iii) interest income of $149,432, including interest income from interest-bearing loans to third parties of $144,884; and (iv) other miscellaneous income of $46,132.
The net other income for the six months ended March 31, 2024 primarily consisted of (i) other income of $669,837 mainly resulting from the reassessment of a previously accrued disputed payable, now recognized as non-operating income due to recent resolution of the dispute; (ii) government subsidy income of $345,245; (iii) interest expenses of $253,691; and (iv) interest income of $1,206.
Income tax benefit/expense
The income tax benefit was $91,751 for the six months ended March 31, 2025, and income tax expense was $20,050 for the six months ended March 31, 2024. The change was primarily due to a shift from taxable income to taxable loss and the decrease in the deductible temporary difference on depreciation expenses during the six months ended March 31, 2025.
Net loss/income
As a result of the foregoing, our net loss was $29,425 for the six months ended March 31, 2025 and our net income was $234,854 for the six months ended March 31, 2024.
3