Haoxi Health Technology Ltd

Haoxi Health Technology Limited is a Cayman Islands holding company with no material operations of its own, conducting business in China through its wholly owned indirect PRC subsidiary, Beijing Haoxi Digital Technology Co., Ltd. The operating entity is an online marketing solution provider in China, with an advertiser client base mainly in the healthcare industry. The growth of the operating entity has benefited from the quick increase of news feed ads, its major form of ad placement, in the online marketing industry in China. The healthcare industry in China has developed rapidly because of the growth of average income and the aging population, providing a conducive environment for the business. The operating entity has served approximately 2,000 advertisers since its incorporation in 2018, the majority of which are healthcare companies. During the fiscal years ended June 30, 2026, 2025, and 2024, it served 565, 473, and 543 advertiser customers, respectively, of which 230, 414, and 471 were healthcare companies, respectively. The operating entity primarily places its ads through mainstream online short video platforms and social media platforms in China, such as Toutiao, Douyin, WeChat, and Sina Weibo. Driven by growing demand for personalized and high-quality services in the healthcare and medical aesthetics sectors, Haoxi Beijing officially launched its livestreaming agency services in April 2025, but as of the date of the annual report, it is still in the process of researching and developing the service offerings and has yet to generate any revenue from this service.

The operating entity competes primarily with other online advertising service providers in China for access to quality ad inventory, agency relationships with popular media, and advertiser base. Competition is based on brand recognition, quality of services, effectiveness of sales and marketing efforts, creativity in design and contents of ads, optimization capability, pricing, rebate and discount policies, strategic relationships, and hiring and retention of talented staff. The operating entity is materially dependent on media platforms operated by ByteDance, particularly Ocean Engine, a subsidiary of ByteDance, with which it has had a direct contractual relationship since June 16, 2022. The purchase amount of the operating entity's transactions with Ocean Engine accounted for 99.41%, 97.48%, and 99.66% of its total purchases for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. The operating entity's five largest customers accounted, in the aggregate, for 30.69%, 27.32%, and 21.06% of total revenue for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. Suzhou 190 Network Technology Co., Ltd. was the top customer in fiscal year 2026, accounting for 10.68% of total revenues; Shanghai Xukang Network Technology Co., LTD was the top customer in fiscal year 2025, accounting for 6.87% of total revenues; and JMDH was the top customer in fiscal year 2024, accounting for 10.32% of total revenues.

The company generates revenue through the operating entity by providing one-stop online marketing solutions, in particular online short video marketing solutions, to advertisers through the operating entity's media partners. The operating entity provides customized marketing solutions by planning, producing, placing, and optimizing online ads, especially online short video ads, to help advertisers acquire, convert, and retain ultimate consumers on various online media platforms. The operating entity's agreements with advertisers are largely short-term agreements, and advertisers may cease purchasing its online marketing services at any time with no prior notice. The operating entity's relationships with media partners are mainly governed by agreements that provide for credit periods and rebate policies, typically with a term of one year or shorter, subject to renewal upon expiry. The operating entity is deemed an "advertising operator" under the PRC Advertising Law and is required to examine advertising content for compliance with applicable laws.

The operating entity's core service is online short video marketing solutions, which involves planning, producing, placing, and optimizing online ads for advertisers. The operating entity has developed its own data analysis software, "Bidding Compass," which has helped it obtain ad placement data. The operating entity has established a stable placement with mainstream online advertising platforms in China and has been working closely with them since its establishment in 2018. The operating entity also launched livestreaming agency services in April 2025, but has yet to generate any revenue from this service as of the date of the annual report.

The operating entity's business is concentrated in the healthcare industry, with a majority of its advertiser customers being healthcare companies. In fiscal year 2026, it served 565 advertiser customers, of which 230 were healthcare companies. The operating entity's top 10 customers during the fiscal years ended June 30, 2026, 2025, and 2024 include healthcare companies, such as plastic surgery hospitals and dental hospitals, which place ads through the operating entity. The operating entity's revenue is derived from providing online marketing services to advertisers, and it also earns rebates and incentives from media partners based on advertising spend.

During the fiscal year ended June 30, 2026, the company experienced significant operational developments, including the launch of livestreaming agency services in April 2025. The company also completed several equity financings and reverse share splits. On January 14, 2025, a 1-for-128 reverse split was effective, and on August 14, 2026, a 1-for-20 reverse split was effective. On May 21, 2026, another reverse split was effective. The company also entered into a Business Cooperation Agreement on Agent Data Promotion with Ocean Engine with a term from January 1, 2026 to December 31, 2026. On July 6, 2026, the Company approved a statutory share capital reduction, a non-adjusting subsequent event not reflected in the closing share capital balance.

Total revenue increased by $22.02 million, or 67.14%, to $54.83 million for the fiscal year ended June 30, 2026 from $32.80 million for the fiscal year ended June 30, 2025. This growth was driven by a diversified revenue mix, higher renewal rates of existing customers, and an increase in the number of new customers. Total revenue decreased by $15.72 million, or 32.39%, to $32.80 million for the fiscal year ended June 30, 2025 from $48.52 million for the fiscal year ended June 30, 2024, primarily due to increasing competition in the industry. Total revenue increased by $20.29 million, or 72%, to $48.52 million for the fiscal year ended June 30, 2024 from $28.23 million for the fiscal year ended June 30, 2023, primarily due to higher advertisement expenditures by health care industry clients. The company reported a net loss of $9.54 million for the fiscal year ended June 30, 2026, compared with net income of $3.88 million for the fiscal year ended June 30, 2025.

The operating entity plans to expand its advertiser and media bases and explore new market opportunities. It has launched livestreaming agency services in April 2025, which are still in the research and development phase, with no revenue generated yet. The company expects to continue to grow as it seeks to expand its advertiser and media bases and explore new market opportunities. The operating entity's future growth will depend on its ability to maintain relationships with existing media partners as well as building partnerships with new media. The company also plans to invest in R&D of Bidding Compass, its data analysis software, though it may fail to result in a satisfactory return.

The company expects its overall selling, general, and administrative expenses, including marketing expenses, salaries, and professional and business consulting expenses, to continue to increase in the foreseeable future, as it plans to hire additional personnel and incur additional expenses in connection with the expansion of its business operations. The company also expects to incur significant additional legal, accounting, and other expenses as a newly public company. There is no assurance that the company will be able to maintain sufficient operating revenue to offset its operating expenses.

The company has historically funded its operations and working capital needs through a combination of cash generated from operations and proceeds from equity financings, including its initial public offering and subsequent equity financings. The company believes its current cash and cash equivalents and anticipated cash flows from equity financing will be sufficient to meet its anticipated working capital requirements and expenditures and bank loan repayment requirements for the next 12 months. The company may continue to seek additional equity financing from time to time as needed.

The company intends to keep any future earnings to finance the expansion of its business, and does not anticipate that any cash dividends will be paid in the foreseeable future. The company has not made any dividends or distributions to its shareholders as of the date of the annual report. The company's capital allocation strategy focuses on funding business expansion and working capital needs.

The company faces significant headwinds, including the risk of net cash outflow from operating activities. The company reported net cash used in operating activities of $2.57 million, $3.36 million, and $0.75 million for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. The operating entity is required by certain media partners to place deposits as performance security, and it may elect to make deposits associated with committed advertising spend on behalf of selected advertisers. These practices contribute to a timing mismatch in operating cash flow, which is generally positively correlated with business volume. The company also faces risks related to the PRC government's regulatory oversight, including potential cybersecurity reviews and CSRC filing requirements for subsequent offerings.

The company faces risks related to customer concentration, as certain customers contributed to a significant percentage of total revenue. The five largest customers accounted for 30.69% of total revenue in fiscal year 2026. The loss of one or more significant customers could have a material adverse impact on financial performance. The company also faces risks related to its dependence on Ocean Engine, which accounted for 99.41% of total purchases in fiscal year 2026. If the relationship with Ocean Engine deteriorates, the company's financial performance could be adversely affected.

The company is materially dependent on a single supplier, Ocean Engine, a subsidiary of ByteDance, which accounted for 99.41% ¹ of total purchases in fiscal year 2026. If the relationship with Ocean Engine deteriorates or the agreement is not renewed on substantially similar terms, the company's financial performance could be adversely affected. The company also faces significant customer concentration risk, with the five largest customers accounting for 30.69% ² of total revenue in fiscal year 2026. The loss of one or more significant customers could have a material adverse impact. The company has experienced net cash outflows from operating activities, reporting $2.57 million ³ in fiscal year 2026, and expects this to continue as it expands. The company's operations are subject to PRC regulatory risks, including potential cybersecurity reviews and CSRC filing requirements for subsequent offerings, which could limit its ability to offer securities. Additionally, the company's PRC subsidiaries did not pay social insurance contributions and housing provident fund contributions in full for all employees for the fiscal years ended June 30, 2026, 2025, and 2024, which could result in fines and penalties.

Management's message emphasizes the company's position as an online marketing solution provider in China, with a focus on the healthcare industry. The company highlights its growth driven by the quick increase of news feed ads and the rapid development of the healthcare industry due to rising average income and an aging population. Management emphasizes the operating entity's experienced management team, its proprietary data analysis software "Bidding Compass," and its stable relationships with mainstream online advertising platforms. The company has officially launched livestreaming agency services in April 2025, though it is still in the research and development phase. Management acknowledges the unstable and volatile revenue, with total revenue increasing by 67.14% to $54.83 million in fiscal year 2026, but also reports a net loss of $9.54 million for the fiscal year. The company intends to keep future earnings to finance business expansion and does not anticipate paying cash dividends in the foreseeable future.