UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from                 to

Commission file number: 001-42256

WORK Medical Technology Group LTD

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

Floor 23, No. 2 Tonghuinan Road

Xiaoshan District, Hangzhou City, Zhejiang Province

The People’s Republic of China

+86-571-82613568

(Address of principal executive offices)

Shuang Wu, Chief Executive Officer

Telephone: +86-571-82613568

Email: wushuang@workmedtech.com

Floor 23, No.2 Tonghuinan Road

Xiaoshan District, Hangzhou City, Zhejiang Province

The People’s Republic of China

+86-571-82613568

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

An aggregate of 14,591,942 ordinary shares, par value $0.0005 per share, as of September 30, 2024.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

TABLE OF CONTENTS

INTRODUCTION

In this annual report on Form 20-F, unless the context otherwise requires, references to:

This annual report on Form 20-F includes our audited consolidated financial statements for the fiscal years ended September 30, 2024 and 2023. In this annual report, 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 United States 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 United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets.

This annual report contains translations of certain RMB amounts into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this annual report:

Part I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

In this annual report, unless otherwise stated, the terms “we,” “us,” “our,” “Work Cayman,” “our Company,” and the “Company” refer to WORK Medical Technology Group LTD, an exempted company limited by shares incorporated under the laws of the Cayman Islands and not a Chinese operating company. Work Cayman has no operations of its own and conducts all of its operations through the PRC subsidiaries, namely, Work (Hangzhou) Medical Treatment Technology Co., Ltd. (“Work Hangzhou”), our wholly owned PRC subsidiary, and its subsidiaries, Hangzhou Shanyou Medical Equipment Co., Ltd. (“Hangzhou Shanyou”), Shanghai Chuqiang Medical Equipment Co., Ltd. (“Shanghai Chuqiang”), Hangzhou Hanshi Medical Equipment Co., Ltd. (“Hangzhou Hanshi”), Hangzhou Woli Medical Treatment Technology Co., Ltd. (“Hangzhou Woli”), Shanghai Saitumofei Medical Treatment Technology Co., Ltd. (“Shanghai Saitumofei”), Huangshan Saitumofei Medical Technology Co., Ltd. (“Huangshan Saitumofei”), and Hunan Saitumofei Medical Treatment Technology Co., Ltd. (“Hunan Saitumofei”) (collectively referred to herein as “the PRC subsidiaries”). The operations of the PRC subsidiaries could affect other parts of our business.

Investors in our Ordinary Shares should be aware that they will not directly hold equity interests in the PRC subsidiaries but rather are purchasing equity solely in WORK Medical Technology Group LTD, a Cayman Islands holding company, which indirectly owns a majority of the equity interests in such PRC subsidiaries. The Chinese regulatory authorities could disallow this structure, which would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless. For risks facing our Company as a result of our organizational structure and doing business in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China.” We do not currently use a variable interest entity (“VIE”) structure.

In addition, as we conduct all of our operations through the PRC subsidiaries in China, we and the PRC subsidiaries are subject to legal and operational risks associated with being based in China, including risks related to the legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese or United States regulations, which risks could result in a material change in the PRC subsidiaries’ operations and/or cause the value of our Ordinary Shares to significantly decline or become worthless and affect our ability to offer or continue to offer securities to investors. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. We do not believe, as advised by our PRC counsel, AllBright Law Offices (Fuzhou), that we or the PRC subsidiaries are directly subject to these regulatory actions or statements, as neither we nor the PRC subsidiaries have implemented any monopolistic behavior, and the PRC subsidiaries’ business does not implicate cybersecurity, because the PRC subsidiaries currently engage in the manufacture and sale of medical devices and neither we nor the PRC subsidiaries possess the personal information of over one million users, nor are we or the PRC subsidiaries involved in any type of restricted industries. On September 8, 2006, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”) which were jointly adopted by six PRC regulatory agencies came into effect. The M&A Rules include, among other things, provisions that purport to require that offshore special purpose vehicles (each, an “SPV”) that are controlled by PRC entities or individuals and that have been formed for overseas listing purposes through acquisitions of PRC domestic interests held by such PRC entities or individuals, obtain the approval of the China Securities Regulatory Commission (the “CSRC”) prior to the listing and trading of any such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by SPVs. Since the Company is neither controlled by PRC entities or individuals, nor formed for overseas listing purposes through acquisitions of PRC domestic interests held by such PRC entities or individuals, we believe, as advised by our PRC counsel, AllBright Law Offices (Fuzhou), that the Company is not an SPV, and, therefore, the M&A Rules do not apply to us, and we do not need to obtain the approval from the CSRC under the M&A Rules. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore SPVs.

Furthermore, on March 31, 2023, the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”) and relevant supporting guidelines (collectively, the “New Administrative Rules Regarding Overseas Listings”) issued by the CSRC came into force. These rules propose to establish a new filing-based regime to regulate overseas offerings and listings by Chinese domestic companies. According to the New Administrative Rules Regarding Overseas Listings, among other things, Chinese domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of Trial Administrative Measures within three working days following their submission of initial public offering (“IPO”), listing applications, or completion of subsequent securities offerings. The New Administrative Rules Regarding Overseas Listings apply to both IPO and subsequent securities offerings of a company in the same overseas market where it has previously offered and listed securities. Under these rules, companies like ours must file with the CSRC within three working days after completing a post-IPO securities offering. On the same day, the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Administration Provisions”) promulgated by the CSRC became effective. According to the Confidentiality and Archives Administration Provisions, domestic companies that seek overseas offering and listing (either in direct or indirect means) and the securities companies and securities service (either incorporated domestically or overseas) providers that undertake relevant businesses shall not leak any state secret or working secret of government agencies, or harm national security and public interests. Furthermore, a domestic company that provides accounting archives or copies of accounting archives to any entities, including securities companies, securities service providers and overseas regulators, and individuals, shall fulfill due procedures in compliance with applicable regulations. Our Ordinary Shares began trading on the Nasdaq Capital Market under the symbol “WOK” on August 23, 2024, and on August 26, 2024, the Company completed its IPO. We believe, as advised by our PRC counsel, Allbright Law Offices (Fuzhou), that our IPO did not involve the leaking of any state secret or working secret of government agencies, or the harming of national security and public interests. However, we may be required to perform additional procedures in connection with the provision of accounting archives. The specific requirements of the relevant procedures are currently unclear, and we cannot be certain whether we will be able to perform the relevant procedures. We also believe, based on the advice of our PRC counsel, AllBright Law Offices (Fuzhou), that (i) because we are not an SPV which acquires PRC domestic companies’ equity with our shares prior to the listing of our Ordinary Shares on Nasdaq, we were not required to submit an application to the CSRC for its approval of the IPO and the listing and trading of our Ordinary Shares with Nasdaq under the M&A Rules; (ii) as we are regarded as a domestic company to be indirectly listed on overseas markets under the Trial Administrative Measures, we were required to complete the filing procedures with the CSRC in accordance with the Trial Administrative Measures with respect to our IPO and on December 21, 2023, we completed all the required filing procedures with the CSRC with respect to our IPO; (iii) neither we nor the PRC subsidiaries are subject to cybersecurity review with the Cyberspace Administration of China (the “CAC”), pursuant to the Measures for Cybersecurity Review (2021 version), which became effective on February 15, 2022, since the PRC subsidiaries currently engage in the manufacture and sale of medical devices and neither we nor the PRC subsidiaries possess personal information of over one million users; (iv) the Company is currently not required to obtain permission or approval from any of the PRC central or local governmental authorities, except for completing the filing procedures with the CSRC, and it has not received any denial to list on a U.S. exchange. However, in the event that we conduct subsequent offerings, we could be subject to new filing requirements with the CSRC. In the event that filings with the CSRC are required, we cannot assure you that we can complete the filing procedures, obtain the approvals, or complete other compliance procedures in a timely manner, or at all, or that any completion of filing or approval or other compliance procedures would not be rescinded. Any such failure would subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory authorities may impose restrictions and penalties on the operations of the PRC subsidiaries in China, significantly limit or completely hinder our ability to launch any new offering of our securities, limit our ability to pay dividends outside of China, delay or restrict the repatriation of the proceeds from future capital raising activities into China, or take other actions that could materially and adversely affect our business, results of operations, financial condition and prospects, as well as the trading price of our Ordinary Shares. Furthermore, the PRC government authorities may further strengthen oversight and control over listings and offerings that are conducted overseas. Any such action may adversely affect our operations and significantly limit or completely 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; and (v) there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations and future PRC laws and regulations, and there can be no assurance that the relevant government agencies will not take a view that is contrary to, or otherwise different from, the conclusions stated above. If the relevant government agencies take a view that is contrary to, or otherwise different from, the foregoing conclusions, it could have a material adverse effect on the PRC subsidiaries’ business, operating results and reputation, as well as the trading price of our Ordinary Shares. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Any requirement to obtain prior approval under the M&A Rules and/or any other regulations promulgated by relevant PRC regulatory agencies in the future could delay our subsequent securities offerings and failure to obtain any such approvals, if required, could have a material adverse effect on the PRC subsidiaries’ and our business, operating results and reputation, as well as the trading price of our Ordinary Shares, and could also create uncertainties for our subsequent securities offerings and affect our ability to offer or continue to offer securities to investors outside China” on page 32; “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations” on page 27; and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Additional compliance procedures may be required in connection with our subsequent securities offerings, due to the promulgation of 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 page 30.

However, since these statements and regulatory actions by the PRC government are newly published and official guidance and related implementation rules have yet to be fully issued, it is highly uncertain what the potential impact such modified or new laws and regulations will have on the PRC subsidiaries’ daily business operations, the ability to accept foreign investments and list on a U.S. exchange. Moreover, the Standing Committee of the National People’s Congress (the “SCNPC”) or other PRC regulatory authorities may in the future promulgate laws or regulations or implementing rules that require our Company, or any of our subsidiaries to obtain regulatory approval from Chinese authorities before listing in the U.S. Although the Company is currently not required to obtain permission or approval from any of the PRC central or local governmental authorities, except for completing the filing procedures with the CSRC, and it has not received any denial to list on a U.S. exchange, the PRC subsidiaries’ operations could be adversely affected, directly or indirectly; our ability to offer, or continue to offer, securities to investors would be potentially hindered; and the value of our securities might significantly decline or be worthless, by existing or future laws and regulations relating to the business of the PRC subsidiaries or our industry or by intervention or interruption by PRC governmental authorities, if we or the PRC subsidiaries (i) do not receive or maintain such permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, (iii) applicable laws, regulations, or interpretations change and we or the PRC subsidiaries are required to obtain such permissions or approvals in the future, or (iv) due to any intervention or interruption by PRC governmental with little advance notice. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China” beginning on page 27 for a discussion of these legal and operational risks and other information that should be considered before making a decision to purchase our securities.

Moreover, the Chinese government may exert substantial influence over the manner in which the PRC subsidiaries conduct their business activities. The PRC government may also intervene or influence the PRC subsidiaries’ operations and our subsequent securities offerings at any time, which could result in a material change in the PRC subsidiaries’ operations and our Ordinary Shares could decline in value significantly or become worthless. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government exerts substantial influence over the manner in which the PRC subsidiaries conduct their business activities. The PRC government may also intervene or influence the PRC subsidiaries’ operations and our subsequent securities offerings at any time, which could result in a material change in the PRC subsidiaries’ operations and our Ordinary Shares could significantly decline in value or become worthless” on page 29.

In addition, although Work Medical Technology Group (China) Limited (“Work Medical Technology”), our Hong Kong subsidiary, is an investment holding company, the legal and operational risks associated with operating in mainland China may also apply to the future activities (if any) in Hong Kong of Work Medical Technology, to the extent that they are made applicable to such entity and its anticipated operations. Work Medical Technology, as of the date of this annual report, has yet to commence operations and is expected to be limited to operating as an investment holding company in the future without any substantive or data-related operations in Hong Kong. However, such operations may be affected if Hong Kong adopts rules, regulations or policy guidance with respect to currency exchange control. Furthermore, as of the date of this annual report, we do not expect that any regulatory actions related to data security or anti-monopoly concerns in Hong Kong will impact the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or foreign exchange because we have never had and do not plan to have any material operations in Hong Kong. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The enactment of Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region and Hong Kong Autonomy Act of U.S. could impact our Hong Kong holding subsidiary” on page 42.

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, the national laws of the PRC not listed in Annex III of the Basic Law do not apply to our Hong Kong subsidiary, Work Medical Technology. 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 Work Medical Technology due to changes 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 Work Medical Technology, as relevant authorities may impose fines and penalties upon Work Medical Technology, delay or restrict the repatriation of the proceeds from our securities offerings 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.

Furthermore, as more stringent criteria have been imposed by the U.S. Securities and Exchange Commission (the “SEC”) and the Public Company Accounting Oversight Board (the “PCAOB”) recently, our securities may be prohibited from trading on a national exchange or over-the-counter under the Holding Foreign Companies Accountable Act (“the HFCA Act”), if the PCAOB is unable to inspect our auditors for two consecutive years. As a result, an exchange may determine to delist our securities. Pursuant to the HFCA Act, if the PCAOB is unable to inspect an issuer’s auditors for two consecutive years, the issuer’s securities are prohibited to trade on a U.S. stock exchange. The PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. Furthermore, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations. On June 22, 2021, United States Senate passed the Accelerating Holding Foreign Companies Accountable Act. On December 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”), was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years, as was formerly required under the HFCA Act before such amendment, to two consecutive years. According to the Consolidated Appropriations Act, any foreign jurisdiction could be the reason why the PCAOB does not have complete access to inspect or investigate a company’s auditor. As it was originally enacted, the HFCA Act applied only if the PCAOB’s inability to inspect or investigate was due to a position taken by an authority in the foreign jurisdiction where the relevant public accounting firm is located. As a result of the Consolidated Appropriations Act, the HFCA Act now also applies if the PCAOB’s inability to inspect or investigate the relevant accounting firm is due to a position taken by an authority in any foreign jurisdiction. The denying jurisdiction does not need to be where the accounting firm is located. As of the date of this annual report, our auditor WWC, P.C., is not on the list published by the PCAOB subject to the determinations as to inability to inspect or investigate completely, as announced by the PCAOB on December 16, 2021, and it is based in the U.S. and is registered with the PCAOB and subject to PCAOB inspection, having its latest inspection completed in 2023. However, recently developments with respect to audits of China-based companies, create uncertainty about the ability of our auditor, to fully cooperate with the PCAOB’s request for audit workpapers without the approval of the Chinese authorities. In the event it is later determined that the PCAOB is unable to inspect or investigate completely the Company’s auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the Company’s securities to be prohibited under the HFCA Act, and ultimately result in a determination by a securities exchange to delist the Company’s securities. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC (the “MOF”), and the PCAOB signed a Statement of Protocol (the “Protocol”), which sets out specific arrangements on conducting inspections and investigations over relevant audit firms within the jurisdiction of the PRC and the U.S, including the audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. 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. Notwithstanding the foregoing, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor, then such lack of inspection could cause our securities to be delisted from the stock exchange. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.” on page 40.

As a holding company, we may rely on dividends and other distributions on equity paid by the PRC subsidiaries for our cash and financing requirements. If any of the PRC subsidiaries incur debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to us. Subject to certain contractual, legal, and regulatory restrictions, and our internal cash management policy, cash and capital contributions may be transferred among our Cayman Islands holding company and our subsidiaries. If needed, our Cayman Islands holding company can transfer cash to the PRC subsidiaries through loans and/or capital contributions, and the PRC subsidiaries can transfer cash to our Cayman Islands holding company through issuing dividends or other distributions. Our finance department supervises cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary or department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested and submitting it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred. As of the date of this annual report, none of the PRC subsidiaries have made any dividends or other distributions of earnings to the Company or any U.S. investors. As of the date of this annual report, the Company has transferred the net proceeds in the amount of $7,373,839 from our IPO through Work BVI to Work Medical Technology, from such amount, $5,404,654 of the net proceeds remained available after reimbursing PRC subsidiaries for expenses advanced from them in connection with the IPO. In the fiscal year ended September 30, 2023, and 2022, there was no cash transferred from the Cayman Islands holding company to its PRC subsidiaries. Funds also transferred among five PRC subsidiaries, Hangzhou Shanyou, Hangzhou Hanshi, Hangzhou Woli, Shanghai Saitumofei, and Work Hangzhou for operational purposes. The aggregate principal amounts of funds transferred among the PRC subsidiaries were $2,459,263, $8,262,606, and $84,234 for the fiscal years ended September 30, 2024, 2023, and 2022, respectively. As of the date of this annual report, there have been no other transfers or distributions made or dividends paid among the Company and its subsidiaries, except as described above. In the future, cash proceeds raised from overseas financing activities, including subsequent securities offerings, may be transferred by us to the PRC subsidiaries via capital contribution or shareholder loans, as the case may be. See also “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy” and our audited consolidated financial statements for the fiscal years ended September 30, 2024 and 2023.

Cash transfers from our Cayman Islands holding company are subject to applicable PRC laws and regulations on loans and direct investment. We may rely on dividends from our subsidiaries in China for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us, and as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, Work Medical Technology. Current PRC regulations permit our indirect PRC subsidiaries to pay dividends to Work Medical Technology only out of their respective accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is 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. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in complying with the administrative requirements necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenue from our or their operations, we may be unable to pay dividends on our Ordinary Shares.

Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. Work Medical Technology may be considered a non-resident enterprise for tax purposes, so that any dividends our PRC subsidiaries pay to Work Medical Technology 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%. See “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation.”

In order for us to pay dividends to our shareholders, we will rely on payments made from Work Hangzhou and its subsidiaries to WFOE and from WFOE to Work Medical Technology, and then to our Company. According to the EIT Law, such payments from subsidiaries to parent companies in China are subject to the PRC enterprise income tax at a rate of 25%. In addition, if Work Age or its subsidiaries or branches incur debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

Pursuant to 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 PRC project. The 5% withholding tax rate, however, 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 the PRC 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 any dividends paid by our PRC subsidiaries to its immediate holding company, Work Medical Technology. As of the date of this annual report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Work Medical Technology intends to apply for the tax resident certificate if and when Work Age plans to declare and pay dividends to Work Medical Technology.

To the extent cash is located in the PRC or within a PRC domiciled entity and may need to be used to fund operations outside of the PRC, the funds may not be available due to limitations placed on us and our subsidiaries by the PRC government. To the extent cash in and assets of the business is in the PRC or a PRC entity, the funds and assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash and assets.

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Summary of Risk Factors

Investing in our securities involves significant risks. You should carefully consider all of the information in this annual report before investing in our securities. Below is a summary of the principal risks we face. These risks are discussed more fully under “Item 3. Key Information—D. Risk Factors.”

Risks Related to the PRC Subsidiaries’ Business and Industry (for a more detailed discussion, see “Item 3. Key Information — D. Risk Factors — Risks Related to the PRC Subsidiaries’ Business and Industry”)

Risks and uncertainties related to the PRC Subsidiaries’ business and industry include, but are not limited to, the following:

Risks Related to Doing Business in China (for a more detailed discussion, see “Item 3. Key Information—D. Risk Factors — Risks Related to Doing Business in China”)

We face risks and uncertainties relating to doing business in the PRC in general, including, but not limited to, the following:

Risks Relating to Our Ordinary Shares and the Trading Market (for a more detailed discussion, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Ordinary Shares and the Trading Market”)

In addition to the risks described above, we are subject to general risks and uncertainties relating to our Ordinary Shares and the trading market, including, but not limited to, the following:

Risks Related to the PRC Subsidiaries’ Business and Industry

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

The PRC subsidiaries’ operating history may not be indicative of their future growth or financial results. There is no assurance that the PRC subsidiaries will be able to grow their revenue in future periods. Their growth rates may decline for any number of possible reasons, and some of them are beyond their 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. The PRC subsidiaries expect to 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 their expansion plan is subject to uncertainty and the total number of items sold and number of transacting customers may not grow at the rate they expect for the reasons stated above. If their growth rates decline, investors’ perceptions of their business and prospects may be adversely affected and the market price of our Ordinary Shares could decline.

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

The quality and safety of the PRC subsidiaries’ products, whether self-manufactured or out-sourced, are critical to our success. As a medical device manufacturer with a history of over 20 years, quality and safety are always the core values, as medical devices are directly used for the human body and thus essential to the human health. The PRC subsidiaries 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 their quality control system, which in turn depends on a number of factors, including, but not limited to the design of a quality control system, employee training to ensure that employees adhere to and implement the quality control policies and procedures and the effectiveness of monitoring any potential violation of their quality control policies and procedures. Despite such quality control management system, the PRC subsidiaries cannot eliminate the risks of errors, defects or failures. They may fail to detect or cure defects as a result of a number of factors, many of which are outside their control. Please refer to “Item 4. Information on the Company—B. Business Overview—Quality Control” for more information.

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

As of the date of this annual report, the PRC subsidiaries are unaware of material quality accidents.

The PRC subsidiaries may experience significant liability claims or complaints from customers, doctors and patients, litigation and regulatory investigations and proceedings, such as claiming in relation to medical device safety, or adverse publicity involving their products, which could adversely affect the PRC subsidiaries’ and our financial condition and results of operations.

The PRC subsidiaries face an inherent risk of liability claims or complaints from customers, doctors and patients. The PRC subsidiaries take those complaints and claims seriously and endeavor to reduce such complaints by implementing various remedial measures. Nevertheless, we cannot assure you that they can successfully prevent or address all complaints.

Any complaints or claims against the PRC subsidiaries, even if meritless and unsuccessful, may divert management attention and other resources from the PRC subsidiaries’ business and adversely affect their business and operations. Customers may lose confidence in the PRC subsidiaries and their brands, which may adversely affect their 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 subsidiaries’ products, can adversely affect the PRC subsidiaries’ business, results of operations and reputation.

The PRC subsidiaries face potential liability, expenses for legal claims, and harm due to the nature of their business. For example, customers could assert legal claims against them in connection with personal injuries or illness related to the use of medical devices they sell. 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 subsidiaries to liabilities associated with customer protection laws. The PRC subsidiaries may be responsible for compensation for a customer’s loss even if personal injuries or illness are not caused by them. Thus, they may also be held liable if their suppliers or other business partners fail to comply with applicable product quality and safety related rules and regulations. Though they can ask the responsible parties for indemnity after that, their reputation could still be adversely affected.

The PRC subsidiaries may face additional exposure to claims and lawsuits. These claims could divert management time and attention away from their business and result in significant costs to investigate and defend, regardless of the merits of the claims. In some instances, they may elect or be forced to pay substantial damages if they are unsuccessful in their efforts to defend against these claims, which could harm their business, financial condition, and results of operations. In addition, the PRC subsidiaries’ 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 adversely affect their and respective reputations and the Group’s financial condition and results of operations.

Moreover, the PRC subsidiaries’ products may be subject to recall by competent authorities if they fail to comply with certain quality requirements. Recalls may be accompanied by claims or lawsuits for breaches of contract, for the inability to provide products of a certain quality on time, for which the PRC subsidiaries may elect or be forced to pay substantial damages if they are unsuccessful in their efforts to defend against these claims or lawsuits, and thus, could harm their business, and the Group’s financial condition and results of operations.

On November 16, 2020, Hangzhou Shanyou was required to recall 20,000 disposable medical masks by Heilongjiang Provincial Drug Administration, because the mask strings failed to comply with an elastic requirement.

The PRC subsidiaries have not, as of the date of this annual report, been notified that they will be subject to any punishment, nor are they aware of any risk, currently or in the foreseeable future, regarding these recalls by the relevant government authorities, however, there is no assurance that the relevant government authorities will not later determine that a basis does exist for punishment with respect to recalled products.

As of the date of this annual report, the PRC subsidiaries are not aware of any warning, investigations, prosecutions, disputes, claims or other proceedings in respect of customer protection rights or breaches of contract, nor have they been punished or can foresee any punishment to be made by any government authorities of the PRC or any in any overseas jurisdiction. However, there is no assurance that such entities will not find a basis in the future for investigations, prosecutions, disputes, claims or other proceedings with respect to customer protection rights or breaches of contract with respect to the PRC subsidiaries’ products, which could adversely harm their business, and the Group’s financial condition and results of operations.

The decreased demand for masks and in the unit price of masks could reduce our revenue, which could adversely affect the PRC subsidiaries’ and our results of operations.

Since China lifted travel restrictions and quarantine requirements in December 2022, the demand for masks and the sales volume and unit price of masks substantially decreased. With the reduced demand for masks and unit price of masks, our net revenue from sales of masks decreased from $10,619,035, which accounted for approximately 53.87% of our total net revenue, for the fiscal year ended September 30, 2022, to $5,091,331, or approximately 37.53% of our total net revenue, for the fiscal year ended September 30, 2023. Furthermore, our net revenue from sales of masks decreased to $1,559,750, or approximately 13.56% of our total net revenue, for the fiscal year ended September 30, 2024.

While we do not expect this trend to continue in future financial periods, we estimate that the demand and unit price of masks have since stabilized. To mitigate these adverse effects, we have been strengthening our marketing efforts, focusing on medical devices other than masks. Nevertheless, if such trend continues, it could further reduce our revenue from sales of masks, thereby decreasing our total revenue, which could adversely affect the PRC subsidiaries’, the Group’s financial condition and our results of operations.

The PRC subsidiaries face the risk of fluctuations in the cost, availability and quality of their raw materials, which could adversely affect their results of operations, and thus, adversely affect the Group as a whole.

The cost, availability and quality of the PRC subsidiaries’ principal raw materials, such as meltblown, non-woven fabrics, steel spring, OPP membrane, and methyl silicone oil, are important to their operations. If the cost of raw materials increases due to policy changes, large market price fluctuation or any other reason, the business and results of operations of the PRC subsidiaries could be adversely affected, as well as the Group’s financial condition and results of operations.

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 subsidiaries’ operations and adversely affect their financial results, which could adversely affect the Group as a whole.

Defective raw materials could subject the PRC subsidiaries to product liability claims or legal actions, which could adversely affect their and the Group’s financial condition and results of operations.

A significant interruption in the operations of the PRC subsidiaries’ third-party suppliers and other business partners could potentially disrupt their operations.

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

Although the PRC subsidiaries believe that they could establish alternate sources from other suppliers for most of their raw materials, any delay in locating and establishing relationships with other sources could result in shortages or back orders for such raw materials. There can be no assurance that such replacement suppliers will provide the raw materials that are needed by the PRC subsidiaries in the quantities that they request or at the prices that they are willing to pay. Any shortage in quantities or increase in prices could adversely affect the PRC subsidiaries’ and the Group’s financial condition and results of operations.

Moreover, 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. Additionally, on October 7, 2023, Hamas, a U.S. designated terrorist organization, launched a series of coordinated attacks from the Gaza Strip onto Israel. On October 8, 2023, Israel formally declared war on Hamas, and the armed conflict is ongoing as of the date of this annual report. Since the PRC subsidiaries’ raw and auxiliary materials are purchased from certified and qualified suppliers in China, their supply has been very stable for many years and are easily sourced due to the PRC subsidiaries’ geographical locations. The prices of raw materials used in the PRC subsidiaries’ operations are not volatile and they, along with the PRC subsidiaries’ supply chain, have not been impacted by the recent conflict between Russia and Ukraine or the war between Isarel and Hamas. However, the impact of these actions and related sanctions on the world economy and the specific impact on the Company’s financial condition, results of operations and cash flows are not determinable as of the date of this annual report.

The PRC subsidiaries do not have long-term contracts with their suppliers and the suppliers can reduce order quantities or terminate sales to the PRC subsidiaries at any time.

The PRC subsidiaries do not have long-term contracts with their suppliers. At any time, their suppliers can reduce the quantities of products that sell to the PRC subsidiaries, or cease selling products to the PRC subsidiaries altogether. Such reductions or terminations could have a material adverse impact on the PRC subsidiaries’ revenue, profits and financial condition, which may also adversely affect the Group as a whole.

Overall tightening of the labor market, increases in labor costs or any possible labor unrest may adversely affect the PRC subsidiaries’ business and results of operations, which may also adversely affect the Group as a whole.

The PRC subsidiaries’ business requires a substantial number of personnel. Any failure to retain stable and dedicated labor by them may lead to disruption to their business operations. Although they have not experienced any labor shortages as of the date of this annual report, they have observed an overall tightening and increasingly competitive labor market. The PRC subsidiaries have experienced, and expect to continue to experience, increases in labor costs due to increases in salary, social benefits, and employee headcount. The PRC subsidiaries compete with other companies in their industry and other labor-intensive industries for labor, and they may not be able to offer competitive remuneration and benefits compared to their competitors. If they are unable to manage and control their labor costs, their business, financial condition, and results of operations, along with the Group’s financial condition and results of operations may be materially and adversely affected.

The PRC subsidiaries’ industry is intensely competitive. The PRC subsidiaries 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 subsidiaries 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 theirs. Some of their potential competitors may have greater name recognition, greater operating revenue, larger customer bases, longer customer relationships and greater financial, technical, personnel and marketing resources than they have. If they are unsuccessful competing with their competitors for their existing and prospective customers’ business, their financial condition and results of operation may be adversely affected, and the Group’s financial condition and results of operation may be accordingly adversely affected.

Furthermore, increased competition may reduce the PRC subsidiaries’ market share and profitability and require them to increase their sales and marketing efforts and capital commitment in the future, which could negatively affect their results of operations or force them to incur further losses, which could also adversely affect the Group as a whole. Although the PRC subsidiaries have continuously grown 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 their and the Group’s business, financial condition and results of operations.

The continuing development of the PRC subsidiaries’ products depends upon the PRC subsidiaries’ maintaining strong working relationships with their customers, distributors and sales agents.

The research, development, marketing and sale of the PRC subsidiaries’ current products and potential new and improved products or future product indications for which we receive regulatory clearance or approval depend upon the PRC subsidiaries’ maintaining working relationships with their customers, distributors and sales agents. See “Item 4. Information on the Company—B. Business Overview—Research and Development.” The PRC subsidiaries rely on those professionals to provide them with considerable knowledge and experience regarding the research, development, marketing and sale of their products. Distributors and sales agents assist them in marketing and sales, as well as collecting customers’ feedback and advice related to their products. Researchers at hospital and medical institution customers keep them informed of the latest requirements and research and development (“R&D”) results. If the PRC subsidiaries cannot maintain strong working relationships with these professionals and continue to receive their advice and input, the development, improvement and marketing of the PRC subsidiaries’ products could suffer, which could have a material adverse effect on the PRC subsidiaries’ and our business, financial condition and results of operations.

Technological changes may adversely affect sales of the PRC subsidiaries’ 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 industry could adversely affect sales of the PRC subsidiaries’ products. Products could be rendered obsolete because of future innovations by competitors or others, which would have a material adverse effect on the business, financial condition and results of operations of the PRC subsidiaries and the Group.

Consolidation in the medical device industry could have an adverse effect on the PRC subsidiaries’ revenue 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 try to use their market power to negotiate price concessions or reductions for the PRC subsidiaries’ products. If the PRC subsidiaries reduce their prices because of consolidation in the healthcare industry, their revenue would decrease, which could have a material adverse effect on their and our business, financial condition and results of operations.

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

As a significant part of their growth strategy, the PRC subsidiaries 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 upon their ability to identify, select and acquire the technologies and patents on terms that are acceptable to them.

Any patents and technology the PRC subsidiaries identify or acquire may require additional development efforts prior to commercial manufacturing and sale, 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 product 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 subsidiaries are unable to develop suitable potential products through internal research programs or by obtaining patents or technologies from third parties, it could have a material adverse effect on the PRC subsidiaries and our business, financial condition and results of operations.

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

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

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

To remain competitive, the PRC subsidiaries must continue to stay abreast of the constantly evolving industry trends and to enhance and improve their technology accordingly. Success will depend, in part, on the ability of the PRC subsidiaries to identify, develop or acquire leading technologies useful in their business. There can be no assurance that they will be able to use new technologies effectively or meet customer’s requirements. If they 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, and may adversely affect the Group’s financial condition and results of operations.

If the PRC subsidiaries sell medical devices to non-profit medical institutions through public bid invitation, their sales prices will be limited based on the results of the bidding.

In China, the procurement of medical devices by non-profit medical institutions is subject to specific procurement procedures. According to relevant laws and regulations, all non-profit medical institutions under all levels of government and state-owned enterprises from different industries shall participate in the centralized procurement of medical devices. The centralized procurement of medical devices must follow the basic principles of openness, fairness, impartiality and good faith, and the procurement method is mainly based on public bid invitation. Therefore, if the PRC subsidiaries sell medical devices to non-profit medical institutions through public bid invitation, their sales prices will be limited based on the results of the bidding, which may reduce their profitability, which result would adversely impact the profitability of the Group.

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

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

Our success depends on our management team and other key personnel, the loss of any of whom could disrupt our operations.

Our future success will depend in substantial part on the continued service of the members of our senior management, in particular, those identified under the section titled “Management.” The loss of the services of one or more of our key personnel could impede implementation of our business plan and result in reduced profitability. We do not carry key person life insurance on any of our officers or employees. Our future success will also depend on the PRC subsidiaries’ continued ability to attract, retain and motivate highly qualified technical sales and marketing customer support. Because of the rapid growth of the economy in China, competition for qualified personnel is intense. We cannot assure you that we will be able to retain our key personnel or that we will be able to attract, assimilate or retain qualified personnel in the future. Any loss of key personnel or failure to attract, assimilate or retain qualified personnel could disrupt our operations.

The PRC subsidiaries may not be able to adequately protect and maintain their intellectual property.

Our success will depend on the PRC subsidiaries’ ability to continue to develop and market their products. The PRC subsidiaries have been granted 30 patents in mainland China relating to their products and have 13 pending patent applications. No assurance can be given that such patents will not be challenged, invalidated, infringed or circumvented, or that such intellectual property rights will provide a competitive advantage to the PRC subsidiaries. Also, litigation may be necessary to enforce their intellectual property rights or determine the validity and scope of the proprietary rights of others.

The outcome of such potential litigation may not be favorable and any success in litigation may not be able to adequately protect their rights. Such litigation may be costly and divert management attention away from the PRC subsidiaries’ business. An adverse determination in any such litigation would impair their intellectual property rights and may harm their business, prospects and reputation, as well as the business and prospects of the Group. Enforcement of judgments in China is uncertain and even if they are successful in such litigation, it may not provide them with an effective remedy.

The PRC subsidiaries’ introduction of new technologies and products may increase the likelihood that third parties will assert claims that the PRC subsidiaries’ products infringe upon their proprietary rights.

The rapid technological changes that characterize our industry require that the PRC subsidiaries quickly implement new processes and components with respect to their products. Often with respect to recently developed processes and components, a degree of uncertainty exists as to who may rightfully claim ownership rights in such processes and components. Uncertainty of this type increases the risk that claims alleging that such components or processes infringe upon third party rights may be brought against the PRC subsidiaries. Although Hangzhou Shanyou takes, and will continue to take, steps to ensure that its new products do not infringe upon third party rights, if its products or manufacturing processes are found to infringe upon third party rights, it may be subject to significant liabilities and be required to change its manufacturing processes or be prohibited from manufacturing certain products, which could have a material adverse effect on its and our operations and financial condition, as well as the Group as a whole.

The PRC subsidiaries may be required to defend against charges of infringement of patent or other proprietary rights of third parties. Although patent and other intellectual property disputes in our industry have often been settled through licensing or similar arrangements, such defense could require the PRC subsidiaries to incur substantial expense and to divert significant resources of their technical and management personnel and could result in their loss of rights to develop or make certain products or require them to pay monetary damages or royalties to license proprietary rights from third parties. Furthermore, we cannot be certain that the necessary licenses would be available to the PRC subsidiaries on acceptable terms, if at all. Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent the PRC subsidiaries from manufacturing and selling certain of their products. Any such litigation, whether successful or unsuccessful, could result in substantial costs to the PRC subsidiaries and diversions of their resources, either of which could adversely affect their business, and the financial condition and results of operations of the Group.

The PRC subsidiaries may not be able to prevent others from unauthorized use of their intellectual property, which could harm their business and competitive position and adversely affect the Group as a whole.

The PRC subsidiaries rely on a combination of trademark, fair trade practice, patent, copyright and trade secret protection laws in China, as well as confidentiality procedures, to protect their intellectual property rights. The PRC subsidiaries are careful to remain current in their annual patent fee payments. They regard their trademark, patents, know-how, proprietary technologies, and similar intellectual property as critical to our success. The PRC subsidiaries may become an attractive target to intellectual property attacks in the future with the increasing recognition of their brands. Any of their intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide them with competitive advantages. In addition, there can be no assurance that (i) all of their intellectual property rights will be adequately protected, or (ii) their 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. Accordingly, the PRC subsidiaries 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 their intellectual property is difficult, time-consuming and costly and the steps taken may be inadequate to prevent the misappropriation of their intellectual property. In the event that the PRC subsidiaries 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 subsidiaries will prevail in such litigation. In addition, their trade secrets may be leaked or otherwise become available to, or be independently discovered by, their competitors. Any failure in protecting or enforcing their intellectual property rights could have a material adverse effect on their and our business, financial condition and results of operations.

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

Our revenue is generated from sales of medical devices, both domestically and internationally, and we anticipate that revenue from such sales will continue to represent the substantial portion of our total revenue in the near future. The PRC subsidiaries’ 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 recessions, downturns in business cycles of the PRC subsidiaries’ customers, interest rate fluctuations, and other economic factors beyond the PRC subsidiaries’ control. Deterioration in the economic environment subjects their business to various risks, which may have a material and adverse impact on their operating results, causes them not to reach their long-term growth goals, and, thus, adversely affects the Group as a whole. For example, a downturn in the economy could directly affect the discretionary spending power of their customers and in turn, depress the number of orders for their products.

Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact the PRC subsidiaries’ business and operating results, which may adversely affect the Group as a whole.

The U.S. government has recently made statements and taken certain actions that may lead to potential changes to the 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 subsidiaries or the industry and customers. Although cross-border business currently contributes a small portion of the PRC subsidiaries’ business, as they 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 their products and services, impact the competitive position of their products or prevent them 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 subsidiaries’ and the Group’s financial condition and results of operations.

The PRC subsidiaries do not have any product liability, business interruption, or property insurance and they may incur liabilities that are not covered by insurance, which could expose them to significant costs and business disruption.

The PRC subsidiaries do not maintain product liability, business interruption or property insurance. Moreover, they do not carry any key-man life insurance of any variety. The PRC subsidiaries provide social security insurance, including pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated benefit contribution plan for their employees.

In the event the PRC subsidiaries were to incur substantial losses or liabilities due to fire, explosions, floods, other natural disasters or accidents, or any product liability claims or business interruption, their results of operations would be materially and adversely affected. Any such occurrences could have an adverse effect on the PRC subsidiaries and the Group’s financial condition and results of operations.

If we do not obtain substantial additional financing, our ability to execute on our business plan as outlined in this annual report will be impaired.

Our plans for business expansion and development are dependent upon our raising significant additional capital. Our plans call for significant new investments in research and development, marketing, expanded productions capacity, and working capital for raw materials and other items. Management estimates that our capital needs for expansion will be approximately $30 million. Although we expect the proceeds of our IPO and our net earnings to substantially fund our planned growth and development, our management will be required to properly and carefully administer and allocate these funds. Should our capital needs be higher than estimated, or should additional capital be required after the close of our IPO, we will be required to seek additional investments, loans, or debt financing, or conduct subsequent securities offerings to fully pursue our business plans. Such additional investment may not be available to us on terms which are favorable or acceptable, and we cannot guarantee you that the proceeds of a subsequent security offering will adequately meet our capital needs. Should we be unable to meet our full capital needs, our ability to fully implement our business plan will be impaired.

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

Global pandemics, epidemics in China or elsewhere in the world, or fear of 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 subsidiaries’ business operations, reduce or restrict their supply of products and services, 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 subsidiaries’ and our 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 subsidiaries’ and our business, financial condition, and results of operations. Any one or more of these events may impede the PRC subsidiaries’ production and delivery efforts and adversely affect their sales results, or even for a prolonged period of time, which could materially and adversely affect the PRC subsidiaries’ and our business, financial condition, and results of operations.

Beginning in 2020, the COVID-19 pandemic resulted in quarantines, travel restrictions, and temporary closure of stores and facilities in China and elsewhere. China lifted its travel restrictions and quarantine requirements in December 2022. The extent of the impact of COVID-19 on the Company’s future financial results will be dependent on future developments, such as the length and severity of any resurgence, future government actions in response to COVID-19 on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company is currently unable to quantify the expected impact of COVID-19 on its future operations, financial condition, liquidity, and results of operations.

The PRC subsidiaries are also vulnerable to natural disasters and other calamities. We cannot assure you that the PRC subsidiaries 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 subsidiaries’ 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 our manufacturing facilities, as well as adversely affect the PRC subsidiaries’ and our business, financial condition, and results of operations.

The PRC subsidiaries’ international sales are subject to a variety of risks that could adversely affect their profitability and operating results, which may adversely affect the profitability and operating results of the Group.

The PRC subsidiaries sell disposable medical devices internationally. For the fiscal year ended September 30, 2024, 2023, and 2022, their international sales accounted for 15%, 7%, and 7%, respectively, of our revenue. Although they 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 their foreign sales or otherwise disrupt their business, which may adversely affect the profitability and operating results of the Group:

The PRC subsidiaries are subject to a variety of environmental laws that could be costly for them to comply with, and they could incur liability if they fail to comply with such laws or if they are responsible for releases of contaminants to the environment, which could adversely affect the Group as a whole.

Our operating subsidiaries are all located in the PRC. Chinese laws impose various environmental controls on the management, handling, generation, manufacturing, transportation, storage, use and disposal of wastewater, solid waste, and other materials used or generated in the manufacturing of Hangzhou Shanyou’s products. If the PRC subsidiaries fail to comply with any present or future environmental laws, they could be subject to fines, corrective actions, other liabilities or the suspension of production, which could adversely affect the Group.

The PRC subsidiaries endeavor to adhere to environmental protection and governance requirements and have formulated a systematic environmental protection management system in the treatment of wastewater and solid waste in accordance with national requirements. However, changes in environmental laws may result in costly compliance requirements or otherwise subject them to future liabilities.

In particular, with the further expansion of Hangzhou Shanyou’s production capacity, its pollutant emissions will 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 subsidiaries’ and the Group’s financial condition and results of operations.

With respect to one construction project, Hangzhou Shanyou failed to file the required Environmental Impact Registration Form for the records. According to the PRC laws and regulations, Hangzhou Shanyou is required to file the Environmental Impact Registration Form of construction project for the records. Its failure to meet such requirement may result in a penalty of up to RMB50,000 imposed by local authorities, which it does not expect will have a material impact on its and our business, financial condition and results of operations.

Moreover, Hangzhou Shanyou failed to obtain the relevant authorities’ approval of an Environmental Impact Statement before construction of facilities for its production lines, and failed to inspect the production lines to determine if they complied with relevant regulations of environmental protection and did not make the Inspection and Acceptance Reports of Environmental Protection upon completion of such construction. According to PRC laws and regulations, before construction, Hangzhou Shanyou was required to obtain the approval of the relevant authorities after reviewing its Environmental Impact Statement. Upon the completion of construction, it is required to inspect the production lines to determine if they comply with relevant regulations of environmental protection and make Inspection and Acceptance Reports of Environmental Protection. Hangzhou Shanyou’s failure to inspect the production lines to determine if they comply with relevant regulations of environmental protection and make Inspection and Acceptance Reports of Environmental Protection may result in an order to complete relevant procedures, and a penalty of between RMB0.2 million and RMB1 million, which may be imposed by local authorities. If Hangzhou Shanyou fails to complete relevant procedures within the stipulated period, the local authorities may impose a penalty of between RMB1 million and RMB2 million. Furthermore, if material environmental pollution or ecological damage is caused by such failure, Hangzhou Shanyou may be ordered to stop production or stop using the affected production lines by the PRC regulatory authorities. Moreover, its non-compliance in failing to inspect its production lines and making Inspection and Acceptance Reports of Environmental Protection may be recorded in Credibility Archive, a list that record companies’ non-compliance with environmental matters that can be accessed by the public, according to Interim Measures for Environmental Protection Acceptance of Completion of Construction Projects. Being recorded in Credibility Archive results in disclosure of such non-compliance to the public, which may adversely affect the reputation of Hangzhou Shanyou, and adversely affect the Group as a whole. As of the date of the annual report, Hangzhou Shanyou believes it has obtained the approval for its Environmental Impact Statement by the relevant authorities, and it has completed the procedures for the inspection of its production lines; however, despite the completion of the required procedures, there is no assurance that Hangzhou Shanyou will not be penalized for not completing the above procedures in a timely manner, and any penalty could adversely affect the reputation of Hangzhou Shanyou, which could adversely affect the business, financial condition and results of operations of the Group.

The PRC subsidiaries are subject to a variety of fire protection laws that could be costly for them to comply with, and they could incur liability if they fail to comply with such laws, which could adversely affect the Group as a whole.

Companies operating in China are required to comply with a variety of fire protection laws, such as having an examination of fire protection design, inspection and acceptance of fire protection, record-filing and random inspection of construction projects. According to relevant laws and regulations with respect to construction projects, construction projects are subject to inspection and acceptance for fire protection. For certain construction projects, such as Hangzhou Shanyou’s production lines, a project facility owner shall provide fire protection design drawings to the relevant authorities before commencing construction and prepare the Inspection and Acceptance Reports of Fire Protection for the records of the competent authorities, and such authorities shall conduct a random inspection thereof. In case of failure to provide fire protection design drawings that meet the requirements of construction, the relevant authorities shall not issue a construction license. If a project facility owner places into service a construction project which was required to undergo a fire protection inspection and acceptance and the preparation of an Inspection and Acceptance Report of Fire Protection, but has not undergone such inspection and acceptance and failed to prepare an Inspection and Acceptance Report of Fire Protection, or has failed the inspection and acceptance, or failed to suspend the use of such construction project for which such project facility owner prepared the Inspection and Acceptance Report of Fire Protection for the records of the competent authorities but is later found to be unqualified in a random inspection, such project facility owner will be ordered to stop using the affected construction project, stop production or business operations and a fine of between RMB30,000 and RMB300,000 may be imposed by competent departments. If a project facility owner has undergone a fire protection inspection and acceptance and has already prepared an Inspection and Acceptance Report of Fire Protection but only fails to submit the report to the competent authorities for the records, such project facility owner will be subject to a fine of RMB5,000. Please see “Item 4. Information on the Company—B. Business Overview—Regulation—Fire Prevention Management” on page 88.

As of the date of this annual report, Hangzhou Shanyou, the PRC subsidiary that manages all production lines, has not provided fire protection design drawings before construction nor has it prepared the Inspection and Acceptance Reports of Fire Protection for the records of the competent authorities, which may result in it being ordered to stop the use of its production lines and it being subject to a fine of between RMB30,000 and RMB300,000. If it makes up the inspection and acceptance and prepares Inspection and Acceptance Reports of Fire Protection but does not submit them to the competent authorities for the records, it will be subject to a fine of RMB5,000. Since all of its products are manufactured by operation of such production lines, any such development could materially and adversely affect the Group’s business, financial condition and results of operations.

The PRC subsidiaries are subject to a variety of construction laws, and they could incur liability if they fail to comply with such laws, which could adversely affect their operations.

According to relevant laws and regulations, any company engaged in the construction and decoration of various types of buildings and their attached facilities, including the installation of their supporting lines, pipelines and equipment, prior to the commencement of construction, should apply to the competent department of the local government for a construction license. Those who have not obtained the construction license shall be ordered by the license-issuing authority that has jurisdiction to stop the construction, to correct such lapse within a time limit, and pay a fine of between 1% to 2% of the contract price of the construction project. Furthermore, the project facility owner shall, within 15 days from the date of the completion and acceptance inspection of the construction project, submit the inspection and acceptance report to the competent administrative department of construction or other relevant departments for the record. If it fails to do so, it shall be ordered to make corrections and pay a fine of between RMB0.2 million to RMB0.5 million. Where the project facility is placed into service without being subject to completion inspection and acceptance, the project facility owner shall be ordered to make corrections and pay a fine of between 2% to 4% of the contract price of the project. If any loss is caused as a consequence of the failure to obtain the construction license, it shall also be liable for compensation.

As of the date of this annual report, as to the production lines of Hangzhou Shanyou, which were placed into service without having been subject to completion inspection and acceptance, it did not obtain a construction license prior to the commencement of construction nor undergone the completion inspection and acceptance nor did it prepare the Inspection and Acceptance Reports of Construction for the records of the competent authorities, therefore, Hangzhou Shanyou could be fined (i) an amount equal to 1% to 2% of the contract price of the production lines construction (approximately $16,500 to $33,000), for its failure to obtain a construction license prior to the commencement of construction, (ii) plus a fine of between RMB0.2 million to RMB0.5 million (approximately $28,000 to $70,000) for its failure to prepare the Inspection and Acceptance Reports of Construction for the records of the competent authorities and make adequate rectification, and (iii) a fine of between 2% to 4% of the contract price of the production lines construction (approximately $33,000 to $66,100), for its failure to complete inspection and acceptance before placing the production lines into service. As a result, the aggregate amount of potential fine could be between $77,500 to $169,100. While we anticipate that the possibility of being fined is relatively low, since Hangzhou Shanyou has not been subject to such fine historically, and the estimated maximum fine amount is relatively immaterial, being less than 2% of our consolidated revenue in the fiscal year ended September 30, 2024, we cannot assure you that the production lines will not be ordered to be suspended and rectified, which could affect Hangzhou Shanyou’s production, and therefore could materially and adversely affect both its and our business, financial condition and results of operations. Moreover, we cannot assure that the safety of the production lines has been adequately addressed, since they have not been subject to completion inspection and acceptance. If any personal injury or property loss is caused by the production lines, Hangzhou Shanyou would be liable for compensation, which could materially and adversely affect both its and our reputation, business, financial condition and results of operations.

The PRC subsidiaries’ rights to use their leased driveways, warehouses, and a parking area could be challenged by governmental authorities, due to the lessor’s failure to obtain the property ownership certificate as required by law, and their rights to use the leased collectively managed construction land could be challenged by governmental authorities, due to the lessor’s failure to comply with legal procedures related to land lease. Failure to comply with administrative or regulatory requirements with respect to property leased by the PRC subsidiaries may disrupt their usage and occupancy rights and could result in penalties and dispossession from such properties, which may disrupt their operations.

The PRC subsidiaries lease several properties for various operational purposes. Non-compliance with administrative or regulatory requirements by the lessors or our PRC subsidiaries regarding these rental properties could lead to disruptions in usage and occupancy rights, potential penalties, and dispossession from the rental properties, which may disrupt the PRC subsidiaries’ operations.

As of the date of this annual report, the PRC subsidiaries have leased three offices, two driveways, two warehouses, and a parking area. However, the property ownership certificates for the two driveways, two warehouses, and the parking area have not been provided by the lessors of such properties to the PRC subsidiaries. This poses a risk of these sites being identified as illegally constructed, or the PRC subsidiaries lacking the legal right to use these properties. If these properties are determined to have been illegally constructed and are ordered to be demolished, or the PRC subsidiaries are determined to lack the legal right to use these properties, the PRC subsidiaries may be at risk of not being able to continue to use such properties. Moreover, for those properties that the PRC subsidiaries are determined to lack the legal right to use, the leases of these properties may be invalidated or terminated due to challenges by entitled third parties, which may extinguish our PRC subsidiaries’ rights to continued usage and occupancy of these properties, and their operations may be disrupted.

Moreover, the land leased by the PRC subsidiaries for warehouses is classified as collectively managed construction land. Under PRC laws and regulations, the lease of such land, which is duly registered according to law, can be granted by the landowner to an entity, but requires approval from over two-thirds of the collective economic organization’s members or villagers. If this requirement is not met, competent authorities may mandate rectification within a prescribed time-frame, which would result in the termination of the lease and tenant’s dispossession from the leased property. As of the date of this annual report, the lessors of our PRC subsidiaries’ leased land have not furnished valid property ownership certificates or obtained the necessary consent from the required percentage of collective members or villagers. This non-compliance poses a risk that the lessors may be ordered to rectify the situation, which would terminate the lease and extinguish the PRC subsidiaries’ rights to continued usage of the leased land and their operations may be disrupted.

In addition, lease agreements of some of the PRC subsidiaries’ leased properties are not registered and filed with the competent PRC government authorities as required by applicable PRC laws and regulations. Pursuant to the PRC laws, such registration and filing shall be accompanied by valid property ownership certificates provided by the lessors of such properties, which have yet to be provided, as stated above. The PRC subsidiaries could face fines of up to RMB10,000 for each such unregistered property, should the PRC subsidiaries fail to rectify the non-compliance within the time-frame prescribed by the relevant authorities.

Although the PRC subsidiaries have not received any notices from the lessors or competent departments, we cannot assure you that the lessors will provide valid property ownership certificates, nor can we assure you that the properties mentioned above will not be determined to have been illegally constructed and be ordered to be demolished.

Additionally, we cannot guarantee that the lessors of such land will not be required to rectify any violations, nor can we assure that these lessors possess the legal right to enter into the lease agreements. If the PRC subsidiaries’ expectations are wrong, they may need to find new facilities for one or more of their needs, and bear additional costs. Any consequential loss of any of the leased properties mentioned above would require additional expense and divert management’s time and attention to find an alternative location, and would disrupt the PRC subsidiaries’ business operations, which could materially and adversely impact our business, financial condition, and results of operations.

If the PRC subsidiaries fail to timely renew their medical device licenses or registration certificates, it could adversely affect the PRC subsidiaries’ and our reputation, financial condition and results of operations.

As a medical device manufacturer with all of our operating subsidiaries located in the PRC, all of the PRC subsidiaries’ manufacturing and sales activities must comply with relevant laws and regulations of China and other countries. 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 recordation administration with Class II and Class III medical devices subject to registration administration. The U.S. Food, Drug and Cosmetic Act stipulates that manufacturer from foreign country which intend to sell its products in the U.S. should register with the FDA and list its medical devices with FDA. The PRC subsidiaries are in the business of manufacturing and sales of Class I and II medical devices and sales of III medical devices. If they fail to timely record or register their medical devices, both their and our financial condition and results of operations will be adversely affected.

The PRC subsidiaries have entered into a number of related party transactions in the ordinary course of their business, and may continue to enter into related party transactions in the future.

In the ordinary course of the PRC subsidiaries’ business, they have entered into transactions with related parties. For the fiscal years ended September 30, 2024, 2023, and 2022, the total revenues of the Group were $11,506,440, $13,565,951, and $19,711,290, respectively, while the revenues generated by sales to related parties were $577,370, $1,064,336, and $212,975, respectively, which accounted for 5%, 8%, and 0.04% of the total revenues, respectively. For the fiscal years ended September 30, 2024, 2023, and 2022, the total borrowed money of the Group was $13,394,778, $9,107,082, and 7,248,367, respectively, while the money borrowed from related parties was $nil, $nil, and $nil, respectively, which accounted for 0%, 0%, and 0%, respectively.

Based on the foregoing analysis, we conclude that the PRC subsidiaries have not relied on a large number of related party transactions to conduct their ordinary business transactions. Nevertheless, past experience may not reflect the future. We cannot guarantee that the PRC subsidiaries will not continue to enter into related party transactions in the future. In addition, there can be no assurance that they have achieved and will achieve the most favorable terms with related parties for each related party transaction. Furthermore, there can be no assurance that the above-mentioned transactions or any future related party transactions that they may enter into, individually or in the aggregate, will not have an adverse effect on their business, and their and the Group’s financial condition and results of operations. Further, the transactions with the related parties may potentially involve conflicts of interests. Additionally, there can be no assurance that any disputes that may arise among the PRC subsidiaries and related parties will be resolved in the PRC subsidiaries’ favor. For details, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”

If our PRC subsidiaries cannot collect timely payments from their customers, their business and operations, and the Group’s financial condition and results of operations may be materially and adversely affected.

Our PRC subsidiaries could not collect timely payments from some of their customers due to such customers’ lack of working capital, and, as a result, the Group made a significantly greater amount of bad debt provision in the fiscal year ended September 30, 2022, based on credit-worthiness and financial condition of the distributor customers. Despite the recovering economy since late 2022 and management’s increased efforts in payment collections, we cannot assure you that our PRC subsidiaries will be able to collect timely payments as expected. See “Item 5. Operating And Financial Review and Prospects—B. Liquidity and Capital Resources.” Our PRC subsidiaries’ failure to collect timely payments in future financial periods could have a material and adverse effect on their business, and their and the Group’s financial condition and results of operations.

Our PRC subsidiaries rely in part on third-party distributors to place their products into the market and they may not be able to control their distributors.

Our PRC subsidiaries rely in part on third-party distributors to sell their products. For the fiscal year ended September 30, 2024, 2023, and 2022, the PRC subsidiaries had approximately 953, 892, and 867 domestic distributors, and 29, 22, and 37 exporting distributors, respectively. See “Item 4. Information on the Company—B. Business Overview—Marketing and Sales—Distribution Network.”

As our PRC subsidiaries sell and distribute their products through their distributors, and any one of the following events could cause fluctuations or reductions in our revenue that could have an adverse effect on our PRC subsidiaries’ and our financial condition and results of operations:

Our PRC subsidiaries may not be able to compete successfully against larger and better-funded sales and marketing campaigns of some of their current or future competitors, especially if these competitors provide their distributors with more favorable arrangements. We cannot assure you that our PRC subsidiaries will not lose any of their distributors to their competitors, which could cause them to lose some or all of their favorable arrangements with such distributors and may result in the termination of their relationships with other distributors. In addition, our PRC subsidiaries may not be able to successfully manage their distributors and the cost of any consolidation or further expansion of their distribution and sales network may exceed the revenue generated from these efforts. There can be no assurance that our PRC subsidiaries will be successful in detecting any non-compliance by their distributors with the provisions of their distribution agreements. Non-compliance by the distributors could, among other things, negatively affect our brand, demand for our PRC subsidiaries’ products, and our PRC subsidiaries’ relationships with other distributors. Furthermore, if the sales volumes of our PRC subsidiaries’ products to consumers are not maintained at a satisfactory level or if distributor orders fail to track consumers’ demand, our PRC subsidiaries’ distributors may not place orders for new products from our PRC subsidiaries, or may decrease the quantity of the distributors’ usual orders. The occurrence of any of these factors could result in a significant decrease in the sales volume of our PRC subsidiaries’ products, and therefore, adversely affect both our PRC subsidiaries’ and our financial condition and results of operations.

Our success will be dependent upon our PRC subsidiaries’ ability to maintain relationships with existing suppliers who are critical and necessary to the production of our PRC subsidiaries’ products and our PRC subsidiaries’ ability to create relationships with new suppliers.

As of the fiscal years ended September 30, 2024, 2023, and 2022, the PRC subsidiaries had a total of 141, 143, and 135 suppliers, respectively. For the fiscal year ended September 30, 2024, the top three significant suppliers represented approximately 15%, 10%, and 7% of the total supplies purchased, respectively. For the fiscal year ended September 30, 2023, the top three significant suppliers represented approximately 13%, 11%, and 9% of the total supplies purchased, respectively. For the fiscal year ended September 30, 2022, the top three significant suppliers represented approximately 16%, 11%, and 7% of the total supplies purchased, respectively. See “Item 4. Information on the Company—B. Business Overview —Supplier.”

Our success will be dependent upon our PRC subsidiaries’ ability to maintain relationships with existing suppliers and enter into new supplier agreements. Our PRC subsidiaries rely on suppliers to provide raw materials for the products. If our PRC subsidiaries’ suppliers experience substantial financial difficulties, cease operations, or otherwise face business disruptions, our PRC subsidiaries would be required to take measures to ensure raw materials remain available. Any supply chain disruption could affect our PRC subsidiaries’ ability to provide medical devices, and could increase the production costs and negatively affect both our PRC subsidiaries’ and our financial condition and results of operations.

Risks Related to Doing Business in China

Changes in the political and economic policies of the PRC government or in relations between China and the United States may materially and adversely affect the PRC subsidiaries’ and our business, financial condition and results of operations and may result in the PRC subsidiaries’ inability to sustain their growth and expansion strategies.

All of the operations are conducted in the PRC and a majority of our revenue is sourced from the PRC. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC or changes in government relations between China and the United States or other governments. There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs.

The PRC economy differs from the economies of most developed countries in many respects, including the extent 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 by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies.

While the PRC economy has experienced significant growth in the past four decades, growth has been uneven, both geographically and among various sectors of the economy. 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 PRC economy, but may also have a negative effect on the PRC subsidiaries. The PRC subsidiaries’ financial condition and results of operation could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to the PRC subsidiaries. In addition, the PRC government has implemented in the past certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity.

In July 2021, the SEC has imposed enhanced disclosure requirements on China-based companies seeking to register securities with the SEC. As all of the operations are based in China, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities by China based companies could adversely affect the PRC subsidiaries’ business and results of operations. If the business environment in China deteriorates from the perspective of domestic or international investment, or if relations between China and the United States or other governments deteriorate, the Chinese government may intervene with the PRC subsidiaries’ operations and business in China and United States, as well as the market price of our Ordinary Shares, may also be adversely affected.

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

All of the operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. The PRC subsidiaries are subject to laws, rules and regulations applicable to foreign investment in China. 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.

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 or the PRC subsidiaries may not be aware of the 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 we or the PRC subsidiaries enjoy than in more developed legal systems. These uncertainties may impede the PRC subsidiaries’ ability to enforce the contracts they have entered into and could materially and adversely affect the PRC subsidiaries’ and our business, financial condition and results of operations.

On July 6, 2021, 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, and made the Opinions available to the public. 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 us and the PRC subsidiaries 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 December 28, 2021, the Measures for Cybersecurity Review (2021 version) were promulgated and took effect 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 be subject to cybersecurity review.

On November 14, 2021, the Cyberspace Administration of China released the Regulations on Network Data Security (draft for public comments) and will accept public comments until December 13, 2021. The draft Regulations on Network Data Security provide that 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. We do not believe, as advised by our PRC counsel, AllBright Law Offices (Fuzhou), that we or any of the PRC subsidiaries may be considered to be an “operator of critical information infrastructure”, or “online platform operators,” as mentioned above; however, Measures for Cybersecurity Review (2021 version) were recently adopted and the Regulations on Network Data Security (draft for public comments) are in the process of being formulated and it remains unclear how the Opinions will be interpreted, amended and implemented by the relevant PRC governmental authorities.

On February 17, 2023, the CSRC issued the New Administrative Rules Regarding Overseas Listings, which came into force on March 31, 2023. These Rules propose to establish a new filing-based regime to regulate overseas offerings and listings by Chinese domestic companies. According to the New Administrative Rules Regarding Overseas Listings, among other things, Chinese domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Administrative Measures within three working days following their submission of initial public offering (“IPO”), listing applications, or completion of subsequent securities offerings. The New Administrative Rules Regarding Overseas Listings apply to both IPO and subsequent securities offerings of the company in the same overseas market where it has previously offered and listed securities. Under these rules, companies like ours must file with the CSRC within three working days after completing a post-IPO securities offering. As we are regarded as a domestic company to be indirectly listed on overseas markets under the Trial Administrative Measures, we were required to complete the filing procedures with the CSRC in accordance with the Trial Administrative Measures with respect to our IPO and on December 21, 2023, we completed all the required filing procedures with the CSRC with respect to our IPO. See “Item 3. Key Information—D. Risk Factors—Risks Related to doing business in China—Additional compliance procedures may be required in connection with our subsequent securities offerings, due to the promulgation of 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 page 30.

Furthermore, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for any follow-on offering, we 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.

Furthermore, 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 subsidiaries’ operations at any time, which are beyond our control. Therefore, any such action may adversely affect the PRC subsidiaries’ operations and significantly limit or hinder our ability to offer or continue to offer securities to you and reduce the value of such securities.

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 the PRC subsidiaries’ 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 the PRC subsidiaries’ and our 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 subsidiaries conduct their business activities. The PRC government may also intervene or influence the PRC subsidiaries’ operations and subsequent securities offerings at any time, which could result in a material change in the PRC subsidiaries’ operations and our Ordinary Shares could significantly decline in value or become worthless.

Except for completing the filing procedures with the CSRC, we are currently not required to obtain any other approval from Chinese authorities to list on U.S exchanges. However, if the Company or any of the PRC subsidiaries were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, continue to offer securities to investors, or materially affect the interest of the investors and cause significantly depreciation of our price of Ordinary Shares.

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those authority relating to 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 our and the PRC subsidiaries’ part to ensure 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 us to divest ourselves of any interest we then hold in the operations in China.

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 subsidiaries’ business segments may be subject to various government and regulatory interference in the regions in which the PRC subsidiaries operate. The PRC subsidiaries could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. The PRC subsidiaries 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 we or the PRC subsidiaries will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although neither we nor any of the PRC subsidiaries is currently required to obtain permission from any of the PRC central or local government, except for completing the filing procedures with the CSRC, and neither we nor any of the PRC subsidiaries has received any denial to list on a U.S. exchange, the PRC subsidiaries’ operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to the PRC subsidiaries’ business or industry, which may also adversely affect the Group as a whole. 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.

Additional compliance procedures may be required in connection with our subsequent securities offerings, due to the promulgation of 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, the CSRC issued the New Administrative Rules Regarding Overseas Listings, which became effective on March 31, 2023. These rules propose to establish a new filing-based regime to regulate overseas offerings and listings by Chinese domestic companies. According to the New Administrative Rules Regarding Overseas Listings, among other things, Chinese domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of Trial Administrative Measures within three working days following their submission of initial public offering (“IPO”), listing applications, or completion of subsequent securities offerings. The New Administrative Rules Regarding Overseas Listings apply to both IPOs and subsequent securities offerings of the company in the same overseas market where it has previously offered and listed securities. Under these rules, companies like ours must file with the CSRC within three working days after completing a post-IPO securities offering. As we are regarded as a domestic company to be indirectly listed on overseas markets under the Trial Administrative Measures, we were required to complete the filing procedures with the CSRC in accordance with the Trial Administrative Measures with respect to our IPO and on December 21, 2023, we completed all the required filing procedures with the CSRC with respect to our IPO. We are advised by our PRC counsel, AllBright Law Officers (Fuzhou), that the Company is currently not required to obtain permission or approval from any of the PRC central or local governmental authorities, except for completing the filing procedures with the CSRC, and it has not received any denial to list on a U.S. exchange. However, in the event that we conduct subsequent offerings, we could be subject to new filing requirements with the CSRC. In the event that filings with the CSRC are required, we cannot assure you that we can complete the filing procedures, obtain the approvals, or complete other compliance procedures in a timely manner, or at all, or that any completion of filing or approval or other compliance procedures would not be rescinded. Any such failure to do so would subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory authorities may impose restrictions and penalties on our operations in China, significantly limit or completely hinder our ability to launch any new offering of our securities, limit our ability to pay dividends outside China, delay or restrict the repatriation of the proceeds from future capital raising activities into China, or take other actions that could materially and adversely affect our business, results of operations, financial condition and prospects, as well as the trading price of our Ordinary Shares. Furthermore, the PRC government authorities may further strengthen oversight and control over listings and offerings that are conducted overseas. Any such action may adversely affect our operations and significantly limit or completely 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. Furthermore, on February 24, 2023, the CSRC promulgated the Confidentiality and Archives Administration Provisions, which also became effective on March 31, 2023. According to the Confidentiality and Archives Administration Provisions, domestic companies that seek overseas offering and listing (either in direct or indirect means) and the securities companies and securities service (either incorporated domestically or overseas) providers that undertake relevant businesses shall institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations. They shall not leak any state secret or working secret of government agencies, or harm national security and public interests. Therefore, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain 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. The above-mentioned documents and materials that, if leaked, will be detrimental to national security or public interest, therefore, the domestic company shall strictly fulfill relevant procedures stipulated by applicable regulations. Furthermore, a domestic company that provides accounting archives or copies of accounting archives to any entities, including securities companies, securities service providers and overseas regulators and individuals, shall fulfill due procedures in compliance with applicable regulations. Working papers produced in mainland China by securities companies and securities service providers in the process of undertaking businesses related to overseas offering and listing by domestic companies shall be retained in mainland China. Where such documents need to be transferred or transmitted to areas outside of mainland China, relevant approval procedures stipulated by regulations shall be followed. We believe, as advised by our PRC counsel, Allbright Law Offices (Fuzhou), that our IPO did not involve the leaking of any state secret or working secret of government agencies, or the harming of national security and public interests. However, we may be required to perform additional procedures in connection with the provision of accounting archives. The specific requirements of the relevant procedures are currently unclear, and we cannot be certain whether we will be able to perform the relevant procedures.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our directors and officers named in the annual report based on foreign laws.

We are an exempted company incorporated under the laws of the Cayman Islands. Our operations are conducted by the PRC subsidiaries in China, and most of our assets are located in China. In addition, most of our directors and senior executive officers reside within China for a significant portion of the time and are PRC nationals. As a result, it may be difficult for our shareholders to effect service of process upon us or those persons inside China. In addition, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

Shareholder claims that are common in the United States, including securities law class actions and fraud claims, 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 obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local 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 regulatory cooperation with the securities regulatory authorities in the Unities States have not been efficient in the absence of mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which took effect in March 2020, overseas securities regulatory authorities may not carry out investigations and evidence collection directly within the territory of mainland China, and that no Chinese entity or individual is allowed to provide any documents or materials related to securities business activities to overseas agencies without prior consent of the securities regulatory authority of the State Council and the competent departments of the State Council.

You may incur additional costs and face procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against us or our management named in this annual report based on Hong Kong laws.

You may incur additional costs and face procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against us or our management, as judgments entered in the United States can be enforced in Hong Kong only at common law. To enforce a judgment of the United States in Hong Kong, it must be a final judgment rendered conclusively upon the merits of the claim, for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a “competent” court, as determined by the private international law rules applied by the Hong Kong courts.

Furthermore, foreign judgments of United States courts will not be directly enforced in Hong Kong. There are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the United States. However, the common law of Hong Kong permits an action to be brought upon a foreign judgment. A foreign judgment itself may form the basis of a cause of action, since the judgment may be regarded as creating a debt between the parties to such action. The defenses that are available to a defendant in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from the judgment debtor. A foreign judgment of the United States predicated solely upon the federal securities laws of the United States or the securities laws of any State or territory within the United States may be enforceable in Hong Kong, but will be subject to the conditions with regard to enforcement of such judgments being met, including but not limited to the foregoing requirements.

Any requirement to obtain prior approval under the M&A Rules and/or any other regulations promulgated by relevant PRC regulatory agencies in the future could delay our securities offerings and failure to obtain any such approvals, if required, could have a material adverse effect on the PRC subsidiaries’ and our business, operating results and reputation, as well as the trading price of our Ordinary Shares, and could also create uncertainties for our securities offerings and affect our ability to offer or continue to offer securities to investors outside China.

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce (the “MOFCOM”), the State-Owned Assets Supervision and Administration Commission (“SASAC”), the State Administration of Taxation (“SAT”), the State Administration of Industry and Commerce (“SAIC”), the CSRC, and the State Administration of Foreign Exchange (“SAFE”), jointly adopted the M&A Rules, which came into effect on September 8, 2006 and were amended on June 22, 2009. The M&A Rules include, among other things, provisions that purport to require that offshore special purpose vehicle formed for the purpose of an overseas listing of securities in a PRC entity obtain the approval of the CSRC prior to the listing and trading of any such special purpose vehicle’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles.

While the application of the M&A Rules remains unclear, we believe, based on the advice of our PRC counsel, AllBright Law Offices (Fuzhou), that (i) since the Company is neither controlled by PRC entities or individuals, nor formed for overseas listing purposes through acquisitions of PRC domestic interests held by such PRC entities or individuals, we believe that the Company is not an SPV, and therefore, the M&A Rules do not apply to us, and we do not need to obtain the approval from the CSRC under the M&A Rules; and (ii) there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations and future PRC laws and regulations, and there can be no assurance that the relevant government agencies will take a view that is contrary to, or otherwise different from, the conclusion stated above. Substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles. If the CSRC or other PRC regulatory body subsequently determines that we need to obtain the CSRC’s approval for our subsequent securities offerings or if the CSRC or any other PRC government authorities promulgates any interpretation or implements rules that would require us to obtain CSRC or other governmental approvals for our subsequent securities offerings under the M&A Rules, we may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies. In any such event, these regulatory agencies may impose fines and penalties on the PRC subsidiaries’ operations in China, limit the PRC subsidiaries operating privileges in China, delay or restrict the repatriation of the proceeds from our subsequent securities offerings into the PRC or take other actions that could have a material adverse effect on the PRC subsidiaries’ and our business, financial condition, results of operations, reputation and prospects, as well as our ability to complete subsequent securities offerings. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt subsequent securities offerings before settlement and delivery of Ordinary Shares. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that such settlement and delivery may not occur in subsequent securities offerings. See “Item 4. Information on the Company—B. Business Overview—Regulations—M&A Rules and Regulation on Overseas Listings” on page 94.

In addition, the security review rules issued by the MOFCOM that took effect in September 2011 specify that if a merger and acquisition of domestic enterprise by a foreign investor falls within the M&A safety review scope, the foreign investor shall file an application for M&A safety review to the Ministry of Commerce. The M&A safety review scope is as follows: foreign investors’ M&A of domestic military industry enterprises and military industry support enterprises, enterprises around key and sensitive military facilities, and other units which have impact on national defense security; and foreign investors’ M&A of domestic enterprises, which have impact on the national security, in fields of important agricultural products, important energy and resources, important infrastructure, important transport service, key technology and major equipment manufacturing, etc. and such M&A may result in foreign investors’ acquirement of actual control over the enterprises. The rules prohibit any activities attempting to bypass a security review, including by holding on agency basis, trust, multi-tier reinvestment, leasing, loan, control by agreement, overseas transactions, etc.

The PRC subsidiaries are not operating in an industry that prohibits or limits foreign investment. As a result, the PRC subsidiaries are not required to obtain any permission from Chinese authorities to operate, other than those permissions a domestic company in China will need to engage in businesses similar to the PRC subsidiaries’. Such licenses and permissions include a Business License, Medical Device Registration Certificate, Medical Device Production Certificate, Medical Device Selling Certificate, Record Form of Medical Device Products, Certificate of Class I medical device production recordation, Certificate of Class II medical device selling recordation, Record Registration Form for Foreign Trade Business Operators, and Certificate of the Customs of the People’s Republic of China on Registration of a Customs Declaration Entity. The PRC subsidiaries have obtained the above licenses and permissions to conduct their business in China. However, the PRC government may take actions to exert more oversight and control over offerings by China-based issuers conducted overseas and/or foreign investment in such companies, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors outside China and cause the value of our securities to significantly decline or become worthless.

In the future, the PRC subsidiaries may grow their business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions, if required, could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM or its local counterparts may delay or inhibit the PRC subsidiaries’ ability to complete such transactions. It is unclear whether the PRC subsidiaries’ business would be deemed to be in an industry that raises “national defense security” or “national security” concerns. However, the MOFCOM or other government agencies may publish explanations in the future determining that the PRC subsidiaries’ business is in an industry subject to the security review, in which case the PRC subsidiaries’ future acquisitions in the PRC, may be closely scrutinized or prohibited. The PRC subsidiaries’ abilities to expand the business or maintain or expand market share through future acquisitions would as such be materially and adversely affected. Furthermore, according to the M&A Rules, if a PRC entity or individual plans to merge or acquire its related PRC entity through an overseas company legitimately incorporated or controlled by such entity or individual, such a merger and acquisition will be subject to examination and approval by the MOFCOM. There is a possibility that the PRC regulators may promulgate new rules or explanations requiring that the PRC subsidiaries obtain the approval of the MOFCOM or other PRC governmental authorities for the PRC subsidiaries’ completed or ongoing mergers and acquisitions. There is no assurance that, if the PRC subsidiaries plan to make an acquisition, they can obtain such approval from the MOFCOM or any other relevant PRC governmental authorities for their mergers and acquisitions, and if the PRC subsidiaries fail to obtain those approvals, they may be required to suspend their acquisition and be subject to penalties. Any uncertainties regarding such approval requirements could have a material adverse effect on the PRC subsidiaries’ and our business, results of operations and corporate structure.

In addition, on July 6, 2021, the relevant PRC government authorities made public the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. Pursuant to the Opinions, Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and management of confidential information. Numerous regulations, guidelines and other measures are expected to be adopted under the umbrella of or in addition to the Cybersecurity Law and Data Security Law.

On July 10, 2021, the Cyberspace Administration of China issued the Measures for Cybersecurity Review (Revision Draft for Comments) for public comments, which proposes to authorize the relevant government authorities to conduct cybersecurity review on a range of activities that affect or may affect national security, including listings in foreign countries by an operator that possess the personal data of more than one million users. The operators refer to operators of critical information infrastructure and data processors. On November 14, 2021, the Cyberspace Administration of China issued the Regulations on Network Data Security (draft for public comments) which set forth cyber data security compliance requirements in greater detail. On December 28, 2021, the Measures for Cybersecurity Review (2021 version) were promulgated and took effect 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. Neither we nor the PRC subsidiaries do expect to be subject to cybersecurity review, because the PRC subsidiaries currently engage in the manufacture and sale of medical devices and neither we nor the PRC subsidiaries possess personal information of over one million users. As of the date of this annual report, neither we nor the PRC subsidiaries have been involved in any investigations on cybersecurity review initiated by the Cyberspace Administration of China, and neither we nor the PRC subsidiaries have received any warning, sanction, or penalty in such respect. However, the Measures for Cybersecurity Review were recently adopted and the Regulations on Network Data Security (draft for public comments) are 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. On February 17, 2023, the CSRC issued the New Administrative Rules Regarding Overseas Listings, which came into force on March 31, 2023. According to the New Administrative Rules Regarding Overseas Listings, among other things, a domestic company in the PRC that seeks to offer and list securities on overseas markets shall fulfill the filing procedures with the CSRC as per requirement of the Trial Administrative Measures. Where a domestic company seeks to directly offer and list securities on overseas markets, the issuer shall file with the CSRC. Where a domestic company seeks to indirectly offer and list securities on overseas markets, the issuer shall designate a major domestic operating entity, which shall, as the domestic responsible entity, file with the CSRC. Initial public offerings or listings on overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas. See “Item 3. Key Information—D. Risk Factors—Risks Related to doing business in China—Additional compliance procedures may be required in connection with our subsequent securities offerings, due to the promulgation of 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 page 30. Furthermore, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we or the PRC subsidiaries obtain their prior approvals or ex-post record-filing for our IPO and any follow-on offerings, we or the PRC subsidiaries may be unable to obtain such approvals or record-filing which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

Except for the filing procedures with the CSRC, as of the date of this annual report, we do not believe we or the PRC subsidiaries are required to obtain any permission from any PRC governmental authorities to offer securities to foreign investors. 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 our IPO and offering securities to foreign investors. As of the date of this annual report, neither we nor the PRC subsidiaries have received any inquiry, notice, warning, sanctions or regulatory objection to our IPO from the CSRC or other PRC governmental authorities. However, there remains significant uncertainty regarding the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities. If it is determined in the future that the approval of the CSRC, the Cyberspace Administration of China or any other regulatory authority is required for our IPO, we or the PRC subsidiaries may face sanctions by the CSRC, the Cyberspace Administration of China or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on the PRC subsidiaries’ operations in China, limit the PRC subsidiaries ability to pay dividends outside of China, limit the PRC subsidiaries’ operations in China, delay or restrict the repatriation of the proceeds from our subsequent securities offerings into China or take other actions that could have a material adverse effect on the PRC subsidiaries’ and our business, financial condition, results of operations and prospects, as well as the trading price of our securities. In addition, if the Cyberspace Administration of China or other PRC regulatory agencies later promulgate new rules requiring that we or the PRC subsidiaries obtain their approvals for our IPO, we or the PRC subsidiaries may be unable to obtain such approval or a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such an approval requirement could have a material adverse effect on the trading price of our securities.

Hong Kong does not have a comprehensive cyber or data security law. The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (“PDPO”) is the main legislation in Hong Kong which aims to protect the privacy of individuals in relation to personal data, and to regulate the collection, holding, processing, or use of personal data based on a set of data protection principles. The PDPO regulates the conduct of a data user, i.e. any person who, either alone or jointly or in common with other persons, controls the collection, holding, processing or use of personal data.

Pursuant to Section 33 of the PDPO, the PDPO is applicable to the collection and processing of personal data if such activities take place in Hong Kong, or if the personal data is collected by a data user whose principal place of business is in Hong Kong. Contravention with the data protection principals set out in PDPO may entitle the Privacy Commissioner for Personal Data to issue a written notice directing the data user to remedy and prevent recurrence of any contravention. As of the date of this annual report, we have neither collected nor processed any personal data in Hong Kong, and our Hong Kong subsidiary, Work Medical Technology, has not collected or processed any personal data. Therefore, we believe the PDPO does not currently have any material impact on our Hong Kong subsidiary’s business, or our business, financial condition or our subsequent securities offerings. However, if (i) we or our Hong Kong subsidiary do not comply with any privacy laws or regulations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or users’ personal data, or (ii) applicable laws, regulations, or interpretations thereof change and we or our Hong Kong subsidiary become subject to any requirements for additional permissions or approvals in the future, we or our Hong Kong subsidiary may have to expend significant time and costs to procure them. If we or our Hong Kong subsidiary is unable to do so, on commercially reasonable terms, in a timely manner or otherwise, we or our Hong Kong subsidiary may become subject to governmental enforcement actions, litigation or public statements against us or our Hong Kong subsidiary by customers or others, and our and our Hong Kong subsidiary’s and business, reputation, financial condition, and results of operations may be materially and adversely affected.

In addition, although Work Medical Technology, our Hong Kong subsidiary, is an investment holding company, the legal and operational risks associated with operating in mainland China may also apply to the future limited activities (if any) in Hong Kong of Work Medical Technology, to the extent that they are made applicable to such entity and its anticipated operations. Work Medical Technology, as of the date of this annual report, has yet to commence operations, and is expected to be limited to operating as an investment holding company in the future without any substantive or data-related operations in Hong Kong. However, such operations may be affected if Hong Kong adopts rules, regulations or policy guidance with respect to currency exchange control. Furthermore, as of the date of this annual report, we do not expect that any regulatory actions related to data security or anti-monopoly concerns in Hong Kong will impact the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or foreign exchange, because we have never had and do not plan to have any material operations in Hong Kong.

PRC regulations regarding acquisitions impose significant regulatory approval and review requirements, which could make it more difficult for the PRC subsidiaries to pursue growth through acquisitions.

Under the Anti-Monopoly Law, companies undertaking acquisitions relating to businesses in China must notify the State Council’s anti-monopoly law enforcement authority, in advance of any transaction where the parties’ revenue in the China market exceed certain thresholds and the buyer would obtain control of, or decisive influence over, the target, while under the M&A Rules, the approval of MOFCOM must be obtained in circumstances where overseas companies established or controlled by PRC entities or residents acquire domestic companies affiliated with such PRC entities or residents. Applicable PRC laws, rules and regulations also require certain merger and acquisition transactions to be subject to security review. Due to the level of our revenue, the PRC subsidiaries’ proposed acquisition of control of, or decisive influence over, any company with revenue within China of more than RMB400 million in the year prior to any proposed acquisition would be subject to the State Council’s anti-monopoly law enforcement authority’s merger control review. As a result, many of the transactions the PRC subsidiaries may undertake could be subject to the State Council’s anti-monopoly law enforcement authority’s merger review. Complying with the requirements of the relevant regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from the State Council’s anti-monopoly law enforcement authority, may delay or inhibit the PRC subsidiaries’ ability to complete such transactions, which could affect the PRC subsidiaries’ ability to expand their business or maintain market share, and which may adversely affect the Group as a whole. If the practice of the State Council’s anti-monopoly law enforcement authority and MOFCOM remains unchanged, the PRC subsidiaries’ ability to carry out their investment and acquisition strategy may be materially and adversely affected and there may be significant uncertainty as to whether the PRC subsidiaries will be able to complete large acquisitions in the future in a timely manner or at all, which could adversely affect the expansion goals of the Group.

PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or the PRC subsidiaries to liability or penalties, limit our ability to inject capital into the PRC subsidiaries or limit the PRC subsidiaries’ ability to increase their registered capital or distribute profits.

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 the SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a Chinese mainland shareholder-holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Moreover, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls.

We have notified substantial beneficial owners of Ordinary Shares who we know are PRC residents of their filing obligation, and are aware that all substantial beneficial owners have completed the necessary registration with the local SAFE branch or qualified banks as required by SAFE Circular 37. However, we may not at all times be aware of the identities of all of our beneficial owners who are PRC residents. We do not have control over our beneficial owners and cannot assure you that all of our PRC-resident beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules. The failure of our beneficial owners who are PRC residents to register or amend their SAFE registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, or the failure of future beneficial owners of our Company who are PRC residents to comply with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject such beneficial owners or the PRC subsidiaries to fines and legal sanctions. Furthermore, since it is unclear how SAFE Circular 37, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant PRC government authorities, we cannot predict how these regulations will affect the PRC subsidiaries’ business operations or future strategy. Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to the PRC subsidiaries and limit the PRC subsidiaries’ ability to distribute dividends to our Company. These risks may have a material adverse effect on our business, financial condition and results of operations.

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

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

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

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

Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from our IPO and subsequent securities offerings, to our WFOE, which may adversely affect our liquidity and our ability to fund and expand the PRC subsidiaries’ business in China.

On October 23, 2019, SAFE issued the Circular on Further Promoting Cross-border Trade and Investment Facilitation, or SAFE Circular 28, which took effect on the same day. SAFE Circular 28, subject to certain conditions, allows foreign-invested enterprises whose business scope does not include investment, or non-investment foreign-invested enterprises, to use their capital funds to make equity investments in China. On December 4, 2023, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Deepening Reforms to Facilitate Cross-Border Trade and Investment, which stipulated that domestic equity transferors (including institutions and individuals) can directly remit to the capital project settlement account the equity transfer consideration funds paid in foreign currency by domestic entities, as well as the foreign exchange funds raised by domestic enterprises listed overseas. The funds in the capital project settlement account can be independently settled and utilized. Since SAFE Circular 28 was issued only recently, its interpretation and implementation in practice are still subject to substantial uncertainties.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, and the fact that the PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future, 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 to PRC subsidiaries in or future capital contributions by us to our WFOE in China. As a result, uncertainties exist as to our ability to provide prompt financial support to the PRC subsidiaries when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from our IPO and subsequent securities offerings and to capitalize or otherwise fund the PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand the PRC subsidiaries’ business.

We rely to a significant extent on dividends and other distributions on equity paid by our subsidiaries to fund offshore cash and financing requirements and any limitation on the ability of the PRC subsidiaries to make remittance to pay dividends to us could limit our ability to access cash generated by the operations of those entities.

We are a holding company and rely to a significant extent on dividends and other distributions on equity paid by our subsidiaries for our offshore cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, fund inter-company loans, service any debt we may incur outside of China and pay our expenses. The laws, rules and regulations applicable to the PRC subsidiaries permit payments of dividends only out of their retained earnings, if any, determined in accordance with applicable accounting standards and regulations.

Under PRC laws, rules and regulations, each of our subsidiaries incorporated in mainland China is required to set aside at least 10% of its after-tax profits each year, after making up for previous years’ accumulated losses, if any, to fund certain statutory reserves, until the aggregate amount of such fund reaches 50% of its registered capital. As a result of these laws, rules and regulations, our subsidiaries incorporated in mainland China are restricted in their ability to transfer a portion of their respective net assets to their shareholders as dividends. As of September 30, 2024 and 2023, these restricted assets were $972,494 and $972,494, respectively.

Limitations on the ability of the PRC subsidiaries to make remittance to pay dividends to us could limit our ability to access cash generated by the operations of those entities, including to make investments or acquisitions that could be beneficial to our businesses, pay dividends to our shareholders or otherwise fund and conduct our business.

We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.

Under the PRC Enterprise Income Tax Law and its implementing rules, both of which came into effect on January 1, 2008 and were last amended on December 29, 2018, enterprises established under the laws of jurisdictions outside of China with “de facto management bodies” located in China may be considered PRC tax resident enterprises for tax purposes and may be subject to the PRC enterprise income tax at the rate of 25% on their global income. “De facto management body” refers to a managing body that exercises substantive and overall management and control over the production and business, personnel, accounting books and assets of an enterprise. The SAT issued the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or the SAT Circular 82, on April 22, 2009. SAT Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises, not those controlled by individuals or foreign enterprises, the determining criteria set forth in SAT Circular 82 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises. If we were to be considered a PRC resident enterprise, we would be subject to PRC enterprise income tax at the rate of 25% on our global income, and our profitability and cash flow may be materially reduced as a result of our global income being taxed under the Enterprise Income Tax Law. We believe that none of our entities outside of mainland 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.”

Dividends payable to our foreign investors and gains on the sale of our Ordinary Shares by our foreign investors may be subject to PRC tax.

Under the Enterprise Income Tax Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises, which do not have an establishment or place of business in mainland China or which have such establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the extent such dividends are derived from sources within mainland China. Any gain realized on the transfer of Ordinary Shares by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such gain is regarded as income derived from sources within mainland China. If we are deemed a PRC resident enterprise, dividends paid on our Ordinary Shares, and any gain realized from the transfer of our Ordinary Shares, may be treated as income derived from sources within mainland China and may as a result be subject to PRC taxation. See “Item 4. B. Business Overview—Regulations—Regulations Relating to Taxation.” Furthermore, if we are deemed a PRC resident enterprise, dividends payable to individual investors who are non-PRC residents and any gain realized on the transfer of Ordinary Shares by such investors may be subject to PRC tax at a current rate of 20%. Any PRC tax liability may be reduced under applicable tax treaties. However, it is unclear whether holders of our Ordinary Shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas if we are considered a PRC resident enterprise. If dividends payable to our non-PRC investors, or gains from the transfer of our Ordinary Shares by such investors are subject to PRC tax, the value of your investment in our Ordinary Shares may decline significantly.

We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

On February 3, 2015, the SAT issued the Announcement on Several Issues Concerning the Enterprise Income Tax on Indirect Transfer of Assets by Non-Resident Enterprises, or the SAT Circular 7. The SAT Circular 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Circular 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Circular 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. On October 17, 2017, the SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or the SAT Circular 37, which came into effect on December 1, 2017. The SAT Circular 37 further clarifies the practice and procedures of the withholding of non-resident enterprise income tax.

Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our Company may be subject to filing obligations or taxed if our Company is transferor in such transactions, and may be subject to withholding obligations if our Company is transferee in such transactions, under SAT Circular 7 and/or SAT Circular 37. For transfer of shares in our Company that do not qualify for the public securities market safe harbor by investors who are non-PRC resident enterprises, the PRC subsidiaries may be requested to assist in the filing under SAT Circular 7 and/or SAT Circular 37. As a result, we may be required to expend valuable resources to comply with SAT Circular 7 and/or SAT Circular 37 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our Company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

Restrictions on currency exchange may limit our ability to utilize our revenue effectively.

All of our revenue is denominated in Renminbi. The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Since we expect a significant portion of our future revenue will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.

Fluctuations in exchange rates could result in foreign currency exchange losses to us and may reduce the value of, and amount in U.S. Dollars of dividends payable on, our shares in foreign currency terms.

The value of the RMB and the Hong Kong dollar against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. In August 2015, the People’s Bank of China, or the PBOC, changed the way it calculates the mid-point price of RMB against the U.S. dollar, requiring the market-makers who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as changes in major currency rates. In 2017, the value of the Renminbi appreciated by approximately 6.3% against the U.S. dollar; and in 2018, the Renminbi depreciated by approximately 5.7% against the U.S. dollar. From the end of 2018 through the end of December 2020, the value of the Renminbi appreciated by approximately 5.10% against the U.S. dollar. It is difficult to predict how market forces or PRC or U.S. government policy, including any interest rate increases by the Federal Reserve, may impact the exchange rate between the RMB and the U.S. dollar in the future. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, including from the U.S. government, which has threatened to label China as a “currency manipulator,” which could result in greater fluctuation of the RMB against the U.S. dollar. However, the PRC government may still at its discretion restrict access to foreign currencies for current account transactions in the future. Therefore, it is difficult to predict how market forces or government policies may impact the exchange rate between the RMB and the U.S. dollar or other currencies in the future. In addition, the PBOC regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. If the exchange rate between RMB and U.S. dollar fluctuates in unanticipated manners, our results of operations and financial condition, and the value of, and dividends payable on, our shares in foreign currency terms may be adversely affected. We may not be able to pay dividends in foreign currencies to our shareholders. Appreciation of RMB to U.S dollar will result in exchange loss, while depreciation of RMB to U.S dollar will result in exchange gain.

Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by PRC regulations may subject the PRC subsidiaries to penalties.

Companies operating in China are required to participate in various government-mandated employee benefit contribution plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the PRC subsidiaries’ employees up to a maximum amount specified by the local government from time to time at locations where the PRC subsidiaries operate their businesses. The requirement of employee benefit contribution plans has not been implemented consistently by the local governments in China, given the different levels of economic development in different locations. Companies operating in China are also required to withhold individual income tax on employees’ salaries based on the actual salary of each employee upon payment. The PRC subsidiaries may be subject to late fees and fines in relation to the underpaid employee benefits and under-withheld individual income tax, which may adversely affect the PRC subsidiaries’ and the Group’s financial condition and results of operations.

As of the date of this annual report, (i) some of the PRC subsidiaries have not completed the social insurance registration and the housing fund registration; (ii) the PRC subsidiaries did not make contributions in the full amount for the social insurance fund and the housing provident fund for their employees, as required under the relevant PRC laws and regulations; and (iii) the PRC subsidiaries did not make contributions in the housing fund for some employees. For the fiscal years of 2024, 2023, and 2022, $300,945, $287,629, and $295,009 of contributions for the social insurance fund, respectively, should have been made but were not. For the fiscal years of 2024, 2023 and 2022, $94,815, $90,620, and $92,945 of contributions for the housing provident fund, respectively, should have been made but were not.

Although the PRC subsidiaries have not received any order or notice from the local authorities, nor any claims or complaints from their current and former employees regarding such non-compliance, we cannot assure you that the PRC subsidiaries will not be subject to any order to rectify non-compliance in the future, nor can we assure you that there will not be any employee complaints regarding social insurance payments or housing provident fund contributions against the PRC subsidiaries, or that the PRC subsidiaries will not receive any claims in respect of social insurance payments or housing provident fund contributions under the PRC laws and regulations. In addition, the PRC subsidiaries may incur additional costs to comply with such laws and regulations by the PRC government or relevant local authorities. Any such development could materially and adversely affect the PRC subsidiaries’ and our business, financial condition and results of operations.

Our Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years, the SEC shall prohibit such Ordinary Shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years, as was formerly required under the HFCA Act before such amendment, to two consecutive years. According to the Consolidated Appropriations Act, any foreign jurisdiction could be the reason why the PCAOB does not have complete access to inspect or investigate a company’s auditor. As it was originally enacted, the HFCA Act applied only if the PCAOB’s inability to inspect or investigate was due to a position taken by an authority in the foreign jurisdiction where the relevant public accounting firm is located. As a result of the Consolidated Appropriations Act, the HFCA Act now also applies if the PCAOB’s inability to inspect or investigate the relevant accounting firm is due to a position taken by an authority in any foreign jurisdiction. The denying jurisdiction does not need to be where the accounting firm is located.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) mainland China, and (ii) Hong Kong. Our auditor is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. On August 26, 2022, CSRC, the MOF, and the PCAOB signed a Protocol, which sets out specific arrangements on conducting inspections and investigations over relevant audit firms within the jurisdiction of both the PRC and the U.S., including the audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. 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. Notwithstanding the foregoing, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor, then such lack of inspection could cause our securities to be delisted from the stock exchange.

Furthermore, various equity-based research organizations have recently published reports on China-based companies after examining their corporate governance practices, related party transactions, sales practices and financial statements, and these reports have led to special investigations and listing suspensions on U.S. national exchanges. Any similar scrutiny on us, regardless of its lack of merit, could cause the market price of our Ordinary Shares to fall, divert management resources and energy, cause us to incur expenses in defending ourselves against rumors, and increase the premiums we pay for director and officer insurance.

WWC, P.C., the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, 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. As of the date of this annual report, our auditor, WWC, P.C., is not on the list published by the PCAOB subject to the determinations as to inability to inspect or investigate completely, as announced by the PCAOB on December 16, 2021, and is based in the U.S., registered with the PCAOB and subject to PCAOB inspection, having its latest inspection completed in 2023. However, the recent developments would add uncertainties to our offering, and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.

The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations were more stringent than the HFCA Act. For example, if a company’s auditor was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022.

The SEC has announced that the SEC staff is preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report. It is unclear when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations will be adopted. The implications of this possible regulation in addition to the requirements of the HFCA Act are uncertain. While we understand that there has been dialogue among the CSRC, the SEC and the PCAOB regarding the inspection of PCAOB-registered accounting firms in China, there can be no assurance that we will be able to comply with requirements imposed by U.S. regulators. Such uncertainty could cause the market price of our Ordinary Shares to be materially and adversely affected, and our securities could be delisted and prohibited from being traded on the national securities exchange earlier than would be required by the HFCA Act. If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our Ordinary Shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our Ordinary Shares. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless.

Further, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to maintain the listing of our Ordinary Shares on Nasdaq, which could materially impair the market for and market price of our Ordinary Shares.

The enactment of Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region and Hong Kong Autonomy Act of U.S. could impact our Hong Kong holding subsidiary.

On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (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 Hong Kong Autonomy Act (“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 former chief executive of Hong Kong Special Administrative Region 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 Relating to our Ordinary Shares and the Trading Market

Our share price may be volatile and could decline substantially, which could result in substantial losses to our investors.

The trading price of our Ordinary Shares is likely to continue to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our shares, regardless of our actual operating performance.

The market price of our Ordinary Shares may be volatile, both because of actual and perceived changes in the Company’s financial results and prospects, and because of general volatility in the stock market. The factors that could cause fluctuations in our share price may include, among other factors discussed in this section, the following:

The listing of our Ordinary Shares on the Nasdaq Global Market is contingent on our compliance with the Nasdaq Global Market’s conditions for continued listing. A decline in the closing price of our Ordinary Shares could result in a breach of the requirements for listing on the Nasdaq Global Market. If we do not maintain compliance, Nasdaq could commence suspension or delisting procedures in respect of our Ordinary Shares. The commencement of suspension or delisting procedures by an exchange remains at the discretion of such exchange and would be publicly announced by the exchange. If a suspension or delisting were to occur, there would be significantly less liquidity in the suspended or delisted securities. In addition, our ability to raise additional necessary capital through equity or debt financing would be greatly impaired. Furthermore, with respect to any suspended or delisted Ordinary Shares, we would expect decreases in institutional and other investor demand, analyst coverage, market making activity and information available concerning trading prices and volume, and fewer broker-dealers would be willing to execute trades with respect to such Ordinary Shares. A suspension or delisting would likely decrease the attractiveness of our Ordinary Shares to investors and cause the trading volume of our Ordinary Shares to decline, which could result in a further decline in the market price of our Ordinary Shares.

In addition, the stock markets have experienced significant price and trading volume fluctuations from time to time, and the market prices of the equity securities of medical device companies are sometimes subject to sharp price and trading volume changes. These broad market fluctuations may materially and adversely affect the market price of our Ordinary Shares.

We may issue additional Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Ordinary Shares.

We may issue additional Ordinary Shares or our other securities to investors. We may also issue additional Ordinary Shares or other equity securities of equal or senior rank in the future for any reason or in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without shareholder approval, in a number of circumstances.

Our issuance of additional Ordinary Shares or other equity securities of equal or senior rank would have the following effects:

We currently do not expect to pay dividends on our Ordinary Shares in the foreseeable future.

We currently do not expect to pay dividends on our Ordinary Shares in the foreseeable future. Instead, for the foreseeable future, it is expected that we will continue to retain any earnings to finance the development and expansion of its business, and not to pay any cash dividends on its Ordinary Shares. Consequently, you should not rely on an investment in the Company as a source for any future dividend income.

Subject to the provisions of the Companies Act (Revised) of the Cayman Islands (the "Cayman Companies Act") and any rights attaching to any class or classes of shares under and in accordance with the articles: (a) the directors may declare dividends or distributions out of our funds which are lawfully available for that purpose; and (b) our shareholders may, by ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors. Subject to the requirements of the Cayman Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, dividends may also be declared and paid out of any share premium account. The directors when paying dividends to shareholders may make such payment either in cash or in specie. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future price appreciation of our Ordinary Shares. We cannot guarantee that our Ordinary Shares will appreciate in value or even maintain the price at which you purchased the Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment in our Ordinary Shares.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us or our business, our Ordinary Share price and trading volume could decline.

The trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts commence coverage of our Company, the trading price for its Ordinary Shares would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade its securities or publish inaccurate or unfavorable research about its business, its stock price would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on our Company, demand for its Ordinary Shares could decrease, which might cause its Ordinary Share price and trading volume to decline.

Our Chief Operating Officer and Liwei Zhang have substantial influence over our Company. Their interests may not be aligned with the interests of our other shareholders, and they could prevent or cause a change of control or other transactions.

As of the date of this annual report, Baiming Yu, our Chief Operating Officer (“COO”), beneficially owns an aggregate of 42.83% of our outstanding Ordinary Shares. Liwei Zhang, the spouse of Baiming Yu, beneficially owns an aggregate of 4.28% of our outstanding Ordinary Shares. Baiming Yu and Liwei Zhang beneficially own an aggregate of 47.11% of our outstanding Ordinary Shares. Moreover, Baiming Yu owns 3.35% of shares and Liwei Zhang owns 1.65% of shares of Hangzhou Shanyou. Because share percentage is aligned with voting power, Baiming Yu and Liwei Zhang do not have substantial influence over Hangzhou Shanyou.

Accordingly, as to Work Cayman, Mr. Yu and Ms. Zhang could have significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the appointment of directors and other significant corporate actions. They will also have the power to prevent or cause a change in control. Without the consent of Mr. Yu and Ms. Zhang, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. In addition, they could violate their fiduciary duties by diverting business opportunities from us to themselves or others. The interests of Mr. Yu and Ms. Zhang 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 Mr. Yu, Ms. Zhang, and their affiliated entity, see “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”

A sale or perceived sale 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.

We incur substantial increased costs being a public company.

We incur significant legal, accounting and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies.

Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior March 31, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures.

We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

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 could be subject to adverse United States federal income tax consequences.

A non-United States corporation will be a 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 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 are not currently a PFIC under the current PFIC rules for United States federal income tax purposes. However, the determination of whether or not we are a PFIC according to the PFIC rules is made on an annual basis and depends 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 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. See “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation—Passive Foreign Investment Companies.”

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, 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 Public Company Accounting Oversight Board, or 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.

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.

Our ability to produce accurate financial statements has been materially adversely affected by our failure to establish proper internal control over financial reporting. If we fail to establish and maintain proper internal control over financial reporting in a reasonably timely manner, our ability to produce accurate financial statements or comply with applicable regulations may continue to be impaired.

Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of preparing our consolidated financial statements for the year ended September 30, 2024, we identified a material weakness in our internal control over financial reporting and other control deficiencies as of September 30, 2024. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified to date relates to a lack of accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United States (“U.S. GAAP”) and SEC reporting and compliance requirements.

Following the identification of the material weakness and control deficiency, we have undertaken certain remedial steps and plan to continue taking remedial measures, including:

The implementation of these measures may not fully address the material weakness in our internal control over financial reporting, and we cannot conclude that it has been fully remedied as of the date of this annual report. Our failure to correct the material weakness or our failure to discover and address any other material weaknesses 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.

As a public company, we are subject to Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. We qualify as an “emerging growth company” pursuant to the JOBS Act with less than US$1.235 billion in revenue for our last fiscal year. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting. Moreover, even if management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.

During the course of documenting and testing our internal control procedures, we may identify other weaknesses and deficiencies in the internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Moreover, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our securities. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

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. We are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

As 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 Nasdaq corporate governance listing standards as, except for general fiduciary duties and duties of care, Cayman Islands law has no corporate governance regime which applies to the Company that prescribes specific corporate governance standards in a manner similar to the Nasdaq listing standards. Currently, we do not intend to rely on home country practice with respect to our corporate governance. 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.

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 standards. 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.

The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Cayman Companies Act and by the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities 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 in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law. Appeals from the Cayman Islands Courts to the Privy Council (which is the final Court of Appeal for British overseas territories such as the Cayman Islands) are binding on courts 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 responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

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 requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. These rights, however, may be provided in a company’s amended and restated articles of association. Our amended and restated articles of association allow our shareholders holding shares representing in aggregate not less than 10% of our voting share capital in issue, to requisition a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance notice of at least five calendar days is required for the convening of any general meeting of our shareholders. A quorum required for a meeting of shareholders consists of at least one shareholder, present in person or by proxy, holding not less than one third of the issued shares of the class of the Company. Our amended and restated articles of association also allow shareholder to propose a resolution for the appointment of a director by giving notice in writing not less than seven nor more than 42 clear days before the date appointed for a general meeting.

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

We are 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.

Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.

If we are forced to enter into an insolvency liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our Company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account* in violation of the Cayman Companies Act, while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable for a monetary fine and to imprisonment for five years in the Cayman Islands.

Our board of directors may decline to register transfers of Ordinary Shares in certain circumstances.

Our board of directors may, in its sole discretion, decline to register any transfer of any Ordinary Share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any Ordinary Share unless (i) the instrument of transfer is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of only one class of shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; (v) the shares transferred are free of any lien in favor of us; or (vi) a fee of such maximum sum as the Nasdaq Capital Market may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, on 14 days’ notice being given by advertisement in one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.

This, however, is unlikely to affect market transactions of the Ordinary Shares purchased by investors in a public offering. Once Ordinary Shares have been listed, the legal title to such Ordinary Shares and the registration details of those Ordinary Shares in the Company’s register of members will remain with the Depository Trust Company. All market transactions with respect to those Ordinary Shares will then be carried out without the need for any kind of registration by the directors, as the market transactions will all be conducted through the Depository Trust Company systems.

Provisions in our amended and restated articles of association may discourage, delay, or prevent a change in control.

Some provisions of our amended and restated articles of association may discourage, delay or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, the following:

Item 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Our Corporate History and Structure

Work Cayman is a Cayman Islands exempted company incorporated on March 1, 2022. Work BVI is our wholly-owned subsidiary formed in the British Virgin Islands on March 15, 2022. Work Medical Technology is Work BVI’s wholly-owned subsidiary formed in Hong Kong on April 19, 2022. WFOE, is Work Medical Technology’s wholly-owned subsidiary formed in Hangzhou on April 28, 2022. Work Hangzhou is WFOE’s wholly-owned subsidiary formed in Hangzhou on November 10, 2021.

Our operations are primarily conducted by Work Hangzhou and its subsidiaries in China.

Work Hangzhou is a limited liability company formed in China on November 10, 2021 with registered capital of RMB5 million.

Hangzhou Woli, a PRC limited liability company formed on July 29, 2022, with registered capital of RMB15 million, is a wholly owned subsidiary of Work Hangzhou.

Shanghai Saitumofei, a PRC limited liability company formed on May 15, 2019, with registered capital of RMB10 million, is a majority owned subsidiary of Work Hangzhou, of which Work Hangzhou owns approximately 44.20% shares, Jun Ma owns approximately 20.80% shares, Jianyuan Lu owns approximately 17.33% shares, Huangshan Tunxi District Leading Industry Incubation Fund Partnership (Limited Partnership) owns approximately 13.33% shares, and Shanghai Aikerui Medical Technology Co., Ltd. owns approximately 4.33% shares. It currently engages in the research and development of Class II and III medical devices, biological and medical technology.

Hunan Saitumofei, a PRC limited liability company formed on April 2, 2021, with registered capital of RMB2 million, is a wholly owned subsidiary of Shanghai Saitumofei.

Hangzhou Shanyou, a PRC limited liability company formed on April 29, 2002, with registered capital of RMB100 million, is a majority owned subsidiary of Work Hangzhou, of which Work Hangzhou owns 95% shares, our COO, Baiming Yu owns 3.35% shares and Liwei Zhang, spouse of Baiming Yu, owns 1.65% shares. It currently engages in the manufacture and sale of Class I and II medical devices.

Hangzhou Hanshi, a PRC limited liability company formed on July 22, 2019, with registered capital of RMB1 million, is a majority owned subsidiary of Hangzhou Shanyou and engages in the sales of Class II medical devices. The rest of Hangzhou Hanshi’s shareholders are Cheng Peng, Xiuwen Zhang and Zhengyan He, who own 25%, 10% and 5% shares, respectively.

Shanghai Chuqiang, a PRC limited liability company formed on March 12, 2018, with registered capital of RMB2 million, is a wholly owned subsidiary of Hangzhou Shanyou and engages in the sales of Class II medical devices.

Hangzhou Youshunhe, a PRC limited liability company formed on February 27, 2023, with registered capital of RMB1 million, is a majority owned subsidiary of Hangzhou Shanyou. The other shareholder of Hangzhou Youshunhe is Hangzhou Shunshunxin Material Technology Co., Ltd. Hangzhou Youshunhe does not have any operations as of the date of this annual report.

Huangshan Saitumofei, a PRC limited liability company formed on April 30, 2024, with registered capital of RMB1 million, is a fully owned subsidiary of Shanghai Saitumofei. Huangshan Saitumofei does not have any operations as of the date of this annual report.

The following diagram illustrates our corporate structure as of the date of this annual report:

On April 6, 2023, the shareholders of the Company unanimously passed resolutions effecting the subdivision of the Company’s authorized and issued share capital and the adoption of the amended and restated memorandum of association, pursuant to which, (1) the Company effectuated a 1:2000 share subdivision, whereupon the Company’s authorized share capital was amended from US$50,000 divided into 50,000 shares of par value US$1.00 each to US$50,000 divided into 100,000,000 Ordinary Shares of a par value of $0.0005 each; and (2) immediately after the share subdivision, the shareholders voluntarily surrendered, on a pro rata basis, a total of 87,500,000 Ordinary Shares of a par value of $0.0005 each, after which, the Company had an aggregate of 12,500,000 Ordinary Shares issued and outstanding.

For details of our principal shareholders’ ownership, please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”

Neither we nor the PRC subsidiaries are operating in an industry that prohibits or limits foreign investment. As a result, neither we nor the PRC subsidiaries are required to obtain any permission from Chinese authorities to operate other than those requisite that a domestic company in China will need to engage in the businesses similar to the that of the PRC subsidiaries. Such licenses and permissions include Business License, Medical Device Registration Certificate, Medical Device Production Certificate, Medical Device Selling Certificate, Record Form of Medical Device Products, Certificate of Class I medical device production recordation, Certificate of Class II medical device selling recordation, Record Registration Form for Foreign Trade Business Operators, and Certificate of the Customs of the People’s Republic of China on Registration of a Customs Declaration Entity. The PRC subsidiaries have obtained the above licenses and permissions to conduct their business in China. However, the PRC government may take actions to exert more oversight and control over offerings by China based issuers conducted overseas and/or foreign investment in such companies, 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.

We treated Work Hangzhou and its subsidiaries as our consolidated affiliated entities under U.S. GAAP for the fiscal years ended September 30, 2024, 2023, and 2022. We have consolidated the financial results of Work Hangzhou and its subsidiaries in our financial statements in accordance with U.S. GAAP for the same periods.

Work Hangzhou and its subsidiaries contributed to 100% of our consolidated revenue and accounted for 66% of our consolidated total assets and liabilities for the fiscal years ended September 30, 2024, 2023, and 2022. There was no reconciliation performed between the financial position, cash flows and results of operations of Work Hangzhou and us.

Corporate Information

Our principal executive offices are located at Floor 23, No. 2 Tonghuinan Road, Hangzhou City, Zhejiang Province, the PRC, and our telephone number is +86-571-82613568. Our registered office in the Cayman Islands is 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. We maintain a corporate website at http://www.hzsy120.com/. The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report.

The SEC maintains a website at www.sec.gov that contains reports, proxies, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.

For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditures.”

B. Business Overview

Our Mission

Our mission is to become a world-leading manufacturer of medical devices, and we are committed to providing professional and reliable medical devices to the world.

Overview

In furtherance of our commitment to providing professional and reliable medical devices, both domestically and internationally, the PRC subsidiaries specialize in the research, development, manufacturing, and sales of medical devices as follow:

Hangzhou Shanyou

Among the PRC subsidiaries, only Hangzhou Shanyou is responsible for production, and only Hangzhou Shanyou has production lines. Hangzhou Shanyou mainly manufactures and sells Class I and II medical devices, including endotracheal tubes, laryngeal mask airways, heat and moisture exchanging filters (HMEF), disposable breathing circuits, nebulizer kits, and yankauer suction sets, etc. In addition to Class I and II medical devices, Hangzhou Shanyou focuses on manufacturing and sales of hygiene products and disposable medical supplies as well, including a filtering half mask and a non-powered air-purifying particle respirator.

Additionally, Hangzhou Shanyou has retained the certificate for selling Class III disposable medical devices. However, as of the date of this annual report, Hangzhou Shanyou has no sale activities for Class III disposable medical devices.

Hangzhou Hanshi

Hangzhou Hanshi mainly focuses on the sales of Class II medical devices.

Shanghai Chuqiang

Shanghai Chuqiang focuses on the sales of Class II medical devices.

Shanghai Saitumofei

Shanghai Saitumofei focuses on the research and development of Class II and III medical devices, and biological and medical technology.

Hunan Saitumofei

Hunan Saitumofei focuses on the research and development of Class I, II and III medical devices.

Hangzhou Woli

Hangzhou Woli focuses on the sales of chemical products.

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 intend to develop our business and strengthen brand loyalty by implementing the following strategies:

Our Revenue Model

We generate revenue through the PRC subsidiaries’ manufacturing and sales of medical devices under their own brands. For the fiscal years ended September 30, 2024, 2023 and 2022, we recognized $11,506,440, $13,565,951, and $19,711,290 in revenue, respectively.

The PRC subsidiaries sell medical devices, both domestically and internationally. For the fiscal years ended September 30, 2024, 2023 and 2022, the revenue of domestic sales was $9,823,148, $12,598,261, and $18,291,527, accounting for 85%, 93%, and 93%, respectively, of our revenue, and the revenue of international sales was $1,683,292, $967,690, and $1,419,763, accounting for 15%, 7%, and 7%, respectively, of our revenue.

Products

In the Chinese market, the PRC subsidiaries’ products are sold in 34 provincial-level administrative regions. Internationally, the products are exported to more than 30 countries in Asia, Africa, Europe, North America, South America, and Oceania.

The PRC subsidiaries current product portfolio sold internationally includes 1) Class I disposable medical devices, such as, medical face masks, artery compression tourniquets, endotracheal tube holders, intubating stylets, guedel airways, etc.; 2) Class II disposable medical devices, such as, disposable breathing circuits, laryngeal mask airways, endotracheal tubes, anesthetic kit, oxygen face masks, HMEF, anesthesia masks, laryngoscope blades, yankauer suction sets, and nasal oxygen cannulas; 3) other medical devices, such as KN95 masks and filtering half mask; and 4) medical innovative devices and equipment, such as visualized prostatic dilatation catheter.

As of the date of this annual report, the PRC subsidiaries have a total of 21 medical devices in their product portfolio. All of them are sold domestically and 15 of them are sold internationally.

The 21 products for the fiscal years ended September 30, 2024, 2023, and 2022 were as follows:

Class Category		Product Name		Image		Own Brand/OEM/ Resale		Use		% of Sales in the fiscal year ended September 30, 2024				% of Sales in  the fiscal year ended September 30, 2023				% of Sales in the fiscal year ended September 30, 2022
Class I		Medical Face Masks				Own Brand/OEM		Protection, commonly used by healthcare staff.			12.47	%			16.9	%			36.45	%
Class I		FFP2 Masks				Own Brand		Protection, used by the general public.			0.00	%			3.76	%			4.19	%
Class I		Artery Compression Tourniquets				Own Brand		Stop bleeding.			29.03	%			20.27	%			16.03	%
Class II		Disposable Breathing Circuits				Own Brand/OEM		Conduct oxygen/anesthetic gases from machine to patient.			17.32	%			12.9	%			9.77	%

Class Category		Product Name		Image		Own Brand/OEM/ Resale		Use		% of Sales in the fiscal year ended September 30, 2024				% of Sales in  the fiscal year ended September 30, 2023				% of Sales in the fiscal year ended September 30, 2022
Class II		Laryngeal Mask Airways				Own Brand/OEM		Used as a temporary method to maintain an open airway.			7.27	%			6.18	%			5.32	%
Class II		Endotracheal Tubes				Own Brand/OEM		Maintain air passage during intubation.			14.59	%			7.41	%			5.70	%
Class I		Endotracheal Tube Holders				Own Brand/OEM		Fix an endotracheal tube and protect teeth.			5.06	%			4.01	%			2.85	%
Class II		Anesthetic Kit				Own Brand		Used during general anesthesia.			3.96	%			2.7	%			2.16	%
Class II		Face Masks				Own Brand/OEM		Transfer breathing oxygen gas from a storage tank to the patients’ lungs.			0.84	%			1.32	%			0.88	%
Class II		Filters/HMEF				Own Brand		Filter viruses and bacteria in the breathing circuits.			1.59	%			1.26	%			0.84	%
N/A(1)		KN95 Masks				Own Brand		Protection, used by the general public according to Chinese standard.			1.72	%			20.8	%			14.26	%
Class II		Anesthesia Masks				Own Brand/OEM		Are used to deliver anesthetic gases of oxygen gases.			1.87	%			0.6	%			0.59	%
Class I		Intubating Stylets				Own Brand/OEM		Assist to intubate an endotracheal tube.			0.81	%			0.53	%			0.27	%

Class Category		Product Name		Image		Own Brand/OEM/ Resale		Use		% of Sales in the fiscal year ended September 30, 2024				% of Sales in  the fiscal year ended September 30, 2023				% of Sales in the fiscal year ended September 30, 2022
Class II		Laryngoscope Blades				Own Brand		Used to examine the larynx during intubation.			0.02	%			0.06	%			0.09	%
Class I		Guedel Airways				Own Brand/OEM		Maintain a patient airway.			0.21	%			0.13	%			0.11	%
Class II		Yankauer Suction Sets				OEM		Used for the removal of blood and liquids during surgery.			0.11	%			0.08	%			0.06	%
Class II		Nasal Oxygen Cannulas				OEM		Provide patients with supplemental oxygen.			0.66	%			0.26	%			0.12	%
Class II		SPO2 Sensor				Own Brand		Used for blood saturation monitoring.			0.08	%			0.05	%			0.08	%
Class II		Nasogastric Tubes				Own Brand		Feed and provide certain medications to people through the nose.			0.03	%			—				—
Class II		Personal protective equipment				Resale		Protection, commonly used by healthcare staff.			2.36	%			0.77	%			0.21	%
Class II		Prostatic dilatation catheter				Own Brand/OEM		Therapy for symptoms caused by prostate obstruction			0.00	%			—				—

Note:

In addition to the above products, the PRC subsidiaries are also dedicated to developing new products and technologies, to better accommodate the clinical needs and thus improve medical efficiency. The following product is the example of the latest development.

Visualized Prostatic Dilatation Catheter

Visualized prostatic dilatation catheter is a treatment for patients with benign prostatic hyperplasia. It dilates the hyperplastic prostatic tissue physically while observing the dilatation effect through endoscope. This technology is painless, operation-free, and minimally invasive, without any sequela, which can reduce the operation risk and improves the operation efficiency. The technology has following comparative advantages:

Hangzhou Shanyou received the Medical Device Registration Certificate for the visualized prostatic dilatation catheter on October 11, 2023, which enables Hangzhou Shanyou to manufacture the product. However, as of the date of this annual report, no visualized prostatic dilatation catheters have been sold, and therefore, no revenue has been generated from the sales of this product.

Licenses and Permissions

The following chart sets forth a summary of the licenses and permissions obtained by the PRC subsidiaries as of the date of this annual report: