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GLOBAL
OFFERING
(Incorporated in the Cayman Islands with limited liability)
Stock Code: 6681
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
BrainAurora Medical Technology Limited
腦動極光醫療科技有限公司


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IMPORTANT: If you are in any doubt about any of the contents of this Prospectus, you should seek independent professional advice.
BrainAurora Medical Technology Limited
ʮ̡
(Incorporated in the Cayman Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the
Global Offering
: 181,112,000 Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 18,112,000 Shares (subject to
reallocation)
Number of International Offer Shares : 163,000,000 Shares (subject to
reallocation and the Over-allotment
Option)
Offer Price : HK$3.22 per Offer Share, plus
brokerage of 1%, SFC transaction levy
of 0.0027%, Stock Exchange trading
fee of 0.00565% and AFRC
transaction levy of 0.00015% (payable
in full on application in Hong Kong
dollars and subject to refund)
Nominal value : US$0.0000001 per Share
Stock code : 6681
Joint Sponsors, Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no
responsibility for the contents of this Prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability w hatsoever
for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Prospectus.
A copy of this Prospectus, having attached thereto the documents specified in the section headed “Appendix V – Documents Delivered to the Registrar of
Companies and Available on Display,” has been registered by the Registrar of Companies in Hong Kong as required by section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar
of Companies in Hong Kong take no responsibility for the contents of this Prospectus or any other document referred to above.
The Offer Price will be HK$3.22 per Offer Share. Applicants for Hong Kong Offer Shares are required to pay, on application, the Offer Price of HK$3.22
for each Hong Kong Offer Share together with brokerage fee of 1%, SFC transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC
transaction levy of 0.00015%.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws of the United States and may not be
offered, sold, pledged, or transferred within the United States, except in transactions exempt from, or not subject to, the registration requiremen ts of the
U.S. Securities Act and applicable U.S. state securities laws. The Offer Shares may be offered, sold or delivered outside of the United States in offsh ore
transactions in accordance with Regulation S.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this Prospectus, includin g the risk
factors set out in the section headed “Risk Factors.”
The Overall Coordinators (for themselves and on behalf of the Underwriters), with our consent, may reduce the number of Offer Shares being offered und er
the Global Offering and/or the Offer Price stated in this Prospectus at any time on or prior to the morning of the last day for lodging applications under
the Hong Kong Public Offering. In such a case, an announcement will be published on the websites of the Stock Exchange at www.hkexnews.hk
and our
Company at 66nao.cn and the offer will be canceled and relaunched at the revised number of Offer Shares and/or the revised Offer Price and the
requirements under Rule 11.13 of the Listing Rules (which include the issue of a supplemental prospectus or a new prospectus (as appropriate)), as soo n
as practicable following the decision to make such reduction, and in any event not later than the morning of the day which is the last day for lodging
applications under the Hong Kong Public Offering. Details of the arrangement will then be announced by us as soon as practicable. For further informat ion,
see “Structure of the Global Offering” and “How to Apply for the Hong Kong Offer Shares.”
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by Overall Coordinators (for
themselves and on behalf of the Hong Kong Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. See “Underwriting – Underwriti ng
Arrangements – Hong Kong Public Offering – Grounds for Termination.”
IMPORTANT
December 30, 2024


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. We will not provide printed copies of this prospectus to the public
in relation to the Hong Kong Public Offering.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing
Information” section, and our website at 66nao.cn. If you require a printed copy of
this prospectus, you may download and print from the website addresses above.
To apply for Hong Kong Offer Shares, you may use one of the following
application channels:
Application
Channel Platform Target Investors Application Time
HK eIPO White
Form service
www.hkeipo.hk
Investors who would like
to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in your own name.
From 9:00 a.m. on
Monday, December 30,
2024 to 11:30 a.m. on
Friday, January 3, 2025,
Hong Kong time.
The latest time for
completing full payment
of application monies
will be 12:00 noon on
Friday, January 3, 2025,
Hong Kong time.
HKSCC EIPO
channel
Y our broker or custodian
who is a HKSCC
Participant will submit an
EIPO application on your
behalf through HKSCC’s
FINI system in
accordance with your
instruction
Investors who would not
like to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
CCASS and credited to
your designated HKSCC
Participant’s stock
account.
Contact your broker or
custodian for the earliest
and latest time for giving
such instructions, as this
may vary by broker or
custodian.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this
prospectus are identical to the printed document as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses above.
Please refer to the section headed “How to Apply for Hong Kong Offer Shares” in
this prospectus for further details of the procedures through which you can apply for the
Hong Kong Offer Shares electronically.
IMPORTANT


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Y our application through the HK eIPO White Form service or the HKSCC EIPO
channel must be for a minimum of 1,000 Hong Kong Offer Shares and in one of the
numbers set out in the table below. If you are applying through the HK eIPO White
Form service, you may refer to the table below for the amount payable for the number
of Shares you have selected. Y ou must pay the respective amount payable on application
in full upon application for Hong Kong Offer Shares. If you are applying through the
HKSCC EIPO channel, you are required to prefund your application based on the amount
specified by your broker or custodian, as determined based on the applicable laws and
regulations in Hong Kong.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
1,000 3,252.47 25,000 81,311.84 300,000 975,742.11 6,000,000 19,514,842.20
2,000 6,504.94 30,000 97,574.21 400,000 1,300,989.48 7,000,000 22,767,315.90
3,000 9,757.42 35,000 113,836.58 500,000 1,626,236.86 8,000,000 26,019,789.60
4,000 13,009.90 40,000 130,098.95 600,000 1,951,484.22 9,056,000
(1) 29,454,401.83
5,000 16,262.36 45,000 146,361.32 700,000 2,276,731.59
6,000 19,514.84 50,000 162,623.69 800,000 2,601,978.95
7,000 22,767.31 60,000 195,148.43 900,000 2,927,226.34
8,000 26,019.80 70,000 227,673.17 1,000,000 3,252,473.70
9,000 29,272.26 80,000 260,197.90 2,000,000 6,504,947.40
10,000 32,524.74 90,000 292,722.62 3,000,000 9,757,421.10
15,000 48,787.10 100,000 325,247.36 4,000,000 13,009,894.80
20,000 65,049.48 200,000 650,494.75 5,000,000 16,262,368.50
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong
Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee
and AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for
applications made through the application channel of the HK eIPO White Form Service Provider)
while the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be
paid to the SFC, the Stock Exchange and the AFRC, respectively.
No application for any other number of the Hong Kong Offer Shares will be
considered and any such application is liable to be rejected.
IMPORTANT


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If there is any change in the following expected timetable of the Hong Kong Public
Offering, we will issue an announcement in Hong Kong to be published on the websites
of the Stock Exchange at www.hkexnews.hk and our Company at 66nao.cn .
Hong Kong Public Offering commences .............................. 9:00 a.m. on
Monday,
December 30, 2024
Latest time for completing electronic applications
under the HK eIPO White Form service through
the designated website at www.hkeipo.hk (2): .......................1 1:30 a.m. on
Friday,
January 3, 2025
Application lists open (3) .........................................1 1:45 a.m. on
Friday,
January 3, 2025
Latest time for (a) completing payment for
HK eIPO White Form applications by effecting
internet banking transfer(s) or PPS payment
transfer(s) and (b) giving electronic application
instructions to HKSCC
(4) ..................................... 12:00 noon on
Friday,
January 3, 2025
If you are instructing your broker or custodian who is a HKSCC Participant to give
electronic application instructions via HKSCC’s FINI system to apply for the Hong Kong
Offer Shares on your behalf, you are advised to contact your broker or custodian for the latest
time for giving such instructions which may be different from the latest time as stated above.
Application lists of the Hong Kong Public Offering close (3) ............. 12:00 noon on
Friday,
January 3, 2025
Announcement of the level of indications
of interest in the International Offering, the level of
applications in the Hong Kong Public Offering and
the basis of allocations of the Hong Kong Offer Shares to be
published on the websites of the Stock Exchange
at www.hkexnews.hk and the Company at 66nao.cn on
or around ......................................................T uesday,
January 7, 2025
EXPECTED TIMETABLE (1)
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Results of allocations in the Hong Kong Public Offering
to be available through a variety of channels as described
in “How to Apply for Hong Kong Offer Shares –
Publication of Results” including
(1) in the announcement to be posted on our website
at 66nao.cn
(5) and the Stock Exchange’s website at
www.hkexnews.hk , respectively .................................T uesday,
January 7, 2025
(2) from the “Allotment Results” page
at www.hkeipo.hk/IPOResult
(or www.tricor.com.hk/ipo/result )
with a “search by ID” function from ..................1 1:00 p.m. on Tuesday,
January 7, 2025 to
12:00 midnight on
Monday, January 13, 2025
from the allocation results telephone enquiry line by
calling +852 3691 8488 between 9:00 a.m. and
6:00 p.m. from ................................................W ednesday,
January 8, 2025 to
Monday, January 13, 2025
Despatch of Share certificates or
deposit of Share certificates into CCASS
in respect of wholly or partially successful
applications pursuant to the Hong Kong Public
Offering on or before
(6) ............................................T uesday,
January 7, 2025
Despatch of refund cheques or
HK eIPO White Form e-Auto Refund payment
instructions in respect of wholly or partially unsuccessful
applications pursuant to the
Hong Kong Public Offering on or before
(7) ...........................W ednesday,
January 8, 2025
Dealings in the Shares on the Stock Exchange
expected to commence at 9:00 a.m. on ..............................W ednesday,
January 8, 2025
EXPECTED TIMETABLE (1)
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(1) All times refer to Hong Kong local time, except as otherwise stated.
(2) Y ou will not be permitted to submit your application under the HK eIPO White Form service through the
designated website at www.hkeipo.hk after 11:30 a.m. on the last day for submitting applications. If you have
already submitted your application and obtained a payment reference number from the designated website prior
to 11:30 a.m., you will be permitted to continue the application process (by completing payment of the
application monies) until 12:00 noon on the last day for submitting applications, when the application lists
close.
(3) If there is/are a “black” rainstorm warning signal, a tropical cyclone warning signal number 8 or above and/or
Extreme Conditions, collectively (“ Bad Weather Signals ”) in force in Hong Kong at any time between 9:00
a.m. and 12:00 noon on Friday, January 3, 2025, the application lists will not open and close on that day. See
“How to Apply for Hong Kong Offer Shares” in this prospectus.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
via HKSCC’s FINI system or instructing your broker or custodian to apply on your behalf via HKSCC’s FINI
system should refer to “How to Apply for Hong Kong Offer Shares – 2. Application Channels” in this
prospectus.
(5) None of the website or any of the information contained on the website forms part of this prospectus.
(6) The Share certificates will only become valid evidence of title at 8:00 a.m. on the Listing Date, which is
expected to be Wednesday, January 8, 2025, provided that the Global Offering has become unconditional in
all respects at or before that time. Investors who trade Shares on the basis of publicly available allocation
details or prior to the receipt of the Share certificates or prior to the Share certificates becoming valid do so
entirely at their own risk.
(7) e-Auto Refund payment instructions/refund cheques will be issued in respect of wholly or partially
unsuccessful applications (if applicable) pursuant to the Hong Kong Public Offering.
Applicants who have applied through the HK eIPO White Form service and paid their applications monies
through single bank accounts may have refund monies (if any) despatched to the bank account in the form of
e-Auto Refund payment instructions. Applicants who have applied through the HK eIPO White Form service
and paid their application monies through multiple bank accounts may have refund monies (if any) despatched
to the address as specified in their application instructions in the form of refund checks in favor of the
applicant (or, in the case of joint applications, the first-named applicant) by ordinary post at their own risk.
For details of the structure of the Global Offering, including its conditions, and the
procedures for applications for Hong Kong Offer Shares, see “Structure of the Global
Offering” and “How to Apply for Hong Kong Offer Shares,” respectively, in this prospectus.
If the Global Offering does not become unconditional or is terminated in accordance with
its terms, the Global Offering will not proceed. In such a case, the Company will make an
announcement as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
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IMPORTANT NOTICE TO INVESTORS
This Prospectus is issued by us solely in connection with the Hong Kong Public
Offering and does not constitute an offer to sell or a solicitation of an offer to buy any
security other than the Hong Kong Offer Shares offered by this Prospectus pursuant to
the Hong Kong Public Offering. This Prospectus may not be used for the purpose of, and
does not constitute, an offer or a solicitation of an offer to subscribe for or buy, any
security in any other jurisdiction or in any other circumstances. No action has been taken
to permit a public offering of the Offer Shares or the publication of this Prospectus in any
jurisdiction other than Hong Kong. The publication of this Prospectus and the offering
and sale of the Offer Shares in other jurisdictions are subject to restrictions and may not
be made except as permitted under the applicable securities laws of such jurisdictions
pursuant to registration with or authorization by the relevant securities regulatory
authorities or an exemption therefrom.
You should rely only on the information contained in this Prospectus to make your
investment decision. We have not authorized anyone to provide you with information that
is different from what is contained in this Prospectus. Any information or representation
not made in this Prospectus must not be relied on by you as having been authorized by
us, the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, any of the Underwriters, any of our or their
respective directors, officers or representatives, or any other person or party involved in
the Global Offering.
Page
EXPECTED TIMETABLE ........................................... i
CONTENTS ...................................................... i v
SUMMARY ....................................................... 1
DEFINITIONS .................................................... 3 9
GLOSSARY OF TECHNICAL TERMS ................................. 5 3
FORW ARD-LOOKING STATEMENTS ................................. 6 1
RISK FACTORS ................................................... 6 3
W AIVERS ........................................................ 1 3 0
CONTENTS
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INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL
OFFERING ..................................................... 1 3 5
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING ..... 1 4 0
CORPORATE INFORMATION ....................................... 1 5 0
INDUSTRY OVERVIEW ............................................ 1 5 3
REGULATORY OVERVIEW ......................................... 1 9 1
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE ......... 2 1 8
BUSINESS ........................................................ 2 5 5
DIRECTORS AND SENIOR MANAGEMENT ........................... 3 8 2
CORNERSTONE INVESTORS ....................................... 3 9 9
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS .......... 4 0 7
SUBSTANTIAL SHAREHOLDERS .................................... 4 1 3
SHARE CAPITAL .................................................. 4 1 7
FINANCIAL INFORMATION ........................................ 4 2 0
FUTURE PLANS AND USE OF PROCEEDS ............................ 4 8 1
UNDERWRITING ................................................. 4 9 3
STRUCTURE OF THE GLOBAL OFFERING ........................... 5 0 8
HOW TO APPLY FOR HONG KONG OFFER SHARES ................... 5 2 0
APPENDIX I – ACCOUNTANTS’ REPORT ........................ I - 1
APPENDIX II – UNAUDITED PRO FORMA FINANCIAL
INFORMATION ............................... II-1
APPENDIX III – SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND CAYMAN COMPANIES ACT ...... III-1
APPENDIX IV – STATUTORY AND GENERAL INFORMATION ....... I V - 1
APPENDIX V – DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY ...... V - 1
CONTENTS
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This summary aims to give you an overview of the information contained in this
Prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read the entire document before you decide to invest in the
Offer Shares.
There are risks associated with any investment. Some of the particular risks in
investing in the Offer Shares are set out in “Risk Factors” of this prospectus. In
particular , we are a biotechnology company seeking to list on the Main Board of the Stock
Exchange under Chapter 18A of the Listing Rules on the basis that we are unable to meet
the requirements under Rules 8.05(1), (2) and (3) of the Listing Rules. You should read
that section carefully before you decide to invest in the Offer Shares.
OVERVIEW
We were founded in 2012. Our product pipeline covers both the assessment and
intervention of a broad range of cognitive impairments induced by vascular diseases,
neurodegenerative diseases, psychiatric disorders and child development deficiencies, among
others. Our core product, the Brain Function Information Management Platform Software
System (the “ System ” or the “ Core Product ”), has been commercialized for eight indications
from four major types of cognitive impairment and is under development for several other
cognitive impairment indications as of the Latest Practicable Date. As of the Latest Practicable
Date, we had three other products that had received regulatory approval in China, the Basic
Cognitive Ability Testing Software (the “ BCAT”), the Cognitive Ability Supplemental
Screening and Assessment Software (the “ SAS”) and the Dyslexia Supplemental Screening and
Assessment Software (the “ DSS”) and one other product that had received regulatory approval
in the EU, the Cognitive Impairment Treatment Software, as well as six product candidates
under different stages of preclinical and clinical development or registration process. We enjoy
rights with respect to our products and product candidates in jurisdictions where we receive
regulatory approvals.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET THE
SYSTEM WITH NEW INDICATIONS SUCCESSFULLY, AND CERTAIN AI-POWERED
TECHNOLOGIES RELATED TO OUR PRODUCTS ARE STILL IN EARLY
DEVELOPMENT STAGE.
We are a commercial stage company. As of the Latest Practicable Date, the System had
been included in the provincial health insurance reimbursement lists of 30 provinces in China.
We are also the first organizer of a project initiated by the NHC, according to Frost & Sullivan,
under which we are tasked with helping hospitals to establish cognitive centers in over 2,100
public hospitals across China and promoting the development of cognitive impairment DTx
market in China. We also collaborate with hospitals to establish cognitive centers outside of the
NHC project to help us build long-term business relationship with the participating hospitals.
We invest in this strategy by providing the System, the hardware on which the System operates,
SUMMARY
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as well as the funding for renovating the cognitive center premises. As of the Latest Practicable
Date, we had helped more than 120 hospitals establish cognitive centers in China, including
several leading hospitals with “National Medical Center” (ᔼኪʕː) certification for
various medical specialties by the NHC. We have also been deeply involved in the publications
of the first four expert consensus in the field of DTx in China. In March 2023, we co-authored
the “Chinese expert consensus on digital therapeutics for cognitive impairment (2023 edition)”
(΍ᗆ(2023) ), which for the first time in China systematically
defined cognitive impairment DTx, and has earned us widespread recognition by top hospitals
and medical professionals in China, according to Frost & Sullivan. We are committed to
making achievements in the brain scientific research to DTx products that benefit cognitive
impairment patients.
Overview of Our Core Product
Our Core Product, the System, is an evidence-based, medical-grade DTx product, and the
first cognitive impairment DTx product in China that has received regulatory approval. The
System is software that combines clinical experience in brain science with deep neural
networks (the “ DNN”) algorithms, a powerful category of machine learning (the “ ML”)
algorithms, to assess a patient’s cognitive impairment and provide personalized DTx treatment
options. The System enables clinical assessment and interventions for various types of
cognitive impairment induced by vascular diseases, neurodegenerative diseases, psychological
disorders and child development deficiencies, among other types of cognitive impairments.
Key components of the System include the virtual human technology and psychometric scale
bank for initial assessment, a library of training tasks based on psychological paradigms and
a DNN-based recommendation algorithm to tailor training to the patient’s cognitive deficit and
treatment progress.
How the System Provides Clinical Assessment and Intervention
Patients with cognitive impairment symptoms begin their journey with the System with
consultations with physicians, who may decide to conduct cognitive assessment using the
System. Physicians then identify the types of the patients’ cognitive functions that are impaired
with the assistance of the System and then direct the System to assign the relevant cognitive
training tasks. Patients’ training results each day are fed into the DNN model to determine the
training tasks for the next day. After a certain period of time of conducting the cognitive
trainings, patients undergo follow-up cognitive assessment to evaluate whether the impaired
cognitive functions experienced any improvements and provide feedback to enable
readjustment of training tasks in order to further improve cognitive training efficacy. The
following diagram sets forth a flowchart setting forth the different stages of how the System
serves patients.
SUMMARY
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Patients with cognitive impairment symptoms
Cognitive Assessment
Identification of Cognitive Impairment Type and Impaired Cognitive Functions
• VDCI
• NCI
• PCI
• CDDCI
Cognitive Intervention and Training
• Seven daily cognitive training tasks based on identified cognitive impairment and
   impaired cognitive functions.
• Tasks selected from millions of possible combinations using DNN-based algorithm.
Follow-up Assessment
Upon assessment order from physicians
Physicians prescribe the System based on identification
Provide feedback to enable readjustment of
Provide basis for physicians
Patients conduct daily trainings
• MOCA/MMSE
• Patients demographic information
• Other medical diagnosis and records
• Continuous attention ability and attention span
• Short-term and long-term memory
• Spatial and other sensory capabilities
• Mood and impulse control
The System provides a library of over 300 training tasks designed to stimulate specific
aspects of cognitive function based on various psychological paradigms. These tasks target
specific neural networks and brain regions associated with cognitive function. At the
identification stage, physicians are able to determine the patients’ specific cognitive
impairment indications. This leads to differences in how the training tasks are assigned to
provide tailored medical solutions to patients suffering from different indications. Specifically,
our DNN-based algorithms use the type of patient cognitive impairment as a critical input in
determining what training task combinations are optimal for patient treatment. See
“Business—Cognitive Intervention and Training” for details on the underlying brain science
theories and the mechanism of this recommendation process.
SUMMARY
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The following screenshot demonstrates the functioning of the River Crossing Training
Task, one of the over 300 training tasks from the System’s library designed to target specific
cognitive impairment.
River Crossing Training Task
Training Task:
Cut the Tree into the Appropriate LengthPause/Help Score
Task Instruction:
Move the Tree Trunk
with Your Fingers
Task Difficulty:
High
To enhance treatment effectiveness, the System uses a DNN-based recommendation
algorithm to personalize the training program for each patient. This algorithm takes into
account individual differences in cognitive impairment and sensitivity to training tasks. By
dynamically adapting training scenarios, the System improves training effectiveness and
facilitates cognitive improvement in patients. See “—Our Core Product” and “Business—Core
Product: Brain Function Information Management Platform Software System—Mechanism of
Action” for more detail.
SUMMARY
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OUR PIPELINE
The following chart summarizes the development status of the System under various indications, as well as other products and product
candidates in our pipeline as of the Latest Practicable Date.
Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Reg istration Commercialization
Vascular disease
induced cognitive
impairment
Vascular cognitive impairment Assessment + Intervention ChinaJune 2020
Aphasia Assessment + Intervention ChinaJune 2020
Atrial fibrillation induced cognitive
impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Hypertension induced cognitive
impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Coronary heart disease induced
cognitive impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Post-cardiac surgery
rehabilitation Assessment + Intervention 2025 Q1 Clinical Trial
Initiation
2026 China
Heart failure induced cognitive
impairment Assessment + Intervention 2026 H1 Clinical Trial
Initiation 2028 China
Neurodegenerative
disease induced
cognitive impairment
Alzheimer’s disease Assessment + Intervention ChinaJune 2020
Amnestic mild cognitive
impairment Assessment + Intervention 2025 Data Analysis
Completion 2026 China
Parkinson’s disease Assessment + Intervention 2026 Q2
Clinical Trial Initiation 2027 China
Psychiatric disorder
induced cognitive
impairment
Depression Assessment + Intervention ChinaJune 2020
Schizophrenia Assessment + Intervention ChinaJune 2020
Sleep disorders Assessment + Intervention ChinaJune 2020
Anxiety Assessment + Intervention 2025 Q1 Clinical Trial
Initiation 2026 China
Brain Function
Information
Management
Platform Software
System
SUMMARY
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Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Regis tration Commercialization
Child development
deficiency induced
cognitive impairment
Attention deficit hyperactive
disorder Assessment + Intervention ChinaJune 2020
Autism Assessment + Intervention ChinaJune 2020
Language delay Assessment + Intervention 2025 Q2 Clinical Trial
Initiation 2026 China
Cerebral palsy Assessment + Intervention 2025 Q2 Clinical Trial
Initiation 2026 China
Dyslexia Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Other disorders
Epilepsy Assessment + Intervention
2025 Q2
Clinical Trial
Initiation
2026 China
Bone fracture induced pain Assessment + Intervention
2025 Q4
Clinical Trial
Completion
2026 China
Diabetes Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Phenylketonuria induced
cognitive impairment Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Kidney disease induced cognitive
impairment Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Multiple sclerosis Asse ssment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Hepatic encephalopathy Assessment + Intervention
2025 Q3
Clinical Trial
Initiation
2026 China
Post-breast cancer surgery
rehabilitation Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Post-lung cancer surgery
rehabilitation Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Drug addiction Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
SUMMARY
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Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Reg istration Commercialization
Basic Cognitive
Ability
Testing
Software
Cognitive impairment Assessment China
Cognitive Ability
Supplemental
Screening and
Assessment
Software
Cognitive impairment Assessment China
Dyslexia
Supplemental
Screening and
Assessment
Software
Child development
deficiency induced
cognitive impairment
Dyslexia Assessment
2025 H2 Full
Commercialization
2025 H2 Full
Commercialization
2025 H2 Full
Commercialization 2025
2025
2025
China
Covid-19 Induced
Cognitive
Impairment
Assessment and
Recovery
Training Software
Other disorders Covid-19 induced cognitive
impairment Assessment + Intervention
2025 H2
Registration
Approval
2025 China
Attention Deficit
Hyperactivity
Disorder
Assessment and
Treatment Software
Child development
deficiency induced
cognitive impairment
Attention deficit hyperactivity
disorder Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2025 China
Quantitative
Cognitive
Assessment
Software for
Depression
Psychiatric disorders Depression Assessment
2025 Q1
Clinical Trial
Completion
2025 China
Depression
Treatment
Software
Psychiatric disorders D epression Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Cognitive
Impairment
Assessment
Software
Cognitive impairment Assessment
2025
Registration
Submission
2026 EU
2025 H2
Registration
Submission
2026
Commencement of
Commercialization
2026 US
Cognitive
Impairment
Treatment
Software
Cognitive impairment Intervention
2026 EU
2026 US
Core
Product
Commercialized
Product/Indication
Product exempt from clinical
trials under current relevant
re
gulations
2025
Registration
Submission
Regulatory approvals obtained through
submission of clinical evaluation materials
on the S
ystem conducted by third parties
SUMMARY
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We have built end-to-end capabilities ranging from R&D to commercialization.
 R&D and Technology . We have assembled a dedicated and multi-disciplinary R&D
team of 120 members with 26 holding a masters degree and two holding PhDs as of
the Latest Practicable Date. Our extensive technological capabilities enable us to
flexibly and rapidly expand the indications coverage of our System, as well as to
develop other assessment and intervention DTx products, in a cost-effective manner.
For additional details of our R&D capabilities and technology, see “Business—Our
Pipeline.”
 Commercialization . We believe our commercialization capabilities are largely
attributable to our achievements in evidence-based academic and scientific research
in the fields of cognitive impairment, and the performance of our System and other
products, which have gained us wide recognition by customers and accelerated the
commercialization of our System and other products. For additional details of our
commercialization capabilities, see “Business—Our Pipeline.”
We believe that our diversified product portfolio, together with our end-to-end
capabilities across R&D to commercialization, will create high entry barriers, solidify our
industry position and fuel a strong growth trajectory.
OUR CORE PRODUCT
Our Core Product, the System, is an evidence-based, medical-grade DTx product, and the
first cognitive impairment DTx product in China that has received regulatory approval. In
September 2018, we obtained the initial Class II medical device registration certificate (the
“2018 Certificate ”) from the Hunan Medical Products Administration (the “ Hunan MPA ”) for
the System. In June 2020, we obtained an amended certificate (the “ 2020 Amended
Certificate ”) from the Hunan MPA to include the screening, assessment, recovery and data
analysis of eight specific indications (vascular cognitive impairment, aphasia, Alzheimer’s
disease, depression, schizophrenia, sleep disorders, Attention Deficient Hyperactivity Disorder
(the “ ADHD ”), and autism), making it possible for us to commercialize the System in China.
The 2020 Amended Certificate and the 2018 Certificate are the same certificate with revised
scope descriptions. In May 2023, we renewed the 2020 Amended Certificate with the Hunan
MPA (the “ 2023 Renewed Certificate ”), which contains the same indication coverage as the
2020 Amended Certificate.
As of the Latest Practicable Date, there are three recommendations from Chinese
regulatory authorities regarding the reclassification of DTx medical devices from Class II to
Class III. These represent advice from the relevant experts nationwide and are not binding
regulations on medical device classification as of the Latest Practicable Date, according to our
PRC Legal Advisor. As advised by Frost & Sullivan, such potential reclassifications would
make a difference on the steps of clinical development and obtaining regulatory approvals that
must be undertaken by players in the industry, not on the market demands or opportunities for
SUMMARY
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such products. Players with the resources and experience in carrying out evidence-based
clinical research and development would potentially enjoy competitive advantage with regards
to cognitive impairments DTx products that may be reclassified into Class III medical device,
according to Frost & Sullivan. See “Regulatory Overview—PRC Regulatory
Overview—Regulation Relating to Medical Devices—Potential reclassification of DTx
medical devices from Class II to Class III” for more details on the recommended
reclassifications and their potential impact on our market opportunities and competition.
The System is software that combines clinical experience in brain science with DNN
algorithms, a powerful category of ML algorithms, to assess a patient’s cognitive impairment
and provide personalized DTx treatment options. The System enables clinical assessment and
interventions for various types of cognitive impairment induced by vascular diseases,
neurodegenerative diseases, psychological disorders and child development deficiencies,
among other types of cognitive impairments. The System incorporates our two underlying
technologies, namely virtual human and AI technologies. In particular, our DNN algorithms are
trained with a large amount of information on patient demographics, clinical assessment,
diagnosis and information collected during patients’ participation in training tasks at diverse
difficulty levels. Our DNN algorithms undergo constant iteration and training to dynamically
adjust the content of the training tasks. The DNN algorithms can identify the most suitable
training out of millions of different possible combinations, building on over 300 training
modules that are designed to activate the appropriate brain regions for the best therapeutic
effect.
Competitive Advantages
Supported by our core technologies of virtual human and AI, our System features two
primary competitive advantages in terms of assessment efficiency and treatment efficacy.
 Assessment Efficiency. Our virtual human technology can perform medical assessment
and communicate with a large number of patients at once, greatly improving their
assessment efficiency. Our AI technology enables physicians to perform assessment and
intervention in a streamlined and user-friendly manner.
 Treatment Efficacy. By dynamically identifying and recommending the most suitable
training out of millions of different possible combinations, our DNN algorithms enable
the System to offer self-adaptive and personalized trainings that lead to more favorable
enhancement of cognitive functions for patients who use the System together with drug
therapies compared to patients under drug therapies alone, as measured by patients’
response time, accuracy rate, improvement in training performance scores and length of
user stay.
SUMMARY
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Key Indications
Our System targets a variety of cognitive impairment indications, covering the assessment
and intervention of four major types of cognitive impairment, namely VDCI, NCI, PCI and
CDDCI, with eight commercialized indications in four major types of cognitive impairment.
We also have several other indications under development, including atrial fibrillation,
hypertension-related cognitive impairment, coronary artery disease-related cognitive
impairment, and amnestic mild cognitive impairment, among others.
We are pursuing further development and commercialization of these key indications by
conducting or planning to conduct clinical trials with the goal of obtaining regulatory approval
and achieving commercialization. We also plan to work to integrate these new indications into
our System and to actively promote these new capabilities to our collaborating hospitals and
new hospital customers who may be looking for an assessment and/or intervention option for
these new indications. As part of our key indication expansion efforts, we are collaborating
with the Anzhen hospital and multiple other hospitals and clinical trial institutions to evaluate
our System in application to cognitive impairment induced by various different conditions.
This includes atrial fibrillation (Trial Registration: NCT05374642), coronary heart disease
(Trial Registration: NCT05735041) and hypertension (Trial Registration: NCT05704270). For
more information on the future development plan of our Core Product, see “Business—Core
Product: Brain Function Information Management Platform Software System—Future
Development Plans for Our System.” For additional details on our planned use of proceeds in
relation to the future development of these indications, see “Future Plans and Use of
Proceeds—Use of Proceeds.”
OUR KEY PRODUCTS AND PRODUCT CANDIDATES
As of the Latest Practicable Date, four of our products besides the System had obtained
regulatory approval in China or abroad, including, among others, the Basic Cognitive Ability
Testing software (the “ BCAT”), the Cognitive Ability Supplemental Screening and Assessment
software (the “ SAS”) and the Dyslexia Supplemental Screening and Assessment Software (the
“DSS”). All three of these products were developed based on the technology framework of the
assessment function of the System. We also conducted additional R&D on the BCA T and the
SAS to make cognitive impairment assessment by physicians more accurate and efficient.
BCAT
BCA T is designed to facilitate healthcare professionals’ assessment of patients’ basic
cognitive capacity by enabling patients to self-administer tests of their cognitive capacities
relating to processing speed, working memory, episodic memory, visual-spatial ability and
verbal comprehension. We obtained a Class II medical device registration certificate from the
Hunan MPA for the BCA T in October 2022. The BCA T can improve the efficiency of medical
assessment by medical professionals, promote cost-efficient diagnostic paradigms and improve
patient’s treatment experience.
SUMMARY
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SAS
SAS is designed to facilitate healthcare professionals’ assessment of patients’ cognitive
capacity by enabling patients to self-administer the Mini-Mental State Examination (the
“MMSE ”) and Montreal Cognitive Assessment (the “ MoCA ”) tests. We obtained a Class II
medical device registration certificate from the Hunan MPA for the SAS in December 2022
after submitting relevant clinical evaluation materials. Though the SAS is no substitute for
human judgment and cannot on its own automatically derive diagnostic conclusions, it can
improve the efficiency of medical assessment by medical professionals, promote cost-efficient
diagnostic paradigms and improve patient’s treatment experience.
DSS
DSS is designed to facilitate the assessment of risk of developmental dyslexia in children.
We received a Class II medical device registration certificate for DSS in September 2023.
Other Product Candidates
We also have the following products under different stages of development.
 COVID-19 Induced Cognitive Impairment Assessment and Recovery Training Software:
We collaborated with Xuanwu Hospital to complete a clinical trial focused on cognitive
decline due to COVID-19 infection, commonly referred to as “COVID-19 brain fog” in
October 2023. We have submitted Class II medical device registration for this product
candidate in the second quarter of 2024 and expect to receive registration approval in the
second half of 2025. Once approved, we plan to promote the commercialization of this
product through existing sales channels.
 ADHD Assessment and Treatment Software: We are currently under preclinical
development of the ADHD assessment and treatment software (the “ ADHD Software ”).
We intend to initiate clinical trial for our ADHD Software by the first quarter of 2025.
 Quantitative Cognitive Assessment Software for Depression: We are currently under
clinical development for the quantitative cognitive assessment software for depression,
which is an electronic cognitive function assessment tool developed based on the latest
scientific development on an understanding of human intelligence and cutting-edge
clinical research on cognitive dysfunction associated with depression. We expect to
complete the trial by the first quarter of 2025.
 Depression Treatment Software: We are currently under preclinical development of the
depression treatment software, called “Mind Island Aurora,” which is a computerized
system utilizing a combination of game-playing and Computerized Cognitive Behavioral
Therapy (the “ CCBT ”) to improve the symptoms related to depression. The software aims
at deepening patients’ understanding about emotional rationalization and interpersonal
skills in an interest-inspiring way. We expect to initiate clinical trial in the first quarter
of 2025.
SUMMARY
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 Cognitive Impairment Assessment Software and Cognitive Impairment Treatment
Software: In order to expand our international footprint and build global influence, we are
developing the following products in the U.S. and the EU: Cognitive Impairment
Assessment Software and Cognitive Impairment Treatment Software. On July 22, 2022,
we obtained the CE mark in the EU for our Cognitive Impairment Treatment Software,
which allows its commercialization in Europe that is expected to commence in 2026. We
are also developing our Cognitive Impairment Treatment Software and Cognitive
Impairment Assessment Software in the U.S. in preparation for regulatory filings under
Section 510(k).
OUR COMPETITIVE STRENGTHS
We believe the following strengths have contributed to our success and differentiated us
from our competitors:
 Seasoned player in China’s cognitive impairment DTx market with significant
market opportunities;
 Comprehensive coverage of cognitive impairment indications with rapid pipeline
expansion;
 R&D capabilities and core technologies supported by multidisciplinary team;
 Strong commercialization capabilities and accelerated commercialization
momentum propelled by academic and industry achievements; and
 Visionary management team with rich experience in brain sciences, AI technologies,
and business development.
OUR STRATEGIES
We plan to execute the following strategies to achieve our mission and drive our future
growth:
 Continue indication expansion of the System and development of other product
candidates to further solidify our position in China’s cognitive impairment DTx
market;
 Accelerate commercialization of the System and other products and enhance market
penetration;
 Further improve our research and development capabilities;
 Expand our international footprint and build global influence; and
 Strategically seek merger and acquisition opportunities.
SUMMARY
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OUR BUSINESS MODEL
We offer the System to hospitals which enable hospitals to provide assessment and
intervention to their cognitive impairment patients utilizing the System (and potentially our
other products and product candidates). We generate revenue from hospitals which pay us
based on the amount of in-hospital use of the System integral software solutions by patients
and the pricing based on negotiations between the hospitals and us with reference to the
provincial health insurance reimbursement lists. To a lesser extent, we also provide the System
integral software solutions directly to individual patients out of hospitals who pay us periodic
subscription fees during the period they use the System. In addition to selling the System to
hospitals and individual patients, we also offer research projects services by providing the
System as well as technical and operational support services to help universities, hospitals and
research institutions conduct research projects. We also began offering training facilitation
service in 2023 where we assist our customer and the organizer of the training sessions in
performing the organizational and logistical groundwork. The customer and organizer is a
public institution dedicated to advancing the knowledge and capabilities of physicians and
other medical professionals in China. We charge service fees from attendees. The service fee
from each training is based on the type and number of training attendees when they sign up for
the training. We record training facilitation service revenue at the completion of each training.
Historically, we also sold hardware equipment with our System pre-installed together with user
accounts which enable customers to use the System on the hardware equipment.
Business Sustainability and Commercialization Strategies
We believe the long-term sustainability of our product commercialization can be
substantiated by the following strategies and trends:
 Further helping hospitals establish cognitive centers: We became the first organizer
of a project initiated by the NHC, according to Frost & Sullivan, under which we are
tasked with helping to establish cognitive centers in over 2,100 public hospitals
across China and promoting the development of cognitive impairment DTx market
in China over the next five years. We intend to continue to help hospitals establish
cognitive centers, and fully capitalize on the commercialization potential of our
System in new cognitive centers in these hospitals, which we believe will provide
us sustainable growth in our business and revenue scale.
 Enhanced brand and product awareness: We intend to recruit more talents with
academic and professional experiences in the field of cognitive impairment DTx to
expand our commercialization team and enhance the team’s academic and marketing
capabilities in order to further promote our brand and product awareness.
 Product innovation and indication expansion: We plan to accelerate the
development, registration, and commercialization processes to expand our System to
more cognitive impairment indications by developing upgraded versions of the
System or developing new products.
SUMMARY
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 Growing industry trend demonstrating strong market demand: We believe we are
well-positioned to capture the rapid growth in the cognitive impairment DTx market
in China, and achieve sustainable business and revenue growth. The cognitive
impairment DTx market in China has been growing rapidly as a result of strong
market demands. According to Frost & Sullivan, the market size of the cognitive
impairment DTx in China reached RMB268.6 million in 2023 and is expected to
increase to RMB1,046.7 million in 2025 and RMB8,927.4 million in 2030,
representing CAGRs of 97.4% and 53.5%, respectively.
See “Business—Business Sustainability and Commercialization Strategies” for more
detailed descriptions of our strategies to achieve long-term sustainability of our product
commercialization.
MARKET OPPORTUNITIES AND COMPETITION
Market Size
The market size of the cognitive impairment DTx in China reached RMB268.6 million in
2023 and is expected to increase to RMB1,046.7 million in 2025 and RMB8,927.4 million in
2030, representing CAGRs of 97.4% and 53.5%, respectively.
Classification of DTx Products
DTx is a type of healthcare assessment and intervention tool that uses digital technologies
to prevent, diagnose, manage and treat diseases. There are two main categories of DTx:
medical-grade DTx and non-medical-grade DTx.
o Medical-grade DTx are typically required to undergo rigorous evidence-based
clinical evaluation processes to demonstrate safety and efficacy in clinical trials and
can be prescribed as effective first-line treatments without the side effects associated
with conventional drugs. In contrast to non-medical-grade DTx, medical-grade DTx
can provide diseases assessment and intervention either as monotherapy or in
combination with existing drugs and other therapies. Because of the accessible
nature of DTx, medical-grade DTx provide clinically validated therapeutic options
that are appropriate for patients with chronic conditions that require ongoing
treatment and monitoring and are consistent with government goals to promote
access to healthcare in rural or underserved areas worldwide.
o Non-medical-grade DTx refers to applications designed to help individuals maintain
wellness and prevent diseases by providing DTx-based preventive care with a focus
on cognitive and mental health. The safety and efficacy of non-medical-grade DTx
are typically not validated through rigorous evidence-based clinical processes.
Non-medical-grade DTx includes applications for health promotion, disease
prevention, self-diagnosis, management, rehabilitation, palliative care and epidemic
or pandemic care.
SUMMARY
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Market Competition
Key players in the global cognitive impairment DTx market (outside China) include
companies that offer cognitive training interactive games, cognitive behavioral therapies,
health monitoring systems and other types of cognitive impairment DTx products. As of the
Latest Practicable Date, there were approximately 23 FDA-approved products by
approximately 14 key global players covering cognitive impairment induced by various
indications.
In China, as of the Latest Practicable Date, approximately 100 cognitive impairment DTx
products by approximately 50 players, including our Company, had been approved by the
NMPA or its local counterparts, and at least 20 cognitive impairment DTx products by
approximately 20 players are currently in the process of clinical trials and obtaining relevant
medical device registration certificates, as of the Latest Practicable Date, according to Frost &
Sullivan. We are the first company in China that has developed a medical-grade DTx product
for cognitive impairment. We have a 25.0% market share in China’s cognitive impairment DTx
market and 91.6% market share in China’s medical-grade cognitive impairment DTx market in
terms of revenue in 2023, according to Frost & Sullivan. For more information, see “Industry
Overview—Cognitive Impairment DTx Market—Competitive Landscape of Cognitive
Impairment DTx.”
Our System targets a variety of cognitive impairment indications, covering the assessment
and intervention of four major types of cognitive impairment: vascular disease induced
cognitive impairment (the “ VDCI ”), Neurodegenerative disease induced cognitive impairment
(the “ NCI”), Psychiatric disorder induced cognitive impairment (the “ PCI”), and Child
development deficiency induced cognitive impairment (the “ CDDCI ”).
Key players in the global VDCI DTx market (outside China) include one player that offers
at least two FDA-approved VDCI DTx products. In China, a total of approximately 28 VDCI
DTx products by approximately 22 players, including our Company, had been approved by the
NMPA or its local counterparts, and at least five VDCI DTx products by five players were in
the process of clinical trials and obtaining relevant medical device registration certificates, as
of the Latest Practicable Date, according to Frost & Sullivan.
Key players in the global NCI DTx market (outside China) include at least three players
that offers at least four FDA-approved NCI DTx products. In China, a total of approximately
36 NCI DTx products by approximately 34 players, including our Company, had been approved
by the NMPA or its local counterparts, and at least ten more NCI DTx products by at least ten
players were in the process of clinical trials and obtaining relevant medical device registration
certificates, as of the Latest Practicable Date, according to Frost & Sullivan.
SUMMARY
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Key players in the global PCI DTx market (outside China) include at least 12 players that
offer at least 18 FDA-approved PCI DTx products. In China, a total of approximately 32 PCI
DTx products by approximately 31 players, including our Company, have been approved by the
NMPA or its local counterparts, and at least five additional PCI DTx products by at least five
players are currently in the process of clinical trials and obtaining relevant medical device
registration certificates, as of the Latest Practicable Date, according to Frost & Sullivan.
Key players in the global CDDCI DTx market (outside China) include at least two players
that offer at least three FDA-approved CDDCI DTx products. In China, a total of
approximately 25 CDDCI DTx products by at least 22 players, including our Company, have
been approved by the NMPA or its local counterparts, and at least ten CDDCI DTx products
by at least ten players are currently in the process of clinical trials and obtaining relevant
medical device registration certificates, as of the Latest Practicable Date according to Frost &
Sullivan.
RESEARCH AND DEVELOPMENT
We focus our R&D efforts on developing innovative cognitive impairment medical
technologies and solutions to assess and intervene in patients’ cognitive impairment caused by
a variety of diseases. We have devoted significant resources to building up our R&D
capabilities and technological infrastructure, enabling us to stay abreast of the latest
technology trend in the DTx industry, provide clinically advanced new products and enhance
the efficacy, ease of use, safety and reliability of our products, as well as expand their
applications, as appropriate.
As a result of our investment in our R&D capabilities, we have independently developed
critical components of the System including the underlying AI models that power the System
comprising (i) the adaptive collaborative intervention model, which combines different AI
models to give optimal treatment recommendations for patients and is designed to ensure that
the training content stimulates the appropriate neural networks; and (ii) the large language
model, which is designed to perform semantic analysis and response interpretation to allow the
System to better understand patient input, and is the result of our adaptation of an open-source
large language model. We are also independently developing our multimodal cognitive
computing model, which uses various data such as a patient’s speech, movement, and
appearance to understand cognitive impairments and improve diagnosis and our multimodal
affective computing model, which is designed to capture and analyze patients’ changes in
emotions and moods when responding to assessment questions or when conducting cognitive
trainings. In terms of our virtual human technology, we have independently developed the
critical technology components of speech correction, intention recognition and automated
assessment and analysis.
SUMMARY
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We are also investing in integrating new advances in AI technology with traditional
medical care, such as pursuing the multimodal cognitive computing model that are based on
task-based assessment, which requires a technology to detect abnormalities within a few
hundred milliseconds. As a result of our efforts, we have built AI-based DNN algorithms,
which enable the System to become highly self-adaptive. The DNN algorithms can identify the
most suitable training out of millions of different possible combinations, building on over 300
training modules that are designed to activate the appropriate brain regions for the best
therapeutic effect. We believe this dynamic and self-adaptive training leads to more
personalized treatment and more favorable enhancement of cognitive functions for patients
than traditional drug therapies, as measured by the MoCA scores and patients’ response time,
accuracy rate, improvement in training performance scores and length of user stay.
Virtual human technology automates patient interaction and other processes that were
traditionally performed by physicians with patients on a one-on-one basis, which enables
physicians to assess a large number of patients at once. Our virtual human technology
comprises a series of technological capabilities obtained from third parties or independently
developed by us. These capabilities include (i) speech recognition and correction; (ii) intention
recognition; and (iii) automated assessment and analysis. As a result of the abovementioned
automated processes, our virtual human technology breaks through the constraints of
traditional clinical assessment standards such as the MMSE and MoCA. These traditional
standards typically require medical professionals to personally conduct one-on-one
assessments, which lack efficiency as medical professionals can only ask, record and explain
assessment questions and responses one patient at a time. In terms of virtual human technology,
we have developed the key operative technology components of the virtual human technology,
namely speech correction, intention recognition and automated assessment and analysis
technologies.
These R&D efforts also help us maintain the advantages of the System and facilitate the
development of other products and product candidates. In particular, these efforts (i) will
enable us to expand the use of the System to other indications, thereby increasing the versatility
of the System compared to other cognitive DTx products; and (ii) have the potential to improve
the user experience of our products by facilitating more genuine human-machine interactions,
more accurate assessment and more personalized intervention, thereby helping us to maintain
the System’s advantage and facilitate further expansion of our product pipelines.
Our exceptional R&D capability has earned the recognition of various industry
authorities. For example, in January 2024, the Chinese Medical Association ( ʕശᔼኪึ)
awarded us the 2023 Chinese Medical Science and Technology Prize-First Place (2023 ϋʕശ
Ҧᆤɓഃᆤ) a prestigious award that recognizes advances in various categories of
medical science and technology for innovation related to our System. For a list of our other
awards, see “Business—Awards and Recognitions.”
SUMMARY
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SALES AND MARKETING
We had commercialized our System for eight indications and obtained regulatory
approvals for three additional products as of the Latest Practicable Date. For details of our
commercialized products, see “Business—Our Product Pipeline.”
Our Marketing Model
We focus our selling and distribution efforts on establishing relationships with hospitals,
which were our primary customers during the Track Record Period. We seek to raise the profile
of our technologies and products in the medical community and encourage their adoption,
primarily through (i) collaborations with top hospitals and research institutions; (ii)
collaborations with key opinion leader(s) (the “ KOL(s) ”); (iii) regular organization and
participation in various academic conferences and (iv) promotional efforts to individual
patients who have experienced our products in hospitals and may wish to continue purchasing
our products for use in their homes. We did not engage distributors for the selling and
distributions of our services and products during the Track Record Period. For additional
details of our marketing model, see “Business—Sales and Marketing—Our Marketing Model.”
Pricing
The prices we charge hospitals for provision of the System integral software solutions in
hospitals are primarily determined by the pricing based on negotiations between the hospitals
and us with reference to the relevant provincial health insurance reimbursement lists. We
invoice the hospitals periodically based on the number of times our products are used by these
hospitals to assess and treat patients during the period. As of the Latest Practicable Date, our
System had been included in the health insurance reimbursement lists in 30 provinces in China.
For patients who purchase our System integral software solutions out of hospitals, we charge
a subscription fee which enables them to access and train with our System and receive related
support services for a certain period of time from the comfort of their own homes. As of the
Latest Practicable Date, the price for cognitive training in hospitals ranges from approximately
RMB10.0 to RMB930.0 per session, depending on the training content and number of training
sessions actually received by the patient. The prices for out-of-hospital subscription range from
approximately RMB480.0 to RMB5,600.0 with subscription periods of one month to one year.
For our research projects services, we charge our customers on a cost-plus basis, taking into
account the amount of staff resources and other costs of providing data analytics and system
development services, plus a margin determined on an individual basis depending on
characteristics of each project, such as (i) the degree to which our customers rely on our System
to conduct research projects; (ii) the level of labor intensity of a project; and (iii) case-by-case
negotiations with customers. Due to the tailored nature of research project services, the price
we charge for research project services can range from approximately RMB50,000 to RMB10.0
million. For our sale of integrated equipment and user accounts, the typical selling price for
each equipment alone was approximately RMB3,000, and the typical selling price for each user
account is approximately RMB1,000, which is primarily determined by costs plus a reasonable
margin acceptable to customers. For our training facilitation service, we charge approximately
RMB2,000 to RMB3,000 service fee per attendee based on the type of training attendees when
they sign up for the training.
SUMMARY
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CUSTOMERS
Our customers primarily include (i) hospitals from which we generate revenue for
provision of the System integral software solutions in hospitals; (ii) individual patients from
whom we generate revenue for provision of the System integral software solutions out of
hospitals; and (iii) hospitals, universities, and other research institutions from which we
generate research project revenue. See “Financial Information—Description of Selected
Components of Statements of Profit or Loss—Revenue” for more details. As of the Latest
Practicable Date, we had generated sales revenue for the System from 186 hospitals. The total
revenue generated from our top five customers was RMB1.6 million, RMB8.3 million,
RMB50.8 million, and RMB28.9 million in 2021, 2022, 2023, and the six months ended June
30, 2024, respectively, accounting for 70.1%, 73.1%, 75.6%, and 55.6%, respectively, of our
total revenue during the same periods. Revenue from our largest customer was RMB0.8
million, RMB4.4 million, RMB26.8 million, and RMB14.5 million in 2021, 2022, 2023, and
the six months ended June 30, 2024, respectively, accounting for 35.5%, 39.1%, 39.9%, and
28.0%, respectively, of our total revenue during the same periods.
SUPPLIERS
Our major suppliers primarily provide us (i) certain research and development services;
(ii) operational support provided to cognitive centers on our behalf; (iii) suppliers of certain
hardware on which our products run; and (iv) marketing and promotion service providers. Our
suppliers are primarily located in China. We have established stable relationships with many
of our key suppliers.
The total purchases from our top five suppliers were RMB36.3 million, RMB13.8 million,
RMB39.2 million, and RMB30.2 million in 2021, 2022, 2023, and the six months ended June
30, 2024, respectively, accounting for 80.3%, 46.4%, 43.9%, and 55.5%, respectively, of our
total purchases during the same periods. Purchases from our largest supplier were RMB15.0
million, RMB3.8 million, RMB16.7 million, and RMB14.9 million in 2021, 2022, 2023, and
the six months ended June 30, 2024, respectively, accounting for 33.2%, 12.7%, 18.7%, and
27.4%, respectively, of our total purchases during the same periods.
MANUFACTURING
We have third-party vendors who manufacture the hardware on which our products run.
We do not own or operate any manufacturing facilities.
SUMMARY
–1 9–


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INTELLECTUAL PROPERTY
As of the Latest Practicable Date, we had 183 registered trademarks, 63 granted patents,
78 registered software copyrights and filed 136 patent applications in China, as well as four
pending patent applications overseas.
As of the Latest Practicable Date, in relation to the System, we had 30 granted patents and
38 filed patent applications. Our Directors believe that such patent and patent applications have
covered all the key characteristics of the System and the possibilities of us failing to operate
and commercialize the System in China due to any objection or claim from other market
players concerning similar technologies or features underlying their registered patents or patent
applications is remote. As of the Latest Practicable Date, to our best knowledge, there was no
pending opposition by any third party against, nor any other circumstances which has any
material adverse effect on, our patent applications filed in China.
OUR CONTROLLING SHAREHOLDERS
Immediately following the completion of the Share Subdivision and the Global Offering
(on the basis that all the Preferred Shares are converted into Shares on a one-to-one basis and
assuming that the Over-allotment Option is not exercised), Mr. Tan and Dr. Wang, acting in
concert pursuant to the Offshore AIC Agreement, will, together with their respective close
associates, namely ZTan Limited, Wispirits Limited, Wiseforward Limited and Neurobright
Limited, control the voting rights of approximately 44.11% of the total issued share capital of
our Company, and thus are our Controlling Shareholders. For details of the control of voting
rights in our Company by each member of the Controlling Shareholders, see the section headed
“Relationship with our Controlling Shareholders”.
For the background of our Controlling Shareholders, see the sections headed “Directors
and Senior Management” and “History, Reorganization and Corporate Structure”.
Offshore AIC Agreement
Pursuant to the Offshore AIC Agreement, and not taking into account the voting rights of
the Proxy Grantor entrusted through the V oting Proxy Agreement, Mr. Tan and Dr. Wang will
together control the voting rights of approximately 36.28% of the total issued share capital of
our Company, being the aggregate voting rights controlled by the Offshore AIC Parties
immediately after the completion of the Share Subdivision and the Global Offering (on the
basis that all the Preferred Shares are converted into Shares on a one-to-one basis and assuming
the Over-allotment Option is not exercised). For the details of the Offshore AIC Agreement, see
the section headed “History, Reorganization and Corporate Structure — Acting in Concert
Arrangements — Offshore AIC Agreement.”
SUMMARY
–2 0–


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Voting Proxy Agreement
Following the initial investment in our Group by the onshore affiliate of the Proxy
Grantor prior to the Reorganization, and taking into account the increase in the value of its
investment thereafter attributable to the sustained business development of the Group, the
Proxy Grantor, being Healthblooming Limited, has developed confidence in the management
of the Group under the supervision of Mr. Tan. Accordingly, to (i) further affirm the Proxy
Grantor’s support and faith in the commercial direction and guidance of Mr. Tan to act in a
manner that is aligned with the interests of our Group (including attaining our long-term
business prospects and strategic objectives) and our Shareholders as a whole; (ii) reflect the
importance of Mr. Tan’s vision and leadership in our Group’s continued growth; and (iii) enable
Mr. Tan to further consolidate his control in our Group and continue to drive the Group’s
development, the Proxy Grantor entered into the V oting Proxy Agreement dated August 6,
2023, with Mr. Tan. Pursuant to the V oting Proxy Agreement dated August 6, 2023, Mr. Tan is
entitled to exercise, in his sole discretion, all rights as the Shareholder of our Company on
behalf of the Proxy Grantor, in relation to the Shares representing approximately 7.83% of the
total issued share capital of our Company held by the Proxy Grantor immediately after the
completion of the Share Subdivision and the Global Offering (on the basis that all the Preferred
Shares are converted into Shares on a one-to-one basis and assuming the Over-allotment
Option is not exercised), according to the applicable laws and rules with respect to corporate
governance, including but not limited to the voting rights of Shareholders at shareholder
meetings.
The V oting Proxy Agreement took immediate effect upon the date thereof and shall
continue in force so long as the Proxy Grantor holds any Share in our Company subject to the
V oting Proxy Agreement.
As a result of the arrangements set out above, Mr. Tan and Dr. Wang are entitled to control
approximately 7.83% in aggregate of the voting rights of our Company, being the aggregate
voting rights held by the Proxy Grantor, immediately after the completion of the Share
Subdivision and the Global Offering (on the basis that all the Preferred Shares are converted
into Shares on a one-to-one basis and assuming the Over-allotment Option is not exercised).
OUR PRE-IPO INVESTORS
Since the establishment of our Group, we have entered into several rounds of financing
agreements with our Pre-IPO Investors, which include professional investors principally
engaged in equity investments in the healthcare sector. Among our Pre-IPO Investors, Northern
Light Strategic Fund IV L.P ., Northern Light V enture Fund IV L.P . and Northern Light Partners
Fund IV L.P . are Sophisticated Investors having made meaningful third-party investment in our
Company. For further details of the identity and background of our Pre-IPO Investors, and the
principal terms of the Pre-IPO Investments, see the section headed “History, Reorganization
and Corporate Structure — Pre-IPO Investments.”
SUMMARY
–2 1–


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SUMMARY OF KEY FINANCIAL INFORMATION
This summary historical data of financial information set forth below have been derived
from, and should be read in conjunction with, our consolidated financial statements, including
the accompanying notes, set forth in the Accountants’ Report set out in Appendix I to this
Prospectus, as well as the information set forth in “Financial Information” of this Prospectus.
Our financial information was prepared in accordance with IFRS.
Description of Selected Components of Statements of Profit or Loss
The following table sets forth our consolidated statements of profit or loss and other
comprehensive income with line items in absolute amounts and as percentages of our revenue
for the periods indicated, which are derived from our consolidated statements of profit or loss
and other comprehensive income set out in the Accountants’ Report included in Appendix I to
this Prospectus:
For the year
ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 2,299 11,291 67,200 24,412 51,887
Cost of sales (995) (7,994) (35,136) (12,309) (27,367)
Gross profit 1,304 3,297 32,064 12,103 24,520
Other income 1,478 3,915 2,079 1,692 582
Other gains and losses, net (3) 3,098 2,318 2,139 2,135
Fair value loss of financial
liabilities at fair value through
profit or loss (“FVTPL”) (623,764) (385,886) (165,216) (163,543) (243)
Impairment loss under expected
credit loss (“ECL”) model, net
of reversal (13) (50) (848) (248) (4,142)
Selling and distribution expenses (10,813) (11,928) (38,399) (17,024) (25,376)
Administrative expenses (26,782) (27,762) (54,398) (15,047) (28,138)
Research and development
expenses (32,760) (67,627) (90,733) (34,371) (64,231)
Finance costs (6,391) (19,223) (20,216) (9,962) (10,904)
Listing expenses – – (25,767) (10,309) (8,592)
Other expenses (94) (295) – – –
Loss before tax (697,838) (502,461) (359,116) (234,570) (114,389)
Income tax expense –––––
Loss and total comprehensive
expense for the year/period (697,838) (502,461) (359,116) (234,570) (114,389)
(Loss) profit for the year/period
attributable to:
Owners of the Company (697,837) (502,452) (359,083) (234,597) (114,328)
Non-controlling interests (1) (9) (33) 27 (61)
SUMMARY
–2 2–


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Non-IFRS Measures
To supplement our consolidated statements of profit or loss and other comprehensive
income, which are presented in accordance with IFRS, we also use adjusted net loss (non-IFRS
measure) as an additional financial measure, which is not required by, or presented in
accordance with, IFRS. We believe this non-IFRS measure facilitates comparisons of operating
performance from period to period and company to company by eliminating potential impacts
of certain items. We believe this measure provides useful information to investors and others
in understanding and evaluating our consolidated results of operations in the same manner as
they help our management in assessing our results of operations. The fair value loss of financial
liabilities at FVTPL is adjusted because it will cease upon the completion of this Global
Offering; share-based payments are adjusted because they are non-cash in nature. However, our
non-IFRS measure does not have a standardized meaning prescribed by IFRS, and our adjusted
net loss (non-IFRS measure) may not be comparable to similarly titled measures presented by
other companies. The use of this non-IFRS measure has limitations as an analytical tool, and
you should not consider it in isolation from, or as a substitute for an analysis of, our results
of operations or financial condition as reported under IFRS.
We define adjusted net loss (non-IFRS measure) as loss and total comprehensive expense
for the year adjusted by adding back fair value loss of financial liabilities at FVTPL and
share-based payments, both being non-cash in nature.
The following table reconciles adjusted net loss (non-IFRS measure) for the years/periods
indicated to the nearest financial measure calculated and presented in accordance with IFRS,
which is loss and total comprehensive expense for the year:
For the year
ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Reconciliation of loss and total
comprehensive expense for
the year
to adjusted net loss
(non-IFRS measure)
Loss and total comprehensive
expense for the year/period (697,838) (502,461) (359,116) (234,570) (114,389)
Add:
Fair value loss of financial
liabilities at FVTPL 623,764 385,886 165,216 163,543 243
Share-based payments 19,370 – 44,873 – 35,304
Adjusted net loss (non-IFRS
measure) (54,704) (116,575) (149,027) (71,027) (78,842)
SUMMARY
–2 3–


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The following table sets forth a breakdown of our revenue, gross profit and gross margin by types of solutions and services during the periods
indicated.
For the year ended December 31, For the six months ended June 30,
2021 2022 2023 2023 2024
Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin
RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 %
(unaudited)
Provision of the System integral software solutions
In hospitals 967 528 54.6 4,075 686 16.8 41,224 20,399 49.5 15,216 7,198 47.3 35,282 16,495 46.8
Out of hospitals 240 110 45.8 1,095 470 42.9 5,723 3,333 58.2 1,901 1,133 59.6 10,544 6,711 63.6
Subtotal 1,207 638 52.9 5,170 1,156 22.4 46,947 23,732 50.6 17,117 8,331 48.7 45,826 23,206 50.6
Research projects 413 37 9.0 5,993 2,035 34.0 14,290 4,784 33.5 5,119 2,563 50.1 5,914 1,167 19.7
Training facilitation
service –––––– 5,085 2,891 56.9 1,324 578 43.7 53 – –
Others 679 629 92.6 128 106 82.8 878 657 74.8 852 631 74.1 94 147 100.0
Total/overall 2,299 1,304 56.7 11,291 3,297 29.2 67,200 32,064 47.7 24,412 12,103 49.6 51,887 24,520 47.3
SUMMARY
–2 4–


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The increase in our revenue and gross profit from 2021 to 2022 was primarily due to (i)
an increase in the number of hospitals to which we provided the System integral software
solutions; (ii) an increase in the number of times the System integral software solution was
utilized by patients in hospitals and out of hospitals; (iii) an increase in the number of projects
and project sizes we undertook. The decrease in our gross profit margin from 2021 to 2022 was
primarily due to an one-time retrospective fee rate adjustment with respect to a service provider
in September 2022 from floating rates (based on sales volume) to a fixed rate at the high end
of the previously floating rate range, which contributed to the higher fee rate and the resulting
lower gross profit margin in 2022.
The increases in our revenue and gross profit from 2022 to 2023 are primarily due to (i)
an increase in the number of hospitals to which we provided the System integral software
solutions, as well as the number of times the System integral software solution was utilized by
patients in hospitals and out of hospitals; (ii) an increase in research projects we undertook; and
(iii) our launch of training facilitation service in 2023. The increase in our gross profit margin
from 2022 to 2023 was primarily because the above-mentioned retrospective fee rate
adjustment for periods prior to 2022 was all recorded in 2022 resulting in lower gross profit
margin in 2022.
The increase in our revenue and gross profit from the six months ended June 30, 2023 to
the six months ended June 30, 2024 was primarily due to (i) an increase in the number of
hospitals to which we provided the System integral software solutions; (ii) an increase in the
number of times the System integral software solution was utilized by patients in hospitals and
out of hospitals; and (iii) an increase in the average project sizes we undertook. The decrease
in gross profit margin during the same periods was primarily due to a decrease in the gross
profit margin of our research projects services.
See “Financial Information—Period-to-Period Comparison” for an explanation of
fluctuations of our revenue, gross profit and gross margin, among other items.
Our loss and total comprehensive expense for the year decreased from RMB697.8 million
in 2021 to RMB502.5 million in 2022, primarily due to an RMB237.9 million decrease in fair
value loss of financial liabilities at FVTPL, partially offset by an increase in operating
expenses and finance costs as we expanded the scale of our operations. Our loss and total
comprehensive expense for the year decreased from RMB502.5 million in 2022 to RMB359.1
million in 2023, primarily due to an RMB220.7 million decrease in fair value loss of financial
liabilities at FVTPL, partially offset by an increase in operating expenses and finance costs as
we expanded the scale of our operations. Our loss and total comprehensive expense for the
period decreased from RMB234.6 million in the six months ended June 30, 2023 to RMB114.4
million in the six months ended June 30, 2024, primarily due to (i) an RMB163.2 million
decrease in fair value loss of financial liabilities at FVTPL; and (ii) an RMB12.4 million
increase in gross profit, driven by our expanded business scale; partially offset by an increase
in operating expenses and finance costs as we expanded the scale of our operations. We expect
to remain at a net loss position in 2024, primarily due to expected significant spending on
operating expenses in order to carry out research and development of our products for more
indications, to establish sales relationship with more hospitals and expand sales volume, to
manage our growth, and to complete this Global Offering.
SUMMARY
–2 5–


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Description of Selected Components of Statements of Financial Position
The following table sets forth selected information from our consolidated statements of
financial position as of the dates indicated, which have been extracted from the Accountants’
Report set out in Appendix I to this Prospectus:
As of December 31,
As of
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Total non-current assets 30,598 110,914 92,130 39,072
Total current assets 340,700 307,174 302,724 279,855
Total assets 371,298 418,088 394,854 318,927
Total current liabilities 176,939 35,621 392,844 391,120
Net current
assets/(liabilities) 163,761 271,553 (90,120) (111,265)
Total non-current liabilities 875,641 1,476,710 334,191 339,073
Total liabilities 1,052,580 1,512,331 727,035 730,193
Net liabilities (681,282) (1,094,243) (332,181) (411,266)
Non-controlling interest (1) (10) (43) (104)
The following table sets forth our current assets and current liabilities as of the dates
indicated:
As of
December 31,
As of
June 30,
2024
As of
October 31,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current assets
Contract costs 457 251 4,094 884 1,148
Trade and other receivables
and prepayments 16,474 19,674 76,053 103,644 124,259
Amounts due from related
parties 29 29 – – –
Financial assets at FVTPL – 228,789 – – –
Restricted bank deposit – – 165,000 119,421 69,471
Term deposits – 30,180 – – –
Bank balances and cash 323,740 28,251 57,577 55,906 36,172
Total current assets 340,700 307,174 302,724 279,855 231,050
SUMMARY
–2 6–


--- page 36 ---
As of
December 31,
As of
June 30,
2024
As of
October 31,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current liabilities
Trade and other payables 13,974 17,746 43,261 46,842 47,404
Contract liabilities 450 1,023 3,804 5,837 8,118
Amounts due to related
parties 2,364 2,364 – – –
Lease liabilities 6,686 7,523 7,927 5,534 9,675
Bank and other borrowings – 6,965 22,083 16,127 7,125
Deferred income – – 225 993 1,563
Financial liabilities at
FVTPL 153,465 – 315,544 315,787 275,906
Total current liabilities 176,939 35,621 392,844 391,120 349,791
Net current
assets/(liabilities) 163,761 271,553 (90,120) (111,265) (118,741)
Our net current assets increased from RMB163.8 million as of December 31, 2021 to
RMB271.6 million as of December 31, 2022, primarily due to (i) an RMB228.8 million
increase in financial assets at FVTPL; (ii) an RMB153.5 million decrease of financial liabilities
at FVTPL; and (iii) an RMB30.2 million increase in term deposits; partially offset by (i) an
RMB295.5 million decrease in bank balances and cash; and (ii) an RMB7.0 million increase
in other borrowing.
Our net current assets of RMB271.6 million as of December 31, 2022 changed to net
current liabilities of RMB90.1 million as of December 31, 2023. The change was primarily due
to (i) an RMB315.5 million increase in current portion of financial liabilities at FVTPL in
relation to the issuance of Series A-1 Preferred Shares in July 2023 in exchange for termination
of preferential rights of certain investor; and (ii) an RMB228.8 million decrease in financial
assets at FVTPL resulting from our redemption of financial products; partially offset by an
RMB165.0 million increase in restricted bank deposits.
Our net current liabilities increased to RMB111.3 million as of June 30, 2024 and further
increased to RMB118.7 million as of October 31, 2024. The change was primarily due to
decreases in our restricted bank deposit and bank balances and cash, partially offset by an
increase in trade and other receivables and prepayments. We expect that the automatic
conversion of financial liabilities into ordinary shares at Listing and the proceeds from this
Global Offering will turn our net current liabilities position into net current asset position.
SUMMARY
–2 7–


--- page 37 ---
Net Liabilities
Our net liabilities increased from RMB681.3 million as of December 31, 2021 to
RMB1,094.2 million as of December 31, 2022, primarily due to an RMB502.5 million loss and
total comprehensive expense for the year in 2022, partially offset by an RMB89.5 million
capital injection from our financing transactions.
Our net liabilities decreased from RMB1,094.2 million as of December 31, 2022 to
RMB332.2 million as of December 31, 2023, primarily due to (i) an RMB1,012.3 million
reclassification from financial liabilities at FVTPL to equity when preferential rights for
certain pre-IPO investors were terminated; and (ii) an RMB64.0 million capital injection from
our financing transactions in 2023, which is partially offset by an RMB359.1 million in loss
and total comprehensive expense for the year.
Our net liabilities increased from RMB332.2 million as of December 31, 2023 to
RMB411.3 million as of June 30, 2024, primarily due to an RMB114.4 million loss and total
comprehensive expense for the period, partially offset by an RMB35.3 million recognition of
equity settled shared-based payments.
Upon Listing, our preferred shares will be re-designated from liabilities to equity as a
result of the automatic conversion into ordinary shares at Listing. Further, we expect this
Global Offering (including the proceeds received therefrom and equity issued) to contribute to
the conversion from net liabilities position into net assets position.
Selected Data of Consolidated Statements of Cash Flows
The following table sets forth selected data from our consolidated statements of our cash
flows for the periods indicated:
For the year
ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash used in operating
activities (49,206) (100,680) (136,872) (66,006) (75,527)
Net cash (used in)/from investing
activities (21,476) (334,462) 102,553 11,166 86,002
Net cash from/(used in)
financing activities 393,609 139,647 63,527 57,199 (12,190)
Net increase/(decrease) in cash
and cash equivalents 322,927 (295,495) 29,208 2,359 (1,715)
Cash and cash equivalents at the
beginning of the year/period 813 323,740 28,251 28,251 57,577
Cash and cash equivalents at the
end of the year/period 323,740 28,251 57,577 30,871 55,906
SUMMARY
–2 8–


--- page 38 ---
In the six months ended June 30, 2024, our net cash used in operating activities was
RMB75.5 million, which was primarily attributable to loss before tax of RMB114.4 million,
adjusted for non-cash and non-operating items. Positive adjustments for non-cash and
non-operating items primarily include recognition of equity settled share-based payments of
RMB35.3 million; finance costs of RMB10.9 million, and depreciation of property, plant and
equipment of RMB8.6 million; and negative adjustments for non-cash and non-operating items
primarily include gain on re-estimated repayments of long-term bond of RMB2.2 million, and
interest income of RMB0.4 million. The amount was then adjusted by changes in working
capital, primarily including increase in trade and other receivables and prepayments of
RMB30.1 million and increase in trade and other payables of RMB1.3 million.
In 2023, our net cash used in operating activities was RMB136.9 million, which was
primarily attributable to loss before tax of RMB359.1 million, adjusted for non-cash and
non-operating items. Positive adjustments for non-cash and non-operating items primarily
include fair value loss of financial liabilities at FVTPL of RMB165.2 million, recognition of
equity-settled share-based payments of RMB44.9 million, finance costs of RMB20.2 million,
depreciation of property, plant and equipment of RMB13.8 million and depreciation of
right-of-use assets of RMB7.0 million; and negative adjustments for non-cash and non-
operating items include fair value gains on financial assets at FVTPL of RMB2.7 million and
interest income of RMB2.1 million. The amount was then adjusted by changes in working
capital, primarily including increase in trade and other receivables and prepayments of
RMB48.0 million and an increase in trade and other payables of RMB23.4 million.
In 2022, our net cash used in operating activities was RMB100.7 million, which was
primarily attributable to loss before tax of RMB502.5 million, adjusted for non-cash and
non-operating item. Positive adjustments for non-cash and non-operating items primarily
include fair value loss of financial liabilities at FVTPL of RMB385.9 million, finance costs of
RMB19.2 million, depreciation of right-of-use assets of RMB6.6 million, and depreciation of
property, plant and equipment of RMB5.7 million; and negative adjustments for non-cash and
non-operating items include interest income of RMB3.9 million and fair value gains on
financial assets at FVTPL of RMB3.2 million. The amount was then adjusted by changes in
working capital, primarily including increase in trade and other receivables and prepayments
of RMB11.8 million and increase in trade and other payables of RMB2.1 million.
In 2021, our net cash used in operating activities was RMB49.2 million, which was
primarily attributable to loss before tax of RMB697.8 million, adjusted for non-cash and
non-operating item. Positive adjustments for non-cash and non-operating items primarily
include fair value loss of financial liabilities at FVTPL of RMB623.8 million, recognition of
equity-settled share-based payment of RMB19.4 million, and finance costs of RMB6.4 million
and negative adjustments for non-cash and non-operating items include interest income of
RMB1.3 million. The amount was then adjusted by changes in working capital, primarily
including increase in trade and other receivables and prepayments of RMB6.0 million and
increase in trade and other payables of RMB4.9 million.
SUMMARY
–2 9–


--- page 39 ---
WORKING CAPITAL
The Directors are of the opinion that, taking into account of the following financial
resources available to us described below, we have sufficient working capital to cover at least
125% of our costs, including R&D expenses, selling and distribution expenses, administrative
expenses, finance costs and other expenses for at least the next 12 months from the date of this
Prospectus:
 our future operating cash flows;
 our cash and cash equivalents as of the Latest Practicable Date;
 available equity and debt financing; and
 the estimated net proceeds from the Global Offering.
Our cash burn rate refers to the average monthly (i) net cash used in operating activities,
which includes research and development expenses, and (ii) capital expenditures. We had bank
balances and cash of RMB36.2 million as of October 31, 2024. We estimate that we will
receive net proceeds of approximately HK$501.3 million after deducting the underwriting fees
and expenses payable by us in the Global Offering, assuming no Over-allotment Option is
exercised and assuming an Offer Price of HK$3.22 per Offer Share. Assuming an average cash
burn rate going forward of one and half times the level for the first half of 2024, we estimate
that our cash and cash equivalents, the current portion of restricted bank deposits and the
current portion of financial assets as of October 31, 2024 will be able to maintain our financial
viability for at least six months or, if we also take into account the estimated net proceeds from
the Listing, for at least 29 months. Pursuant to the terms of the restricted bank deposit account,
we are allowed to withdraw proceeds, subject to approvals by the Shaoxing Binhai New Area
Biomedical Industry Equity Investment Fund Partnership (LP) (ٰ
ΥྫΆุ(Υྫ)) (the “ Shaoxing Fund ”). During the Track Record Period, the
Shaoxing Fund routinely granted such approvals whenever we raised withdrawal requests. As
such, we included the restricted bank deposit in our calculation above. If restricted bank
deposits are not included, our Directors can still confirm that we have sufficient working
capital to cover at least 125% of our costs, including R&D expenses, selling and distribution
expenses, administrative expenses, finance costs and other expenses for at least the next 12
months from the date of this Prospectus. We will continue to monitor our cash flows from
operations closely and expect to raise our next round of financing.
SUMMARY
–3 0–


--- page 40 ---
KEY FINANCIAL RATIOS
The following table sets forth the key financial ratios of our Group for the periods or as
of the dates indicated:
For the year ended/
As of December 31,
For the
six months
ended/As of
June 30,
20242021 2022 2023
Gross margin 56.7% 29.2% 47.7% 47.3%
Current ratio (1) 1.9 8.6 0.8 0.7
Average trade payables
turnover days (2) 29.1 43.8 52.0 52.3
Average trade receivables
turnover days (3) 114.6 153.3 160.7 227.2
Notes:
(1) Current ratio equals current assets divided by current liabilities as of the end of the year/period.
(2) Trade payable turnover days for a period equals the arithmetic mean of the beginning and ending trade
payables balances divided by cost of sales for that period and multiplied by the number of days in that
period.
(3) Trade receivable turnover days for a period equals the arithmetic mean of the beginning and ending
trade receivable balances divided by revenue for that period and multiplied by the number of days in
that period.
Our gross margin was 56.7%, 29.2%, 47.7%, and 47.3% in 2021, 2022, 2023, and the six
months ended June 30, 2024, respectively. See “Financial Information—Period-to-Period
Comparison” for more details.
Our current ratio increased from 1.9 as of December 31, 2021 to 8.6 as of December 31,
2022, primarily due to the significant decrease of the current portion of the financial liabilities
at FVTPL. Our current ratio decreased significantly from 8.6 as of December 31, 2022 to 0.8
as of December 31, 2023 and remained relatively stable at 0.7 as of June 30, 2024, primarily
due to the significant increase of the current portion of the financial liabilities at FVTPL. See
“Financial Information—Net Current Assets/(Liabilities)” for further detailed explanations on
current assets and current liabilities.
The average trade payables turnover days were 29.1 days in 2021, 43.8 days in 2022 and
52.0 days in 2023. The increase in average trade payables turnover days from 2021 to 2023 was
primarily due to longer payment settlement periods with respect to suppliers. The average trade
payables turnover days remained relatively stable at 52.3 days for the six months ended June
30, 2024.
SUMMARY
–3 1–


--- page 41 ---
The average trade receivables turnover days were 114.6 days in 2021, 153.3 days in 2022,
160.7 days in 2023 and 227.2 days for the six months ended June 30, 2024. The increase in
average trade receivables turnover days from 2021 to the six months ended June 30, 2024 was
primarily due to the significant increase in trade receivables as we began serving more
cognitive centers and delayed payments from scientific research projects.
SUBSEQUENT EVENTS
On December 24, 2024, our Shareholders resolved to, among other things, conduct the
Share Subdivision pursuant to which each share in our then issued and unissued share capital
was split into 1,000 shares of the corresponding class with nominal value of US$0.0000001
each effective upon the conditions of the Global Offering being fulfilled. Our Shareholders also
resolved to, immediately upon completion of the Share Subdivision, automatically convert
each issued and unissued Series A Preferred Shares into ordinary Shares on a one-to-one basis
by way of re-designation upon Listing.
GLOBAL OFFERING STATISTICS
The Global Offering by us consists of:
 the offer by us of initially 18,112,000 Hong Kong Offer Shares, for subscription by
the public in Hong Kong, referred to in this Prospectus as the Hong Kong Public
Offering; and
 the offer by us of initially 163,000,000 International Offer Shares, outside the U.S.
(including to professional, institutional and other investors within Hong Kong) in
offshore transactions in reliance on Regulation S, referred to in this Prospectus as
the International Offering.
Based on the
Offer Price of
HK$3.22
Market capitalization of our Shares (1) HK$4,077.4
million
Unaudited pro forma adjusted consolidated net tangible assets of
our Group attributable to owners of our Company as of June 30,
2024
(2)
HK$89.8
million
Unaudited pro forma adjusted consolidated net tangible assets per
Share (2)
HK$0.09
Notes:
* All statistics in this table are on the assumption that the Over-allotment Option is not exercised.
SUMMARY
–3 2–


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(1) The calculation of market capitalization is based on 1,266,278,000 Shares expected to be in issue taking
into account of the Share Subdivision and immediately upon completion of the Global Offering
(assuming the Over-allotment Option is not exercised). The difference of 181,044,000 between
1,266,278,000 and 1,085,234,000 (being the number of Shares outstanding immediately following
completion of the Global Offering, which represent the number of Ordinary Shares and Series A-2
Preferred Shares of our Company issued as of June 30, 2024 assuming that Share Subdivision had been
completed in exchange of the paid-in capital of BrainAurora Zhejiang as of June 30, 2024 and
181,112,000 new Shares issued under the Global Offering) is (i) 95,878,000 shares of Series A-1
Preferred Shares which is recognized as financial liabilities at FVTPL as of June 30, 2024; and (ii)
85,166,000 shares issued to Wisdomspirit Holding Limited which is set up by our Company to facilitate
the administration of the Pre-IPO Share Award Scheme and over which our Company is able to control.
(2) The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners
of our Company as of June 30, 2024 is calculated after making the adjustments referred to in Appendix
II to this Prospectus.
(3) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of
our Group attributable to owners of our Company as of June 30, 2024 to reflect any operating result
or other transactions of our Group entered into subsequent to June 30, 2024. In particular , the
unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners of
our Company as shown on page II-1 of Appendix II to the prospectus have not been adjusted to illustrate
the effect of the conversion of the Series A-1 Preferred Shares into ordinary Shares.
Had the conversion of Series A-1 Preferred Shares been assumed to take place as of June 30, 2024, the
unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners of
our Company as of June 30, 2024 would have increased by approximately RMB315,787,000, which
represents the carrying amount of Series A-1 Preferred Shares as of June 30, 2024, and the total Shares
in issue would have increased by 95,878,000 Shares to a total of 1,181,112,000 Shares in issue.
The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners
of our Company as of June 30, 2024 taking into account of the above subsequent event and the Global
Offering would be RMB0.34 per share (equivalent to HK$0.37 per Share) based on an Offer Price of
HK$3.22 per Share, assuming the amounts denominated in RMB could have been converted into HK$
at the rate of HK$1 to RMB0.9244, which was the exchange rate prevailing on December 16, 2024 with
reference to the rate published by the People’ s Bank of China.
DIVIDEND
No dividend has been proposed, paid or declared by our Company since our incorporation
till the Latest Practicable Date. We do not currently have a dividend policy.
We are a holding company incorporated in the Cayman Islands. We may need dividends
and other distributions on equity from our PRC subsidiaries to satisfy our liquidity
requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only
out of their accumulated profits, if any, determined in accordance with PRC accounting
standards and regulations. In addition, our PRC subsidiaries are required to set aside at least
10.0% of their respective accumulated profits each year, if any, to fund certain reserve funds
until the total amount set aside reaches 50.0% of their respective registered capital. Our PRC
subsidiaries may also allocate a portion of its after-tax profits based on PRC accounting
standards to employee welfare and bonus funds at their discretion. These reserves are not
distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own
behalf in the future, the instruments governing the debt may restrict their ability to pay
dividends or make other payments to us.
SUMMARY
–3 3–


--- page 43 ---
We currently expect to retain all future earnings for use in the operation and expansion
of our business and do not anticipate paying cash dividends in the foreseeable future. Any
declaration and payment as well as the amount of dividends will be subject to our constitutional
documents and the Cayman Companies Act. The declaration and payment of any dividends in
the future may be determined by our Board as it thinks fit, and will depend on a number of
factors, including our earnings, capital requirements, overall financial condition and
contractual restrictions. Our shareholders in a general meeting may approve any declaration of
dividends, which must not exceed the amount recommended by our Board. As advised by our
Cayman counsel, under the Cayman Companies Act a Cayman Islands company may pay a
dividend out of either profits or share premium account, provided that in no circumstances may
a dividend be paid if this would result in the company being unable to pay its debts as they fall
due in the ordinary course of business. In light of our accumulated losses as disclosed in this
Prospectus, it is unlikely that we will be eligible to pay a dividend out of our profits in the
foreseeable future. We may, however, pay a dividend out of our share premium account unless
the payment of such a dividend would result in our Company being unable to pay our debts as
they fall due in the ordinary course of business. There is no assurance that dividends of any
amount will be declared to be distributed in any year.
FUTURE PLANS AND USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$501.3 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, assuming no Over-allotment Option is
exercised, at the Offer Price of HK$3.22 per Share.
 approximately 40.0% of the net proceeds, or approximately HK$200.5 million, is
expected to be used for conducting further research and development activities,
advancing clinical trials for more indications, and advancing selling and distribution
activities of our Core Product, the System;
 approximately 16.5% of the net proceeds, or approximately HK$82.7 million, is
expected to be used for helping establish new cognitive centers for more hospitals
across China through which hospitals can use our products to diagnose and treat
patients with cognitive impairment and/or other disorders;
 approximately 15.0% of the net proceeds, or approximately HK$75.2 million, is
expected to be used for strengthening our capabilities in AI and related technologies;
 approximately 5.0% of the net proceeds, or approximately HK$25.1 million, is
expected to be used for accelerating the research, development and
commercialization of other product candidates in and beyond our current product
pipeline;
SUMMARY
–3 4–


--- page 44 ---
 approximately 15.0% of the net proceeds, or approximately HK$75.2 million, is
expected to be used for brain science and DTx research centers in collaboration with
academic institutions and hospitals; and
 approximately 8.5% of the net proceeds, or approximately HK$42.6 million, is
expected to be used for our working capital and other general corporate purposes.
For further details, see “Future Plans and Use of Proceeds.”
RISK FACTORS
We believe there are certain risks and uncertainties involved in our operations, some of
which are beyond our control. These risks are set out in “Risk Factors” in this Prospectus.
Some of the major risks we face include:
 Our future growth depends substantially on the successful development of our
product portfolio. If we are unable to successfully complete clinical development,
obtain regulatory approval and commercialize our product candidates, or experience
significant delays in doing so, our business and financial prospects will be
materially adversely affected.
 DTx industry is developing rapidly. If we are not able to develop and release new
products that are competitive in the market, or develop successful enhancements or
indication expansions of our System or any future products in a timely manner our
products may become obsolete and our business, operating results and financial
condition could be materially adversely affected.
 Clinical development is a lengthy, expensive and uncertain process, and
unsuccessful clinical trials or procedures relating to products and indications under
development could have a material adverse effect on our prospects, including
incurring additional costs, experiencing delays in completing, or ultimately being
unable to complete the development and commercialization of our product if clinical
trials fail to demonstrate safety and efficacy to the satisfaction of regulatory
authorities.
 Our algorithms and methodologies are complex and may contain errors or may not
operate properly, which could adversely affect our business, financial condition and
results of operations.
 Some of our current and future products may be classified or reclassified as Class
III medical devices under relevant PRC laws and regulations.
SUMMARY
–3 5–


--- page 45 ---
 We have relatively limited experience in marketing and sales of our products, and
rely on our in-house marketing force to promote our products. If we are unable to
develop and successfully maintain adequate sales and commercial distribution
capabilities, our business and results of operations could be adversely affected. If we
are unable to maintain and expand our relationships with qualified third-party
service providers, or to attract, motivate and retain a sufficient number of qualified
personnel to support our selling and distribution efforts, sales volumes or margin of
our System and other products may be adversely affected and we may be unable to
extend our market coverage and deepen our market penetration as contemplated.
 We mainly derived our revenue from services provided through our System. There
is also no assurance that we will be able to maintain our sales, which may be
adversely affected by many factors outside of our control, including downward
pricing pressure caused by changes in medical insurance coverage, binding pricing
guidance, market competition, expiration of patent protection, introduction of
substitute products marketed by our competitors, disruptions in sales, issues with
respect to product quality or severe adverse events incurred, and disputes over
intellectual property or other matters with third parties.
 The regulatory framework for DTx products is constantly evolving. Increasingly
stringent regulatory requirements could create barriers to our development and
introduction of new products. Conversely, in the event that regulatory requirements
are lowered, competitors could potentially enter the DTx market and compete
against us more easily.
 We have been in a net loss position since our inception and may continue to incur
net losses for the foreseeable future, and you may lose substantially all your
investments in us given the high risks and uncertainties associated with our business
operations and the cognitive impairment DTx industry.
 The permit, filing or other requirements of the CSRC or other PRC government
authorities in relation to our proposed listing or further capital raising activities may
be required under PRC laws. We cannot assure you that we could meet the relevant
requirements, obtain necessary permit from the relevant government authorities, or
complete such filing in a timely manner or at all.
 Our relationships with customers will be subject to applicable anti-bribery,
anti-kickback, fraud and abuse and other healthcare laws and regulations, which
could expose us to criminal sanctions, civil penalties, exclusion from government
healthcare programs, contractual damages, reputational harm and diminished profits
and future earnings.
SUMMARY
–3 6–


--- page 46 ---
LISTING-RELATED EXPENSES
The total listing expenses payable by our Company are estimated to be approximately
RMB75.7 million representing 14.0% of the total gross proceeds from the Global Offering,
assuming the Over-allotment Option is not exercised and based on an Offer Price of HK$3.22.
These Listing expenses mainly comprise legal and other professional fees paid and payable to
the professional parties, commissions payable to the Underwriters, and printing and other
expenses for their services rendered in relation to the Listing and the Global Offering.
Approximately RMB49.5 million of such listing expenses is expected to be charged to our
consolidated statements of profit or loss, and approximately RMB26.6 million of which is
expected to be deducted from equity (relating to listing expenses directly attributable to the
issue of shares). During the Track Record Period, listing expenses of RMB44.7 million were
incurred of which RMB34.4 million were charged to our consolidated statements of profit or
loss and other comprehensive income and RMB10.4 million were recognized to our
consolidated statements of financial position. We estimate that we will further incur listing
expenses of RMB31.4 million of which RMB15.1 million will be charged to our consolidated
statements of comprehensive income and RMB16.2 million is expected to be accounted for as
a deduction from equity upon completion of the Global Offering.
The following table sets forth a breakdown of the listing expenses for the Global Offering
based on the Offer Price of HK$3.22.
Listing Expenses
Based on an
Offer Price of
HK$3.22
HK$ ‘000
Non-underwriting related expenses
Legal and audit expenses 37,926
Other expenses 15,695
Underwriting related expenses 28,237
Total 81,857
During the Track Record Period, the amount of the listing expenses charged to our
consolidated statements of profit or loss was nil, nil, RMB25.8 million, RMB10.3 million and
RMB8.6 million in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024,
respectively, and the amount of the listing expenses recognized to our consolidated statements
of financial position which will be deducted in equity upon Listing was nil, nil, RMB7.7
million, RMB1.8 million and RMB2.7 million in 2021, 2022, 2023, and the six months ended
June 30, 2023 and 2024, respectively.
SUMMARY
–3 7–


--- page 47 ---
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that up to the date of this Prospectus, there has been no material
adverse change in our financial, operational or trading positions or prospects since June 30,
2024, being the end of the period reported on as set out in the Accountants’ Report included
in Appendix I to this Prospectus.
SUMMARY
–3 8–


--- page 48 ---
In this Prospectus, unless the context otherwise requires, the following terms shall
have the meanings set out below. Certain other terms are explained in the section headed
“Glossary of Technical Terms” in this Prospectus.
“510(k)” or “Section 510(k)” or
“510(k) clearance process”
Section 510(k) of the Food, Drug and Cosmetic Act
(21 CFR 807), which establishes the FDA’s premarket
notification requirements for demonstrating that a
medical device is safe and effective before it is marketed
in the United States
“Accountants’ Report” the accountants’ report prepared by Deloitte Touche
Tohmatsu, details of which are set out in Appendix I
“affiliate(s)” with respect to any specified person, any other person,
directly or indirectly, controlling or controlled by or
under direct or indirect common control with such
specified person
“AFRC” Accounting and Financial Reporting Council (ʿৌ
ਕිజ҅)
“Anding Hospital” Beijing Anding Hospital of Capital Medical University
(ᔼ৫)
“Anzhen Hospital” Beijing Anzhen Hospital of Capital Medical University
(ᔼ৫)
“Articles of Association” or
“Articles”
the third amended and restated articles of association of
our Company adopted by special resolution on December
24, 2024, with effect upon the Listing Date, a summary of
which is set out in “Summary of the Constitution of our
Company and Cayman Companies Act” in Appendix III
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Audit Committee” the audit committee of the Board
“Award(s)” an award of the Awarded Shares by the Board pursuant to
the Pre-IPO Share Award Scheme
“Awarded Share(s)” the Shares awarded by our Company pursuant to the
Pre-IPO Share Award Scheme
DEFINITIONS
–3 9–


--- page 49 ---
“Beijing Children’s Hospital” Beijing Children’s Hospital of Capital Medical
University (᙮̏ԯՅഁᔼ৫)
“Beijing Zhijingling” Beijing Zhijingling Technology Co., Ltd. (߅
ʮ̡), a limited liability company established in
the PRC on September 23, 2014 and wholly owned by
BrainAurora Zhejiang, being one of our Major
Subsidiaries
“Board,” “Board of Directors” or
“our Board”
the board of Directors
“BrainAurora Zhejiang” Zhejiang BrainAurora Medical Technology Co., Ltd. ( ए
ʮ̡), a limited liability
company established in the PRC on September 21, 2012
and directly wholly owned by WFOE, being one of our
Major Subsidiaries
“Business Day” a day on which banks in Hong Kong are generally open
for normal banking business to the public and which is
not a Saturday, Sunday or public holiday in Hong Kong
“BVI Subsidiary” BrainAurora Limited, a business company with limited
liability incorporated in the British Virgin Islands on
April 28, 2023 and directly wholly owned by our
Company
“CAGR” compound annual growth rate
“Capital Market Intermediaries”
or “capital market
intermediary(ies)” or “CMI(s)”
the capital market intermediaries participating in the
Global Offering and has the meaning ascribed thereto
under the Listing Rules
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“CEO” chief executive officer of our Company
“CFO” chief financial officer of our Company
“Changsha Zhijingling” Changsha Zhijingling Education Technology Co., Ltd.
(ʮ̡), a limited liability
company established in the PRC on August 11, 2017 and
wholly owned by BrainAurora Zhejiang, being one of our
Major Subsidiaries
DEFINITIONS
–4 0–


--- page 50 ---
“Chaoyang Hospital” Affiliated Beijing Chaoyang Hospital of Capital Medical
University (᙮̏ԯಃජᔼ৫)
“China” or “PRC” the People’s Republic of China, but for the purpose of
this Prospectus and for geographical reference only and
except where the context requires, excluding the Hong
Kong Special Administrative Region, the Macao Special
Administrative Region and the Taiwan region
“Circular 37” the Notice of the SAFE on Issues Concerning Foreign
Exchange Administration of the Overseas Investment and
Financing and the Round-Tripping Investment Made by
Domestic Residents through Special-Purpose Companies
(ʮ̡ྤ̮
)
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong) as amended, supplemented or otherwise modified
from time to time
“Companies Act” or “Cayman
Companies Act”
the Companies Act, Cap 22 (Act 3 of 1961, as
consolidated and revised) of the Cayman Islands, as
amended, supplemented or otherwise modified from time
to time
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong) as amended, supplemented or otherwise
modified from time to time
“Company,” “our Company” or
“the Company”
BrainAurora Medical Technology Limited ( ໘ਗ฽Έᔼᐕ
ʮ̡), an exempted company with limited
liability incorporated under the laws of the Cayman
Islands on April 25, 2023
“Compliance Adviser” SPDB International Capital Limited, our compliance
adviser
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“connected transaction(s)” has the meaning ascribed thereto under the Listing Rules
DEFINITIONS
–4 1–


--- page 51 ---
“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rules and
unless the context otherwise requires, refers to Mr. Tan,
Dr. Wang, together with their respective close associates,
namely ZTan Limited, Wispirits Limited, Wiseforward
Limited and Neurobright Limited, as further detailed in
the section headed “Relationship with Our Controlling
Shareholders”
“Core Product” has the meaning ascribed thereto under Chapter 18A of
the Listing Rules, and for the Company, means the
System
“CSRC” the China Securities Regulatory Commission
“De novo” or “De Novo
Classification Request”
a process which allows a company to request that a new
product classification be established without the
company first submitting a 510(k) notification for the
device
“Director(s)” the directors of our Company
“Dr. Wang” Dr. Wang Xiaoyi (׋an executive Director, CEO,
chief research officer of the Company and a Controlling
Shareholder
“EIT” the PRC enterprise income tax
“EIT Law” the Enterprise Income Tax Law of the PRC ( ʕശɛ͏
), as amended, supplemented or
otherwise modified from time to time
“EUA” or “Emergency Use
Authorization”
FDA approval under section 564 of the Federal Food,
Drug, and Cosmetic Act of unapproved medical products
or unapproved uses of approved medical products for
emergency use to diagnose, treat, or prevent serious or
life-threatening diseases or conditions caused by
chemical, biological, radiological, or nuclear threat
agents
“Extreme Condition(s)” extreme conditions as announced by the government of
Hong Kong
“FDA” the Food and Drug Administration of the U.S.
DEFINITIONS
–4 2–


--- page 52 ---
“FINI” “Fast Interface for New Issuance”, the online platform
operated by HKSCC that is mandatory for admission to
trading and, where applicable, the collection and
processing of specified information on subscription in
and settlement for the Listing
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., a
global market research and consulting company, which is
an Independent Third Party
“Frost & Sullivan Report” an independent market research report commissioned by
us and prepared by Frost & Sullivan for the purpose of
this Prospectus
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group,” “our Group, “our,”
“we” or “us”
the Company and its subsidiaries from time to time or,
where the context so requires, in respect of the period
prior to our Company becoming the holding company of
its present subsidiaries, such subsidiaries as if they were
subsidiaries of our Company at the relevant time
“Guide for New Listing
Applicants”
the Guide for New Listing Applicants issued by the Hong
Kong Stock Exchange effective from January 1, 2024
“HK$” or “Hong Kong Dollars”
or “HK Dollars” and “HK
cents”
Hong Kong dollars, the lawful currency of Hong Kong
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the designated website at www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form service provider designated
by our Company as specified on the designated website at
www.hkeipo.hk
“HK Subsidiary” BrainAurora (HK) Medical Technology Limited, a
limited company incorporated in Hong Kong on May 11,
2023 and directly wholly owned by BVI Subsidiary
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly owned subsidiary of Hong Kong Exchanges and
Clearing Limited
DEFINITIONS
–4 3–


--- page 53 ---
“HKSCC EIPO” the application for the Offer Shares to be issued in the
name of HKSCC Nominees and deposited directly into
CCASS to be credited to your designated HKSCC
Participant’s stock account through causing HKSCC
Nominees to apply on your behalf, including by
instructing your broker or custodian who is a HKSCC
Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Offer Shares on
your behalf
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“HKSCC Operational
Procedures”
the operational procedures of HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time
to time in force
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong Offer Shares” 18,112,000 Shares being initially offered by our
Company for subscription at the Offer Price pursuant to
the Hong Kong Public Offering (subject to reallocation as
described in the section headed “Structure of the Global
Offering”)
“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong at the Offer Price (plus
brokerage of 1%, SFC transaction levy of 0.0027%, Stock
Exchange trading fee of 0.00565% and AFRC transaction
levy of 0.00015%) on the terms and subject to the
conditions described in this document, as further
described in “Structure of the Global Offering – The
Hong Kong Public Offering”
“Hong Kong Share Registrar” Tricor Investor Services Limited
DEFINITIONS
–4 4–


--- page 54 ---
“Hong Kong Stock Exchange” or
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Hong Kong Takeovers Code” or
“Takeover Code”
the Codes on Takeovers and Mergers and Share Buy-
backs issued by the SFC, as amended, supplemented or
otherwise modified from time to time
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering
whose names are set out in the section headed
“Underwriting – Hong Kong Underwriters”
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated December 26, 2024,
relating to the Hong Kong Public Offering entered into
by, among others, our Company, the Controlling
Shareholders, the Overall Coordinators and the Hong
Kong Underwriters, as further described in
“Underwriting – Underwriting Arrangements – Hong
Kong Public Offering – Hong Kong Underwriting
Agreement”
“Hunan MPA” Hunan Medical Products Administration
“Independent Third Party(ies)” any entity or person, to the best of our Directors’
knowledge, information and belief having made all
reasonable enquiries, who is not a connected person of
our Company within the meaning ascribed to it under the
Listing Rules
“International Offer Shares” 163,000,000 Shares being offered for subscription under
the International Offering, together, where relevant, with
any additional Shares which may be issued pursuant to
the exercise of the Over-allotment Option, subject to
reallocation as described in the section headed “Structure
of the Global Offering”
“International Offering” the conditional placing of the International Offer Shares
at the Offer Price outside the United States in offshore
transactions in accordance with Regulation S or any other
available exemption from the registration requirements
under the U.S. Securities Act, as further described in
“Structure of the Global Offering”
DEFINITIONS
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“International Underwriters” the group of international underwriters expected to enter
into the International Underwriting Agreement relating to
the International Offering
“International Underwriting
Agreement”
the underwriting agreement relating to the International
Offering and expected to be entered into by, among
others, our Company and the International Underwriters
on or around January 6, 2025, as further described in
“Underwriting – Underwriting Arrangements –
International Offering”
“Joint Bookrunners” the joint bookrunners as named in “Directors and Parties
Involved in the Global Offering”
“Joint Global Coordinators” the joint global coordinators as named in “Directors and
Parties Involved in the Global Offering”
“Joint Lead Managers” the joint lead managers as named in “Directors and
Parties Involved in the Global Offering”
“Joint Sponsors” the joint sponsors as named in “Directors and Parties
Involved in the Global Offering”
“Latest Practicable Date” December 21, 2024, being the latest practicable date for
the purpose of ascertaining certain information contained
in this Prospectus prior to its publication
“Listing” the listing of our Shares on the Main Board
“Listing Committee” the listing committee of the Hong Kong Stock Exchange
“Listing Date” the date, expected to be on or about Wednesday, January
8, 2025, on which the Shares are to be listed and on which
dealings in the Shares are to be first permitted to take
place on the Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited, as amended,
supplemented or otherwise modified from time to time
“M&A Rules” the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors (Իᒅ
)
DEFINITIONS
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“Main Board” the stock exchange (excluding the option market)
operated by the Stock Exchange which is independent
from and operated in parallel with the GEM of the Stock
Exchange
“Major Subsidiary(ies)” collectively and individually, BrainAurora Zhejiang,
Beijing Zhijingling and Changsha Zhijingling, as set out
in “History, Reorganization and Corporate Structure —
Our Major Subsidiaries”
“Memorandum” or
“Memorandum of Association”
the third amended and restated memorandum of
association of our Company adopted by special resolution
on December 24, 2024, with effect upon the Listing Date,
a summary of which is set out in “Appendix III —
Summary of the Constitution of our Company and
Cayman Companies Act”
“MOFCOM” or “Ministry of
Commerce”
the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷
ਠਕ௅) (formerly known as the Ministry of Foreign
Trade and Economic Cooperation of the PRC ( ʕശɛ͏
௅))
“Mr. Tan” Mr. Tan Zheng ( ᗈ፾), the chairman of the Board, an
executive Director, chief strategy officer of the Company
and a Controlling Shareholder
“NHC” the National Health Commission of the PRC ( ʕശɛ͏΍
ึ)
“NMPA” the National Medical Products Administration of China
(္ຖ၍ଣ҅) or, where the context so requires,
its predecessor, the China Food and Drug Administration
(္ຖ၍ଣᐼ҅), or CFDA
“Nomination Committee” the nomination committee of the Board
“NPC” the National People’s Congress of the PRC ( ʕശɛ͏΍
ɽึ)
“Offer Price” the offer price per Offer Share (exclusive of brokerage
fee of 1%, SFC transaction levy of 0.0027%, Stock
Exchange trading fee of 0.00565% and AFRC transaction
levy of 0.00015%), expressed in Hong Kong dollars, at
which Hong Kong Offer Shares are to be subscribed for
pursuant to the Global Offering
DEFINITIONS
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“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares, together, where relevant, with any additional
Shares to be issued by our Company pursuant to the
exercise of the Over-allotment Option
“Offshore AIC Agreement” the acting in concert agreement dated August 6, 2023
entered into between Mr. Tan, Dr. Wang, ZTan Limited
and Wispirits Limited
“Offshore AIC Parties” Mr. Tan, Dr. Wang, ZTan Limited and Wispirits Limited
“Onshore AIC Agreement” the acting in concert agreement dated December 20, 2020
entered into between Mr. Tan, Dr. Wang, Shuhui LP , and
Zhipan LP
“Onshore AIC Parties” Mr. Tan, Dr. Wang, Shuhui LP , and Zhipan LP
“Over-allotment Option” the option expected to be granted by our Company to the
International Underwriters, exercisable by the Joint
Global Coordinators and the Overall Coordinators on
behalf of the International Underwriters, to require our
Company to allot and issue additional Shares to the
International Underwriters to, among other things, cover
over-allocations in the International Offering, if any,
details of which are described in “Structure of the Global
Offering – Over-allotment Option”
“Overall Coordinators” China International Capital Corporation Hong Kong
Securities Limited and SPDB International Capital
Limited
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central
bank of the PRC
“PRC Legal Advisor” Commerce & Finance Law Offices, our legal advisor on
PRC laws in connection with the Global Offering
“Pre-IPO Investment(s)” the investment(s) in our Company undertaken by the
Pre-IPO Investors prior to this initial public offering, the
details of which are set out in “History, Reorganization,
and Corporate Structure”
DEFINITIONS
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“Pre-IPO Share Award Scheme” the share award scheme adopted by the Company on July
30, 2023, the principal terms of which are set out in
“Statutory and General Information – Further
Information about Our Company – Pre-IPO Share Award
Scheme” in Appendix IV
“Prospectus” this prospectus being issued in connection with the Hong
Kong Public Offering
“province” province in China refers to the highest level of local
administrative areas under the direct jurisdiction of the
Central People’s Government, and there are currently
provinces, autonomous regions, municipalities directly
under the central government, and special administrative
regions
“Proxy Grantor” Healthblooming Limited, being the grantor of voting
proxy pursuant to the V oting Proxy Agreement
“Regulation S” Regulation S under the U.S. Securities Act
“Remuneration Committee” the remuneration committee of the Board
“Renminbi” or “RMB” Renminbi, the lawful currency of the PRC
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅)
“SAIC” the State Administration of Industry and Commerce of
the PRC (၍ଣᐼ҅),
which has now been merged into the SAMR
“SAMR” the State Administration for Market Regulation of the
PRC (̹ఙ္ຖ၍ଣᐼ҅)
“SA T” the State Taxation Administration of the PRC ( ʕശɛ͏
೼ਕᐼ҅)
“Series A Preferred Shares” or
“Preferred Shares”
series A preferred shares in the share capital of our
Company with a par value of US$0.0001 each prior to the
Share Subdivision or US$0.0000001 each upon the
completion of the Share Subdivision, consisting of the
Series A-1 Preferred Shares and the Series A-2 Preferred
Shares
DEFINITIONS
–4 9–


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“Series A-1 Preferred Shares” series A-1 preferred shares in the share capital of our
Company with a par value of US$0.0001 each prior to the
Share Subdivision or US$0.0000001 each upon the
completion of the Share Subdivision
“Series A-2 Preferred Shares” series A-2 preferred shares in the share capital of our
Company with a par value of US$0.0001 each prior to the
Share Subdivision or US$0.0000001 each upon the
completion of the Share Subdivision
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” or “Securities and Futures
Ordinance”
the Securities and Futures Ordinance, Chapter 571 of the
Laws of Hong Kong, as amended, supplemented or
otherwise modified from time to time
“Share(s)” ordinary share(s) in the share capital our Company, with
a nominal value of US$0.0001 each prior to the Share
Subdivision or US$0.0000001 each upon the completion
of the Share Subdivision
“Share Subdivision” the subdivision of each share in the Company’s issued
and unissued share capital with par value of US$0.0001
each into 1,000 shares of the corresponding class with
nominal value of US$0.0000001 each
“Shareholder(s)” holder(s) of our Share(s)
“Shenzhen BrainAurora” Shenzhen BrainAurora Medical Technology Co., Ltd. ( ଉ
ʮ̡), a limited liability
company established in the PRC on October 17, 2023 and
wholly owned by BrainAurora Zhejiang, being one of our
subsidiaries
“Shuhui LP” Tianjin Shuhui Information Consulting Partnership
(Limited Partnership) (ፔ༔ΥྫΆุ(ࠢ
Υྫ), formerly known as Shanghai Shuhui
Business Information Consulting Center (Limited
Partnership) (ፔ༔ʕː(Υྫ)), a
limited partnership established in the PRC on May 17,
2016 and ultimately controlled by Dr. Wang
DEFINITIONS
–5 0–


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“Sophisticated Investor(s)” has the meaning ascribed to it under Chapter 2.3 of the
Guide for New Listing Applicants issued by the Stock
Exchange and, for the Company, means Northern Light
Strategic Fund IV L.P ., Northern Light V enture Fund IV
L.P . and Northern Light Partners Fund IV L.P .
“Stabilizing Manager” China International Capital Corporation Hong Kong
Securities Limited
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“subsidiary(ies)” has the meaning ascribed to it in section 15 of the
Companies Ordinance
“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules
“Track Record Period” the period comprising three financial years ended
December 31, 2023 and the six months ended June 30,
2024
“treasury share(s)” has the meaning ascribed to it under the Listing Rules
“U.S. Government” the federal government of the United States, including its
executive, legislative and judicial branches
“U.S. persons” U.S. persons as defined in Regulation S
“U.S. Securities Act” United States Securities Act of 1933, as amended,
supplemented or otherwise modified from time to time
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“United States,” “USA” or
“U.S.”
the United States of America, its territories, its
possessions and all areas subject to its jurisdiction
“US$” or “U.S. dollars” United States dollars, the lawful currency of the United
States
“V A T” value-added tax
DEFINITIONS
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“V oting Proxy Agreement” the voting proxy agreement entered into between
Healthblooming Limited and Mr. Tan, dated August 6,
2023
“WFOE” Zhejiang Zhiling Ruidong Medical Technology Co., Ltd.
(ʮ̡), a limited liability
company established in the PRC on June 16, 2023 and
directly wholly owned by HK Subsidiary
“Xuanwu Hospital” Xuanwu Hospital Capital Medical University (߅
ᔼ৫)
“Xuanwu Trial” the randomized controlled trial we initiated in December
2015 in cooperation with Xuanwu Hospital (one of the
best hospital in neurology in China)
“Zhipan LP” Nanjing Zhipan Information Consulting Partnership
(Limited Partnership) (ፔ༔ΥྫΆุ(ࠢ
Υྫ), formerly known as Shanghai Zhipan Business
Information Consulting Center (Limited Partnership) ( ɪ
ፔ༔ʕː(Υྫ)) and Tianjin Zhipan
Information Consulting Partnership (Limited
Partnership) (ፔ༔ΥྫΆุ(Υྫ)), a
limited partnership established in the PRC on May 17,
2016 and ultimately controlled by Dr. Wang
“%” per cent
Unless otherwise specified, all references in this Prospectus to any shareholdings in our
Company following the completion of the Share Subdivision and the Global Offering assuming
that the Over-allotment Option is not exercised.
For ease of reference, the names of Chinese laws and regulations, governmental
authorities, institutions, natural persons or other entities (including certain of our
subsidiaries) have been included in the Prospectus in both the Chinese and English languages
and in the event of any inconsistency, the Chinese version shall prevail. English translations
of company names and other terms from the Chinese language are provided for identification
purposes only.
Certain amounts and percentage figures included in the Prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them.
DEFINITIONS
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This glossary contains definitions of certain terms used in this Prospectus in
connection with our Company and our business.
These terms and their definitions may not correspond to any industry standard
definitions, and may not be directly comparable to similarly titled terms adopted by other
companies operating in the same industries as our Company.
“active control group” the group in a clinical research study that receives the
other interventions being tested
“AD” or “Alzheimer” Alzheimer’s disease, caused by the accumulation of
abnormal protein structures in the brain, which leads to
the death of brain cells and the shrinking of brain tissue,
affecting patients’ memory and thinking skills
“ADHD” Attention Deficient Hyperactivity Disorder, one of the
most common neurodevelopmental disorders in children,
which is characterized by symptoms such as difficulty
paying attention, difficulty controlling impulsive
behavior and being overly active
“ADHD Software” Attention Deficit Hyperactivity Disorder Assessment and
Treatment Software
“ADHD RS-IV” tests based on ADHD Rating Scale – IV
“A&D Journal” Alzheimer’s & Dementia, a leading peer-reviewed
journal representing a high academic level of clinical
studies in cognitive impairment
“AI” artificial intelligence
“AMCI trial” Amnestic Mild Cognitive Impairment trial
“aphasia” a language disorder caused by damage to parts of the
brain that control speech and understanding of language
“AQ” the Aphasia Quotient, a summary score that indicates
overall severity of language impairment
“assessment and intervention” core activities that guide supports that a social worker
provides to help service user in social work
GLOSSARY OF TECHNICAL TERMS
–5 3–


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“atrial fibrillation induced
cognitive impairment”
cognitive impairment caused by atrial fibrillation through
different mechanisms, like cerebral infarcts, decreased
brain volume, and cerebral microbleeds
“atrial fibrillations” an irregular and rapid heart rhythm that can lead to blood
clots in the heart, increasing the risk of stroke, heart
failure and other heart-related complications
“autism” a neurobiological condition caused by differences in the
way the brains of individuals with Autism are wired and
function. Such differences can affect the way individuals
with Autism process and respond to information, leading
to difficulties with communication, social interaction,
and behavior
“BCA T” Basic Cognitive Ability Testing software, designed to
facilitate healthcare professionals’ assessment of
patients’ basic cognitive capacity by enabling patients to
self-administer tests of their cognitive capacities relating
to processing speed, working memory, episodic memory,
visual-spatial ability and verbal comprehension
“BNT” the Boston Naming Test
“causal-based adaptive
collaborative intervention
model”
a type of algorithm that adjusts the content of the training
sessions to achieve personalized interventions and
improve the System it is applied to
“CBT” cognitive-behavioral therapy
“CCBT” Computerized Cognitive Behavioral Therapy
“CDDCI” Child development deficiency induced cognitive
impairment, which is present at birth, and is caused by
genetic conditions or brain damage that occurs during
pregnancy or childbirth. Examples include Attention
Deficient Hyperactivity Disorder, dyslexia and autism
“CE mark” the mark appears on products signify that products sold in
the European Economic Area have been assessed to meet
high safety, health, and environmental protection
requirements
GLOSSARY OF TECHNICAL TERMS
–5 4–


--- page 64 ---
“CE registration certificate” a certificate of compliance verifies certain products are
safe for sale and use in the European Economic Area
“CHD” Coronary heart disease, affecting the blood vessels of the
heart, with increased risk of cognitive impairment, which
can lead to a decline in cognitive function and an
increased risk of death
“CI” Confidence Interval, a range of estimates for an unknown
parameter, referring the probability that a population
parameter will fall between a set of values for a certain
proportion of times
“Class II Medical Device” devices that have a moderate to high risk to the patient
and/or user
“ClinicalTrials.gov” a public database containing information about clinical
trials for an array of diseases and conditions around the
world
“cognitive center” the center we help hospital customers establish within the
hospital premises where the hospitals maintain or
improve patients’ cognitive abilities by using our System
for the medical assessment and intervention of various
types of cognitive impairment
“cognitive development” the emergence of children’s ability to consciously
cognize, understand, and articulate their understanding in
adult terms
“COVID-19” coronavirus disease 2019, a disease caused by a novel
virus designated as severe acute respiratory syndrome
coronavirus 2
“DD” developmental dyslexia
“Diagnostic and Statistical
Manual of Mental Disorders
Fifth Edition” or “DSM-5”
provides detailed descriptions, classifications, and
diagnostic criteria for mental disorders.
“DNN” Deep neural networks
GLOSSARY OF TECHNICAL TERMS
–5 5–


--- page 65 ---
“double-blind” the way used in clinical trial in which neither the
participants nor the researchers know which treatment or
intervention participants are receiving until the clinical
trial is over
“DSS” Dyslexia Supplemental Screening and Assessment
Software, designed to facilitate the assessment of risk of
developmental dyslexia in children
“DTx” digital therapeutics, the delivery of medical therapies
directly to patients using evidence-based, clinically
evaluated software for the assessment and intervention of
a wide range of diseases and disorders
“dyslexia” a learning disorder that involves difficulty reading due to
problems identifying speech sounds and learning how
they relate to letters and words
“effect size” a quantitative measure of the magnitude of the
experimental effect
“electroencephalography” a technique of electrical activity in the brain using small,
metal discs attached to the scalp
“episodic memory” a neurocognitive capability that enables individuals to
remember past experiences
“executive control” a set of cognitive processes enable individuals to plan,
monitor, and successfully execute their goals
“expert consensus” the collective opinions of an expert panel on a clinical
topic
“first-line treatments” the initial, or first treatment recommended for a disease
or illness
“GCP” good clinical practice, an international ethical and
scientific quality standard for the performance of a
clinical trial on medicinal products involving humans
“Hypertension” high blood pressure, a blood pressure reading of 130/80
millimeters of mercury (mm Hg) or higher
GLOSSARY OF TECHNICAL TERMS
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“ICH GCP” first produced in June 1996, the International Council
for Harmonisation of Technical Requirements for
Pharmaceuticals for Human Use (ICH) Guideline for
Good Clinical Practice (GCP) is an internationally agreed
standard that ensures ethical and scientific quality in
designing, recording and reporting trials that involve
human subjects.
“Image processing” the process of transforming an image into a digital form
and performing certain operations to get some useful
information from it
“indications” a sign that something exists, is true, or is likely to happen
“International Classification of
Diseases” or “ICD”
published by the World Health Organization and used
worldwide in medical research to ensure consistent
disease statistics and diagnostic standards
“intervention group” the group in a clinical research study that receives
treatments or other intervention being tested
“ISO 13485” a set of requirements for a quality management system
where an organization needs to demonstrate its ability to
provide medical devices and related services that
consistently meet customer and applicable regulatory
requirements
“KOL(s)” key opinion leader(s), person(s) who have expert
knowledge and influence in a respective field
“large language model” a deep learning algorithm that can perform a variety of
natural language processing tasks, using massive
datasets, which enables it to recognize, translate, predict,
or generate text or other content
“learning disorder” brain takes in and works with information in a way that
is not typical, causing difficulty in one or more areas of
learning, even when overall intelligence or motivation is
not affected
“long-term memory” the transfer of information from short-term memory into
long-term storage in order to create enduring memories
GLOSSARY OF TECHNICAL TERMS
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“medical-grade DTx” digital therapeutic that are typically required to undergo
rigorous evidence-based clinical evaluation processes to
demonstrate safety and efficacy in clinical trials
“ML” machine learning
“MMSE” the Mini-Mental State Examination, which provides a
rapid, comprehensive, and accurate assessment of an
individual’s intellectual functioning and cognitive
decline. The MMSE evaluates orientation, immediate
recall, attention and processing, delayed recall, naming,
retelling, reading, 3-step instructions, writing, and
structuring information through a series of questions
“MoCA” Montreal Cognitive Assessment is a rapid screening tool
for mild cognitive impairment. It assesses many different
cognitive domains, including visuospatial and executive
functioning, naming, immediate recall, attention,
language, abstract thinking, delayed recall and
orientation
“monotherapy” the use of a single drug to treat a particular disorder or
disease
“multiple sclerosis” a condition that can affect the brain and spinal cord,
causing a wide range of potential symptoms, including
problems with vision, arm or leg movement, sensation or
balance
“natural language processing” a branch of artificial intelligence that enables computers
to comprehend, generate, and manipulate human
language
“NCI” Neurodegenerative disease induced cognitive impairment
“neuroplasticity” the ability of the nervous system to change its activity in
response to intrinsic or extrinsic stimuli by reorganizing
its structure, functions or connections
“NRDP journal” Nature Reviews Disease Primers, an internationally
leading academic journal
GLOSSARY OF TECHNICAL TERMS
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“One-Belt-One-Road” a strategy initiated by PRC to connect Asia with Africa
and Europe via land and maritime networks with the aim
of improving regional integration, increasing trade and
stimulating economic growth
“parallel-designed” clinical study where two groups of treatments, A and B,
are given so that one group receives only A while another
group receives only B
“PCI” Psychiatric disorder induced cognitive impairment,
caused by psychiatric disorders like depression and
anxiety
“PD” or “Parkinson’s disease” Parkinson’s disease, with symptoms like tremors,
stiffness, and problems with balance and coordination, is
caused by the death of dopamine-producing neurons in
the brain, resulting in a lack of dopamine, a
neurotransmitter that helps regulate movement
“prevalence” the number of disease cases present in a particular
population at a given time
“processing speed” the ability to identify, discriminate, integrate, make a
decision or respond to visual and verbal information once
receiving it
“PTSD” Symptoms of post-traumatic stress disorder, caused by
traumatic events with symptoms of flashbacks,
nightmares, severe anxiety, as well as uncontrollable
thoughts about the event
“randomized controlled trial”
or “randomized controlled
clinical trial”
a research study for validating or finding the therapeutic
effects and side effects of a treatment in order to
determine the therapeutic value and safety of such
treatment, which typically compares a proposed new
treatment against an existing standard of care, and the
population receiving the program or policy intervention
is chosen at random from the eligible population
“SAS” Cognitive Ability Supplemental Screening and
Assessment Software, designed to facilitate healthcare
professionals’ assessment of patients’ cognitive capacity
by enabling patients to self-administer MMSE and MoCA
tests
GLOSSARY OF TECHNICAL TERMS
–5 9–


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“schizophrenia” a chronic brain disorder, includes delusions,
hallucinations, disorganized speech, trouble with
thinking and lack of motivation
“SCI Impact Factor” Science Journal Impact Factor, a measure of the citations
published within a given journal over a fixed time period
“sq.m.” square meter, a unit of area
“the System” our Core Product, the Brain Function Information
Management Platform Software System
“TMT B-A” the Trail Making Test B-A which is a psychological test
of executive function
“VCI” vascular cognitive impairment, which is a type of
vascular disease induced cognitive impairment
“VCIND” vascular cognitive impairment, no dementia, which is a
mild stage of vascular cognitive impairment
“VDCI” vascular disease induced cognitive impairment, typically
caused by brain damages due to impaired blood flow to
the brain, whose symptoms include confusion, attention
deficiency, difficulty with organization, unsteady gait and
memory problems, among others
“VR” Virtual reality
“W AB” Western Aphasia Battery
“WMS” the Wechsler Memory Scale, a neuropsychological test
designed to measure different memory functions in a
person
“working memory” a cognitive system with a limited capacity to hold
information temporarily
GLOSSARY OF TECHNICAL TERMS
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We have included in this Prospectus forward-looking statements. Statements that are
not historical facts, including statements about our intentions, beliefs, expectations or
predictions for the future, are forward-looking statements.
This Prospectus contains certain forward-looking statements and information relating to
our Company, our subsidiaries and consolidated affiliated entities that are based on the beliefs
of our management as well as assumptions made by and information currently available to our
management. When used in this Prospectus, the words “aim,” “anticipate,” “believe,” “could,”
“expect,” “going forward,” “intend,” “may,” “ought to,” “plan,” “project,” “seek,” “should,”
“will,” “would” and the negative of these words and other similar expressions, as they relate
to our Group or our management, are intended to identify forward-looking statements. Such
statements reflect the current views of our management with respect to future events,
operations, liquidity and capital resources, some of which may not materialize or may change.
These statements are subject to certain risks, uncertainties and assumptions, including the other
risk factors as described in this Prospectus. Y ou are strongly cautioned that reliance on any
forward-looking statements involves known and unknown risks and uncertainties. The risks
and uncertainties facing our company which could affect the accuracy of forward-looking
statements include, but are not limited to, the following:
 our operations and business prospects;
 our financial condition and operating results and performance;
 industry trends and competition;
 our product candidates under development or planning;
 the timing and outcome of the applications for registration of our products with the
NMPA and other regulators;
 our strategies, plans, objectives and goals and our ability to successfully implement
these strategies, plans, objectives and goals;
 our ability to attract customers and build our brand image;
 general political and economic conditions;
 future developments of the COVID-19 outbreak in the PRC and globally;
 changes to regulatory and operating conditions in the industry and markets in which
we operate; and
 the amount and nature of, and potential for, future development of our business.
FORW ARD-LOOKING STATEMENTS
–6 1–


--- page 71 ---
Subject to the requirements of applicable laws, rules and regulations, we do not have any
and undertake no obligation to update or otherwise revise the forward-looking statements in
this Prospectus, whether as a result of new information, future events or otherwise. As a result
of these and other risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this Prospectus might not occur in the way we expect or at all.
Accordingly, you should not place undue reliance on any forward-looking information. All
forward-looking statements in this Prospectus are qualified by reference to the cautionary
statements in this section.
In this Prospectus, statements of or references to our intentions or those of our Directors
are made as of the date of this Prospectus. Any such information may change in light of future
developments.
FORW ARD-LOOKING STATEMENTS
–6 2–


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An investment in our Shares involves significant risks. You should carefully consider
all of the information in this Prospectus, including the risks and uncertainties described
below, as well as our financial statements and the related notes, and the “Financial
Information” section, before deciding to invest in our Shares. The following is a
description of what we consider to be our material risks. Any of the following risks could
have a material adverse effect on our business, financial condition, results of operations
and growth prospects. In any such an event, the market price of our Shares could decline,
and you may lose all or part of your investment. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial also may impair our business
operations.
These factors are contingencies that may or may not occur , and we are not in a
position to express a view on the likelihood of any such contingency occurring. The
information given is subject to the cautionary statements in the section headed “Forward
Looking Statements” in this Prospectus.
We believe there are certain risks and uncertainties involved in our operations, some of
which are beyond our control. We have categorized these risks and uncertainties into: (i) risks
relating to our business and industry, consisting of (a) risks relating to the development of our
product candidates, (b) risks relating to commercialization of our product candidates; (c) risks
relating to extensive government regulation; (d) risks relating to our intellectual property
rights, and (e) risks relating to our reliance on third parties; (ii) risks relating to our financial
position and need for additional capital; (iii) risks relating to our general operations; and
(iv) risks relating to the Global Offering.
Additional risks and uncertainties that are presently not known to us or not expressed or
implied below or that we currently deem immaterial could also have a material adverse effect
on our business, financial condition and operating results. Y ou should consider our business
and prospects in light of the challenges we face, including the ones discussed in this section.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
Risks Relating to Development of Our Product Candidates
Our future growth depends substantially on the successful development of our product
portfolio. If we are unable to successfully complete clinical development, obtain regulatory
approval and commercialize our product candidates, or experience significant delays in
doing so, our business and financial prospects will be materially adversely affected.
Our business substantially depends on the successful development, obtaining and
maintaining the necessary regulatory approvals and commercialization of our current and
future product candidates. As of the Latest Practicable Date, we had commercialized the Brain
Function Information Management Platform Software System (the “ System ”) for application
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in the assessment and treatment of cognitive impairment induced by vascular diseases, aphasia,
Alzheimer’s disease, depression, schizophrenia, sleeping disorder, Attention Deficient
Hyperactivity Disorder (the “ ADHD ”) and autism. Our System was under development for
several other cognitive impairment indications in addition to the eight commercialized
indications; we also had three additional products with regulatory approvals in China, one
product with regulatory approval in the EU and six additional product candidates under
different stages of preclinical and clinical development or registration process as of the Latest
Practicable Date. See “Business—Our Product Pipeline” for more details on our complete
product pipeline. We have invested a significant portion of our time and financial resources
towards the development and commercialization of our products and product candidates. We
incurred research and development expenses of RMB32.8 million, RMB67.6 million,
RMB90.7 million, RMB34.4 million and RMB64.2 million in 2021, 2022, 2023, and the six
months ended June 30, 2023 and 2024, respectively. We incurred loss and total comprehensive
expense for the year of RMB697.8 million, RMB502.5 million, RMB359.1 million, RMB234.6
million and RMB114.4 million in 2021, 2022, 2023, and the six months ended June 30, 2023
and 2024, respectively. Whether we can generate profit from our operating activities largely
depends on the successful commercialization of our System to more indications and of our
other products candidates under development.
The success of our products and product candidates will depend on several factors,
including but not limited to:
 successful enrollment of trial participants in, and completion of, clinical trials, as
well as completion of preclinical studies;
 favorable safety and efficacy data resulting from our clinical trials and preclinical
studies;
 obtaining and maintaining the necessary regulatory approvals, commercialization
authorizations and successfully launching our product candidates effectively in
target markets, if and when approved, in a timely manner;
 the performance by any third parties we may retain in a manner that complies with
our protocols and applicable laws and that protects the integrity of the resulting data;
 obtaining and maintaining patent, trade secret and other intellectual property
protection and regulatory exclusivity;
 ensuring we do not infringe, misappropriate or otherwise violate the patent, trade
secret and/or other intellectual property rights of third parties;
 appropriately pricing our products and timely collecting payments;
 enhancing our marketing and distribution capabilities in an efficient and cost-
effective manner;
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 market and pricing competition with other cognitive impairment digital therapeutics
(the “ DTx”) products;
 keeping up with industry and technology developments; and
 continued acceptable safety profile and efficacy of our products and product
candidates following regulatory approval, if and when received.
If we are not successful in one or more of these factors in a timely manner, or at all, we
could experience significant delays or be unable to obtain the necessary approval for and/or to
successfully expand commercialized indications of our System or to commercialize our other
product candidates, which may have a materially adverse effect on our business and may result
in us not being able to generate sufficient revenue and cash flow to continue our research,
development and general business operations.
DTx industry is developing rapidly. If we are not able to develop and release new products
that are competitive in the market, or develop successful enhancements or indication
expansions of our System or any future products in a timely manner our products may
become obsolete and our business, operating results and financial condition could be
materially adversely affected.
DTx industry is new and rapidly evolving, and it is uncertain whether it will achieve and
sustain high levels of demand and market adoption. Our future financial performance will
depend on growth in this market and on our ability to adapt to emerging demands of our
customers. It is difficult to predict the future growth rate and size of our target markets. The
DTx industry is characterized by rapid technological change, frequent new product
introductions and enhancements, changing customer demands, and evolving industry
standards. Social trends and political policies on the DTx industry (including but not limited
to ESG related matters over the industry) may further evolve, which could lead to changes in
need for our products and the need for us to adapt our business model and our product
pipelines. Our success therefore depends on our ability to accurately forecast the industry
trends and continuously identify, develop and market more advanced products in a timely
manner that address unmet clinical needs. Product designs can change with market conditions,
as well as demand and preferences of hospitals and medical professionals. We cannot assure
you that we will be able to successfully identify new technological opportunities, enhance or
adapt to new technologies and methodologies, develop new products, or improve or expand the
indication coverage of our existing products in a timely manner. Even if we develop new or
improve our existing technologies and products, our ability to market our products could be
limited by the need for regulatory clearance or approval, restrictions imposed on approved
indications, entrenched patterns of clinical practice, uncertainty over third-party
reimbursement, or other obstacles.
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Technological innovations often entail great uncertainty. A successful innovation cannot
be a linear and regular method; rather, it has to take into account the randomness of the process
and the industry participants’ partial knowledge of the domain. We may not succeed in
developing, marketing and delivering in a timely and cost-effective manner enhancements or
improvements to our commercialized products or any new products that respond to continued
changes in market demands, new customer requirements or achieve market acceptance. The
timetable for the release of new products and enhancements to existing products is difficult to
predict due to complexity in product development, and we may not offer new products and
updates as rapidly as our users require or expect. Any new products that we develop or acquire
may not be introduced in a timely or cost-effective manner, may contain errors or defects, or
may not achieve the broad market acceptance necessary to generate significant or any revenue.
In addition, technological innovations often require substantial time and investment before we
can determine their commercial viability. We devote significant financial and other resources
to our research and development activities, while our research and development efforts may not
lead to new or improved technologies or products that will be commercially successful.
Furthermore, we may not have the financial resources necessary to fund future projects. Even
if we are able to successfully develop new products or improve or expand the indication
coverage of existing products, we may not generate revenue in excess of the costs of
development and procurement, or achieve the desired financial return. These products and
relevant technologies may be rendered obsolete or less competitive due to changing customer
preferences or the introduction by our competitors of products with newer technologies or
features or other factors.
The introduction of new products by competitors, the development of entirely new
technologies to replace existing DTx offerings or shifts in healthcare benefits trends could
make our products obsolete or materially and adversely affect our business, financial condition
and results of operations. We may experience difficulties with software development, industry
standards, design or marketing that could delay or prevent our development, introduction or
implementation of new products, indication coverage, additional features or capabilities. If
patients and healthcare providers do not widely adopt our products, we may not be able to
realize a return on our investment. If we do not accurately anticipate patient and physician
demands or we are unable to develop, license or acquire new features and capabilities on a
timely and cost-effective basis, or if such enhancements do not achieve market acceptance, it
could result in adverse publicity, loss of revenue or market acceptance or claims by patients or
healthcare providers brought against us, each of which could have a material and adverse effect
on our reputation, business, results of operations and financial condition.
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Clinical development is a lengthy, expensive and uncertain process, and unsuccessful
clinical trials or procedures relating to products and indications under development could
have a material adverse effect on our prospects, including incurring additional costs,
experiencing delays in completing, or ultimately being unable to complete the development
and commercialization of our product if clinical trials fail to demonstrate safety and efficacy
to the satisfaction of regulatory authorities.
According to a catalog issued by the NMPA, medical devices are classified into three
different categories, Class I, Class II and Class III medical device registration certificate,
depending on the degree of risk associated with a particular medical device and the extent of
control needed to ensure the safety and efficacy of such medical device. Our System has
received its initial Class II Certificate from the Hunan MPA in September 2018. In June 2020,
the System obtained an amended Class II medical device registration certificate from the
Hunan MPA which includes the specific types of cognitive impairment covered by the System,
making it possible for us to commercialize the System in China. In 2023, we successfully
renewed the Class II medical device registration certificate which now expires in 2028. To
obtain medical device registrations of Class II medical devices for commercialization in a
particular indication, we need to conduct, at our own expense, adequate and well-controlled
clinical trials to demonstrate the safety and efficacy of our products.
Some of our current and future products may be classified or reclassified as Class III
medical devices under relevant PRC laws and regulations. See “Regulatory Overview—PRC
Regulatory Overview—Regulation Relating to Medical Devices—Registration and Record-
Filing of Medical Devices” for more details. If this occurs, there may be more extensive
regulatory requirements for the approval, manufacture, distribution and supervision of such
products. These requirements may include additional clinical trials conducted under more
stringent protocols than those required for Class II certifications, the need to obtain licenses to
manufacture and distribute Class III medical devices and the establishment of an information
management system to ensure traceability of all Class III medical devices that we manufacture
and sell. Complying with the additional regulatory requirements for a Class III medical device
may increase our research and development, regulatory, manufacturing and distribution costs,
delay our research and development and commercialization timelines and have a material
adverse effect on our business prospects, results of operations and financial condition.
Successful preclinical studies and early clinical trials do not necessarily mean that later
clinical trials will also result in data that replicate the results of prior trials and preclinical
studies and ultimately lead to regulatory approval. Our System was under development for
several other cognitive impairment indications in addition to the eight commercialized
indications; we also had three additional products with regulatory approvals in China, one
product with regulatory approval in the EU and six additional product candidates under
different stages of preclinical and clinical development or registration process as of the Latest
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Practicable Date. See “Business—Our Product Pipeline” for a detailed description of the
development stages of our products and product candidates. We may experience numerous
unexpected events during, or as a result of, clinical trials that could delay or prevent our ability
to obtain the necessary regulatory approval or commercialize our product candidates, including
but not limited to:
 regulators or institutional review boards (“ IRBs,” also known as independent ethics
committees) may not authorize us or our investigators to commence or conduct a
clinical trial at a prospective trial site;
 unanticipated protracted negotiations or an inability to agree on reasonable
contractual terms with prospective CROs and hospitals for the provision of trial
centers, which may lead to delayed commencement (if at all) of clinical studies for
regulatory approvals;
 failure of our product to demonstrate superior results than competing or alternative
products, if applicable;
 clinical trials of our product candidates may fail to demonstrate the primary or
secondary endpoints as anticipated, and we may decide, or regulators may require
us, to conduct additional clinical trials or abandon product development programs;
 the number of subjects required for clinical trials of our product candidates may be
larger than we anticipate, enrollment may be insufficient or slower than we
anticipate or subjects may drop out at a higher rate than we anticipate;
 our third-party contractors in connection with our clinical studies may fail to comply
with regulatory requirements or meet their contractual obligations to us in a timely
manner, or at all;
 we might have to suspend or terminate clinical trials of our product candidates for
various reasons, including a finding of a lack of clinical response or other
unexpected characteristics; and
 the initial or interim results of the clinical trial may not be predictive of the final
results; interim, “topline” and preliminary data from clinical trials of our product
candidates under different indications may change as more patient data becomes
available and are subject to confirmation, audit, and verification procedures that
could result in material changes in the final data.
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There can be no assurance that the ongoing or planned clinical trials will be completed
in a timely or cost-effective manner or result in a commercially viable product. If we
experience delays in the completion of, or the termination of, a clinical trial of any of our
product candidates, the commercial prospects of that product candidate may be impacted, and
our ability to generate revenue from any of those product candidates may be delayed. In
addition, any delays in completing our clinical trials may increase our costs, slow down our
product candidate development process and approval process, and jeopardize our ability to
commercialize that product candidate. This may have a material adverse effect on business and
financial condition. Clinical trials of our product candidates may produce negative or
inconclusive results. Our future clinical trial results may not be favorable. Even if our future
clinical trial results show favorable efficacy, not all users may benefit. We cannot assure you
that our product candidates are able to suit the conditions of each clinical trial participant.
Our algorithms and methodologies are complex and may contain errors or may not operate
properly, which could adversely affect our business, financial condition and results of
operations.
Our algorithms and methodologies are crucial to our various types of DTx products. We
feed training data into our algorithms, which typically include patient demographic
information, clinical assessment information, and information collected when patients conduct
training sessions at different difficulty levels, such as patient’s performances, on, types of, and
difficulty levels of previous training sessions. Leveraging such information, our neural
networks (the “ DNN”) algorithms are constantly iterated and trained to timely adjust training
session content in the System and introduce the appropriate training for patients’ next-step
intervention, in order to improve patients’ cognitive functions. We cannot guarantee that the
above working mechanism of our algorithms can function properly as designed. If our
algorithms cannot access abundant and accurate information input to enable it to train and
iterate properly, or if our DNN or other algorithms cannot achieve the intended training and
iteration, the efficiency and efficacy of our System may be lower due to suboptimal task
recommendation and poorly personalized training sessions, which could materially adversely
affect our business operations and results of operations.
If we encounter difficulties enrolling participants in our clinical trials, our clinical
development activities could be delayed, result in increased costs and longer development
periods, or otherwise adversely affected.
Identifying, screening and enrolling of clinical trial participants are critical to our
success. We may not be able to identify and enroll a sufficient number of trial participants with
the required or desired characteristics in accordance with the eligibility criteria defined in our
protocols to complete our clinical trials in a timely manner. The timing of our clinical trials
depends on our ability to recruit participants to participate and remain in the trials until
conclusion, as well as to complete follow-up periods, when required.
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Our clinical trials will likely compete with other clinical trials for comparable product
candidates. This competition will reduce the number and types of trial participants available to
us. For example, some trial participants who might have opted to enroll in our trials may
instead opt to enroll in a trial being conducted by one of our competitors. In addition, because
the number of qualified clinical investigators and clinical trial sites is limited, we expect to
conduct some of our clinical trials at the same clinical trial sites that some of our competitors
use, which will reduce the number of trial participants available for our clinical trials at such
clinical trial sites.
Any delays in enrolling trial participants in our planned clinical trials could result in
increased costs, or may affect the timing or outcome of the planned clinical trials, which could
prevent completion of these trials and adversely affect our ability to advance the development
of our product candidates or indication expansions of existing products.
If we experience delays in enrolling a sufficient number of participants in our clinical
trials to meet relevant regulatory requirements or to generate meaningful statistical data, our
clinical trial costs may increase or our clinical trial phases may not be completed on time,
which may adversely affect our ability to advance the development of our product candidates
and obtain the necessary regulatory approvals in accordance with our current planned timeline.
Our product candidates may cause undesirable side effects or have other properties that
could delay or prevent their regulatory approval, or result in significant negative
consequences following regulatory approval, if any.
Although our products and current product candidates are mainly digital software systems
that are unlikely to cause physical harm to human body, there is a possibility that the patients
may suffer mental and emotional distress while using our products, even in a manner instructed
by qualified physicians. Some patients may suffer from anxiety or sleeping disorder when and
after using our System. If we or others identify undesirable side effects directly or indirectly
caused by our products, a number of potentially significant negative consequences could result,
including:
 regulatory authorities may withdraw clearance, authorization, or approvals of such
product;
 regulatory authorities may require additional warnings for the product;
 we may be required to issue safety communications to patients or healthcare
providers that outline the risks of such side effects;
 we could be sued and held liable for harm caused to patients; and
 our reputation may suffer.
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Any of these events could prevent us from achieving or maintaining market acceptance
of the particular product or product candidate and, as a result of negative impacts to our
reputation, our other products or product candidates and could significantly harm our business,
results of operations and prospects.
Risks Relating to Commercialization of Our Product Candidates
We have relatively limited experience in marketing and sales of our products, and rely on our
in-house marketing force to promote our products. If we are unable to develop and
successfully maintain adequate sales and commercial distribution capabilities, our business
and results of operations could be adversely affected.
We have relatively limited experience in launching, commercialization and marketing of
our System. We started to commercialize the System in June 2020 when we amended the
medical device registration certificate to include eight commercialized indications for the
System. We rely on our in-house sales and marketing team and third-party service providers to
market and promote our products. We incurred selling and distribution expenses of RMB10.8
million, RMB11.9 million, RMB38.4 million, RMB17.0 million and RMB25.4 million in 2021,
2022, 2023, and the six months ended June 30, 2023 and 2024, respectively. The success of our
marketing efforts depends on our ability to maintain and expand our relationships with
qualified service providers, and our ability to attract, motivate and retain qualified and
professional employees in our selling and distribution teams who have, among other things, the
sufficient expertise in brain sciences, virtual human and AI technology, and clinical trials, and
are able to communicate effectively with medical professionals. Competition for experienced
selling and distribution personnel is intense. However, we would have little or no control over
the selling and distribution efforts of third-party service providers. There can be no assurance
that we will be able to develop and successfully maintain our in-house sales and commercial
distribution capabilities or establish or maintain relationships with physicians, hospitals and
other third parties to successfully commercialize our products. If we are unable to maintain and
expand our relationships with qualified third-party service providers, or to attract, motivate and
retain a sufficient number of qualified personnel to support our selling and distribution efforts,
sales volumes or margin of our System and other products may be adversely affected and we
may be unable to extend our market coverage and deepen our market penetration as
contemplated.
In addition, we plan to continue to strengthen our cooperative relationship with hospitals
and physicians for enhancing our product awareness in the market. However, such promotional
activities may not be as effective as we expected, or may be impeded by unanticipated events,
which may cause a decline of our sales revenue, and have a material adverse effect on our
business, financial condition and results of operations.
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We mainly derived our revenue from services provided through our System. Failure to
achieve the anticipated revenue related to the System may have a material adverse impact on
our business and results of operations.
During the Track Record Period, a significant portion of our revenue was derived from
services that allow customers to use our System. We expect that the System will continue to
significantly contribute to our total revenue in the future. However, we cannot assure you that
demand for our System and other DTx products and services will continue to grow as
anticipated. There is also no assurance that we will be able to maintain our sales, which may
be adversely affected by many factors outside of our control, including downward pricing
pressure caused by changes in medical insurance coverage, binding pricing guidance, market
competition, expiration of patent protection, introduction of substitute products marketed by
our competitors, disruptions in sales, issues with respect to product quality or severe adverse
events incurred, and disputes over intellectual property or other matters with third parties. If
we are unable to maintain the sales volumes, pricing levels or profit margin of our medical
products, our business, financial condition and results of operations may be materially and
adversely affected.
The DTx market is relatively new. Failure to achieve broad market acceptance or maintain
good reputation among physicians, hospitals, patients and other customers could have a
material adverse impact on our business, results of operations and prospects.
If our products and any future approved product candidates fail to gain sufficient market
acceptance by hospitals, physicians, patients and third-party payors, among others, the sales of
our products may be adversely affected. In addition, hospitals, physicians, patients and
third-party payors may prefer other novel products to ours. If our products do not achieve an
adequate level of acceptance, we may not generate significant revenue and we may not become
profitable. The degree of market acceptance of our products and product candidates, if
approved for commercial sale, will depend on a number of factors, including:
 the clinical indications for which our products and product candidates are approved;
 perception by physicians, patients and hospitals of our products and product
candidates as safe and effective, and physicians’ willingness to recommend our
products for the assessment and intervention of cognitive impairment patients;
 the actual and perceived advantages of our products and product candidates over
alternative products;
 the prevalence and severity of any adverse effects or complications;
 the timing of market introduction of our products and product candidates as well as
competitive products;
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 the cost of our products in relation to alternatives;
 the availability of adequate coverage, reimbursement and pricing by third-party
payors and government authorities;
 the willingness of patients to pay out-of-pocket in the absence of coverage and
reimbursement by third-party payors and government authorities;
 the effectiveness of our sales and marketing efforts; and
 the operation smoothness of our System.
If any products that we commercialize fail to achieve market acceptance or if we fail to
maintain good relationships with customers or potential customers, we will not be able to
generate significant revenue. Even if our products achieve market acceptance, we may not be
able to maintain that market acceptance over time if new products or technologies introduced
are more favorably accepted by the market, more cost effective or render our products obsolete.
In addition, the operations of our System and other DTx products and product candidates may
encounter technical obstacles, and it is possible that we may discover additional technical
glitches that prevent System from operating properly. If our System does not function reliably
or fails to achieve expectations of our customers in terms of performance, we may be required
to divert resources allocated for other business purposes to address these issues, may suffer
reputational harm, lose or fail to grow our customer base, and may be subject to liability
claims.
We believe that enhancing and maintaining awareness of our “BrainAu” brand is critical
to achieving widespread acceptance of our cognitive impairment DTx products, gaining trust
for our various products and related support services, strengthening our relationships with our
existing customers and attracting new ones. Successful promotion of our brand depends largely
on the quality of the Systems and our other products and product candidates and services and
the effectiveness of our branding and marketing efforts. We expect that our branding and
marketing efforts will require us to incur significant expenses and devote substantial resources.
We cannot assure that our sales and marketing efforts will be successful. Brand promotion
activities may not lead to increased revenue in the near term, and, even if they do, any revenue
increases may not offset the expenses we incur to promote our brand. Our failure to establish
and promote our brand and any damage to our reputation will hinder our growth. In addition,
our reputation may be undermined as a result of the negative publicity about our Company or
our industry in general.
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Our sales may be affected by the level of medical insurance reimbursement patients receive.
Our ability to sell our services which grant customers access to use the System may be
affected by the then available medical insurance coverage in China. The relevant governmental
insurance coverage or reimbursement level in China varies from region to region, as local
government approvals for such coverage must be obtained in each geographic region in China.
In line with market practice, we make our System available for cognitive impairment patients
to use primarily in hospitals. The prices we charge is largely dependent on the amount charged
by hospitals, which is in turn determined by the price level set by the local provincial health
insurance reimbursement lists. In addition, the PRC government may change, reduce or
eliminate the governmental insurance coverage then available for DTx. As of the Latest
Practicable Date, our System had entered the health insurance reimbursement lists of 30
provinces in China. We cannot assure you that we can expand the number of provinces in China
where our System or other products or product candidates enter the provincial health insurance
reimbursement lists. To the extent that our products are not included in the medical insurance
reimbursement list or if any such insurance schemes are changed or cancelled which result in
any removal of our products from the medical insurance reimbursement list, patients may
choose, and hospitals may recommend, alternative options.
In the absence of sufficient medical insurance coverage, market demand for DTx may
drop, which could in turn materially and adversely affect our business, financial condition and
results of operations. Moreover, we may need to lower the prices of our products to have the
use of our products included in the then available medical insurance reimbursement list, and
such price cut and reimbursement may not necessarily lead to any increase in our sales and our
results of operations may be adversely affected.
Guidelines, recommendations and studies published by various organizations could disfavor
our product candidates.
Influential recommendations, guidelines and quality metrics issued by various
organizations and government authorities may significantly affect customers’ willingness to
purchase our products and services. For example, we have been deeply involved in the
publications of the first four expert consensus in the field of cognitive impairment DTx in
China. In particular, in March 2023, we co-authored the “Chinese expert consensus on digital
therapeutics for cognitive impairment (2023 edition)” (΍ᗆ
(2023) ) which for the first time in China systematically defined cognitive impairment DTx,
according to Frost & Sullivan. In addition, three expert consensus and one guideline published
from 2021 to 2023 have referenced our article published on “Alzheimer’s & Dementia”
(the “ A&D Journal ”) in 2019. If any such recommendations, guidelines and quality metrics
that are currently favorable to us are later updated, overturned or modified, or otherwise
interpreted in a manner unfavorable to us, our results of operations and prospects may be
adversely affected.
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Our commercialization efforts to date have focused primarily on China. Our ability to enter
other foreign markets will depend, among other things, on our ability to navigate various
regulatory regimes with which we do not have experience, which could delay or prevent the
growth of our operations outside of China.
To date, our commercialization efforts have focused primarily on China. Expanding our
business to attract customers in other countries and regions is an element of our long-term
business strategy. Our ability to continue to expand our business and to attract talented
employees and customers in various international markets will require considerable
management attention and resources and is subject to the particular challenges of supporting
a rapidly growing business in an environment of multiple languages, cultures, customs, legal
systems, alternative dispute resolution systems, regulatory systems and commercial
infrastructures. Entering new international markets will be expensive, our ability to
successfully gain market acceptance in any particular market is uncertain and the distraction
of our senior management team could harm our business, financial condition and results of
operation.
Sales of our products outside of China are subject to foreign regulatory requirements that
vary widely from country to country. In addition, while the regulations of some countries may
not impose barriers to marketing and selling our products or only require notification, others
require that we obtain the marketing authorization of a specified regulatory body. Complying
with foreign regulatory requirements, including obtaining registrations or marketing
authorizations, can be expensive and time-consuming, and we may not receive regulatory
authorizations, clearances or approvals in each country in which we may plan to market our
products or we may be unable to do so on a timely basis. The time required to obtain
registrations or marketing authorizations, if required by other countries, may be longer than
that required for NMPA clearance, authorization, or approval, and requirements for such
registrations and marketing authorizations may significantly differ from NMPA requirements.
If we modify our products, we may need to apply for additional regulatory authorizations
before we are permitted to sell the modified product. In addition, we may not continue to meet
the quality and safety standards required to maintain the authorizations that we have received.
If we are unable to maintain our authorizations in a particular country, we may no longer be
able to sell the applicable product in that country. A failure or delay in obtaining registration
or marketing authorization in one country may have a negative effect on the regulatory process
in others.
Doing business internationally also involves a number of additional risks, including data
security risks, intellectual property protection, financial risks, and other force majeure factors.
These risks and uncertainties may impact our ability to enter foreign markets, which could
delay or prevent the growth of our operations overseas, and have a material adverse effect on
our business, prospects, results of operations and financial condition.
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The actual market size of our products and product candidates may be smaller than we
anticipate, which could render them ultimately unprofitable even if commercialized.
Our spending on our cognitive impairment DTx product portfolio may not yield any
additional commercially viable products, since the actual market size for them may be smaller
than we anticipate. For example, the DTx market in China is emerging and our products and
product candidates are considered as relatively novel. In addition, there may be other available
treatment methods for our target market, and other players developing similar DTx treatment
methods in the target markets that may be more competitive than us, which may further limit
the market opportunities of our products. As such, the target markets for our products and
product candidates may not consist of as many market opportunities as we expect, which could
have a material adverse effect on the profitability of our product candidates even if
commercialized.
Risks Relating to Extensive Government Regulation
All material aspects of the research, development and commercialization of our products are
heavily regulated.
All jurisdictions in which we conduct our research, development and commercialization
activities regulate these activities in great depth and detail. We intend to focus our activities
in the major markets of China, the EU and the United States. These jurisdictions all have strict
regulations on medical devices, and in doing so they employ broadly similar regulatory
strategies, including regulation of product development, approval, manufacturing, sales and
marketing and distribution of medical devices. However, there are differences in the regulatory
regimes in different jurisdictions, which makes regulatory compliance more complex and
costly for companies like ours that plan to commercialize our products in each of these
jurisdictions.
The process of obtaining regulatory approvals and compliance with appropriate laws and
regulations require substantial time and financial resources. The NMPA, EMA, FDA or a
comparable regulatory authority may require more information, including additional
preclinical or clinical data, to support approval, which may delay or prevent approval and our
commercialization plans. Even if we were to obtain approval, regulatory authorities may
approve any of our product candidates for fewer or more limited indications than we request,
grant approval contingent on the performance of costly post-marketing clinical trials, or
approve a product candidate with an indication that is not desirable for the successful
commercialization of that candidate. Legislative and regulatory proposals may also, from time
to time, be made to expand existing requirements.
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The regulatory approval processes of the NMPA, its local counterparts and other comparable
regulatory authorities are lengthy, time-consuming and inherently unpredictable. The denial
or delay of any such approval would delay development and commercialization of our System
and other product candidates and adversely impact our potential to generate revenue, our
business and our results of operations.
The process to develop and obtain regulatory approval for and commercialize medical
device product candidates is long, complex and costly in China and overseas.
In China, before obtaining regulatory approvals for the commercial sale of our products
for a specific indication, we must demonstrate in preclinical studies and well-controlled
clinical trials, and, to the satisfaction of the NMPA or its local counterparts, that the product
is safe and effective for use for that indication. We are also required to report any serious or
potentially serious incidents involving our products to the NMPA or its local counterparts. We
cannot be certain that any submissions will be accepted for filing and review by the NMPA or
its local counterparts, and the review timeline may be subject to uncertainty.
Our product candidates could fail to receive regulatory approval for many reasons,
including:
 failure to begin or complete clinical trials due to various factors, including
disagreements with regulatory authorities;
 failure to demonstrate that a product candidate is safe and effective;
 failure to deliver clinical trial results that meet the level of statistical significance
required for approval;
 data integrity issues related to our clinical trials;
 regulatory authority’s disagreement with our interpretation of data from preclinical
studies or clinical trials;
 changes in approval policies or regulations that render our preclinical and clinical
data insufficient for approval or require us to amend our clinical trial protocols;
 regulatory requests for additional analysis, reports, data, nonclinical studies and
clinical trials, or questions regarding our interpretation of data and results and the
emergence of new information regarding our product candidates;
 our failure to conduct a clinical trial in accordance with regulatory requirements or
our clinical trial protocols; and/or
 clinical sites, investigators or other participants in our clinical trials deviating from
a trial protocol, failing to conduct the trial in accordance with regulatory
requirements, or dropping out of a trial;
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Comparably, regulatory authorities outside of China also have requirements for approval
of medical devices for commercial sale with which we must comply prior to marketing in those
jurisdictions. However, regulatory requirements can vary widely from jurisdiction to
jurisdiction. Obtaining regulatory approval in one jurisdiction does not mean that the
regulatory approval will be obtained in any other jurisdiction. Approval processes vary among
jurisdictions and can involve additional product testing and validation, and additional
administrative review periods. Seeking foreign regulatory approval may include all of the risks
associated with obtaining NMPA approval (and its local counterparts), and could require
additional nonclinical studies or clinical trials. For these reasons, we may incur substantial
time and financial resources to bring our products to overseas markets in compliance with
different regulatory processes. The introduction of our product candidates in these markets
could be delayed or prevented, as we may not obtain relevant regulatory approvals on a timely
basis, or at all.
In addition, changes in regulatory requirements and guidance may also occur. We may
need to amend clinical trial protocols submitted to applicable regulatory authorities to reflect
these changes. Amendments may impact the costs, timing or successful completion of a clinical
trial.
Even if our product candidates were to successfully obtain approval from the regulatory
authorities, any approval might significantly limit the approved indications for use, or require
that precautions, contraindications or warnings be provided to users, or require expensive and
time-consuming post-approval clinical trials or surveillance as conditions of approval.
Following an approval for commercial sale of our product candidates, certain changes, such as
changes in design, may be required by the NMPA and/or comparable regulatory authorities.
Regulatory approvals for any of our product candidates may also be withdrawn.
If we are unable to obtain regulatory approval for our product candidates in one or more
jurisdictions, or any approval contains significant limitations, our target market will be reduced
and our ability to realize the full market potential of our product candidates will be harmed.
Furthermore, we may not be able to generate sufficient revenue and cash flows or obtain
sufficient funding to continue the development of any other product candidates in the future.
Our product as applied under existing and expanded indications will continue to remain
subject to ongoing or additional regulatory obligations and continued regulatory review,
which may result in significant additional expenses, and we may be subject to penalties if we
experience unanticipated problems with our future approved systems.
Our products and any additional product candidates that are approved by the regulators
are and will be subject to ongoing regulatory requirements with respect to advertising,
promotion, sampling, record-keeping, post-market studies, submission of safety, efficacy, and
other post-market information, and other requirements of regulatory authorities in China, the
EU, the United States, and/or other jurisdictions where we may market or sell our products. We
are and will be subject to continual review and inspections by the regulators to assess our
compliance with applicable laws, requirements, and adherence to commitments we made in any
application materials with the NMPA or other comparable regulatory authorities. Accordingly,
we must continue to devote time, money and effort to all areas of regulatory compliance.
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If problems occur after our products reach the market, the NMPA or other comparable
regulatory authorities may seek to impose a consent decree or withdraw marketing approval.
Later discovery of previously unknown problems with our products or product candidates may
result in requirements to conduct post-market studies or clinical studies to assess new safety
risks or the imposition of distribution restrictions or other restrictions. Other potential
consequences include, among other things:
 restrictions on the marketing or commercialization of our products, withdrawal of
the products from the market, or voluntary or mandatory product recalls;
 fines, untitled or warning letters, or holds on clinical trials;
 refusal by the NMPA or comparable regulatory authorities to approve pending
indications or applications or supplements to approved indications or applications
filed by us or suspension or reduce the scope of previously issued medical device
registration certificate;
 product seizure or detention, or refusal to permit the import or export of our
products and product candidates; and/or
 injunctions or the imposition of civil, administrative or criminal penalties.
We cannot predict the likelihood, nature or extent of governmental policies or regulations
that may arise from future legislation or administrative actions in all relevant jurisdictions. If
we are slow or unable to adapt to changes in existing requirements or the adoption of new
requirements or policies, or if we are unable to maintain regulatory compliance, we may lose
any regulatory approval that we have obtained and we may not achieve or sustain profitability.
The regulatory framework for DTx products is constantly evolving. Increasingly stringent
regulatory requirements could create barriers to our development and introduction of new
products. Conversely, in the event that regulatory requirements are lowered, competitors
could potentially enter the DTx market and compete against us more easily.
Our DTx products are novel and represent a new category of therapeutics for which the
regulatory framework continues to evolve. Our ability to expand indications for existing
products or to seek renewal of existing market authorizations will depend, in part, on our
ability to comply with these complex requirements, which include regulations related to
product design and development, clinical trials, pre-market clearance, authorization, approval,
and marketing, sales and distribution. Maintaining compliance under such evolving
framework is highly technical and complex, and may consume significant management and
financial resources. Increasing regulatory requirements could lead to higher spending
and development barrier in our efforts to introduce new products to market, which could
materially adversely affect our business, results of operations and financial condition. If,
however, the regulatory framework for DTx products simplifies and the requirements that we
and others are required to comply with are lowered, it could result in the increased competition
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and the introduction by competitors of products that are or claim to be superior to our products.
For example, if the DTx regulation in China no longer grants Class II or Class III medical
device classification to DTx products, and the accompanying clinical validation of DTx safety
and efficacy is no longer required for such regulatory approval, it may significantly lower our
competitive advantages and entry barriers for potential players to launch products that may
compete with ours.
Recently enacted and future legislation may increase the difficulty and cost for us to obtain
regulatory approval of and commercialize new product candidates or existing ones under
expanded indications and affect the prices we may be able to charge.
In China, the EU, the United States, and some other jurisdictions, a number of legislative
and regulatory changes and proposed changes regarding healthcare could prevent or delay
regulatory approval of our product candidates, restrict or regulate post-approval activities and
affect our ability to profitably sell our products and any product candidates for which we obtain
regulatory approval. In recent years, there have been and will likely continue to be efforts to
enact administrative or legislative changes to healthcare laws and policies, including measures
that may result in more rigorous coverage criteria and downward pressure on the price we
receive for any approved product. Any reduction in reimbursement from government programs
may result in a similar reduction in payments from private payors. The implementation of cost
containment measures or other healthcare reforms may prevent us from being able to
commercialize our products, generate revenue, or attain profitability.
Legislative and regulatory proposals have been made to expand post-approval
requirements and restrict sales and promotional activities for medical devices. We cannot be
sure whether additional legislative changes will be enacted, or whether NMPA, EMA, FDA or
other comparable regulatory agency’s regulations, guidance or interpretations will be changed,
or what the impact of such changes on the regulatory approvals of our product candidates, if
any, may be. For example, according to the Regulations on the Supervision and Administration
of Medical Devices (2021 Revision) ( ᔼᐕኜ૛္ຖ၍ଣૢԷ(2021ࠈࡌ)) effective on
June 1, 2021, medical device companies are required to establish a quality management system
and monitor and evaluate post-approval risks and adverse events caused by the products. In
addition, laws and regulations in China, including those regulating DTx products and medical
devices, may be amended from time to time. Changes in these areas could impose more
stringent requirements on us and increase our compliance and other operating costs, and we
may not be able to achieve or sustain profitability.
Privacy and data protection laws and regulations could have an implication on our
reputation and customer preference.
In recent years, privacy and data protection has become an increasing regulatory focus of
government authorities across the world. In China, where we operate substantially all our
businesses, the PRC government has enacted a series of laws and regulations on the protection
of personal data in the past few years. For example, regulatory authorities in China are
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considering a number of legislative and regulatory proposals concerning data protection. The
PRC Data Security Law (), or the Data Security Law, which
was promulgated by the Standing Committee of the National People’s Congress on June 10,
2021 and came into effect on September 1, 2021, outlines the regulatory framework of data
security protection. The Opinions on Strictly Cracking Down on Illegal Securities Activities in
Accordance with the Law (จԈ), which were issued by
the General Office of the State Council on July 6, 2021, require to speed up the revision of
legislation on strengthening the confidentiality and archives coordination between regulators
related to overseas issuance and listing of securities, and improvement to the legislation on data
security, cross-border data flow, and management of confidential information.
When conducting our business, we may have access to certain patient data. The personal
information of patients or participants for our clinical trials and other clinical and business
activities is highly sensitive and we are subject to strict requirements under the applicable data
privacy and protection regulations. Accordingly, we have adopted various security policies and
measures to ensure legal compliance regarding privacy and data protection. Our Directors are
of the view that, during the Track Record Period and up to the Latest Practicable Date, we were
in compliance with all applicable PRC laws and regulations with respect to privacy and
personal data protection in all material respects. For details, see “Business—Data Privacy and
Protection.” While we have adopted these measures to protect our proprietary data and
patients’ privacy, privacy leakage incidents might not be avoided due to human error, employee
misconduct or system breakdown. In addition, we cooperate with third parties, including
principal investigators, hospitals, CROs, and other related parties, for our clinical trials. Any
leakage or abuse of patient and customer data by our third-party partners may be perceived by
the patients and customer as a result of our failure. Furthermore, we may be required by
business partners from time to time to upgrade our products to help them comply with such
laws and regulations.
The laws and regulations regarding privacy and data protection in China as well as other
jurisdictions are generally complex and evolving, with uncertainty as to the interpretation and
application thereof. Maintaining compliance under such complex and evolving framework is
crucial to maintaining our reputation and business customers’ preference for our products.
However, maintaining such compliance is highly technical and complex, and may consume
significant management and financial resources.
We may be restricted from transferring our scientific data abroad.
We may in the future conduct clinical trials, registration and post-market surveillance of
our products and product candidates in different jurisdictions, which involve the collection and
storage of personal health information for scientific purposes, and it may require cross-border
transfer of personal or scientific data, which subjects us to relevant laws and regulations. Our
transfer of data may be limited or even restricted if the information is considered of national
security interest in certain jurisdictions in which case, our business may be adversely affected
as a result.
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On March 17, 2018, the General Office of the State Council promulgated the Measures
for the Management of Scientific Data (), or the Scientific Data
Measures, which provide a broad definition of scientific data and relevant rules for the
management of scientific data. According to the Scientific Data Measures, enterprises in China
must seek governmental approval before any scientific data involving a state secret may be
transferred abroad or to foreign parties. Further, any researcher conducting research funded at
least in part by the Chinese government is required to submit relevant scientific data for
management by the entity to which such researcher is affiliated before such data may be
published in any foreign academic journal. To the extent our R&D of our DTx product
candidates are subject to the Scientific Data Measures and any subsequent laws as required by
the relevant government authorities, if we are unable to obtain necessary approvals in a timely
manner, or at all, our R&D of product candidates may be hindered, which may materially and
adversely affect our business, operations, financial conditions and prospects. If the relevant
government authorities consider the transmission of our scientific data to be in violation of the
requirements under the Scientific Data Measures, we may be subject to fines and other
administrative penalties imposed by those government authorities. Moreover, Cyberspace
Administration of China issued the Measures on Security Assessment of the Cross-border
Transfer of Personal Information (Draft for Comment) (ج(ᅄӋจ
Ԉᇃ)) in June 2019, pursuant to which, any cross-border transfer of information that may
endanger national security, damage public interest, or fail to offer effective protection of
personal information security, as assessed by relevant regulatory bodies, will be prohibited. It
is unclear if and the extent to which our clinical data will be considered as an endangerment
to national or personal information security, if the regulation becomes effective. On July 7,
2022, the CAC published the Measures for the Security Assessment of Outbound Data
Transmission () which took effect on September 1, 2022. It
specifies the circumstances in which data processors providing data outbound shall apply for
outbound data transfer security assessment with the Cyberspace Administration, including,
among others, the exit data contains important data. There remain uncertainties whether we
would be subject to the outbound data transfer security assessment.
Cross-border data transfer from other jurisdictions may also be limited. For example,
cross-border data transfer from the EU to abroad is governed by the General Data Protection
Regulation. Also, cross-border transfer of personal data by its nature is subject to general data
privacy regulations in various jurisdictions, and may lead to a restriction of transferring our
data across different jurisdictions.
The permit, filing or other requirements of the CSRC or other PRC government authorities
in relation to our proposed listing or further capital raising activities may be required under
PRC laws.
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 Strictly
Cracking Down on Illegal Securities Activities (จԈ),
which emphasized the need to strengthen the administration over illegal securities activities,
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and the supervision over overseas listings by domestic companies. Stringent measures aimed
at establishing a robust regulatory system are expected to be taken to deal with the risks
associated with overseas listed companies based in or having significant operations in China,
and to tackle any related cybersecurity and data security, cross-border data transmission, and
confidential information management, among other matters.
Further, on February 17, 2023, the CSRC released the Trial Administrative Measures of
the Overseas Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯Бᗇ
) and five ancillary interpretive guidelines (collectively, the
“Overseas Listing Trial Measures”), which apply to overseas offerings and listing by domestic
companies of equity shares, depository receipts, corporate bonds convertible to equity shares,
and other equity securities, and will come into effect on March 31, 2023. According to the
Overseas Listing Trial Measures, overseas offering and listing by domestic companies shall be
made in strict compliance with relevant laws, administrative regulations and rules concerning
national security in spheres of foreign investment, cybersecurity, data security and etc., and
duly fulfill their obligations to protect national security, and the domestic companies may be
required to rectify, make certain commitment, divest business or assets, or take any other
measures as per the competent authorities’ requirements, so as to eliminate or avert any impact
of national security resulting from such overseas offering and listing. No overseas offering and
listing shall be made under any of the following circumstances: (i) such securities offering and
listing is explicitly prohibited by provisions in laws, administrative regulations and relevant
state rules; (ii) the intended securities offering and listing may endanger national security as
reviewed and determined by competent authorities under the State Council in accordance with
law, among other scenarios. The Overseas Listing Trial Measures provide that if an issuer
meets both of the following conditions, the overseas securities offering and listing conducted
by such issuer will be determined as an indirect overseas offering and listing subject to the
filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the
issuer’s operating revenue, total profit, total assets or net assets as documented in its audited
consolidated financial statements over the same period for the most recent accounting year is
accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities
are conducted in the Chinese Mainland, or its main places of business are located in the
Chinese Mainland, or the senior managers in charge of its business operation and management
are mostly Chinese citizens or domiciled in the Chinese Mainland. For an initial public offering
and listing in an overseas market, the issuer shall designate a major domestic operating entity
to file with the CSRC within 3 working days after the relevant application is submitted
overseas. Based on the foregoing, we will be required to complete the filing procedures with
the CSRC in connection with the proposed listing pursuant to the Overseas Listing Trial
Measures.
We cannot assure you that we could meet such requirements, obtain such permit from the
relevant government authorities, or complete such filing in a timely manner or at all. Any
failure may restrict our ability to complete the proposed listing or any future capital raising
activities, which would have a material adverse effect on our business and financial positions.
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Risks Relating to Our Intellectual Property Rights
If we and our current or future collaboration partners are unable to protect our intellectual
property rights throughout the world, or if the scope of such intellectual property rights
obtained is not sufficiently broad, third parties may compete directly against us and our
ability to successfully commercialize our products and product candidates may be adversely
affected.
Our success depends in large part on our ability to protect our proprietary technology,
products and product candidates from competition by obtaining, maintaining and enforcing our
intellectual property rights, including patent rights and trade secrets. We seek to protect the
technology, products and product candidates that we consider commercially important by filing
patent applications in China, the U.S., the EU and other jurisdictions, relying on trade secrets
or medical regulatory protection or employing a combination of these methods. This process
is expensive and time-consuming, and we may not be able to file and prosecute all necessary
or desirable patent applications at a reasonable cost or in a timely manner. We may also fail
to identify patentable aspects of our research and development output before it is too late to
obtain patent protection. As a result, we may not be able to prevent competitors from
developing and commercializing competitive products in all such fields and territories through
intellectual property protection.
Patents may be invalidated and patent applications may not be granted for a number of
reasons, including known or unknown prior deficiencies in the patent application or the lack
of novelty or inventiveness of the underlying invention or technology. We may also fail to
identify patentable aspects of our research and development output in time to obtain patent
protection. Although we enter into nondisclosure and confidentiality agreements or include
such provisions in our relevant agreements with parties who have access to confidential or
patentable aspects of our research and development output, such as our employees, consultants,
advisors, hospitals, and other third parties, any of these parties may breach such agreements
and disclose such output before a patent application is filed, jeopardizing our ability to seek
patent protection. In addition, publications of discoveries in the scientific literature often lag
behind the actual discoveries. Patent applications in China and other jurisdictions are typically
not published until 18 months after filing, or in some cases, not at all. Under the Patent Law
of the PRC () promulgated by the Standing Committee of the
National People’s Congress (the “NPC”) of the PRC, as amended, patent applications are
generally maintained in confidence until their publication at the end of 18 months from the
filing date. The publication of discoveries in the scientific or patent literature frequently occurs
substantially later than the date on which the underlying discoveries were made and the date
on which patent applications were filed. Therefore, we cannot be certain that we were the first
to make the inventions claimed in our patents or pending patent applications or that we were
the first to file for patent protection of such inventions.
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Furthermore, the PRC has adopted the “first-to-file” system under which whoever first
files a patent application will be awarded the patent if all other patentability requirements are
met. The United States also moved to this “first-to-file” system in early 2013 through the
America Invents Act that was enacted in 2011. Under the first-to-file system, even after
reasonable investigation we may be unable to determine with certainty whether any of our
products, processes, technologies, inventions, improvement and other related matters have
infringed upon the intellectual property rights of others, because such third party may have
filed a patent application without our knowledge while we are still developing that product, and
the term of patent protection starts from the date the patent was filed, instead of the date it was
issued. Therefore, the validity of issued patents, patentability of pending patent applications
and applicability of any of them to our product development programs may be lower in priority
than third-party patents issued on a later date if the application for such patents was filed prior
to ours and the technologies underlying such patents are the same or substantially similar to
ours. In addition, we may be involved in claims and disputes of intellectual property
infringement in other jurisdictions (for example, in the United States). In addition, under PRC
patent law, any organization or individual that applies for a patent in a foreign country for an
invention or utility model accomplished in China is required to report to the China National
Intellectual Property Administration (the “ CNIPA”) for confidentiality examination.
Otherwise, if an application is later filed in China, the patent right will not be granted.
The coverage claimed in a patent application can be significantly reduced before the
patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications
we own currently, or we may own or license in the future, are to be issued as patents, they may
not be issued in a form that will provide us with any meaningful protection, prevent
competitors or other third parties from competing with us, or otherwise provide us with any
competitive advantage. In addition, the patent position of medical device companies generally
is highly uncertain, involves complex legal and factual questions, and has been the subject of
much litigation in recent years. As a result, the issuance, scope, validity, enforceability and
commercial value of our patent rights are highly uncertain.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or
enforceability, and our patents may be challenged in the courts or patent offices in the PRC,
the United States and other jurisdictions. We may be subject to a third-party preissuance
submission of prior art to the CNIPA, the United States Patent and Trademark Office (the
“USPTO ”) or other related intellectual property offices, or become involved in post-grant
proceedings such as opposition, derivation, revocation, invalidation and re-examination, or
inter partes review, or interference proceedings or similar proceedings in foreign jurisdictions
challenging our patent rights or the patent rights of others. An adverse determination in any
such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent
rights, allow third parties to commercialize our technology, products or product candidates and
compete directly with us without payment to us, or result in our inability to develop or
commercialize products and product candidates without infringing, misappropriating or
otherwise violating third-party patent rights. Moreover, we may have to participate in
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interference proceedings declared by the USPTO or other related intellectual property offices
to determine priority of invention or in post-grant challenge proceedings, such as invalidation
in the CNIPA or oppositions in a foreign patent office, that challenge the priority of our
invention or other features of patentability of our patents and patent applications. Such
challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being
narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from
using or commercializing similar or identical technology and products, or limit the duration of
the patent protection of our technology, products and product candidates. Such proceedings
also may result in substantial costs and require significant time from our scientific, technical
and management personnel, even if the eventual outcome is favorable to us. Consequently, we
do not know whether any of our technologies, products or product candidates will be
protectable or remain protected by valid and enforceable patents. Our competitors or other
third parties may be able to circumvent our patents by developing similar or alternative
technologies or products in a non-infringing manner.
Furthermore, though various extensions may be available, the life of a patent and the
protection it affords is limited. We may face competition for any approved product candidates
even if we successfully obtain patent protection once the patent life has expired for the product.
The issued patents and pending patent applications, if issued, for our products and product
candidates are expected to expire on various dates as described in “Business—Intellectual
Property Rights.” Upon the expiration of our issued patents or patents that may be issued from
our pending patent applications, we will not be able to assert such patent rights against
potential competitors and our business and results of operations may be adversely affected.
Given the amount of time required for the development, testing and regulatory review of
new product candidates, patents protecting such product candidates might expire before or
shortly after such product candidates are commercialized. As a result, our patents and patent
applications may not provide us with sufficient rights to exclude others from commercializing
products similar or identical to ours. Moreover, some of our patents and patent applications are,
and may in the future be, co-owned with third parties. If we are unable to obtain an exclusive
license to any such third-party co-owners’ interest in such patents or patent applications, such
co-owners may be able to license their rights to other third parties, including our competitors,
and our competitors could market competing products and technology. In addition, we may
need the cooperation of any such co-owners of our patents to enforce such patents against third
parties, and such cooperation may not be provided to us. Any of the foregoing could have a
material adverse effect on our competitive position, business, financial conditions, results of
operations and prospects.
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Claims that our System or the sale or use of our future products infringes, misappropriates
or otherwise violates the patent or other intellectual rights of third parties could result in
costly litigation with an uncertain outcome, or could have material adverse effects on our
reputation and result in additional expense and distraction of our personnel, even if
litigation is avoided.
Our commercial success depends in part on our avoiding infringement upon,
misappropriating, or otherwise violating the patents and other intellectual property rights of
third parties. We are aware of numerous issued patents and pending patent applications
belonging to third parties that exist in fields in which we are developing our product
candidates.
We may also be unaware of third-party patents or patent applications, and given the
dynamic area in which we operate, additional patents are likely to be issued that relate to
aspects of our business. There are a substantial amount of litigation and other claims and
proceedings involving patent and other intellectual property rights in the medical device
industry generally. As the medical device industry expands and more patents are issued, the
risk increases that our product candidates may give rise to claims of infringement of the patent
rights of others.
Third parties may assert that we are using technology in violation of their patent or other
proprietary rights. Even in the absence of litigation, we may seek to obtain licenses from third
parties to avoid the risks of litigation, and if a license is available, it could impose costly
royalty and other fees and expenses on us. If third parties bring successful claims against us
for infringement of their intellectual property rights, we may be subject to injunctive or other
equitable relief, which could prevent us from developing and commercializing one or more of
our product candidates or expanding the indication coverage of our products. Defense of these
claims, regardless of their merit, would involve substantial litigation expense and would
substantially divert attention of our scientific, technical and management personnel and
consume other resources. In the event of a successful claim against us of infringement or
misappropriation, or a settlement by us of any such claims, we may have to pay substantial
damages, such as treble damages, and attorneys’ fees in the case of willful infringement, pay
royalties or redesign our infringing product candidates, which may be impossible or require
substantial time and cost. In the event of an adverse result in any such litigation, or even in the
absence of litigation, we may need to obtain licenses from third parties to advance our research
or allow commercialization of our product candidates. Any such license might not be available
on reasonable terms, or at all. If we are unable to obtain such a license, we would be unable
to further develop and commercialize one or more of our product candidates, which could harm
our business significantly. We may also elect to enter into license agreements to settle patent
infringement claims or to resolve disputes prior to litigation, and any such license agreements
may require us to pay royalties and other fees that could significantly harm our business.
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In particular, we in-license the speech recognition technology to support our virtual
human technology. See “Business—Our Technologies—Virtual Human” for more details. If the
in-licensed technology infringes upon, or receives allegation that it infringes upon, the
intellectual property rights of others, or leads to violation of data privacy and protection laws
and regulations, we may be involved in litigation, government investigations and/or other legal
proceedings, and be found liable for such infringements and/or violations. Even if the licensor
is ultimately responsible, we may be nevertheless responsible to pay fines, damages, incur
substantial legal costs, and have to divert significant managerial resources during the process,
and may not be able to ultimately seek and obtain full indemnification from the licensor.
Even if litigation or other proceedings are resolved in our favor, there could be public
announcements of the results of hearings, motions or other interim proceedings or
developments, and if securities analysts or investors perceive these results to be negative, this
could have a substantial adverse effect on the market price of our Shares. Such litigation or
proceedings could substantially increase our operating losses and reduce the resources
available for development activities or any future sales, marketing or distribution activities. We
may not have sufficient financial or other resources to adequately conduct such litigation or
proceedings. Some of our competitors may be able to sustain the costs of such litigation or
proceedings more effectively than we can because of their greater financial resources. Our
Directors confirm that during the Track Record Period and up to the Latest Practicable Date,
we were not involved in any proceedings in respect of intellectual property right infringement
claims against us or initiated by us. However, there can be no assurance that we would not be
involved in such proceedings in the future. Uncertainties resulting from the initiation and
continuation of patent litigation or other proceedings could have a material adverse effect on
our ability to compete in the marketplace.
Patent terms are limited and thus may be inadequate to protect our competitive position on
our products and product candidates for an adequate amount of time.
In most jurisdictions in which we plan to file applications for patents, the term of a
granted patent is generally 10 to 20 years from the earliest claimed filing date of a
non-provisional patent application in the applicable jurisdictions. Although various extensions
may be available, the life of a patent and the protection it affords are limited. Even if patents
covering our services and products are obtained, we may be open to competition from other
companies once our patent rights expire.
As of the Latest Practicable Date, we had been granted 63 patents. Our granted patents
have expiration dates ranging from 2032 to 2044. We also had 136 patent applications in China
and four pending patent applications overseas as of the Latest Practicable Date. If patents are
granted based on these pending patent applications, the resulting patents will be expected to
expire ranging from 2041 to 2043, excluding any potential patent term extension or adjustment.
Upon expiration of our issued patent or patents that may issue from our pending patent
application, and without patent term extensions, we will not be able to assert such patent rights
against potential competitors and our business and results of operation may be adversely
affected.
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Changes in patent law may reduce the value of patents in general, thereby impairing our
ability to protect our products candidates.
Depending on decisions by the NPC and the CNIPA, the laws and regulations governing
patents could change in a way that would weaken our ability to obtain new patents or to enforce
our existing patents and patents that we might obtain in the future. The United States has
enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S.
Supreme Court rulings have narrowed the scope of patent protection available in certain
circumstances and weakened the rights of patent owners in certain situations. There could be
similar changes in the laws of other jurisdictions that may impact the value of our patent rights
or our other intellectual property rights. In addition to increasing uncertainty with regard to our
ability to obtain patents in the future, this combination of events has created uncertainty with
respect to the value of patents once obtained, if any.
Our intellectual property may be subject to further priority or ownership disputes and similar
proceedings. Should we be unsuccessful in any of these proceedings, we might be required
to obtain licenses from third parties, in terms not necessarily commercially reasonable to us,
or to cease the development and commercialization of one or more of our product candidates
under different indications, which could have a material adverse impact on our business.
We or our licensors may be subject to claims that former employees, collaborators or
other third parties have an interest in our owned or in-licensed patents or other intellectual
property as an inventor or co-inventor. If we or our potential future licensors are unsuccessful
in any interference proceedings or other priority or validity disputes (including any patent
oppositions) to which we or they are subject, we may lose valuable intellectual property rights
through the loss of one or more patents owned or licensed or our owned or licensed patent
claims may be narrowed, invalidated, or held unenforceable. In addition, if we or our potential
future licensors are unsuccessful in any inventorship disputes to which we or they are subject,
we may lose valuable intellectual property rights, such as exclusive ownership of, or the
exclusive right to use, our owned or in-licensed patents. If we or potential licensors are
unsuccessful in any interference proceeding or other priority or inventorship dispute, we may
be required to obtain and maintain licenses from third parties, including parties involved in any
such interference proceedings or other priority or inventorship disputes. Such licenses may not
be available on commercially reasonable terms or at all or may be non-exclusive. If we are
unable to obtain and maintain such licenses, we may need to modify or cease the development
and commercialization of one or more of our product candidates or cease indication expansion
of our products. The loss of exclusivity or the narrowing of our owned and licensed patent
claims could limit our ability to stop others from using or commercializing similar DTx
products.
Any of the foregoing could result in a material adverse effect on our business, financial
condition, results of operations, or prospects. Even if we are successful in an interference
proceeding or other similar priority or inventorship disputes, it could result in substantial costs
and be a distraction to our management and other employees.
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If we are unable to protect the confidentiality of our trade secrets, or if third parties assert
that our employees, consultants, collaborators or partners have wrongfully used or disclosed
confidential information or misappropriated trade secrets, our business and competitive
position would be materially adversely affected.
In addition to our granted patent and pending patent applications, we rely on trade secrets,
including unpatented know-how, technology and other proprietary information, to maintain our
competitive position and to protect our products and product candidates. We seek to protect
these trade secrets, in part, by entering into non-disclosure and confidentiality agreements or
include such undertakings in the agreement with parties that have access to them, such as our
employees, hospitals, consultants, advisors and other third parties. We also enter into
employment agreements or consulting agreements with our employees and consultants that
includes undertakings regarding assignment of inventions and discoveries. However,
nondisclosure agreements with employees, consultants, hospitals and other parties may not
adequately prevent disclosures of our trade secrets and other proprietary information. Any of
these parties may breach such agreements and disclose our proprietary information, and we
may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party
illegally disclosed or misappropriated a trade secret can be difficult, expensive and time
consuming, and the outcome is unpredictable. If any of our trade secrets were lawfully obtained
or independently developed by a competitor, we would have no right to prevent them from
using that technology or information to compete with us and our competitive position would
be harmed.
Although we try to ensure that our employees do not use the proprietary information or
know-how of others in their work for us, we may be subject to claims that we or these
employees have used or disclosed intellectual property, including trade secrets or other
proprietary information, of any such employee’s former employer. We are not aware of any
material threatened or pending claims related to these matters or concerning the agreements
with our management team, but in the future litigation may be necessary to defend against such
claims. If we fail in defending any such claims, in addition to paying monetary damages, we
may lose valuable intellectual property rights or personnel. Even if we are successful in
defending against such claims, litigation could result in substantial costs and be a distraction
to management.
In addition, while we typically require our employees, consultants and third parties
involved in the development of intellectual property to execute agreements assigning such
intellectual property to us, we may be unsuccessful in executing such an agreement with each
party who in fact develops intellectual property that we regard as our own, which may result
in claims by or against us related to the ownership of such intellectual property. If we fail in
prosecuting or defending any such claims, in addition to paying monetary damages, we may
lose valuable intellectual property rights. Even if we are successful in prosecuting or defending
against such claims, litigation could result in substantial costs and be a distraction to our
scientific, technical and management personnel.
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Some of our products utilize third-party open-source data and software, and any failure to
comply with the terms of one or more of these open-source software licenses could have a
material adverse effect on our business, prospects, results of operations and financial
condition, subject us to litigation, or create potential liability.
We have chosen, and we may choose in the future, to use open-source software in our
products. We use various software composition tools which are designed to monitor risks
related to licenses and vulnerabilities related to open-source software. Use and distribution of
open-source software may entail greater risks than use of third-party commercial software, as
open-source licensors generally do not provide warranties or other contractual protections
regarding infringement claims or the quality of the code. Some open-source licenses may
contain requirements that we make available source code for modifications or derivative works
we create based upon the type of open-source software we use. If we combine our proprietary
software with open-source software in a certain manner, we could, under certain open-source
licenses, be required to release the source code of our proprietary software to the public. This
would allow our competitors to create similar products with less development effort and time
and ultimately could result in a loss of business opportunities.
Although we intend to monitor any use of open-source software to avoid subjecting our
products to conditions we do not intend, the terms of many open-source licenses may impose
unanticipated conditions or restrictions on our ability to commercialize our products.
Moreover, there is no assurance that our processes for controlling our use of open-source
software in our products will be effective. If we are held to have breached the terms of an
open-source software license, we could be required to seek licenses from third parties to
continue offering our products on terms that are not economically feasible, to re-engineer our
products, to discontinue the sale of our products if re-engineering could not be accomplished
on a timely basis, or to make generally available, in source code form, our proprietary code,
any of which could materially and adversely affect our business, operating results and financial
condition.
We may co-own patents or other intellectual property rights with our collaboration partners,
which may limit our ability to effectively capitalize on these intellectual property rights.
We may co-own patents or other intellectual property rights with our collaboration
partners. If we are unable to obtain an exclusive license to any such third-party co-owners’
interest in such patents or patent applications, such co-owners may be able to license their
rights to other third parties, including our competitors, and our competitors could market
competing products and technology. In addition, we may need the cooperation of any such
co-owners of our patents to enforce such patents against third parties, and such cooperation
may not be provided to us. Any of the foregoing could have a material adverse effect on our
competitive position, business, financial conditions, results of operations and prospects.
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We may enter into collaborations, in-licensing arrangements, joint ventures, or strategic
alliances with third parties that may not result in the development of commercially viable
products or the generation of significant or any future revenue.
In the ordinary course of our business, we may enter into collaborations, in-licensing
arrangements, joint ventures, or strategic alliances to develop new indications for existing DTx
products, develop new DTx products and to expand into new markets. Proposing, negotiating,
and implementing collaborations, in-licensing arrangements, joint ventures, and strategic
alliances may be a lengthy and complex process. Other companies, including those with
substantially greater financial, marketing, sales, technology or other business resources, may
compete with us for these opportunities or arrangements. We may not identify, secure or
complete any such transactions or arrangements in a timely manner, on a cost-effective basis,
on acceptable terms, or at all. We have limited institutional knowledge and experience with
respect to these business development activities, and we may also not realize the anticipated
benefits of any such transaction or arrangement. In particular, these collaborations may not
result in the development of products that achieve commercial success or result in significant
revenue and could be terminated prior to developing any products.
Additionally, we may not be in a position to exercise sole decision-making authority
regarding the transaction or arrangement, which could create the potential risk of creating
impasses on decisions, and our collaborators may have economic or business interests or goals
that are, or that may become, inconsistent with our business interests or goals. It is possible that
conflicts may arise with our collaborators, such as conflicts concerning the achievement of
performance milestones, or the interpretation of significant terms under any agreement, such
as those related to financial obligations or the ownership or control of intellectual property
developed during the collaboration. If any conflicts arise with our current or future
collaborators, they may act in their self-interest, which may be adverse to our best interest, and
they may breach their obligations to us. In addition, we have limited control over the amount
and timing of resources that our current collaborators or any future collaborators devote to our
collaborators’ or our future products. Disputes between us and our collaborators may result in
litigation or arbitration which would increase our expenses and divert the attention of our
management. Further, these transactions and arrangements are contractual in nature and may
be terminated or dissolved under the terms of the applicable agreements and, in such event, we
may not continue to have rights to the products relating to such transaction or arrangement or
may need to purchase such rights at a premium.
If our trademarks and trade names are not adequately protected, then we may not be able to
build name recognition in our markets of interest and our business may be adversely
affected.
We currently hold registered trademarks and have trademark applications pending, any of
which may be the subject of a governmental or third-party objection, which could prevent the
registration or maintenance of the same. If we are unsuccessful in obtaining trademark
protection for our primary brands, we may be required to change our brand names, which could
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materially adversely affect our business. Moreover, as our products mature, our reliance on our
trademarks to differentiate us from our competitors will increase, and as a result, if we are
unable to prevent third parties from adopting, registering or using trademarks and trade dress
that infringe, dilute or otherwise violate our trademark rights, or engaging in any conduct that
constitutes unfair competition, defamation or other violation of our rights, our business could
be materially adversely affected.
Our trademarks or trade names may be challenged, infringed, circumvented or declared
generic or determined to be infringing on other marks. We may not be able to protect our rights
to these trademarks and trade names, which we need to build name recognition among potential
partners or customers in our markets of interest. At times, competitors or other third parties
may adopt trade names or trademarks similar to ours, thereby impeding our ability to build
brand identity and possibly leading to market confusion. In addition, there could be potential
trade name or trademark infringement claims brought by owners of other registered trademarks
or trademarks that incorporate variations of our registered or unregistered trademarks or trade
names. Over the long term, if we are unable to establish name recognition based on our
trademarks and trade names, then we may not be able to compete effectively and our business
may be adversely affected.
We may become involved in lawsuits to protect or enforce our intellectual property, which
could be expensive, time-consuming and unsuccessful. Our patent rights relating to our
product and product candidates could be found invalid or unenforceable if being challenged
in courts or before the CNIPA, the courts or related intellectual property agencies in other
jurisdictions.
Competitors may infringe our patent rights or misappropriate or otherwise violate our
intellectual property rights. To counter infringement or unauthorized use, litigation may be
necessary in the future to enforce or defend our intellectual property rights, to protect our trade
secrets or to determine the validity and scope of our own intellectual property rights or the
proprietary rights of others. This can be expensive and time consuming. Any claims that we
assert against perceived infringers could also provoke these parties to assert counterclaims
against us alleging that we infringe their intellectual property rights. Many of our current and
potential competitors have the ability to dedicate substantially greater resources to enforce
and/or defend their intellectual property rights than we can. Accordingly, despite our efforts,
we may not be able to prevent third parties from infringing or misappropriating our intellectual
property rights. An adverse result in any litigation proceeding could put our patents, as well as
any patents that may issue in the future from our pending patent applications, at risk of being
invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the
substantial amount of discovery required in connection with intellectual property litigation,
some of our confidential information could be compromised by disclosure during this type of
litigation.
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Defendant counterclaims alleging invalidity or unenforceability are commonplace, a third
party can assert invalidity or unenforceability of a patent on numerous grounds. Third parties
may also raise similar claims before administrative bodies in China, the United States, the EU
or other jurisdictions, even outside the context of litigation. Such proceedings could result in
revocation or amendment to our patents in such a way that they no longer cover and protect
our products or product candidates. The outcome following legal assertions of invalidity and
unenforceability is unpredictable. With respect to the validity of our patents, for example, we,
our patent counsel, and the patent examiner could be unaware of invalidating prior art during
prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or
unenforceability, we would lose at least part, and perhaps all, of the patent protection on our
products or product candidates. Such a loss of patent protection could have a material adverse
impact on our business.
Conversely, we may choose to challenge the patentability of claims in a third party’s
patents. For example, with respect to a third party’s U.S. patent, we may request that the
USPTO review the patent claims in re-examination, post-grant review, inter partes review,
interference proceedings and derivation proceedings. In the EU and other jurisdictions, we may
choose to challenge, third party patents in patent opposition proceedings in the European
Patent Office (the “ EPO”) or other foreign patent offices. However, even if successful, such
proceedings may produce substantial costs, and may consume our time or other resources. If
we fail to obtain favorable results at the USPTO, EPO or other foreign patent offices, we may
be exposed to litigation by third parties alleging that our products or product candidates
infringed their patents.
We may not be able to prevent misappropriation of our trade secrets or confidential
information, particularly in countries where the laws may not protect those rights as fully as
we expect. Our efforts to enforce or protect our proprietary rights related to trademarks, trade
secrets, domain names, copyrights or other intellectual property may be ineffective and could
result in substantial costs and diversion of resources and could adversely affect our business,
financial condition, results of operations and prospects.
Obtaining and maintaining our patent protection depends on compliance with various
procedural, document submission, fee payment and other requirements imposed by
governmental patent agencies, and our patent protection could be reduced or eliminated for
non-compliance with these requirements.
Periodic maintenance fees on any issued patent are due to be paid to the CNIPA, the
USPTO and other patent agencies in several stages over the lifetime of the patent. The CNIPA,
the USPTO and various governmental patent agencies require compliance with a number of
procedural, documentary, fee payment, and other similar provisions during the patent
application process. Although an inadvertent lapse can in many cases be cured by payment of
a late fee or by other means in accordance with the applicable rules, non-compliance can result
in abandonment or lapse of the patent or patent application, resulting in partial or complete loss
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of patent rights in the relevant jurisdiction. Non-compliance events could result in
abandonment or lapse of a patent or patent application include failure to respond to official
actions within prescribed time limits, nonpayment of fees, and failure to properly legalize and
submit formal documents. In any such event, our competitors might be able to enter the market,
which would have a material adverse effect on our business.
Intellectual property rights do not necessarily address all potential threats.
The degree of future protection afforded by our intellectual property rights is uncertain
because intellectual property rights have limitations, and may not adequately protect our
business, or permit us to maintain our competitive advantage. The following examples are
illustrative:
 others may be able to independently develop similar or alternative technologies or
designs that are similar to our services and products but that are not covered by the
claims of the patents that we own or have exclusively licensed;
 we might not have been the first to make the inventions covered by the issued
patents or pending patent applications that we own or may in the future exclusively
license, which could result in the patent applications not issuing or being invalidated
after issuing;
 we might not have been the first to file patent applications covering certain of our
inventions, which could result in the patent applications not issuing or being
invalidated after issuing;
 our competitors might conduct research and development activities in countries
where we do not have patent rights and then use the information learned from such
activities to develop competitive services and products for commercialization in our
major markets;
 we may fail to apply for or obtain adequate intellectual property protection in all the
jurisdictions in which we operate; and
 the patents of others may have an adverse effect on our business, for example by
preventing us from commercializing additional products or applications in more
indications of our existing products.
Any of the aforementioned threats to our competitive advantage could have a material
adverse effect on our business.
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Risks Relating to Our Reliance on Third Parties
We may be unable to develop our product candidates or expand indication coverage of
existing products as anticipated if the third parties with which we cooperate for clinical trials
do not perform in an acceptable manner or if these third parties do not successfully carry
out their duties or meet expected deadlines.
We cooperate with third parties, primarily hospitals, to assist us in designing,
implementing and monitoring our preclinical research and conducting clinical trials. As of the
Latest Practicable Date, we had helped more than 120 hospitals establish cognitive centers in
China. If any of these parties terminates their cooperation with us, the development of
indication expansion of our System and of our other product candidates could be substantially
delayed. In addition, these third parties may not successfully carry out their responsibilities
under the cooperation, meet expected deadlines or follow regulatory requirements, including
clinical and laboratory guidelines. Our reliance on these third parties may result in delays in
completing, or in failing to complete, these studies if they fail to perform in accordance with
the contractual arrangements. Furthermore, if any of these parties fail to perform their
obligations under our agreements with them in the manner specified in those agreements, the
NMPA and/or other comparable regulatory authorities may not accept the data generated by
those studies, which would increase the cost of and the development time for the relevant
product candidate. If any of the preclinical studies or clinical trials of our product candidates
is affected by any of the above-mentioned reasons, we will be unable to meet our anticipated
development or commercialization timelines, which would have a material adverse effect on
our business and prospects.
We may engage CROs and other third-party partners in our research and development
process. Our research and development timeline may be delayed if these third parties do not
successfully carry out their contractual duties or meet expected deadlines in accordance with
regulatory requirements; if there are disagreements between us and such parties; or if such
parties are unable to expand capacities. These third parties may also be affected by natural
disasters, such as floods or fire, health epidemics, including the ongoing COVID-19 pandemic,
or geopolitical developments. These third parties could face production issues, such as
contamination or regulatory concerns following a regulatory inspection of their facilities. In
such instances, we may need to locate an appropriate replacement third-party facility and
establish a contractual relationship, which may not be readily available or on acceptable terms,
which would cause additional delay and increased expense and may have a material adverse
effect on our business.
In addition, we may collaborate with CROs and other third parties to monitor and manage
data for some of our clinical programs and control only certain aspects of their activities. If any
of our CROs or other third parties do not perform to our standards in terms of data accuracy
or completeness, data from those preclinical and clinical trials may be compromised as a result,
and our reliance on these parties does not relieve us of our regulatory responsibilities.
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The clinical development, marketing and sale of our products require us to maintain close
relationships with physicians upon whom we rely on to provide considerable knowledge and
experience. These physicians may assist us as researchers, marketing consultants, and as public
speakers. If we fail to develop, maintain our relationships with them or to continue to receive
their advice and input, the development and marketing of our products could suffer, which
could have a material adverse effect on our business, financial condition, and results of
operations.
We engage third party providers for cloud-based infrastructure. Any disruption in the
operations of these third-party providers, limitations on capacity or interference with our use
could have a material adverse effect on our business, prospects, results of operations and
financial condition.
Our technological infrastructure is implemented using third-party hosting services. We
have no control over any of these third parties, and we cannot guarantee that such third-party
providers will not experience system interruptions, outages or delays, or deterioration in their
performance. We need to be able to access our computational platform at any time, without
interruption or degradation of performance. Our hosted platform depends on protecting the
virtual cloud infrastructure hosted by third-party hosting services by maintaining our
configuration, architecture, features, and interconnection specifications, as well as protecting
the information stored in these virtual data centers, which is transmitted by third-party Internet
service providers. We may experience interruptions, delays and outages in service and
availability from time to time due to a variety of factors, including infrastructure changes,
human or software errors, hosting disruptions and capacity constraints. Any limitation on the
capacity of our third-party hosting services could adversely affect our business, financial
condition, and results of operations. In addition, any incident affecting our third-party hosting
services’ infrastructure, which may be caused by cyberattacks, natural disasters, fire, flood,
severe storm, earthquake, power loss, telecommunications failures, terrorist or other attacks,
and other disruptive events beyond our control, could negatively affect our cloud-based
solutions. A prolonged service disruption affecting our cloud-based solutions could damage our
reputation or otherwise harm our business. We may also incur significant costs for using
alternative equipment or taking other actions in preparation for, or in reaction to, events that
damage the third-party hosting services we use.
In the event that our service agreements with our third-party hosting services are
terminated, or there is a lapse of service, elimination of services or features that we utilize,
interruption of Internet service provider connectivity, or damage to such facilities, we could
experience interruptions in access to our infrastructure as well as significant delays and
additional expense in arranging or creating new facilities and services and/or re-architecting
our hosted software solutions for deployment on a different cloud infrastructure service
provider, which could have a material adverse effect on our business, prospects, results of
operations and financial condition.
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We rely on providers of marketing and promotional services and operational service provider
to promote and market our products and product candidates. If any of them fail to perform
their contractual obligations to us in a timely manner, or encounter any operational
difficulties, we may be unable to commercialize our products and product candidates as
anticipated.
We rely on both our in-house marketing team and third-party provider of marketing and
promotional services to market and promote our products. We incurred selling and distribution
expenses of RMB10.8 million, RMB11.9 million, RMB38.4 million, RMB17.0 million and
RMB25.4 million in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024,
respectively. We also cooperate with an operational service provider which led to business
opportunities with certain hospitals. See “Business—Sales and Marketing—Our Marketing
Model—Collaborations with Top Hospitals and Research Institutions” for more details on this
arrangement. The success of our marketing activities in part depends on our ability to maintain
and enhance our relationships with qualified service providers and our ability to attract,
motivate and retain qualified and professional employees in our marketing and sales teams.
However, we have limited control over these service providers. If any of these service
providers fail to adequately perform their obligations to market and promote our products and
product candidates, either due to breaches of their duties or due to their insolvency or other
operational difficulties, we may not be able to timely find replacement service providers, and
the promotion and commercialization efforts of our products and product candidates may be
hindered, and our business operations, results of operations, and financial condition could be
materially adversely affected.
A limited number of customers accounted for a substantial portion of our revenue during the
Track Record Period, and any decreases in our future sales to them could adversely affect
our financial condition and results of operations.
In 2021, 2022, 2023, and the six months ended June 30, 2024, the aggregate sales to our
five largest customers were RMB1.6 million, RMB8.3 million, RMB50.8 million, and
RMB28.9 million, respectively, representing approximately 70.1%, 73.1%, 75.6%, and 55.6%
of our revenue during the same periods, respectively. In 2021, 2022, 2023, and the six months
ended June 30, 2024, the aggregate sales to our largest customer were RMB0.8 million,
RMB4.4 million, RMB26.8 million, and RMB14.5 million, respectively, representing
approximately 35.5%, 39.1%, 39.9%, and 28.0% of our revenue during the same periods,
respectively. The percentage of revenue from single largest and five largest customers both
presented an increasing trend from 2021 to 2023, and we cannot assure you that we can reverse
such trends in future years or periods. It is likely that we will continue to be dependent upon
a limited number of customers for a significant portion of our revenue for the foreseeable
future. The loss of one or more major customers or a reduction in purchase from any major
customer may reduce our revenue.
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RISKS RELATING TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONAL
CAPITAL
We have been in a net loss position since our inception and may continue to incur net losses
for the foreseeable future, and you may lose substantially all your investments in us given
the high risks and uncertainties associated with our business operations and the cognitive
impairment DTx industry.
Cognitive impairment DTx industry is relatively new with limited track record of
profitability. Investment in the development of DTx is highly speculative. It entails substantial
upfront capital expenditures and significant risks that a product candidate may fail to complete
clinical trials, gain regulatory approval or become commercially viable. We incurred
significant expenses related to our product and product candidates and our ongoing operations.
As a result, we incurred loss and total comprehensive expense of RMB697.8 million,
RMB502.5 million, RMB359.1 million, RMB234.6 million and RMB114.4 million in 2021,
2022, 2023, and the six months ended June 30, 2023 and 2024, respectively. Substantially all
of our operating losses resulted from expenses incurred in connection with our research and
development programs, selling and distribution, as well as administrative expenses associated
with our operations.
We may continue to incur losses in the foreseeable future, and the losses may increase as
we expand our development of, and seek regulatory approvals for, our product candidates, and
commercialize our products. We will also incur costs in support of our growth. The size of our
future net losses will depend, in part, on the number and scope of our product development
programs and the associated costs of those programs, the cost of commercializing any approved
products and our ability to generate revenue. We are unable to predict when, or whether, we
will be able to achieve or maintain profitability. In addition, we may encounter unforeseen
expenses, difficulties, complications, delays and other unknown situations, all of which may
result in our failure in some or all of our development efforts. For example, if the clinical trial
results of our System for expanded indications or other products or product candidates are not
satisfactory, we may be unable to successfully expand our System to additional indications, or
to launch our other product candidates as expected. High and increasing labor costs could also
affect our profitability, and may result from, among other things, labor shortages that require
us to increase salaries in order to attract employees, higher employee health insurance costs,
and labor disruptions by our employees. Even if we do succeed in all of the above activities,
we may not be able to generate revenue that are significant or sufficient enough to achieve
profitability. In addition, we will start incurring costs associated with being a public company
in Hong Kong after the Global Offering. Even if we achieve profitability in the future, we may
not be able to sustain profitability in subsequent periods. Our failure to become and remain
profitable may impact investors’ perception of the potential value of our Group and could
impair our ability to raise capital, maintain our research and development efforts, expand our
business or continue our operations.
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The amount of our future losses or potential profits is uncertain, and our annual operating
results may fluctuate significantly or fall below the expectations of investors or securities
analysts, each of which may cause our stock price to fluctuate or decline.
Our results of operations may fluctuate significantly in the future due to a variety of
factors, many of which are outside of our control and may be difficult to predict, including the
following:
 the timing and success or failure of clinical trials for the System and our other
products and product candidates or competing product candidates, or any other
change in the competitive landscape of our industry;
 our ability to successfully recruit and retain subjects for clinical trials, and any
delays caused by difficulties in such efforts;
 our ability to obtain marketing authorization for our product candidates and the
timing and scope of any such marketing authorizations we may receive;
 the timing and cost of, and level of investment in, research and development
activities relating to our System and other products and product candidates, which
may change from time to time;
 our ability to attract, hire and retain qualified personnel;
 expenditures that we will or may incur to develop additional product candidates;
 the level of demand for the System and our other products and product candidates
should such product candidates receive marketing authorizations, which may vary
significantly;
 the risk/benefit profile, cost and reimbursement policies with respect to the System
and our other products and product candidates, if granted marketing authorization,
and existing and potential future therapeutics that compete with our product
candidates;
 the changing and volatile Chinese and global economic environments including
global inflationary pressures; and
 future accounting pronouncements or changes in our accounting policies.
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We had net operating cash outflows throughout the Track Record Period. We will need
substantial additional financing to fund our operations, and if we are unable to raise capital
when needed or on terms favorable to us, our business, financial condition and results of
operations could be materially and adversely affected.
We need to devote significant financial resources on clinical development, regulatory
registration and approvals, marketing and commercialization, among other investments, before
we can generate revenue from expanded indications of our System or from other products and
product candidates. Our net cash used in operating activities amounted to RMB49.2 million,
RMB100.7 million, RMB136.9 million, RMB66.0 million and RMB75.5 million in 2021, 2022,
2023, and the six months ended June 30, 2023 and 2024, respectively. Sales of our System have
contributed to a portion of our cash flow during the Track Record Period. However, we cannot
assure that we will be able to leverage other revenue-generating sources to generate positive
cash flows from operating activities in the future. Our liquidity and financial condition may be
materially and adversely affected by negative net cash flows, and we cannot assure that we will
generate sufficient cash flows from other sources to fund our operations. If we continue to have
negative operating cash flows in the future, our liquidity and financial condition may be
materially and adversely affected.
We expect to continue to spend substantial amounts on research and development,
advancing the clinical development of our product candidates, commercializing our products
and launching and commercializing any product candidates for which we receive regulatory
approval, including building our own commercial organization to address China and other
markets. Our existing cash and cash equivalents may not be sufficient to enable us to complete
all global development or commercially launch all our current product candidates for the
anticipated indications and to invest in additional programs. Accordingly, we will require
further funding through public or private offerings, debt financing, among other methods of
financing. We cannot assure you that our financial resources will be adequate to support our
operations. Adequate additional funding may not be available to us on acceptable terms, or at
all. If we are unable to raise capital when needed or on favorable or reasonable terms, we would
be forced to delay, reduce or eliminate our research and development programs or future
commercialization efforts.
As we are investing heavily in our research and development efforts, our profitability and
operating cash flows in the short term may continue to be impacted and we may not generate
the results we expect to achieve.
Our technological capabilities and infrastructure are critical to our success. We have been
investing heavily in our research and development efforts. We incurred research and
development expenses of RMB32.8 million, RMB67.6 million, RMB90.7 million, RMB34.4
million and RMB64.2 million in 2021, 2022, 2023, and the six months ended June 30, 2023 and
2024, respectively. The industry in which we operate is evolving rapidly in terms of
technological innovation. We need to invest significant resources, including financial
resources, in research and development to lead technological advances in order to make
our products innovative and competitive in the market. As a result, we expect that our
research and development expenses will continue to increase. Furthermore, development
RISK FACTORS
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activities are inherently uncertain, and we might encounter practical difficulties in
commercializing our development results. Our significant expenditures on research and
development may not generate corresponding benefits. Given the fast pace at which
technologies have been and will continue to be developed, we may not be able to timely
upgrade our technologies in an efficient and cost-effective manner, or at all. New technologies
in our industries could render our technologies, our technological infrastructure or products
that we are developing or expect to develop in the future obsolete or unattractive, thereby
limiting our ability to recover related product development costs, which could result in a
decline in our revenue, profitability and market share.
Our results of operations, financial condition, and prospects may be adversely affected by
fair value changes in our financial liabilities at FVTPL, which could be uncertain due to the
use of unobservable inputs.
During the Track Record Period, we issued redeemable preferred shares which are
designated as financial liabilities at fair value through profit or loss. As of December 31, 2021,
2022, 2023, and the six months ended June 30, 2024, our financial liabilities at FVTPL was
RMB726.7 million, RMB1,162.6 million, RMB315.5 million and RMB315.8 million,
respectively. In 2021, 2022, 2023, and the six months ended June 30, 2024, we recorded fair
value loss of financial liabilities at FVTPL of RMB623.8 million, RMB385.9 million,
RMB165.2 million, RMB163.5 million and fair value gain of financial liabilities at FVTPL of
RMB0.2 million in the six months ended June 30, 2024, respectively, which were primarily
driven by fair value changes of the redeemable preferred shares we issued, which could be
subject to uncertainty due to use unobservable inputs. Such changes may continue to affect our
financial performance until the Listing Date. The automatic conversion of redeemable
preferred shares into ordinary shares upon the Listing is expected to ameliorate our net
liabilities position. Moreover, we do not expect to recognize any further loss or gain on fair
value changes from the redeemable preferred shares in the future. If we continue to incur such
fair value losses, our results of operations, financial condition and prospects may be adversely
affected.
The preferred shares we issued are redeemable preferred shares designated as financial
liabilities at FVTPL. For details, please see Note 27 to the Accountants’ Report in Appendix
I to this Prospectus. The fair value measurement of our preferred shares involves estimates and
assumptions that are subject to significant uncertainties and risks. V aluation techniques are
certified by an independent qualified professional valuer before being implemented for
valuation and are calibrated to ensure that outputs reflect market conditions. V aluation models
established by the valuer make the maximum use of market inputs and rely as little as possible
on our specific data. However, some significant unobservable inputs, such as fair value of our
ordinary shares, possibilities under different scenarios such as initial public offering,
liquidation and redemption, and discount for lack of marketability, require management
estimates. Management estimates and assumptions are reviewed periodically and are adjusted
when necessary. Should any of the estimates and assumptions change, it may lead to changes
in the fair value of financial liabilities at FVTPL. In addition, the valuation methodologies may
involve a significant degree of management judgment and are inherently uncertain, which may
result in material adjustment to the carrying amounts of certain liabilities and in turn may
materially and adversely affect our results of operations.
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Our results of operations are exposed to the impact of fair value changes for financial assets
at FVTPL.
Financial assets at FVTPL primarily consist of short-term Level II structured deposits and
wealth management products we purchased from reputable commercial banks in China. We
recorded nil, RMB228.8 million, nil, and nil in financial assets at FVTPL as of December 31,
2021, 2022, 2023, and June 30, 2024, respectively. Our financial assets at FVTPL are measured
at fair value with any fair value gains or losses recognized under “other gains and losses, net”
of our results of operations. We recorded fair value gains on financial assets at FVTPL of nil,
RMB3.2 million, RMB2.7 million, RMB2.7 million and nil in 2021, 2022, 2023, and the six
months ended June 30, 2023 and 2024, respectively. However, we cannot assure you that we
will continue to record such gains on financial assets at FVTPL in the future. If we have any
financial assets at FVTPL in the future, and their fair value decreases in future periods after
impairment assessment under ECL, we may need to record fair value losses on financial asset
at FVTPL, which could materially and adversely affect our results of operations and financial
condition.
We had net liabilities position and net current liabilities in the past and may not be able to
achieve or maintain net assets and net current assets position in the future.
As of December 31, 2021, 2022, 2023 and June 30, 2024, we had net liabilities of
RMB681.3 million, RMB1,094.2 million, RMB332.2 million and RMB411.3 million,
respectively. We also had net current liabilities of RMB90.1 million, RMB111.3 million and
RMB118.7 million as of December 31, 2023, June 30, 2024 and October 31, 2024, respectively.
Although the financial liabilities at FVTPL will cease to be classified as liability, and will be
reclassified as equity upon the completion of the Listing, there is no assurance that we will not
record net liabilities and/or net current liabilities in the future. Having significant net liabilities
or net current liabilities could constrain our operational flexibility and adversely affect our
ability to expand our business. If we do not generate sufficient cash flow from our operations
to meet our present and future liquidity needs, we may need to rely on additional external
borrowings for funding. If adequate funds are not available, whether on satisfactory terms or
at all, we may be forced to delay or abandon our growth plans, and our business, financial
condition and results of operations may be materially and adversely affected.
We are exposed to credit risk when collecting trade receivables from our customers. If we
experience delays in collecting payments from our customers with regards to trade
receivables, and from other parties with regards to other receivables, our cash flows and
operations could be adversely affected.
Our business and financial results are dependent on the timely payments and credit
worthiness of our customers. We typically grant customers credit terms that range from 30 to
180 days. As of December 31, 2021, 2022, 2023 and June 30, 2024, our trade receivables were
RMB1.1 million, RMB8.4 million, RMB50.7 million and RMB78.8 million, respectively. The
average turnover days of our trade receivables was 114.6 days, 153.3 days, 160.7 days, and
227.2 days in 2021, 2022, 2023, and the six months ended June 30, 2024, respectively. If our
customers’ cash flows, working capital, financial condition or operations deteriorate, they may
RISK FACTORS
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be unable, or they may otherwise be unwilling, to make payments owed to us promptly or at
all. Any substantial defaults or delays could materially and adversely affect our cash flows, and
we could be required to terminate our relationships with customers in a manner that will impair
the effective distribution of our products or provision of services. In addition, we may be
unable to enforce our contractual rights and collect outstanding payments due to complexities
of the procedures in different jurisdictions where we operate. If one or more customers default
on their payment obligations to us, and the scale of such defaults is significant, our business,
financial condition and results of operations may be materially and adversely affected.
Raising additional capital may cause dilution to our shareholders’ equity, restrict our
operations or require us to relinquish rights to our technologies or products.
We may seek additional funding through a combination of equity offerings, debt
financings, collaborations, and licensing arrangements. To the extent that we raise additional
capital through the sale of equity or convertible debt securities, your ownership interests will
be diluted, and the terms may include liquidation or other preferences that adversely affect
your rights as a holder of our Shares. The incurrence of additional indebtedness or the issuance
of certain equity securities could result in increased fixed payment obligations and could also
result in certain additional restrictive covenants, such as limitations on our ability to incur
additional debt or issue additional equity, limitations on our ability to acquire or license
intellectual property rights and other operating restrictions that could adversely impact our
ability to conduct our business. In addition, issuance of additional equity securities, or the
possibility of such issuance, may cause the market price of our Shares to decline.
In the event that we enter into collaborations or licensing arrangements in order to raise
capital, we may be required to accept unfavorable terms, including relinquishing or licensing
to a third party on unfavorable terms our rights to technologies or product candidates that we
otherwise would seek to develop or commercialize ourselves or potentially reserve for future
potential arrangements when we might be able to achieve more favorable terms.
Share-based compensation could result in dilution of existing shareholders’ equity and have
a material adverse effect on our financial performance.
We may issue options, shares or other share-based compensation for the benefit of our
employees (including directors) as remuneration for their services provided to us to incentivize
and reward the eligible persons who have contributed to the success of our Company. Our
share-based compensation was RMB19.4 million, nil, RMB44.9 million, nil and RMB35.3
million in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024, respectively.
Issuance of additional Shares with respect to such share-based payment may dilute the
shareholding percentage of our existing Shareholders. Expenses incurred by our Company with
respect to such share-based payment may also reduce the earnings of our Company, resulting
in the dilution of our Company’s earnings-per-share and therefore have a material and adverse
effect on our reported profit.
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We rely on assumptions, estimates, internally developed software and data from third parties
to deliver timely and accurate information in order to accurately report our financial results
in the timeframe and manner required by law.
We need to receive timely, accurate, and complete information from our internal company
data that has not been independently verified utilizing internally developed software and third
party software in order to accurately report our financial results on a timely basis. If the
information that we receive is not accurate, our consolidated financial statements may be
materially incorrect and may require restatement. While these numbers are based on what we
believe to be reasonable calculations for the applicable period of measurement, there are
inherent challenges in measuring such information. In addition, our measurement of certain
metrics may differ from estimates published by third parties or from similarly-titled metrics of
our competitors due to differences in methodology and as a result our results may not be
comparable to our competitors. As a result, we may have difficulty completing accurate and
timely financial disclosures, which could have an adverse effect on our business.
RISKS RELATING TO OUR GENERAL OPERATIONS
Our historical rapid growth may not be indicative of our future growth and, if we continue
to grow rapidly, we may not be able to manage our growth effectively.
If we are not successful in managing our growth or executing our strategies effectively,
our business, operations, financial condition and future growth may be adversely affected. For
example, as part of our growth strategies, we plan to continue our research and development
in expanding the indication coverage of our System, as well as in other products and product
candidates. As certain jurisdictions we operate or plan to enter, such as China, are large and
diverse market, industry trends and clinical demands may vary significantly by regions. Our
experience in collaborations with certain partners in major cities may not be applicable in other
cities or local regions. As a result, we may not be able to leverage our experience to expand
into local or regional markets. Any failure to effectively manage our growth or execute our
strategies may have an adverse impact on our business and prospects.
As our development and commercialization plans and strategies evolve, we need to
recruit a significant number of additional managerial, operational, sales, marketing, financial
and other personnel. Our recent growth and any future growth will impose significant added
responsibilities on members of management, including:
 identifying, recruiting, integrating, maintaining and motivating additional
employees;
 managing our internal development efforts effectively, including the clinical and
regulatory authority review process for our product candidates, while complying
with our contractual obligations to contractors and other third parties; and
 improving our operational, financial and management controls, reporting systems
and procedures.
RISK FACTORS
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Our future financial performance and our ability to commercialize our products will
depend, in part, on our ability to effectively manage our recent growth and any future growth,
and our management may also have to divert a disproportionate amount of its attention away
from day-to-day activities in order to devote a substantial amount of time to managing these
growth activities.
If we are not able to effectively manage our growth and further expand our organization
by hiring new employees and expanding our groups of consultants and collaborating partners
as needed, we may not be able to successfully implement the tasks necessary to further develop
and commercialize our current and future products and services and, accordingly, may not
achieve our research, development and commercialization goals.
Our competitors may develop or commercialize competing products before or more
successfully than we do, or respond and adapt to the market changes more quickly and
effectively.
The development and commercialization of new medical devices is highly competitive.
We face competition from other major companies focusing on the development of DTx
products worldwide. Our business opportunities could be reduced or eliminated if our
competitors develop and commercialize products that have higher accuracy rates, are less
expensive or are more convenient than any products that we commercialize or are developing.
Our competitors in the global market may also apply for regulatory approvals in China or other
countries for products with the same intended use as our products and product candidates. The
capacity of the relevant authorities, such as the NMPA, to concurrently review multiple
commercialization applications for the same type of medical device may be limited, therefore
such authorities’ schedule to review our product candidates may be delayed when our product
candidates are under the authorities’ concurrent review with our competitors’ products, and the
registration process of our product may be prolonged. Moreover, our competitors may obtain
approvals from the NMPA or its local counterparts and other comparable regulatory authorities
more rapidly than we do, which may allow our competitors to establish a strong market
position before we are able to enter the market.
Many of our competitors have significantly greater financial resources and expertise and
experience in research and development, conducting preclinical studies and clinical trials,
obtaining regulatory approvals and marketing than we do, and are more capable than us to
respond and adapt to the market changes in a timely and effective manner. Our inability to
adequately respond to market changes could have a material adverse effect on our market
position, and our reputation may be materially and adversely affected, which could adversely
affect our relationships with physicians and hospitals and our long-term ability to effectively
market and sell our products or conduct clinical trials for our new products. In this regard, our
business, financial condition and results of operation may be materially and adversely affected.
RISK FACTORS
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Mergers and acquisitions in the medical device industries may result in even more
resources being concentrated among a small number of our competitors. Smaller and other
early-stage companies may also prove to be significant competitors, particularly through
collaborative arrangements with large and established companies. These third parties compete
with us in recruiting and retaining qualified scientific, management and marketing personnel,
establishing clinical trial sites and trial participant registration for clinical trials, as well as
acquiring technologies complementary to, or necessary for, our product development programs.
Our inability to compete effectively could reduce our revenue and current market share, impair
our ability to achieve our targeted market share in future periods, cause a decline in our growth
rates, and harm our position in the DTx industry, and our business, financial condition, results
of operation and return on capital expenditures may be materially and adversely affected.
Our future success depends on our ability to retain key executives and key personnel in our
R&D team, sale and marketing team, and our ability to attract, train, retain and motivate
qualified and highly skilled personnel especially R&D, clinical related, sales and marketing
staff.
Our business and growth depend on the continued service of our senior management and
personnel in our R&D team to develop product candidates, as well as our sales and marketing
team to promote our products and services. Although we have formal employment agreements
with each of our employees, these agreements do not prevent them from terminating their
employment with us at any time. The loss of the services of any of these people could impede
the achievement of our research, development and commercialization objectives.
To retain valuable employees, in addition to salary and cash incentives, we have provided
share awards to our employees. The value to employees of these equity grants may be
significantly affected by movements in the Share price that are beyond our control, and may
at any time be insufficient to counteract more lucrative offers from other companies.
In addition, we rely on consultants and advisors, including scientific and clinical advisors,
to assist us in formulating our discovery, clinical development and commercialization strategy.
The loss of the services of our executive officers or other key employees and consultants could
impede the achievement of our research, development and commercialization objectives and
impact our ability to successfully implement our business strategy.
Furthermore, replacing executive officers, key employees or consultants may be difficult
and may take an extended period of time because of the limited number of individuals in our
industry with the breadth of skills and experience required to successfully develop, gain
regulatory approval of and commercialize products or services. Competition to hire from this
limited pool is intense, and we may be unable to hire, train, retain or motivate these key
personnel or consultants on acceptable terms given the competition among numerous medical
device companies for similar personnel.
RISK FACTORS
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We also experience competition for the recruiting of R&D (including but not limited to
talents in the fields of AI and algorithms) and clinical personnel from universities and research
institutions. Our consultants and advisors may be engaged by our competitors and may have
commitments under consulting or advisory contracts with other entities that may limit their
availability to us. If we are unable to continue to attract and retain high quality personnel, our
ability to pursue our growth strategy may be impacted.
If we fail to effectively expand our overseas clinical development and initiate international
commercialization, our business prospects may be adversely affected.
We have proprietary rights in respect of our products and product candidates in China and
other selected overseas jurisdictions through patent registration and protection over proprietary
technologies. To grow our business, we intend to expand our business operations
internationally.
We plan to broaden our sales and expand our presence globally, especially in the United
States and the EU. However, our limited experience in overseas markets may expose us to risks
and uncertainties. Our success in expanding our business and providing services
internationally, and competing in international markets is subject to our ability to manage
various risks and difficulties, including, but not limited to:
 our ability to effectively manage and coordinate our employees across different
geographic locations;
 our ability to develop and maintain relationships with customers, suppliers and other
local stakeholders;
 the ability to provide sufficient levels of technical support in different locations;
 obtaining the necessary approvals for registering and selling our products in
additional countries;
 reliance on overseas partners for the development, commercialization or marketing
of our products, which may incur additional costs;
 commercializing our products in new markets where we have limited experience and
no sales and marketing infrastructure;
 product and professional liability litigation and regulatory scrutiny arising from the
marketing and sale of products in overseas markets and the costs incurred dealing
with such procedures, as well as our ability to obtain insurance to adequately protect
us from any resulting liabilities;
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 dealing with regulatory regimes, regulatory bodies and government policies which
may differ materially from those in the PRC or with which we may be unfamiliar;
 variations and changes in laws applicable to our operations in different jurisdictions,
including enforceability of intellectual property and contractual rights;
 our ability to obtain and renew licenses that may be needed in overseas locations to
support operations;
 trade restrictions, political changes, disruptions in financial markets, and
deterioration of economic conditions, particularly the relations between China and
the United States;
 foreign investment restrictions;
 changes in tariffs, taxes and foreign currency exchange rates, which could result in
increased operating expenses and reduced revenue;
 the effects of applicable foreign tax structures and potentially adverse tax
consequences;
 economic weakness and inflation;
 workforce uncertainty and labor unrest; and
 business interruptions resulting from geopolitical actions, including war and
terrorism, or natural disasters, including earthquakes, volcanoes, typhoons, floods,
hurricanes and fires.
Our profitability and ability to implement our business strategies, maintain our market
share and compete successfully in international markets may be compromised if we are unable
to manage the foregoing risks and other international risks successfully.
Our business significantly depends on our reputation and customer perception of us, and any
negative publicity on us or failure to maintain and enhance our recognition and reputation
may materially adversely affect our business, financial condition and results of operations.
Our reputation and customer perception of our brand are critical to our business.
Maintaining and enhancing our reputation and recognition depend primarily on the quality and
consistency of our products, as well as continued promotion efforts. Because our products and
product candidates are considered relatively new and novel therapeutic approaches, our success
will depend upon physicians who specialize in the treatment of cognitive impairment targeted
by our products and product candidates and may choose to prescribe potential treatments that
RISK FACTORS
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involve the use of our products and product candidates in lieu of, or in addition to, existing
treatments with which they are more familiar and for which greater clinical data may be
available. Access will also depend on consumer acceptance and adoption of products that are
commercialized. Our promotion efforts may be expensive and ineffective. In addition, our
reputation and customer perception of us could suffer in events that:
 our products fail to gain acceptance by hospitals, physicians and patients;
 our products are defective or malfunction;
 lawsuits or regulatory investigations are instituted against us or relating to our
products or industry;
 we provide poor or ineffective customer service; or
 we are subject to product liability claims.
Negative publicity concerning our products or the DTx market as a whole, could limit
market acceptance of our products and product candidates. If patients and healthcare providers
have a negative perception of DTx, then a market for our products and product candidates may
not develop at all, or it may develop more slowly than we expect. Our success will depend to
a substantial extent on the willingness of healthcare providers to prescribe our products, the
extent to which coverage and adequate reimbursement for these products and product
candidates and related treatments will be available from government health administration
authorities, private health insurers and other organizations and our ability to demonstrate the
value of our products and product candidates to existing and potential patients and physicians.
Similarly, negative publicity regarding patient confidentiality and privacy in the context of
technology-enabled healthcare or concerns experienced by our competitors could limit market
acceptance of DTx.
If we are unable to maintain and further enhance our reputation and recognition, our
ability to attract and retain customers may be impeded and our business prospects may be
materially adversely affected. Any negative incident or negative publicity concerning us, our
products, our management and our employees, regardless of its veracity, could harm our image
and diminish the trust from our customers and the market, which could in turn result in
decreased sales of our products and materially and adversely affect our business. As a result,
we may be required to spend significant time and incur substantial costs in response to
allegations and negative publicity, and may not be able to diffuse them to the satisfaction of
our investors and customers.
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Any failure to offer high quality patient support may adversely affect our relationships with
our existing and prospective patients, and in turn our business, results of operations and
financial condition.
Our patients will depend on our patient support to properly use and upgrade our DTx
products resolve issues in a timely manner. We may be unable to respond quickly enough to
accommodate short-term increases in demand for patient support. Increased patient demand for
support could increase costs and adversely affect our results of operations and financial
condition. Any failure to maintain high-quality patient support, or the market perception that
we do not maintain high quality patient support, could adversely affect patient satisfaction and
their willingness to continue to use our products or the willingness of physicians to prescribe
our products, which in turn could harm our business, results of operations and financial
condition.
If we fail to maintain effective internal controls, we may not be able to accurately report our
financial results or prevent fraud, and our business, financial condition, results of
operations and reputation could be materially and adversely affected.
We will become a public company upon completion of the Global Offering, and our
internal controls will be essential to the integrity of our business and financial results. Our
public reporting obligations are expected to place a strain on our managerial, operational and
financial resources and systems in the foreseeable future. To address our internal controls
issues and to generally enhance our internal controls and compliance environment, we have
taken various measures to improve our internal controls and procedures including establishing
a compliance program, adopting new policies, and providing extensive and ongoing training on
our controls, procedures and policies to our employees. The violation of or deviation from
these internal controls and procedures by any of our employees could adversely affect our
reputation, financial position and current and future business relationships. If one or more of
our employees or former employees were to engage in misconduct or were to be accused of
such misconduct, our businesses and our reputation could be adversely affected.
In addition, in preparation for the Global Offering, we have implemented other measures
to further enhance our internal controls, and plan to take steps to further improve our internal
controls. If we encounter difficulties in improving our internal controls and management
information systems, we may incur additional costs and management time in meeting our
improvement goals. We cannot assure you that the measures taken to improve our internal
controls will be effective. If we fail to maintain effective internal controls in the future, our
business, financial condition, results of operation and reputation may be materially and
adversely affected.
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Our technology infrastructure may experience unexpected system failure, interruption,
inadequacy, security breaches or cyberattacks.
Despite the implementation of security measures, our internal computer systems are
vulnerable to damage from computer viruses and unauthorized access. Although to our
knowledge we have not experienced any material system failure or security breach to date, if
such an event were to occur and cause interruptions in our operations, it could result in a
material disruption of our development programs and our business operations.
Our internal computer systems store a wide variety of business-critical information
including research and development information, commercial information and business and
financial information. Because information systems, networks and other technologies are
critical to many of our operating activities, shutdowns or service disruptions at our company
or vendors that provide information systems, networks, or other services to us pose increasing
risks. Such disruptions may be caused by events such as computer hacking, phishing attacks,
ransomware, dissemination of computer viruses, worms and other destructive or disruptive
software, denial of service attacks and other malicious activity, as well as power outages,
natural disasters (including extreme weather), terrorist attacks or other similar events. Such
events could have an adverse impact on us and our business, including loss of data and damage
to equipment and data. In addition, system redundancy may be ineffective or inadequate, and
our disaster recovery planning may not be sufficient to cover all eventualities. Significant
events could result in a disruption of our operations, damage to our reputation or a loss of
revenue. In addition, we may not have adequate insurance coverage to compensate for any
losses associated with such events.
We could be subject to risks caused by misappropriation, misuse, leakage, falsification or
intentional or accidental release or loss of information maintained in the information systems
and networks of our company and our vendors, including personal information of our
employees and patients. In addition, outside parties may attempt to penetrate our systems or
those of our vendors or fraudulently induce our personnel or the personnel of our vendors to
disclose sensitive information to gain access to our data and/or systems. Like other companies,
we may experience, threats to our data and systems, including malicious codes and viruses,
phishing, and other cyberattacks. The number and complexity of these threats continue to
increase over time. If a material breach of our information technology systems or those of our
vendors occurs, the market perception of the effectiveness of our security measures could be
harmed and our reputation and credibility could be damaged. We could be required to expend
significant amounts of money and other resources to repair or replace information systems or
networks. In addition, we could be subject to regulatory actions and/or claims made by
individuals and groups in private litigation involving privacy issues related to data collection
and use practices and other data privacy laws and regulations, including claims for misuse or
inappropriate disclosure of data, as well as unfair or deceptive practices. Although we develop
and maintain systems and controls designed to prevent these events from occurring, and we
have a process to identify and mitigate threats, the development and maintenance of these
systems, controls and processes is costly and requires ongoing monitoring and updating as
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technologies change and efforts to overcome security measures become increasingly
sophisticated. Moreover, despite our efforts, the possibility of these events occurring cannot be
eliminated entirely. As we outsource more of our information systems to vendors, engage in
more electronic transactions with payors and patients, and rely more on cloud-based
information systems, the related security risks will increase and we will need to expend
additional resources to protect our technology and information systems.
Security breaches, ransomware attacks, loss of data and other disruptions could compromise
sensitive information related to our patients or business or prevent us from accessing critical
information and expose us to liability, which could have a material adverse effect on our
reputation, business, prospects, results of operations and financial condition.
We depend on our information technology for a significant portion of our operations. Our
information technology systems store and process a variety of sensitive data, including but not
limited to, legally protected personal health information, personally identifiable information
about our employees, intellectual property, and proprietary business information. We also
manage and maintain our applications and data utilizing on-site and cloud-based systems.
These applications and data encompass a wide variety of business-critical information
including R&D information, commercial information and business and financial information.
Thus, it is essential that our information technology infrastructure remains secure and is
perceived by hospitals, patients and our research partners to be secure. We seek to preserve the
security of our information technology infrastructure by maintaining physical security of our
premises and physical and electronic security of our information technology systems by
measures such as installing antivirus software, establishing firewalls, backing up data on a
stand-alone workstation with password protection, and saving physical copy of data when
appropriate. Despite our security measures, our information and other technology systems are
vulnerable to damage from a variety of sources, such as telecommunications or network
failures, phishing attacks, ransomware, dissemination of computer viruses, worms and other
destructive or disruptive software, denial of service attacks and other malicious activity, as
well as power outages, natural disasters (including extreme weather), terrorist attacks or other
similar events. Our servers are also vulnerable to physical break-ins, employee errors and
similar disruptive problems.
We cannot assure that it would not happen in the future. Failures or significant downtime
of our information technology or telecommunications systems or those used by our third-party
service providers could prevent us from serving patients and physicians, billing customers,
collecting revenue, handling inquiries from our customers, conducting research and
development activities, deploying our products and services and managing the administrative
aspects of our business. Any disruption or loss of information technology or
telecommunications systems on which critical aspects of our operations depend could have an
adverse effect on our business, reputation, and expose us to significant financial liabilities. In
addition, we may not have adequate insurance coverage to compensate for any losses
associated with such events.
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We do not own any real estate with respect to our current principal place of operation and
may be exposed to risks associated with leased properties. For example, we may be subject
to fines due to the lack of registration of our leases.
We do not own any real property for our operations. As of the Latest Practicable Date, we
leased an aggregate GFA of approximately 11,000 square meters in China. Some of our lessors
were not able to provide property ownership certificates, while the right of certain other lessors
to lease out properties had already expired when leasing the properties to us. This has led to
uncertainties in our abilities to maintain the relevant leasehold relationships. We also used
certain of our leased properties for purpose inconsistent with those set forth in the relevant
lease agreements. If we fail to maintain such leases or otherwise continue to use any of our
leased property as a result of the above, we may need to seek an alternative location and incur
expenses related to such relocation, and our operation and businesses may also be disrupted or
even suspended if we are not able to complete the relocation, including the reconstruction of
relevant facilities in the new location, in a timely manner.
As advised by our PRC Legal Advisor, our right to use the mortgaged properties are
subordinate to the rights of mortgages relating to the relevant properties, which may affect our
use of leased properties. In case such properties we leased are transferred due to the
enforcement of mortgages, which had been set before the properties were leased to us, we may
be required to relocate. As of the Latest Practicable Date, we had not been aware of any
enforcement of the mortgages of the above-mentioned properties. We cannot assure that in the
future, we may not encounter such challenges. In addition, in the event of relocation, we may
incur additional costs, which could adversely affect our daily operation and cause an impact on
our financial condition.
As of the Latest Practicable Date, the lease agreements with respect to the 16 properties
we leased in the PRC for our business operations had not been registered and filed with the
relevant PRC government authorities. As advised by our PRC Legal Advisor, failure to register
such lease agreements with the relevant PRC government authorities does not affect the
validity and enforceability of the relevant lease agreements but the relevant PRC government
authorities may order us or the lessors to, within a prescribed time limit, register the lease
agreements. Failure to do so with the time limit may subject us to a fine ranging from
RMB1,000 to RMB10,000 for each non-registered lease. During the Track Record Period and
as of the Latest Practicable Date, we had not received any such request or suffered any such
fine from the relevant PRC government authorities. For details, see “Business—Our
Properties.”
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Our relationships with customers will be subject to applicable anti-bribery, anti-kickback,
fraud and abuse and other healthcare laws and regulations, which could expose us to
criminal sanctions, civil penalties, exclusion from government healthcare programs,
contractual damages, reputational harm and diminished profits and future earnings.
Anti-bribery laws, anti-kickback, false claims laws, doctors’ payment transparency laws,
fraud and abuse laws or similar healthcare and security laws and regulations could expose us
to sanctions, penalties, contractual damages or reputational damages that would have a material
adverse effect on our business, financial conditions and operations.
We are subject to the anti-bribery laws of various jurisdictions. As our business expands,
the applicability of the applicable anti-bribery laws to our operations has increased. Our
procedures and controls to monitor compliance with anti-bribery law may fail to protect us
from reckless or criminal acts committed by our employees or agents. If we fail to comply with
the applicable anti-bribery laws due to either our own deliberate or inadvertent acts or those
of others, our reputation could be damaged and we could incur criminal or civil penalties, other
sanctions and/or expenses, which would have a material adverse effect on our business,
financial condition, results of operations, cash flows and prospects.
In addition, healthcare providers, doctors and others play a primary role in the
recommendation and prescription of any products for which we obtain regulatory approval.
Our operations are subject to various applicable anti-kickback, false claims laws, doctor
payment transparency laws, fraud and abuse laws or similar healthcare and security laws and
regulations in China and other jurisdictions where we operate. These laws may impact, among
other things, our proposed sales, marketing and education programs. In addition, we may be
subject to personal privacy regulation. Violations of fraud and abuse laws may be punishable
by criminal and/or civil sanctions, including penalties, fines and/or exclusion or suspension
from governmental healthcare programs and debarment from contracting with the governments
of the jurisdictions where we operate, which will result in diminished profits and future
earnings. Furthermore, there are ambiguities as to what is required to comply with certain
requirements, and if we fail to comply with an applicable law requirement, we could be subject
to penalties. If any of the doctors or other providers or entities with whom we do business are
found to be not in compliance with applicable laws, they may be subject to criminal, civil or
administrative sanctions, including exclusions from government funded healthcare programs,
which may also adversely affect our business.
Physicians and other healthcare service providers play a primary role in the
recommendation and use of any products for which we obtain regulatory approval. Our
operations are subject to various applicable anti-kickback laws, false claims laws, physician
payment transparency laws, fraud and abuse laws or similar healthcare and security laws and
regulations in China, including, without limitation, Criminal Law of the PRC, Regulation on
the Supervision and Administration of Medical Devices ( ᔼᐕኜ૛္ຖ၍ଣૢԷ) and the
Administrative Measures for the Registration and Record Filing of Medical Devices ( ᔼᐕ
). Violations of fraud and abuse laws may be punishable by
criminal and/or civil sanctions, including penalties, fines and/or exclusion or suspension from
governmental healthcare programs and debarment from contracting with the PRC government.
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Efforts to ensure that our business arrangements with third parties comply with applicable
healthcare laws and regulations will involve substantial costs. Governmental authorities could
conclude that our business practices may not comply with current or future statutes, regulations
or case law involving applicable fraud and abuse or other healthcare laws and regulations. If
any such actions are instituted against us, and we are not successful in defending ourselves or
asserting our rights, those actions could have a significant impact on our business, including
the imposition of civil, criminal and administrative penalties, damages, disgorgement,
monetary fines, possible exclusion from participation in governmental healthcare programs,
contractual damages, reputational harm, diminished profits and future earnings, and
curtailment of our operations, any of which could adversely affect our ability to operate our
business and our results of operations.
We help hospitals build cognitive centers to establish relationships with hospitals and
market our products. We also sponsor academic conferences to promote the awareness of our
products among the medical community. However, we, our employees or our collaborating
partners may be subject to allegations that the above activities constitute or relate to corruption
and bribery. Such allegations and any related investigations, litigations and other legal
proceedings could harm our reputation, and the costs of defending against such allegations
could be substantial and could divert our resources and harm our results of operations.
We may be involved in lawsuits, claims, administrative proceedings or other legal
proceedings against us, which could adversely affect our business, financial conditions,
results of operations and reputation.
We face an inherent risk of product and professional liability as a result of the
commercialization of our products, the provision of our services, and any future
commercialization of our product candidates in China and globally. For example, we may be
sued if our products or product candidates cause or are perceived to cause injury, or fail to
deliver favorable results in improving patients’ cognitive functions as intended. Any such
product and professional liability claims may include allegations of defects in design, a failure
to warn of dangers inherent in the DTx product, negligence, strict liability or a breach of
warranties. Claims could also be asserted under applicable consumer protection acts. During
the Track Record Period, we had not been subject to any product or professional liability claim.
Responding to such claims could significantly divert our management’s attention from our
general business operations. If we cannot successfully defend ourselves against or obtain
indemnification from our collaborators for product and professional liability claims, we may
incur substantial liabilities or be required to limit commercialization of our products and
product candidates and provision of our services. Even successful defense would require
significant financial and management resources. Regardless of the merits or eventual outcome,
liability claims may result in:
 decreased demand for our products;
 injury to our reputation;
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 withdrawal of clinical trial participants and inability to continue clinical trials;
 initiation of investigations by regulators;
 costs to defend the related litigation;
 a diversion of management’s time and our resources;
 substantial monetary awards to trial participants or subjects, product recalls,
withdrawals, marketing or promotional restrictions;
 loss of revenue;
 exhaustion of any available insurance and our capital resources;
 the inability to commercialize any product candidate; and/or
 a decline in our Share price.
If we are unable to obtain sufficient product and professional liability insurance at an
acceptable cost, potential product and professional liability claims could prevent or inhibit the
commercialization of our products and product candidates. Our insurance policies may also
have various exclusions, and we may be subject to a product and professional liability claim
for which we have no coverage. We may have to pay any amounts awarded by a court or
negotiated in a settlement that exceed our coverage limitations or that are not covered by our
insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.
Even if our agreements with any future collaborators entitle us to indemnification against
losses, such indemnification may not be available or adequate should any claim arise.
Our insurance coverage may not completely cover the risks related to our business and
operations, which could expose us to significant costs and business interruptions.
Our operations are subject to hazards and risks associated with our research and
development, as well as other aspects of our operations, which may cause significant harm to
persons or damage to properties. We maintain different types of insurance policies, including
social insurance for all of our employees and personal accident insurance. For details, see
“Business—Insurance.” However, there is no assurance that our insurance policies will be
adequate to cover all losses incurred. Losses incurred and associated liabilities may have a
material adverse effect on our results of operation if such losses or liabilities are not covered
by our insurance policies.
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If we engage in acquisitions, joint ventures or strategic alliances, this may increase our
capital requirements, dilute our shareholders, cause us to incur debt or assume contingent
liabilities, may have a material adverse effect on our ability to manage our business and may
not result in the development of commercially viable products or the generation of
significant or any future revenue.
From time to time, we may evaluate various acquisitions and strategic partnerships,
including licensing or acquiring complementary products, intellectual property rights,
technologies or businesses. Any completed, ongoing or potential acquisition or strategic
partnership may entail numerous risks, including:
 increased operating expenses and cash requirements;
 the assumption of additional indebtedness or contingent or unforeseen liabilities;
 the issuance of our equity securities;
 assimilation of operations, intellectual property and products of an acquired
company, including difficulties associated with integrating new personnel;
 the diversion of our management’s attention from our existing product programs and
initiatives in pursuing such a strategic merger or acquisition;
 retention of key employees, the loss of key personnel, and uncertainties in our
ability to maintain key business relationships;
 risks and uncertainties associated with the other party to such a transaction,
including the prospects of that party and their existing products and product
candidates and regulatory approvals; and/or
 our inability to generate revenue from acquired technology and/or products
sufficient to meet our objectives in undertaking the acquisition or even to offset the
associated acquisition and maintenance costs.
If we undertake acquisitions, we may issue dilutive securities, assume or incur debt
obligations, incur large one-time expenses and acquire intangible assets that could result in
significant future amortization expense. In addition, we may not be able to integrate any future
acquisition targets to achieve the expected synergies with our existing operations and to fulfill
the contemplated purposes of these acquisitions. We may not achieve the operational or
economic synergies expected from such acquisitions. These synergies are inherently uncertain,
and are subject to significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and are beyond our control. If we achieve
the expected benefits, they may not be achieved within the anticipated time frame. Also, the
synergies from our acquisitions may be offset by costs incurred in the acquisition, increases in
other expenses, operating losses or problems in the business unrelated to our collaboration. As
a result, there can be no assurance that these synergies will be achieved.
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Furthermore, our future acquisition targets may not provide us with the intellectual
property rights, technology, R&D capability, production capacity or sales and marketing
infrastructure we had anticipated, or they may be subject to unforeseen liabilities. We may be
unable to successfully increase the efficiencies of the acquired businesses in the manner we
contemplated or devote more resources and management attention than desirable to the
integration and management of the acquired businesses. Hence, there can be no guarantee that
we will be able to enhance our post-acquisition performance or grow our business through our
recent or future acquisitions.
We face risks related to natural disasters, health epidemics, civil and social disruption and
other outbreaks, which could significantly disrupt our operations.
An outbreak of a respiratory disease COVID-19 was first reported in December 2019 and
continues to expand across China and globally. In March 2020, the World Health Organization
characterized the COVID- 19 outbreak as a global pandemic. Significant rises in COVID-19
cases have been reported since then, causing governments around the world to implement
unprecedented measures such as city lockdowns, travel restrictions, quarantines and business
shutdowns. In May 2023, the WHO declared that COVID-19 is now an established and ongoing
health issue which no longer constitutes a public health emergency of international concern.
The COVID-19 outbreak has caused and may continue to cause a long-term adverse
impact on the economy and social conditions in the PRC and other affected countries, which
may have an indirect impact on our industry and have a material adverse effect on our business,
financial condition and operations.
In addition, any future occurrence of force majeure events, natural disasters or outbreaks
of other epidemics and contagious diseases, including avian influenza, severe acute respiratory
syndrome, swine influenza caused by the H1N1 virus or the Ebola virus disease, may
materially and adversely affect our business, financial condition and operations. Any future
occurrence of severe natural disasters in the PRC or other overseas jurisdictions may materially
and adversely affect their economy and our business.
Damage or extended periods of interruption to our corporate, development and research
and development facilities due to fire, natural disaster, power loss, communications failure,
unauthorized entry or other events could cause us to delay or cease development or
commercialization of some or all of our product candidates. Our insurance might not cover all
losses under such circumstances and our business may be impacted by delays and interruptions.
We cannot assure that any future occurrence of natural disasters or outbreaks of epidemics and
contagious diseases or the measures taken by the governments of the jurisdictions where we
operate or plan to enter in response to such contagious diseases will not seriously disrupt our
operations or those of our customers, which may materially and adversely affect our business,
financial condition and operations.
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Changes in the political and economic policies may materially and adversely affect our
business, financial condition, results of operations and prospects.
Due to our extensive business operations in the PRC, our business, results of operations,
financial condition and prospects may be influenced to a significant degree by economic,
political, legal and social conditions in China. Our growth prospect is in part affected by the
overall economic growth in China, which is in turn influenced by the governmental regulations
and policies in relation to resource allocation, monetary policies, regulations of financial
services and institutions, preferential treatment to particular industries or companies and
others. Any of the foregoing would affect our business, financial condition, results of
operations and prospects.
Failure to pay the social insurance and housing provident funds on behalf of our employees
in accordance with the Labor Contract Law or comply with other PRC regulations may have
an adverse impact on our financial conditions and results of operation.
According to the Social Insurance Law of the PRC ()
implemented on December 29, 2018 and other applicable PRC regulations, any employer
operating in China must open social insurance registration accounts and contribute social
insurance premium for its employees. Any failure to make timely and adequate contribution of
social insurance premium for its employees may trigger an order of correction from competent
authority requiring the employer to make up the full contribution of such overdue social
insurance premium within a specified period of time, and the competent authority may further
impose fines or penalties.
In the future, we may not apply for social insurance registrations and housing provident
fund payment and deposit registrations in a timely manner, and we may not be able to make
full contribution to the social insurance and housing provident funds for our employees in the
future in accordance with the relevant PRC laws and regulations. As a result, we may be
required by competent authorities to pay the outstanding amount and could be subject to late
payment penalties or enforcement application made to the court. As of the Latest Practicable
Date, no competent government authorities had imposed administrative action, fine or penalty
to us with respect to any non-compliance incident nor had any competent government
authorities required us to settle any outstanding amount of social insurance payments and
housing provident fund contributions. We will continue to make full contributions or pay any
historical shortfall within a prescribed time period if demanded by the relevant government
authorities. Our Directors, having consulted our PRC Legal Advisor, are of the opinion that
such non-compliance will not have a material adverse effect on our business.
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We, including but not limited to our HK subsidiary, may be deemed to be a PRC tax resident
enterprise under the EIT Law, which could result in unfavorable tax consequences to us, and
may materially and adversely affect our profitability and the value of your investments.
We are a company incorporated under the laws of the Cayman Islands. Pursuant to the EIT
Law and its implementation rules, if an enterprise incorporated outside the PRC has its “de
facto management bodies” within the PRC, such enterprise would generally be deemed a “PRC
resident enterprise” for tax purposes and be subject to an EIT rate of 25% on its global income.
“De facto management bodies” is defined as the body that has actual overall management and
control over the business, personnel, accounts and properties of an enterprise. In April 2009,
July 2011 and January 2014, the SA T issued several circulars, as amended from time to time,
to clarify certain criteria for the determination of the “de facto management bodies” for foreign
enterprises controlled by the PRC enterprises. However, there have been no official
implementation rules regarding the determination of the “de facto management bodies” for
foreign enterprises not controlled by PRC enterprises (including companies like ourselves). We
take the position that we are not regarded as a PRC tax resident enterprise. If we are regarded
as a PRC tax resident enterprise by the PRC tax authorities, we would have to pay PRC EIT
at a rate of 25% for our entire global income, which may materially and adversely affect our
profits and hence our retained profit available for distribution to our Shareholders.
Y ou may be subject to PRC withholding tax on dividends from us and PRC income tax on
any gain realized on the transfer of our Shares.
Under the EIT law and its implementation rules, PRC withholding tax at a rate of 10%
is normally applicable to dividends from a PRC source paid to investors that are “non-resident
enterprises,” which do not have an establishment or place of business in the PRC, or which
have such an establishment or place of business but whose relevant income is not effectively
connected with the establishment or place of business. Any gain realized on the transfer of
shares by such non-resident enterprise investors is generally subject to a 10% PRC income tax
if such gain is regarded as income derived from sources within the PRC.
Under the PRC EIT Law and its implementation rules, dividends from sources within the
PRC paid to foreign individual investors who are not PRC residents are generally subject to a
PRC withholding tax at a rate of 20% and gains from PRC sources realized by such investors
on the transfer of shares are generally subject to PRC income tax at a rate of 20% for
individuals.
Any PRC tax may be reduced or exempted under applicable tax treaties or similar
arrangements. However, it is unclear whether non-PRC resident investors would in practice be
able to obtain the benefits of any tax treaties between their country of tax residence and the
PRC in the event that a company incorporated outside the PRC is deemed to be a PRC resident
enterprise.
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If we are treated as a PRC resident enterprise, dividends we pay with respect to our
Shares, or the gain realized from the transfer of our Shares, may be treated as income derived
from sources within the PRC and as a result be subject to the PRC income taxes described
above. If PRC income tax is imposed on gains realized through the transfer of our Shares or
on dividends paid to our non-resident investors, the value of your investment in our Shares may
be materially and adversely affected.
Our use of proceeds from business operations may be subject to currency exchange laws and
regulations.
The conversion of RMB into foreign currencies and, in certain cases, the remittance of
currency out of China, are subject to PRC regulations and approvals. A substantial portion of
our revenue is denominated in RMB. Shortages in availability of foreign currency may then
restrict our ability to remit sufficient foreign currency to our offshore entities for our offshore
entities to pay dividends or make other payments or otherwise to satisfy our foreign currency
denominated obligations. The RMB 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, we and our 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, we may not obtain such approvals. Since our revenue is denominated
in RMB, any existing and future restrictions on currency exchange may limit our ability to
utilize revenue generated in RMB to fund our business activities outside of the PRC or pay
dividends in foreign currencies to holders of our Shares. 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.
Changes in international trade policies may affect our business operations.
Any unfavorable government policies on international trade, such as capital controls or
tariffs, may adversely affect our business, financial condition, results of operations, cash flows
and prospects. The current and former United States administrations have called for substantial
changes to U.S. foreign trade policy with respect to China and other countries, including the
possibility of imposing greater restrictions on international trade and significant increases in
tariffs on goods imported into the United States. China has responded by imposing, and
proposing to impose additional, new, or higher tariffs on certain products imported from the
United States. Following mutual retaliatory actions for months, on January 15, 2020, the
United States and China entered into the Economic and Trade Agreement as a phase one trade
deal, effective on February 14, 2020. It remains unclear what additional actions, if any, will be
taken by the United States or other governments with respect to international trade, tax policy
related to international commerce, or other trade matters. If any new tariffs, legislation and
regulations are implemented, or if existing trade agreements are renegotiated, such changes
could have an adverse effect on our business, financial condition and results of operations.
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Any failure by the Shareholders or beneficial owners of our shares to comply with PRC
foreign exchange or other regulations relating to offshore investment activities could restrict
our ability to distribute profits, restrict our overseas and cross-border investment activities
and subject us to liability under PRC laws.
The Circular on Relevant Issues concerning Foreign Exchange Administration of
Overseas Investment and Financing and Return Investments Conducted by Domestic Residents
through Overseas Special Purpose V ehicles (ʮ̡ྤ̮ҳፄ༟ʿ
)( “ SAFE Circular 37 ”), which was promulgated by
SAFE and became effective on July 4, 2014, requires PRC residents to register with banks
designated by 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.”
If the shareholders of an offshore holding company who are PRC residents fail to fulfill
their required registration with the local SAFE branches, the PRC subsidiaries of the offshore
holding company may be prohibited from distributing their profits and proceeds from any
reduction in capital, share transfer or liquidation to the offshore company, and the offshore
company may be restricted in its ability to contribute additional capital to its PRC subsidiaries.
Furthermore, failure to comply with the SAFE registration requirements described above could
result in liability under PRC law for evasion of foreign exchange controls.
We have requested 41 persons, being the PRC residents who we know hold interest in us
to make the necessary applications, filings and amendments as required under SAFE Circular
37 and other related rules. We may not be fully informed of the identities of all our
shareholders or beneficial owners who are PRC residents to ensure their compliance with
SAFE Circular 37 or other related rules. In addition, we cannot provide any assurance that all
of our shareholders and beneficial owners who are PRC residents will comply with our request
to make, obtain or update any applicable registrations or comply with other requirements
required by SAFE Circular 37 or other related rules in a timely manner. Even if our
shareholders and beneficial owners who are PRC residents comply with such request, we
cannot provide any assurance that they will successfully obtain or update any registration
required by Circular 37 or other related rules in a timely manner due to many factors, including
those beyond our and their control. Any failure by our PRC residents shareholders or beneficial
owners to register with SAFE or update their SAFE registrations in a timely manner pursuant
to SAFE Circular 37 and subsequent implementation rules, or the failure of our future
shareholders or beneficial owners who are PRC residents to comply with the registration
requirements set forth in SAFE Circular 37 and subsequent implementation rules may result in
penalties and limit our PRC subsidiaries’ ability to make distributions, pay dividends or other
payments to us or affect our ownership structure and restrict our cross-border investment
activities, which could adversely affect our business, financial condition and results of
operations.
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PRC laws and regulations impose significant regulatory approvals and scrutiny
requirements that may make it more difficult for us to grow through acquisitions in China.
PRC laws and regulations, such as the Regulations on Mergers and Acquisitions of
Domestic Enterprises by Foreign Investors () (the
“M&A Rules”) which came into effect on September 8, 2006 and was amended on June 22,
2009, established procedures and requirements that are expected to make merger and
acquisition activities in China by foreign investors subject to requirements in some instances
that MOFCOM be notified in advance of any change of control transaction in which a foreign
investor takes control of a PRC domestic enterprise, or that the approval from MOFCOM be
obtained in circumstances where overseas companies established or controlled by PRC
enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also
require certain merger and acquisition transactions to be subject to merger control review or
security review.
Fluctuations in exchange rates could result in foreign currency exchange losses and could
materially reduce the value of your investment.
Our revenue and expenses are substantially denominated in Renminbi. A portion of the
revenue must be converted into other currencies in order to meet our foreign currency
obligations. For example, we will need to obtain foreign currency to make payments of
declared dividends, if any, on our Shares. In addition, our proceeds from the Global Offering
will be denominated in Hong Kong dollars. The change in the value of currencies may fluctuate
and is affected by, among other things, changes of the relevant political and economic
conditions and foreign exchange policies. Any significant change in the related exchange rates
may adversely affect the value of and any dividends payable on, our Shares in Hong Kong
dollars.
Any failure to comply with PRC regulations regarding the registration requirements for
employee stock incentive plans may subject the PRC plan participants or us to fines and
other legal or administrative sanctions.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign
Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of
Overseas Publicly-Listed Companies (ྌ̮ි၍
) (the “ SAFE Circular 7 ”), replacing the previous rules issued by SAFE
in March 2007. Under the SAFE Circular 7 and other relevant rules and regulations, PRC
residents who participate in a stock incentive plan in an overseas publicly-listed company are
required to register with SAFE or its local branches and complete certain other procedures.
Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent,
which could be a PRC subsidiary of the overseas publicly listed company or another qualified
institution selected by the PRC subsidiary, to conduct the SAFE registration and other
procedures with respect to the stock incentive plan on behalf of its participants. The
participants must also retain an overseas entrusted institution to handle matters in connection
with their exercise of stock options, the purchase and sale of corresponding stocks or interests
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and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with
respect to the stock incentive plan if there is any material change to the stock incentive plan,
the PRC agent or the overseas entrusted institution or other material changes. Also, SAFE
Circular 37 stipulates that PRC residents who participate in a share incentive plan of an
overseas non-publicly-listed special purpose company may register with SAFE or its local
branches before they exercise the share options. We and our PRC employees who have been
granted share options will be subject to these regulations upon the completion of this Global
Offering. Failure of our PRC share option holders to complete their SAFE registrations may
subject these PRC residents to fines of up to RMB300,000 for entities and up to RMB50,000
for individuals, and legal sanctions and may also limit our ability to contribute additional
capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute dividends to
us, or otherwise materially and adversely affect our business.
The STA has also issued relevant rules and regulations concerning employee share
incentives. Under these rules and regulations, our employees working in the PRC will be
subject to PRC individual income tax upon exercise of the share options. Our PRC subsidiaries
have obligations to file documents with respect to the granted share options or restricted shares
with relevant tax authorities and to withhold individual income taxes for their employees upon
exercise of the share options or grant of the restricted shares. If our employees fail to pay or
we fail to withhold their individual income taxes according to relevant rules and regulations,
we may face sanctions imposed by the competent governmental authorities.
RISKS RELATING TO THE GLOBAL OFFERING
No public market currently exists for our Shares, and an active trading market for our
Shares may not develop and the market price for our Shares may decline or became volatile.
No public market currently exists for our Shares. The initial Offer Price for our Shares
to the public will be the result of negotiations between our Company and the Joint Sponsors,
and the Offer Price may differ significantly from the market price of the Shares following the
Global Offering. We have applied to the Stock Exchange for the listing of, and permission to
deal in, the Shares. A listing on the Stock Exchange, however, does not guarantee that an active
and liquid trading market for our Shares will develop, or if it does develop, that it will be
sustained following the Global Offering or that the market price of the Shares will rise
following the Global Offering.
The price and trading volume of our Shares may be volatile, which could lead to substantial
losses to investors.
The price and trading volume of our Shares may be subject to significant volatility in
response to various factors beyond our control, including the general market conditions of the
securities in Hong Kong and elsewhere in the world. In particular, the business and
performance and the market price of the shares of other companies engaging in similar business
may affect the price and trading volume of our Shares. In addition to market and industry
factors, the price and trading volume of our Shares may be highly volatile for specific business
RISK FACTORS
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reasons, such as the results of clinical trials of our product candidates, the results of our
applications for approval of our product candidates, regulatory developments affecting our
industry, business model, or corporate structure, healthcare, health insurance and other related
matters, fluctuations in our revenue, earnings, cash flows, investments and expenditures,
relationships with our suppliers, movements or activities of key personnel, or actions taken by
competitors or ourselves. Moreover, shares of other companies listed on the Stock Exchange
with significant operations and assets in China have experienced price volatility in the past,
and our Shares may be subject to changes in price not directly related to our performance.
Future sales or perceived sales of a substantial number of our Shares in the public market
following the Global Offering could materially and adversely affect the price of our Shares
and our ability to raise additional capital in the future and may result in dilution of your
shareholding.
Prior to the Global Offering, there has not been a public market for our Shares. Future
sales or perceived sales by our existing Shareholders of our Shares after the Global Offering
could result in a significant decrease in the prevailing market price of our Shares. Only a
limited number of the Shares currently outstanding will be available for sale or issuance
immediately after the Global Offering due to contractual and regulatory restrictions on disposal
and new issuance. Nevertheless, after these restrictions lapse or if they are waived, future sales
of significant amounts of our Shares in the public market or the perception that these sales may
occur could significantly decrease the prevailing market price of our Shares and our ability to
raise equity capital in the future.
In addition, our Shareholders would experience dilution in their shareholdings upon offer
or sale of additional share capital or share capital-linked securities by our Company in future
offerings. If additional funds are raised through our issuance of new share capital or share
capital-linked securities other than on a pro rata basis to existing Shareholders, the
shareholdings of such Shareholders may be reduced and such new securities may confer rights
and privileges that take priority over those conferred by the Offer Shares.
As the Offer Price of our Offer Shares is higher than our net tangible book value per share,
purchasers of our Shares in the Global Offering may experience immediate dilution upon
such purchases. Purchasers of Shares may also experience further dilution in shareholdings
if we issue additional Shares in the future.
The Offer Price of the Offer Shares is higher than the net tangible asset value per Share
immediately prior to the Global Offering. Therefore, purchasers of the Offer Shares in the
Global Offering will experience an immediate dilution in pro forma net tangible asset value,
and our existing Shareholders will receive an increase in the pro forma adjusted consolidated
net tangible assets per Share of their Shares. In order to expand our business, we may consider
offering and issuing additional Shares in the future. Purchasers of the Offer Shares may also
experience dilution in the net tangible asset value per share of their Shares if we issue
additional Shares in the future at a price that is lower than the net tangible asset value per Share
at that time.
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Our Controlling Shareholders may have substantial influence over our Company and their
interests may not be aligned with the interests of our other Shareholders.
Immediately following the completion of the Global Offering, our Controlling
Shareholders will hold in aggregate approximately 44.11% of the voting power at general
meetings of our Company, assuming the Over-allotment Option is not exercised. Our
Controlling Shareholders will, through their voting power at the Shareholders meetings and
their delegates on the Board, have significant influence over our business and affairs, including
decisions in respect of mergers or other business combinations, acquisition or disposition of
assets, issuance of additional shares or other equity securities, timing and amount of dividend
payments, and our management. Our Controlling Shareholders may not act in the best interests
of our minority Shareholders. In addition, without the consent of our Controlling Shareholders,
we could be prevented from entering into transactions that could be beneficial to us. This
concentration of ownership may also discourage, delay or prevent a change in control of our
Company, which could deprive our Shareholders of an opportunity to receive a premium for the
Shares as part of a sale of our Company and may significantly reduce the price of our Shares.
We cannot assure you that we will declare and distribute any amount of dividends in the
future.
We intend to retain most, if not all, of our available funds and any future earnings after
the Global Offering to fund the commercialization of our products, the research and
development activities of our product candidates and to expand our product portfolio. As a
result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you
should not rely on an investment in our Shares as a source for any future dividend income.
Our Board has complete discretion as to whether to distribute dividends. Even if our
Board declares and pays dividends, the timing, amount and form of future dividends, if any,
will depend on our future 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. Accordingly, the return
on your investment in our Shares will likely depend entirely upon any future price appreciation
of our Shares. There is no guarantee that our Shares will appreciate in value after the Global
Offering or even maintain the price at which you purchased the Shares. Y ou may not realize
a return on your investment in our Shares and you may even lose your entire investment in our
Shares.
We have significant discretion as to how we will use the net proceeds of the Global Offering,
and you may not necessarily agree with how we use them.
Our management may spend the net proceeds from the Global Offering in ways with
which you may or may not agree or which do not yield a favorable return to our shareholders.
See “Future Plans and Use of Proceeds—Use of Proceeds.”
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However, our management has complete discretion as to the actual application of our net
proceeds. Y ou are entrusting your funds to our management, whose judgment you must depend
on, for the specific uses we will make of the net proceeds from this Global Offering.
We cannot guarantee that our Shares will remain listed on the Stock Exchange.
Although we currently intend to retain the listing of our Shares on the Stock Exchange,
there is no guarantee of the continued listing of the Shares. Among other factors, our Shares
may also fail to satisfy the listing requirements of the Stock Exchange. Accordingly,
Shareholders will not be able to sell their Shares through trading on the Stock Exchange if the
Shares are no longer listed on the Stock Exchange.
We cannot make fundamental changes to our business without the consent of the Stock
Exchange.
On April 30, 2018, the Stock Exchange adopted new rules under Chapter 18A of the
Listing Rules. Under the new rules, without the prior consent of the Stock Exchange, we will
not be able to effect any acquisition, disposal or other transaction or arrangement or a series
of acquisitions, disposals or other transactions or arrangements, which would result in a
fundamental change in our principal business activities as set forth in this Prospectus. As a
result, we may be unable to take advantage of certain strategic transactions that we might
otherwise choose to pursue in the absence of Chapter 18A of the Listing Rules. Were any of
our competitors that are not listed on the Stock Exchange to take advantage of such
opportunities, we may be placed at a competitive disadvantage, which could have a material
adverse effect on our business, financial condition and results of operations.
The industry facts, statistics and forecasts in the prospectus obtained from various
government publications and the industry report have not been independently verified.
Facts, forecasts and statistics in this Prospectus relating to the DTx industry are obtained
from various sources that we believe are reliable, including official government publications
as well as a report prepared by Frost & Sullivan that we commissioned. However, we cannot
guarantee the quality or reliability of these sources. Neither we, the Joint Sponsors, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters nor our
or their respective affiliates or advisers have verified the facts, forecasts and statistics nor
ascertained the underlying economic assumptions relied upon in those facts, forecasts and
statistics obtained from these sources. Due to possibly flawed or ineffective collection methods
or discrepancies between published information and factual information and other problems,
the industry statistics in this Prospectus may be inaccurate and you should not place undue
reliance on it. We make no representation as to the accuracy of such facts, forecasts and
statistics obtained from various sources. Moreover, these facts, forecasts and statistics involve
risk and uncertainties and are subject to change based on various factors and should not be
unduly relied upon.
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Y ou should read the entire document carefully, and we strongly caution you not to place any
reliance on any information contained in press articles or other media regarding us or the
Global Offering.
Subsequent to the date of this document but prior to the completion of the Global
Offering, there may be press and media coverage regarding us and the Global Offering, which
may contain, among other things, certain financial information, projections, valuations and
other forward-looking information about us and the Global Offering. We have not authorized
the disclosure of any such information in the press or media and do not accept responsibility
for the accuracy or completeness of such press articles or other media coverage. We make no
representation as to the appropriateness, accuracy, completeness or reliability of any of the
projections, valuations or other forward-looking information about us. To the extent such
statements are inconsistent with, or conflict with, the information contained in this Prospectus,
we disclaim responsibility for them. Accordingly, prospective investors are cautioned to make
their investment decisions on the basis of the information contained in this Prospectus only and
should not rely on any other information.
Y ou should rely solely upon the information contained in this Prospectus, the Global
Offering and any formal announcements made by us in Hong Kong in making your investment
decision regarding our Shares. We do not accept any responsibility for the accuracy or
completeness of any information reported by the press or other media, nor the fairness or
appropriateness of any forecasts, views or opinions expressed by the press or other media
regarding our Shares, the Global Offering or us. We make no representation as to the
appropriateness, accuracy, completeness or reliability of any such data or publication.
Accordingly, prospective investors should not rely on any such information, reports or
publications in making their decisions as to whether to invest in our Global Offering. By
applying to purchase our Shares in the Global Offering, you will be deemed to have agreed that
you will not rely on any information other than that contained in this Prospectus and the Global
Offering.
RISK FACTORS
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In preparation for the Listing, our Company has sought the following waivers from strict
compliance with the relevant provisions of the Listing Rules.
W AIVER IN RESPECT OF MANAGEMENT PRESENCE IN HONG KONG
According to Rule 8.12 of the Listing Rules, our Company must have sufficient
management presence in Hong Kong. This normally means that at least two of our executive
Directors must be ordinarily resident in Hong Kong. We do not have a sufficient management
presence in Hong Kong for the purpose of satisfying the requirement under Rule 8.12 of the
Listing Rules. The Joint Sponsors have applied, on behalf of our Company, for a waiver from
strict compliance with Rule 8.12 of the Listing Rules primarily on the basis that, as our
headquarters and principal business operations are located in the PRC, our management
members are best able to attend to their function by being primarily based in the PRC. As such,
the Joint Sponsors have applied, on behalf of our Company, to the Stock Exchange for, and the
Stock Exchange has granted us a waiver from strict compliance with Rule 8.12 of the Listing
Rules subject to, among others, the following conditions:
(a) pursuant to Rule 3.05 of the Listing Rules, we have appointed two authorized
representatives, who will act as our principal channel of communication with the
Stock Exchange. The two authorized representatives appointed are Mr. Tan, the
chairman of the Board, executive Director and chief strategy officer, and Ms. Sham
Ying Man ( Ҋᅂ˖)( “ Ms. Sham ”), our joint company secretary. Ms. Sham is based
in Hong Kong and will be available to meet with the Stock Exchange in Hong Kong
within a reasonable time frame upon the request of the Stock Exchange. Both of our
authorized representatives will be readily contactable by telephone and email to deal
promptly with enquiries from the Stock Exchange;
(b) pursuant to Rule 3.20 of the Listing Rules, each Director has provided his or her
mobile phone number, office phone number and email address and fax number, if
applicable, to the authorized representatives of our Company and the Stock
Exchange. This will ensure that the Stock Exchange and the authorized
representatives should have means for contacting all Directors promptly at all times
as and when required. In the event that a Director expects to travel or is otherwise
out of office, he or she will endeavor to provide his or her phone number of the place
of his or her accommodation to the authorized representatives or maintain an open
line of communication via his or her mobile phone;
(c) each Director who is not ordinarily resident in Hong Kong possesses or can apply
for valid travel documents to visit Hong Kong and can meet with the Stock
Exchange within a reasonable time frame;
(d) pursuant to Rule 3A.19 of the Listing Rules, we have appointed SPDB International
Capital Limited as the Compliance Adviser, which will have access at all times to
our authorized representatives, Directors, senior management and other officers of
our Company, and will act as an additional channel of communication between the
Stock Exchange and us;
W AIVERS
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(e) meetings between the Stock Exchange and our Directors could be arranged through
our authorized representatives or the Compliance Adviser, or directly with our
Directors within a reasonable time frame. Our Company will promptly inform the
Stock Exchange of any changes of our authorized representatives and/or the
Compliance Adviser;
(f) we will appoint other professional advisors (including legal advisors in Hong Kong)
after the Listing to assist us in dealing with any questions which may be raised by
the Stock Exchange and to ensure that there will be prompt and effective
communication with the Stock Exchange; and
(g) our Company has designated staff members as the communication officers at our
headquarters after the Listing who will be responsible for maintaining day-to-day
communication with Ms. Sham, our joint company secretary, and our Company’s
professional advisors in Hong Kong, including our legal advisors in Hong Kong and
the Compliance Adviser, to keep abreast of any correspondences and/or enquiries
from the Stock Exchange and report to our executive Directors to further facilitate
communications between the Stock Exchange and our Company.
W AIVER IN RESPECT OF JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules and Chapter 3.10 of the Guide for
New Listing Applicants, the company secretary must be an individual who, by virtue of his or
her academic or professional qualifications or relevant experiences, is, in the opinion of the
Stock Exchange, capable of discharging the functions of the company secretary.
Pursuant to Note 1 to Rule 3.28 of the Listing Rules, the Stock Exchange considers the
following academic or professional qualifications to be acceptable: (i) a member of The Hong
Kong Chartered Governance Institute; (ii) a solicitor or barrister as defined in the Legal
Practitioners Ordinance (Chapter 159 of the Laws of Hong Kong); or (iii) a certified public
accountant as defined in the Professional Accountants Ordinance (Chapter 50 of the Laws of
Hong Kong).
Pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing “relevant experience,”
the Stock Exchange will consider the individual’s: (i) length of employment with the issuer and
other issuers and the roles they played; (ii) familiarity with the Listing Rules and other relevant
law and regulations including the Securities and Futures Ordinance, Companies Ordinance,
Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Takeovers Code;
(iii) relevant training taken and/or to be taken in addition to the minimum requirement under
Rule 3.29 of the Listing Rules; and (iv) professional qualifications in other jurisdictions.
Our Company appointed Mr. Wang Junjie (௫)( “ Mr. Wang ”) and Ms. Sham as joint
company secretaries. See “Directors and Senior Management — Senior Management” and
“Directors and Senior Management — Joint Company Secretaries” for their biographies.
W AIVERS
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Ms. Sham is a Chartered Secretary, a Chartered Governance Professional and an associate
of both The Hong Kong Chartered Governance Institute and The Chartered Governance
Institute in the United Kingdom, respectively, and therefore meets the qualification
requirements under Note 1 to Rule 3.28 of the Listing Rules and is in compliance with Rule
8.17 of the Listing Rules.
As set out in Code Provision C.6 in Part 2 of the Corporate Governance Code under
Appendix C1 to the Listing Rules, the company secretary should be an employee of the
Company and have day-to-day knowledge of the Company’s affairs. The Company’s principal
business activities are outside Hong Kong. There are practical difficulties finding persons who
possesses day-to-day knowledge of the Company’s affairs in the way that Mr. Wang does, as
the CFO of the Company, while also having the academic and professional qualifications
required. The Company believes that Mr. Wang, by virtue of his knowledge and past experience
in handling corporate administrative matters of the Company, is capable of discharging the
functions of a joint company secretary. Further, the Company believes that it would be in the
best interests of the Company and the corporate governance of the Group to have as its joint
company secretary a person such as Mr. Wang, who is an employee of the Company and who
has day-to-day knowledge of the Company’s affairs. Mr. Wang has the necessary nexus to the
Board and close working relationship with management of the Company in order to perform
the function of a joint company secretary and take the necessary actions in the most effective
and efficient manner.
Accordingly, while Mr. Wang does not possess the formal qualifications required of a
company secretary, the Joint Sponsors have applied, on behalf of our Company, for, and the
Stock Exchange has granted, a waiver for an initial period of three years from the Listing Date
and from strict compliance with the requirements under Rules 3.28 and 8.17 of the Listing
Rules, on the following two conditions pursuant to Chapter 3.10 of the Guide for New Listing
Applicants issued by the Stock Exchange:
(a) Mr. Wang must be assisted by Ms. Sham, who possesses all the requisite
qualifications and experience required under Rule 3.28 of the Listing Rules and is
appointed as a joint company secretary throughout the three-year waiver period after
the Listing; and
(b) the waiver will be revoked if there are material breaches of the Listing Rules by our
Company.
Prior to the end of the three-year period, the qualifications and experience of Mr. Wang
and the need for on-going assistance of Ms. Sham will be further evaluated by our Company
and our Company will liaise with the Stock Exchange to enable us to assess whether Mr. Wang,
having benefited from the assistance of Ms. Sham for the preceding three years, will have
acquired the skills necessary to carry out the duties of company secretary and the relevant
experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further
waiver will not be necessary.
W AIVERS
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W AIVER FROM STRICT COMPLIANCE WITH RULE 10.04 OF AND CONSENT
UNDER PARAGRAPH 5(2) OF APPENDIX F1 TO THE LISTING RULES IN RESPECT
OF SUBSCRIPTIONS OF OFFER SHARES BY AN EXISTING SHAREHOLDER AS
CORNERSTONE INVESTOR
Rule 10.04 of the Listing Rules provides that a person who is an existing shareholder of
the applicant may only subscribe for or purchase securities for which listing is sought if no
securities will be offered to them on a preferential basis and no preferential treatment will be
given to them in the allocation of securities.
Paragraph 5(2) of Appendix F1 to the Listing Rules provides, inter alia, that no
allocations will be permitted to directors or existing shareholders of the applicant or their close
associates, whether in their own names or through nominees, unless any actual or perceived
preferential treatment arising from their ability to influence the applicant during the allocation
process can be addressed without the prior written consent of the Stock Exchange.
Chapter 2.3 of the Guide for New Listing Applicants provides that existing shareholders
are allowed to participate in the initial public offering of a Biotech Company (as defined under
Chapter 18A of the Listing Rules) provided that the applicant complies with Rules 8.08(1) and
18A.07 of the Listing Rules in relation to shares held by the public. Further, pursuant to
paragraph 18 of Chapter 2.3 of the Guide for New Listing Applicants, an existing shareholder
holding less than 10% of shares in a Biotech Company may subscribe for shares in the Listing
as either a cornerstone investor or as a placee and an existing shareholder holding 10% or more
of shares in a Biotech Company may subscribe for shares in the Proposed Listing as a
cornerstone investor.
As further described in the section headed “Cornerstone Investors” in this Prospectus, Mr.
Huang Guangwei ( රΈਃ) is an existing Shareholder, and has entered into a Cornerstone
Investment Agreement (as defined therein) with the Company.
We have applied for a waiver from strict compliance with the requirements under Rule
10.04 of, and a consent under paragraph 5(2) of Appendix F1 to, the Listing Rules, to allow
Mr. Huang Guangwei to participate as a Cornerstone Investor (as defined below) in the Global
Offering. The Stock Exchange has agreed to grant the requested waiver and consent subject to
the conditions that:
(a) we will comply with the public float requirements of Rules 8.08(1) and 18A.07 of
the Listing Rules;
(b) the Shares to be subscribed by and allocated to Mr. Huang Guangwei ( රΈਃ) under
the Global Offering will be at the same Offer Price and on substantially the same
terms or no more favorable than the terms of the other Cornerstone Investors (as
defined below) in the Global Offering;
W AIVERS
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(c) no preferential treatment has been, nor will be, given to Mr. Huang Guangwei ( ර
Έਃ) by virtue of his relationships with the Company in any allocation in the Global
Offering other than the preferential treatment of assured entitlement under the
cornerstone investments which follow the principles set out in paragraph 13 of
Chapter 4.15 of the Guide for New Listing Applicants, that, the Cornerstone
Investment Agreement (as defined below) of Mr. Huang Guangwei ( රΈਃ) does
not contain any material terms which are more favorable to him than those in other
Cornerstone Investment Agreements; and
(d) details of the allocation of the Shares to Mr. Huang Guangwei ( රΈਃ)a sa
Cornerstone Investor under the Global Offering are disclosed in this Prospectus, and
details of the allocation will be disclosed in the allotment results announcement of
our Company. For further information about the cornerstone investments of Mr.
Huang Guangwei ( රΈਃ), see “Cornerstone Investors”.
W AIVERS
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This Prospectus, for which our Directors (including any proposed director who is named
as such in this Prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V
of the Laws of Hong Kong) and the Listing Rules for the purpose of giving information to the
public with regard to our Group. Our Directors (including any proposed Director who is named
as such in this document), having made all reasonable enquiries, confirm that, to the best of
their knowledge and belief, the information contained in this Prospectus is accurate and
complete in all material respects and not misleading or deceptive, and there are no other
matters the omission of which would make any statement herein or this Prospectus misleading.
CSRC FILING
On July 4, 2024, the CSRC issued a notification on our Company’ completion of the PRC
filing procedures for the listing of our Shares on the Stock Exchange and the Global Offering.
In issuing this notification, the CSRC does not accept responsibility for the financial soundness
of our Company, or for the accuracy of any of the statements made or opinions expressed in
this Prospectus and the Application Forms. As advised by our PRC Legal Advisor, our
Company has completed all necessary filings with the CSRC in the PRC in relation to the
Global Offering and the Listing, and upon completion of overseas offering and listing, we shall
report information on overseas offering and listing pursuant to the provisions of relevant
guidelines.
INFORMATION ON THE GLOBAL OFFERING
This Prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. The Global Offering comprises the Hong Kong Public
Offering of initially 18,112,000 Hong Kong Offer Shares and the International Offering of
initially 163,000,000 International Offer Shares (subject, in each case, to reallocation on the
basis as set out in “Structure of the Global Offering” and assuming the Over-allotment Option
is not exercised).
The Hong Kong Offer Shares are offered solely on the basis of the information contained
and representations made in this Prospectus and on the terms and subject to the conditions set
out herein and therein. No person is authorized to give any information in connection with the
Global Offering or to make any representation not contained in this Prospectus, and any
information or representation not contained herein must not be relied upon as having been
authorized by our Company, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Underwriters, any of their respective directors,
agents, employees or advisors or any other party involved in the Global Offering.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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Neither the publication of this Prospectus nor any offering, sale or delivery made in
connection with the Offer Shares should, under any circumstances, constitute a representation
that there has been no change or development reasonably likely to involve a change in our
affairs since the date of this Prospectus or imply that the information contained in this
Prospectus is correct as of any date subsequent to the date of this Prospectus.
Further information regarding the structure of the Global Offering, including its
conditions, is set out in “Structure of the Global Offering” of this Prospectus and the
procedures for applying for our Hong Kong Offer Shares are set out in “How to apply for Hong
Kong Offer Shares.”
OVER-ALLOTMENT AND STABILIZATION
Details of the arrangement relating to the Over-allotment Option and stabilization are set
out in “Structure of the Global Offering.”
UNDERWRITING
The listing of our Shares on the Stock Exchange is sponsored by the Joint Sponsors and
the Global Offering is managed by the Overall Coordinators. The Hong Kong Public Offering
is fully underwritten by the Hong Kong Underwriters under the terms of the Hong Kong
Underwriting Agreement. An International Underwriting Agreement relating to the
International Offering is expected to be entered into on or around January 6, 2025. The
International Offering will be fully underwritten by the International Underwriters under the
terms of the International Underwriting Agreement to be entered into. For full information
about the Underwriters and the underwriting arrangements, see “Underwriting.”
RESTRICTIONS ON OFFER AND SALE OF THE SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his/her acquisition of the Hong Kong Offer Shares to,
confirm that he/she is aware of the restrictions on offers and sales of the Hong Kong Offer
Shares described in this Prospectus.
No action has been taken to permit a public offering of the Offer Shares in any
jurisdiction other than Hong Kong, or the publication of this Prospectus in any jurisdiction
other than Hong Kong. Accordingly, without limitation to the following, this Prospectus may
not be used for the purpose of, and does not constitute, an offer or invitation in any jurisdiction
or in any circumstances in which such an offer or invitation is not authorized or to any person
to whom it is unlawful to make such an offer or invitation. The publication of this Prospectus
and the offering and sales of the Offer Shares in other jurisdictions are subject to restrictions
and may not be made except as permitted under the applicable securities laws of such
jurisdictions pursuant to registration with or authorization by the relevant securities regulatory
authorities or an exemption therefrom. In particular, the Hong Kong Offer Shares have not been
publicly offered or sold, directly or indirectly, in the PRC or the United States.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission
to deal in, the Shares in issue (upon completion of the Share Subdivision and including the
Shares to be converted from the Preferred Shares); and the Shares to be issued pursuant to the
Global Offering (including any Shares which may be issued pursuant to the exercise of the
Over-allotment Option).
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, if the permission for the Shares to be listed on the Stock Exchange pursuant to this
Prospectus has been refused before the expiration of three weeks from the date of the closing
of the Global Offering or such longer period not exceeding six weeks as may, within the said
three weeks, be notified to us by or on behalf of the Stock Exchange, then any allotment made
on an application in pursuance of this Prospectus shall, whenever made, be void.
COMMENCEMENT OF DEALINGS IN THE SHARES
Dealings in the Shares on the Stock Exchange are expected to commence at 9:00 a.m. on
Wednesday, January 8, 2025. The Shares will be traded in board lots of 1,000 Shares each. The
stock code of the Shares will be 6681.
Save as disclosed in this Prospectus, no part of our Share or loan capital is listed on or
dealt in on any other stock exchange and no such listing or permission to list is being or
proposed to be sought on the Stock Exchange or any other stock exchange as of the date of this
Prospectus. All the Shares will be registered on our Hong Kong Share register in order to
enable them to be traded on the Stock Exchange.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the Shares on the Stock
Exchange and our compliance with the stock admission requirements of HKSCC, the Shares
will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in
CCASS with effect from the Listing Date or any other date as determined by HKSCC.
Settlement of transactions between Exchange Participants (as defined in the Listing Rules) is
required to take place in CCASS on the second settlement day after any trading day. All
activities under CCASS are subject to the General Rules of HKSCC and HKSCC Operational
Procedures in effect from time to time. Investors should seek the advice of their stockbroker
or other professional advisor for details of the settlement arrangements as such arrangements
may affect their rights and interests. All necessary arrangements have been made enabling the
Shares to be admitted into CCASS.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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HONG KONG REGISTER OF MEMBERS AND HONG KONG STAMP DUTY
Our Company’s principal register of members will be maintained by our principal share
registrar and transfer office, ICS Corporate Services (Cayman) Limited, in the Cayman Islands.
All of the Shares issued pursuant to the Global Offering will be registered on our Company’s
Hong Kong Share register of members to be maintained in Hong Kong by our Hong Kong
Share Registrar, Tricor Investor Services Limited. Dealings in the Shares registered in our
Company’s Hong Kong Share register of members will be subject to Hong Kong stamp duty.
Unless determined otherwise by our Company, dividends payable in Hong Kong dollars in
respect of Shares will be paid to the Shareholders listed on the Hong Kong Share register of
members of our Company, by ordinary post, at the Shareholders’ risk, to the registered address
of each Shareholder.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional
advisors as to the taxation implications of subscribing for, purchasing, holding or disposing of,
and/or dealing in the Shares or exercising rights attached to them. None of us, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Underwriters, any of their respective directors, officers, employees, agents or representatives
or any other person or party involved in the Global Offering accepts responsibility for any tax
effects on, or liabilities of, any person resulting from the subscription, purchase, holding,
disposition of, or dealing in, or the exercise of any rights in relation to, the Shares.
EXCHANGE RATE CONVERSION
Solely for your convenience, this Prospectus contains translations among certain
Renminbi amounts into Hong Kong dollars and of Renminbi amounts into U.S. dollars at
specified rates.
Unless indicated otherwise, the translation of Renminbi into Hong Kong dollars and of
Renminbi into U.S. dollars, and vice versa, in this Prospectus was made at the following rates:
RMB0.9244 to HK$1.00; RMB7.1882 to US$1.00; and HK$7.7757 to US$1.00. No
representation is made that any amounts in Renminbi, Hong Kong dollars or U.S. dollars can
be or could have been at the relevant dates converted at the above rates or any other rates or
at all.
LANGUAGE
Translated English names of Chinese laws and regulations, governmental authorities,
departments, entities (including subsidiaries of our Group), institutions, natural persons,
facilities, certificates, titles and the like included in this Prospectus and for which no official
English translation exists are unofficial translations for identification purposes only. In the
event of any inconsistency, the Chinese name shall prevail.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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ROUNDING
Unless otherwise stated, all the numerical figures are rounded to one or two decimal
places. Any discrepancies in any table or chart between totals and sums of amounts listed
therein are due to rounding.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIRECTORS
Name Address Nationality
Executive Directors
Mr. Tan Zheng ( ᗈ፾) 1801, Unit 2, 18th Floor, Building 6
No. 3, Wangjing East Garden
Chaoyang District
Beijing
China
Chinese
Dr. Wang Xiaoyi (׋304, 3/F, Building 7, Sunny View
No. 23 Huangsi Street
Xicheng District
Beijing
China
Chinese
Non-executive Directors
Mr. Li Sirui (ြ) No. 704, Gate 1, Building 2
Jinyue Garden
Tingjiang Road, Pudong Street
Beichen District
Tianjin
China
Chinese
Ms. Li Mingqiu (߇׼No. 502, Building 416,
Kapok Garden
No. 3 Island, Haihua Island,
Paipu Town
Danzhou City
Hainan Province
China
Chinese
Mr. Deng Feng 51 Laburnum Rd
Atherton, CA 94027
United States
American
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Independent Non-executive Directors
Mr. Lam Yiu Por (تFlat D, 8/F, Tower 3
Ocean Shores, Tseung Kwan O
New Territories
Hong Kong
Chinese
(Hong Kong)
Dr. Duan Tao (ᏹ) 801, Building 5
Y anlord Park Century
Lane 88 Yinrong Road
Pudong New Area
Shanghai
China
Chinese
Mr. Li Y uezhong ( ҽ˜ʕ) Room 1181, 11/F, Block 14
Hong Kong Parkview
88 Tai Tam Reservoir Road
Repulse Bay
Hong Kong
Chinese
(Hong Kong)
Please see the section headed “Directors and Senior Management” for further details of
our Directors.
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
SPDB International Capital Limited
33/F, SPD Bank Tower
One Hennessy, 1 Hennessy Road
Hong Kong
Sponsor-Overall Coordinators, Overall
Coordinators and Joint Global
Coordinators
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
SPDB International Capital Limited
33/F, SPD Bank Tower
One Hennessy, 1 Hennessy Road
Hong Kong
Joint Bookrunners China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
SPDB International Capital Limited
33/F, SPD Bank Tower
One Hennessy, 1 Hennessy Road
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Fosun International Securities Limited
Suite 2101-2105, 21/F Champion Tower
3 Garden Road
Central
Hong Kong
Tiger Brokers (HK) Global Limited
1/F, No. 308 Des V oeux Road Central
Sheung Wan
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road
Wan Chai
Hong Kong
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central
Hong Kong
China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai
Hong Kong
ABCI Capital Limited
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
China Industrial Securities International
Capital Limited
32/F, Infinitus Plaza
199 Des V oeux Road Central
Sheung Wan
Hong Kong
Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Joint Lead Managers China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
SPDB International Capital Limited
33/F, SPD Bank Tower
One Hennessy, 1 Hennessy Road
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
Fosun International Securities Limited
Suite 2101-2105, 21/F Champion Tower
3 Garden Road
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Tiger Brokers (HK) Global Limited
1/F, No. 308 Des V oeux Road Central
Sheung Wan
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road
Wan Chai
Hong Kong
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central
Hong Kong
China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai
Hong Kong
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Central
Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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China Industrial Securities International
Capital Limited
32/F, Infinitus Plaza
199 Des V oeux Road Central
Sheung Wan
Hong Kong
Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Capital Market Intermediaries China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
SPDB International Capital Limited
33/F, SPD Bank Tower
One Hennessy, 1 Hennessy Road
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
Fosun International Securities Limited
Suite 2101-2105, 21/F Champion Tower
3 Garden Road
Central
Hong Kong
Tiger Brokers (HK) Global Limited
1/F, No. 308 Des V oeux Road Central
Sheung Wan
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road
Wan Chai
Hong Kong
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central
Hong Kong
China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai
Hong Kong
ABCI Capital Limited
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Central
Hong Kong
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Central
Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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China Industrial Securities International
Capital Limited
32/F, Infinitus Plaza
199 Des V oeux Road Central
Sheung Wan
Hong Kong
Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Legal advisers to our Company As to Hong Kong and United States laws:
Davis Polk & Wardwell
10/F, The Hong Kong Club Building
3A Chater Road
Central
Hong Kong
As to PRC laws:
Commerce & Finance Law Offices
12-14/F, China World Office 2
No. 1 Jianguomenwai Avenue
Beijing
PRC
As to Cayman Islands laws:
Walkers (Hong Kong)
15/F, Alexandra House
18 Chater Road
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Legal advisers to the Joint Sponsors and
the Underwriters
As to Hong Kong and United States laws:
Cooley HK
35/F, Two Exchange Square
8 Connaught Place
Central
Hong Kong
As to PRC laws:
Zhong Lun Law Firm
22-31/F, South Tower of CP Center
20 Jin He East Avenue
Chaoyang District
Beijing
China
Auditor and Reporting Accountants Deloitte Touche Tohmatsu
Certified Public Accountants and
Registered Public Interest Entity Auditor
35/F, One Pacific Place
88 Queensway
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai
Branch Co.
Room 2504-2505
Wheelock Square
1717 Nanjing West Road
Shanghai
PRC
Compliance Adviser SPDB International Capital Limited
33/F SPD Bank Tower
One Hennessy
1 Hennessy Road
Hong Kong
Receiving Bank CMB Wing Lung Bank Limited
12/F, CMB Wing Lung Bank Centre
636 Nathan Road, Kowloon
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Registered Office ICS Corporate Services (Cayman)
Limited
3-212 Governors Square
23 Lime Tree Bay Avenue
P .O. Box 30746, Seven Mile Beach
Grand Cayman KY1-1203
Cayman Islands
Headquarter and Principal Place of
Business in the PRC
Room 1301, 13/F, Building 3, Shaoxing
Shuimuwan District Science Park
No. 2 Pingjiang Road
Y uecheng District, Shaoxing City
Zhejiang Province
PRC
Principal Place of Business in Hong Kong 5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Company’s Website 66nao.cn
(the information contained on this website
does not form part of this Prospectus)
Joint Company Secretaries Mr. Wang Junjie (௫)
Room 0804, Unit 3, Building 01, No. 1
Courtyard Tian Ying Road
Hengda Y ujing Bay
Chaoyang District
Beijing
China
Ms. Sham Ying Man ( Ҋᅂ˖)
(chartered secretary, chartered governance
professional and associate member of The
Hong Kong Chartered Governance Institute
and The Chartered Governance Institute in
the United Kingdom)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
CORPORATE INFORMATION
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Authorized Representatives Mr. Tan Zheng ( ᗈ፾)
1801, 18th Floor, Unit 2, Building 6
No. 3, Wangjing East Garden
Chaoyang District
Beijing
China
Ms. Sham Ying Man ( Ҋᅂ˖)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Audit Committee Mr. Lam Yiu Por (ت)Chairman)
Mr. Li Y uezhong ( ҽ˜ʕ)
Dr. Duan Tao (ᏹ)
Remuneration Committee Mr. Li Y uezhong ( ҽ˜ʕ) (Chairman)
Mr. Lam Yiu Por (ت)
Dr. Duan Tao (ᏹ)
Nomination Committee Mr. Tan Zheng ( ᗈ፾) (Chairman)
Mr. Li Y uezhong ( ҽ˜ʕ)
Dr. Duan Tao (ᏹ)
Principal Share Registrar ICS Corporate Services (Cayman)
Limited
3-212 Governors Square
23 Lime Tree Bay Avenue
P .O. Box 30746, Seven Mile Beach
Grand Cayman KY1-1203
Cayman Islands
Hong Kong Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
CORPORATE INFORMATION
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Principal Banks Agricultural Bank of China Shaoxing
Paojiang Branch
No. 86, Century East Street
Paojiang Development Zone
Shaoxing City
Zhejiang Province
China
China Merchants Bank Co., Ltd. Beijing
Beiyuan Road Science and Technology
Finance Branch
Building 4, No. 36, Anhuidongli
Chaoyang District
Beijing
China
CORPORATE INFORMATION
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The information and statistics set out in this section and other sections of this
Prospectus were extracted from the report prepared by Frost & Sullivan, which was
commissioned by us, and from various official government publications and other
publicly available publications. We engaged Frost & Sullivan to prepare the Frost &
Sullivan Report, an independent industry report, in connection with the Global Offering.
The information from official government sources has not been independently verified by
us, the Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint
Bookrunners, Joint Lead Managers, Underwriters, any of their respective directors and
advisers, or any other persons or parties involved in the Global Offering, and no
representation is given as to its accuracy.
DIGITAL THERAPEUTICS MARKET
Overview of the Digital Therapeutics Market
Digital therapeutics (the “ DTx”) refer to software-driven medical solutions that assess
patient conditions by collecting various types of patient input (such as pictures, texts, voices
and video feeds) in order to deliver therapeutic interventions that prevent, treat, and manage
various types of diseases. DTx digitize existing medical principles, guidance or standardized
treatment plans into software-driven interventional measures that improve patients’ access to
and compliance with treatments. It is a subset of digital medicine, which is a part of digital
health. Digital health is an umbrella term that encompasses various types of technology used
in healthcare to manage the health of both patients and healthy individuals. Although still a
relatively new field, DTx market shows promise for improving patient outcomes and reducing
healthcare costs.
The value chain of China’s cognitive impairment DTx industry primarily involves (i)
upstream suppliers of DTx products (such as our Company) and health management platforms;
(ii) midstream service providers that promote DTx products in the relevant markets and
connect upstream suppliers of DTx products with downstream users and customers; and (iii)
downstream users and customers, such as hospitals and patients. See “Business—Our
Strategies” for details of our strategies to capture market demand.
Classification of DTx Products
DTx is a type of healthcare assessment and intervention tool that uses digital technologies
to prevent, diagnose, manage and treat diseases. There are two main categories of DTx:
medical-grade DTx and non-medical-grade DTx.
o Medical-grade DTx are typically required to undergo rigorous evidence-based
clinical evaluation processes to demonstrate safety and efficacy in clinical trials and
can be prescribed as effective first-line treatments without the side effects associated
with conventional drugs. In contrast to non-medical-grade DTx, medical-grade DTx
INDUSTRY OVERVIEW
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can provide diseases assessment and intervention either as monotherapy or in
combination with existing drugs and other therapies. Because of the accessible
nature of DTx, medical-grade DTx provide clinically validated therapeutic options
that are appropriate for patients with chronic conditions that require ongoing
treatment and monitoring and are consistent with government goals to promote
access to healthcare in rural or underserved areas worldwide.
o Non-medical-grade DTx refers to applications designed to help individuals maintain
wellness and prevent diseases by providing DTx-based preventive care with a focus
on cognitive and mental health. The safety and efficacy of non-medical-grade DTx
are typically not validated through rigorous evidence-based clinical processes.
Non-medical-grade DTx includes applications for health promotion, disease
prevention, self-diagnosis, management, rehabilitation, palliative care and epidemic
or pandemic care.
DTx Development History
DTx is an emerging field of healthcare technology that uses software-driven medical tools
to assess patient conditions and deliver therapeutic interventions that prevent, treat, and
manage various types of diseases. The development of DTx has rapidly gained momentum
worldwide, with more than 40 FDA-approved applications currently available. In 2015, the
first FDA-approved DTx emerged to test and monitor blood glucose. In 2017, reSET became
the first interactive FDA-cleared DTx for cognitive behavioral therapy, which marked a shift
from the use of DTx for purely assessment purposes to their use for interventional and
therapeutic purposes. In the same year, the Digital Therapeutics Alliance (the “ DTA”), a global
non-profit organization, was founded to promote the adoption of DTx. This collaboration
aimed to accelerate the development and adoption of DTx, and to establish standards for the
industry. In 2020, the FDA launched the Digital Health Center of Excellence. This center is
dedicated to advancing digital health technologies and ensuring the safety and efficacy of DTx,
suggesting that DTx will continue to play an increasingly important role in healthcare.
Despite a late start, China has made rapid progress in the development and adoption of
DTx to meet the growing healthcare needs of its population. The focus on innovation and
modernization is reflected in a number of milestones that have marked the development of DTx
in China. In 2018, the General Office of the State Council introduced a policy of “internet plus
healthcare, “which laid the groundwork for the industry’s growth. In 2018, the NMPA granted
our Company the country’s first medical device registration certificate for cognitive
impairment DTx on the assessment and intervention of cognitive impairment, according to
Frost & Sullivan. In addition, the National Informatization Plan for the 14th Five-Y ear Plan,
which was released in 2022, emphasizes the promotion of digital health development,
including the development of DTx. This plan is expected to boost the industry by
demonstrating the government’s commitment to supporting the development of innovative
digital health solutions. Overall, these milestones indicate a positive trajectory for DTx in
China, as the industry gains recognition and support from both the private and public sectors.
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In March 2023, we co-authored the “Chinese expert consensus on digital therapeutics for
cognitive impairment (2023 edition)” (΍ᗆ(2023) ), which
systematically defined cognitive impairment DTx for the first time in China, according to Frost
& Sullivan.
Advantages of DTx
DTx represents a new approach to healthcare that offers numerous advantages over
traditional therapies and complements them to create value for patients and healthcare
providers.
o For patients . DTx serves as an effective therapy for a variety of indications which
traditional drug therapies cannot address on its own, or at all. DTx also reduces
barriers to care by enabling patients to use digital solutions from the comfort of their
own homes, reducing the cost of care and the need for travel, while enabling the
delivery of personalized treatment plans tailored to each patient’s symptoms,
progress and demographics.
o For healthcare providers . DTx also improves the efficiency and reach of healthcare
providers. DTx assists physicians to interact with, obtain information from and
conduct medical assessment on multiple patients at the same time, which increases
the physicians’ assessment efficiency. Some DTx products could also utilize AI to
offer highly customized and self-adaptive trainings for patients based on their
specific conditions and stage of recovery, which could significantly increase
intervention efficacy. In addition, DTx enables healthcare providers to extend
patient care beyond the hospital by reaching patients in remote areas or outside of
normal working hours, which is especially valuable where physicians and medical
resources are in short supply.
Global DTx Competitive Landscape
The global DTx market is fragmented and consists of many players offering a wide range
of medical-grade and non-medical-grade products. There are around 40 players in the global
DTx market with FDA-approved DTx products, including companies that offer cognitive
training interactive games, cognitive behavioral therapies, health monitoring systems and other
types of DTx covering indications such as attention deficient hyperactivity disorder (the
“ADHD ”), diabetes, hypertension, insomnia and anxiety, as well as cognitive impairment
induced by various indications.
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Current Development and Future Trends
AI and Future DTx Development
The integration of artificial intelligence (the “ AI”) technologies is a major trend within
the DTx industry. DTx products are software-based and therefore compatible with advances in
AI technologies. As a result, the DTx industry has invested heavily in advanced AI
technologies to enhance the capabilities of DTx products.
A major potential of AI as applied in DTx is to improve assessment efficiency and
produce more accurate diagnostic results. Another promising application of AI in DTx is virtual
health coaching designed to help patient navigate through the course of treatment and improve
patient adherence to treatment plans, ultimately leading to better treatment outcomes. AI
technologies such as natural language processing and sentiment analysis can be used to
enhance the functions of DTx by better understanding the emotional context of patient
feedback and improving the patient experience. AI technology and algorithms in DTx products
can also enhance the intervention efficacy of DTx by offering treatment plans that are more
personalized based on the patient’s background.
With the continued development of AI technologies and big data processing methods, the
DTx industry is well-positioned to create even more innovative and effective products that can
improve patient outcomes and contribute to the advancement of healthcare.
Future Trends of the DTx Market
o Movement towards evidence-based therapeutics . Evidence-based therapeutics is the
foundation of digital therapeutics. Digital therapeutics use systematic and scientific
methods to analyze and apply patient data to improve healthcare decision-making. An
emphasis on evidence-based therapeutics ensures that they meet rigorous scientific
standards, paving the way for their integration into the healthcare system.
o Increasing acceptance by patients . In the future, there is likely to be a significant shift in
patient attitudes toward DTx, with patients increasingly willing to pay for these therapies
as they seek complementary or alternative approaches to traditional treatments. This shift
will be driven by the desire for greater control over patient health outcomes and the
convenience of remote access to therapy. The trend toward the use of DTx represents a
promising future for the field.
o Shifting business model . In certain markets, such as China, the DTx business model is
likely to shift to a business-to-hospital approach, with healthcare institutions and
hospitals becoming the primary adopters and providers of DTx. This trend will improve
the overall safety and efficacy of DTx products while raising the barrier to entry. This
shift represents the integration of digital therapeutics into mainstream healthcare systems,
resulting in higher patient uptake when DTx are recommended by physicians, with lower
associated risk due to physician guidance.
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Entry Barriers of the DTx Market
DTx is a new and rapidly evolving industry that requires a high level of technical
expertise, access to high-quality clinical information, collaborative relationship with industry
participants and the ability to navigate an evolving regulatory landscape. Potential entrants
face the following barriers to enter the DTx market.
 Technology . New DTx products integrate advanced AI technologies, making them
more accurate, standardized and effective. However, optimizing AI and machine
learning (the “ ML”) algorithms requires first-hand experience from medical,
engineering and algorithmic scientists. The ability to create new AI and ML
algorithms pose as a high entry barrier for potential entrants.
 Information . DTx face barriers to entry related to the collection and use of
sufficient, high-quality clinical information. In particular, interventional DTx
products require large amounts of diverse and representative patient information to
train and refine algorithms. However, regulatory requirements can significantly
impede information collection, which involves collaboration with healthcare
providers and patients in order to obtain consent and ensure data privacy and
security, which can be a significant challenge for emerging DTx companies.
 Collaborations with healthcare providers . DTx players in certain markets, such as
China, need to cooperate with healthcare providers, primarily hospitals, to
commercialize their products. The ability to establish such cooperation with
healthcare providers poses as a significant entry barrier for new players in cognitive
impairment DTx market. New players would need to expend significant efforts and
costs to integrate its DTx product into a hospital’s system before the products can
reach patients.
 Evolving regulatory environment . The regulatory environment on DTx in most
markets is constantly evolving. Market participants must have the ability to
accurately interpret and adapt to the ever-changing regulatory environment to ensure
compliance and capitalize on regulations or policies that favor the growth of the
global DTx market.
COGNITIVE IMPAIRMENT DTx MARKET
Overview of Cognitive Impairment
Cognitive impairment refers to deficits in neurocognitive domains, such as complex
attention, executive function, perceptual-motor and learning and memory, that lead to a decline
in cognition function. Cognitive impairment can vary from mild to severe. Mild cases involve
changes in cognitive functions, but the individual is still able to perform everyday activities.
Mid-term cases may include increased forgetfulness, especially of recent events, difficulty in
communication, and the inability to live alone, leading to aimless wandering. Severe cases
involve the inability to recognize friends and family, incontinence and increasingly abnormal
behavior.
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Types of Cognitive Impairment
The causes of cognitive impairment primarily include the following: vascular diseases,
neurodegenerative diseases, psychiatric disorders and child development deficiency. Each
category presents unique treatment challenges, and there is a growing need for effective,
evidence-based solutions that can improve patients’ cognitive functions and quality of life.
V ascular disease induced cognitive impairment
V ascular disease induced cognitive impairment (the “ VDCI ”) is typically caused by brain
damages due to impaired blood flow to the brain. The relevant types of vascular diseases
generally include stroke, cerebral hemorrhage, or narrowed or chronically damaged blood
vessels in the brain. Symptoms of VDCI include confusion, attention deficiency, difficulty with
organization, unsteady gait and memory problems, among others.
Neurodegenerative disease induced cognitive impairment
NCI are caused by conditions that cause progressive damage to brain cells, resulting in
long-term cognitive decline. Alzheimer’s disease (the “ AD”) and amnestic mild cognitive
impairment (the “ AMCI ”) are two common examples.
Psychiatric disorder induced cognitive impairment
Psychiatric disorder induced cognitive impairment (the “ PCI”) is caused by psychiatric
disorders, such as depression and anxiety, that can affect the brain’s ability to process
information, leading to problems with memory, attention and decision-making. Psychiatric
disorders are characterized by a clinically significant disturbance in an individual’s cognition,
emotional regulation or behavior. These disorders are highly prevalent, affecting one in eight
people worldwide, with anxiety and depressive disorders being the most common, according
to Frost & Sullivan. A number of factors can contribute to or trigger psychiatric disorders, such
as genetics, family history, life experiences, use of alcohol or recreational drugs and other
biological factors. Treatment for psychiatric disorders typically involve a combination of drug
therapy and psychotherapy and alternative therapies and brain stimulation therapies may also
be useful.
Child development deficiency induced cognitive impairment
Child development deficiency induced cognitive impairment (the “ CDDCI ”) are
structural or functional abnormalities present at birth or during the growth and development of
children that interfere with their normal physiological or psychological development. These
defects can result in deficiencies in many areas of cognitive development, including
intelligence, language, perceptual-motor, and can be caused by a variety of factors, including
genetics, environment, medications, brain injury and immunodeficiency. Examples of CDDCI
include ADHD, dyslexia and autism.
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Other applications
Cognitive impairment can also arise from other diseases, and cognitive training can serve
as an effective treatment option. For example, cognitive impairment is a chronic complication
of diabetes, which leads to decreased memory and comprehension and spatial positioning
impairment, seriously affecting the quality of life of patients. In particular, diabetes can cause
insulin resistance, hyperglycemia, hypoglycemia, vascular lesions in the brain, and other
psychological factors, which could lead to vascular cognitive impairment, Alzheimer’s disease,
and other types of cognitive impairment. Treatment for such cognitive impairments primarily
involve (i) cognitive and memory training and medications for dementia, which are dedicated
to treating cognitive impairment induced by diabetes; and (ii) lifestyle modification (dieting,
exercising, among others) and glucose-lowering treatment, which are dedicated to treating the
underlying diabetes.
In addition to diabetes, cancer could also lead to cognitive impairments. Prevailing cancer
treatment therapies include chemotherapy, radiation, endocrine, and surgery (with the use of
anesthesia), which could have a negative impact on patients’ memory, attention, concentration,
anxiety and depression, and could in turn lead to cancer-related cognitive impairment.
Cognitive training products and services for the above indications are still under development,
and is expected to work in tandem with drug and other therapies that are targeted on training
cognitive impairments as well as on the underlying diseases.
Current Treatment Paradigm and Unmet Clinical Needs of Cognitive Impairment
Cognitive impairment is an active area of research, but there is currently no standard
treatment therapy. Clinical trials are underway to better understand cognitive impairments and
to find treatments that may improve symptoms or prevent or delay dementia.
If the cognitive impairment is caused by underlying reversible causes, treating those
causes may alleviate the cognitive impairment. For example, if the cognitive impairment is
caused by side effects of certain medications which could affect thinking capabilities, such as
benzodiazepines, anticholinergics, antihistamines, opioids and proton pump inhibitors, such
impairments typically disappear when the patients stop taking the medications. Other
neurological and physiological conditions, such as hypertension, depression and sleep apnea,
can cause mild cognitive impairment. Treatment of these underlying conditions may improve
patient’s memory and overall mental function. Available drug treatments primarily involve
medications such as cholinesterase inhibitors, Aricept, Razadyne, Exelon and Memantine.
However, the effectiveness of such treatment may be limited to improving the conditions of
patients suffering from cognitive impairments induced by neurodegenerative diseases such as
AD or Parkinson’s disease (the “ PD”).
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Cognitive Impairment DTx
Cognitive impairment is common in patients with vascular diseases, neurodegenerative
diseases, psychiatric diseases, and child development deficiencies, among others, and
traditional drug therapies may not be effective or available for cognitive impairments induced
by these diseases. Cognitive impairment DTx products leverage cutting-edge technology to
deliver solutions that can be tailored to the specific needs of individual patients. According to
Frost & Sullivan, the cognitive impairment DTx market has experienced significant growth and
is expected to continue to grow as the number of people affected by cognitive impairments
continues to increase.
Cognitive impairment DTx serves as both an assessment and intervention tool for
cognitive impairment patients.
Assessment
Cognitive impairment DTx can provide a comprehensive assessment of cognitive function
and psychiatric behavioral symptoms, as well as social and daily living skills. It can be used
in a variety of scenarios, including clinical diagnosis, large-scale cognitive screening, and
community health promotion. Cognitive impairment DTx can also be combined with other
technologies, such as virtual reality (the “ VR”), speech recognition and eye-tracking devices,
to provide more accurate and efficient assessments. Compared to traditional assessment
methods where physicians can only assess one patient at a time using non-digitized assessment
tools, cognitive impairment DTx can provide comparable results while reducing medical costs
and improving the efficiency of disease diagnosis and treatment accessibility.
The mechanism of action for DTx assessment of cognitive impairment involves the
development of a cognitive computing model as well as the application of existing medical
principles, guidance and standards in collaboration with medical experts. Once this model is
developed and validated, it can be used to assess a patient’s cognitive status by analyzing
information collected from the patient. This includes age, gender, behavioral records from
family and friends, and medical history. Cognitive tests, information from the patient’s
interaction with an AI chatbot, data from cognitive assessment scales, and information
collected from human-computer interactions during a DTx training session, including the
patient’s behavioral patterns, word choices, voice patterns, and facial expressions, can all be
used. From this data, AI can extract biomarkers of cognitive decline, such as a decline in
language function. AI then uses this data to perform an analysis and generate a screening report
which serve as a critical basis for medical professionals’ diagnosis.
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Intervention
Cognitive impairment DTx offers an innovative approach to treatment and helps to
produce compensatory, transferable and long-lasting treatment effects. Cognitive impairment
DTx can also be combined with pharmaceutical and non-pharmaceutical methods for maximum
effect. In addition, cognitive impairment DTx offers a promising approach to improving
treatment efficacy, optimizing treatment protocols and providing an interactive intervention
process for patients where real-time monitoring of treatment outcomes promotes effective
hospital-patient linkage.
Cognitive impairment DTx harnesses neuroplasticity, practices brain functions, and
continuously strengthens brain function. This is achieved through self-adaptive interventions
in multiple cognitive domains, including memory, reasoning, planning and concentration
problems. Cognitive impairment DTx also incorporates bridging, which helps patients apply
their training to real-life scenarios, and monitoring, which helps patients identify cognitive
levels and exercises. By combining these elements, cognitive impairment DTx can effectively
improve patients’ cognitive functions.
Advantages of Cognitive Impairment DTx over Traditional Options
Assessment
According to Frost & Sullivan, cognitive impairment has become a significant public
health issue among the elderly population, requiring large-scale early detection. However,
traditional assessment options such as diagnostic scales, evaluation of medical history,
neurological examination and examination of bio-markers are complex and time-consuming. In
contrast, cognitive impairment DTx can computerize some of the work and perform it without
the involvement of professionals. This makes the process more efficient and suitable for
large-scale use. Cognitive impairment DTx allows people to closely monitor their cognitive
functions so they do not miss the optimal treatment window, which is critical for effective
treatment.
Intervention
Traditional treatments for cognitive impairment have limitations due to the unclear
mechanisms of many cognitive disorders. As a result, these treatments can only delay disease
progression to a certain extent. Non-pharmacological interventions, such as mental health
therapy, are also limited by the scarcity of healthcare providers, making them expensive and
inconvenient for patients. Cognitive impairment DTx offers a promising alternative. By
combining cutting-edge technologies such as AI and VR, cognitive impairment DTx can
deliver interventions that have the potential to be more effective. Cognitive impairment DTx
can also provide one-to-many therapy and unsupervised cognitive training, making
interventions more accessible and reducing the need for medical staff.
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Prevalence of Cognitive Impairment
Global
The global prevalence of the four major types of cognitive impairment increased from
1,574.3 million in 2018 to 1,736.3 million in 2023, representing a CAGR of 2.0% and is
expected to reach 1,805.7 million in 2025 and further to 1,990.6 million in 2030, representing
CAGRs of 2.0% and 2.0%, respectively. The following graph sets forth the global prevalence
of the four major types of cognitive impairment during the years indicated, as well as CAGRs
during the indicated years.
Global Prevalence of Cognitive Impairment, 2018-2030E
2018
1,574.3 1,605.0 1,640.0 1,673.5 1,703.2 1,736.3 1,770.5 1,805.7 1,841.3 1,878.0 1,915.1 1,952.6 1,990.6
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
688.1
414.0 422.5 431.2 438.9 446.7 455.1 462.8 471.0 487.4479.2 495.6 503.6 511.6
144.7 146.2 150.4 152.3 154.4 156.5 158.9 161.3 166.4163.8 169.1 172.0 174.9
327.5 332.2 336.4 340.5 344.5 348.6 352.8 356.9 365.0361.0 368.9 372.8 376.5
704.1 722.1 741.8 757.5 776.1 796.1 816.5 837.3 859.1 881.5 904.3 927.5
Million CAGR
18-23
2.0%Total
1.6%
1.3%
1.9%
2.4%
2.0%
1.5%
1.2%
1.7%
2.6%
2.0%
1.6%
1.1%
1.7%
2.6%
CAGR
23-25E
CAGR
25E-30E
NCI
PCI
VDCI
CDDCI
Note: The overall prevalence and prevalence in each major type cognitive impairment include patients with
comorbidities.
Source: Frost & Sullivan Analysis
China
The prevalence of the four major types of cognitive impairment in China increased from
314.2 million in 2018 to 345.3 million in 2023, representing a CAGR of 1.9% and is expected
to reach 356.4 million in 2025 and further to 385.9 million in 2030, representing CAGRs of
1.6% and 1.6%, respectively. The following graph sets forth the prevalence of the four major
types of cognitive impairment in China during the years indicated, as well as CAGRs during
the indicated years.
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Prevalence of the Four Major Types of Cognitive Impairment in China, 2018-2030E
2018
314.2 320.0 327.6 333.6 339.6 345.3 350.8 356.4 362.1 367.9 373.8 379.9 385.9
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
128.9
69.8 71.2 73.1 74.5 76.1 77.6 79.0 80.5 83.482.0 84.9 86.4 88.0
45.9 46.8 47.7 48.6 49.3 50.2 50.8 51.5 52.852.1 53.4 54.1 54.6
69.6 70.5 71.7 72.5 73.3 74.1 74.9 75.8 77.676.7 78.6 79.7 80.7
131.5 135.1 138.0 140.8 143.4 146.0 148.6 151.3 154.1 156.8 159.7 162.6
Million CAGR
18-23
1.9%Total
1.8%
1.3%
2.1%
2.2%
1.6%
1.3%
1.1%
1.9%
1.8%
1.6%
1.2%
1.3%
1.8%
1.8%
CAGR
23-25E
CAGR
25E-30E
PCI
NCI
VDCI
CDDCI
Note: The overall prevalence and prevalence in each major type of cognitive impairment include patients with
comorbidities.
Source: Frost & Sullivan Analysis
Market Size of Cognitive Impairment DTx
The global cognitive impairment DTx market size reached US$2,529.4 million in 2023
and is expected to grow to US$4,119.6 million in 2025 and US$6,737.0 million in 2030,
representing CAGRs of 27.6% and 10.3%, respectively. The following graph sets forth the
historical and expected global cognitive impairment DTx market size in the years indicated, as
well as CAGRs during the indicated years.
Global Cognitive Impairment DTx Market Size, 2018-2030E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
Million US$
10.3%2025E-2030E
27.6%2023-2025E
34.7%2018-2023
Period CAGR
571.1 764.5 1,049.2
1,504.7
2,124.1
2,529.4
3,386.5
4,119.6
4,885.6
5,640.2
6,260.6 6,604.9 6,737.0
Source: Frost & Sullivan Analysis
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The market size of the cognitive impairment DTx in China reached RMB268.6 million in
2023 and is expected to increase to RMB1,046.7 million in 2025 and RMB8,927.4 million in
2030, representing CAGRs of 97.4% and 53.5%, respectively. The following graph sets forth
the historical and expected cognitive impairment DTx market size in China in the years
indicated, as well as CAGRs during the indicated years. In 2023, BrainAurora Zhejiang held
25.0% of the total cognitive impairment DTx market in China by revenue.
Cognitive Impairment DTx Market Size in China, 2018-2030E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
Million RMB
53.5%2025E-2030E
97.4%2023-2025E
107.7%2018-2023
Period CAGR
7.0 12.5 27.1 60.4 149.4 268.6 521.5
1,046.7
2,048.2
3,665.1
5,719.2
7,642.5
8,927.4
Source: Frost & Sullivan Analysis
The key assumptions and market policies used by Frost & Sullivan to estimate the above
market size of the cognitive impairment DTx in China are as follows.
 Increasing prevalence. After surveying the relevant scientific literature and
conducting expert interviews, Frost & Sullivan believes that the overall prevalence
of the four major types of cognitive impairment in China is increasing as a result of
a growing aging population. The prevalence of the four major types of cognitive
impairment in China is expected to reach 356.4 million in 2025 and 385.9 million
in 2030. This represents a large patient base, which is expected to generate large
clinical demands and contribute to the growth of the cognitive impairment DTx
market size from 2023 to 2030.
 New market opportunities. The market is expected to diversify with products
targeting more cognitive impairment indications, thereby creating new market
growth opportunities in the future.
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 Expected increase in market penetration. According to expert interviews, the
medical community is increasingly recognizing DTx as a viable therapy for
cognitive impairment, as DTx offers numerous advantages and can complement
traditional therapies to create value for patients and healthcare providers. As a
result, the market penetration of DTx for cognitive impairment is expected to
increase.
 Government policy support. Market growth is also driven by policies to promote
digital health and cognitive health. In recent years, the State Council and local
governments have issued policies to promote the development of DTx. For example,
in February 2022, the National Development and Reform Commission (the
“NDRC”), issued The 14th Five-Y ear Plan for the Development of the Bioeconomy
(“ɤ̬ʞ”஝ྌ), which aims to expand the clinical application of
advanced therapeutic technologies such as intelligent surgical robots, particle
radiotherapy and DTx. In December 2023, the NDRC issued the Overall Program of
Construction of Guangdong-Macao In-Depth Cooperation Zone (Υ
), which emphasizes support for the development of mobile
healthcare and DTx in the cooperation zone. At the local government level, in
November 2021, the Beijing Municipal People’s Government issued the Plan for the
Construction of an International Science and Technology Innovation Center in
Beijing ( ̏ԯ̹“ɤ̬ʞ”ண஝ྌ), which states that
Beijing will support the technological research and development of DTx. Similarly,
in October 2022, the Hainan Provincial People’s Government issued Several
Measures to Accelerate the Development of Digital Therapeutics Industry in Hainan
Province (), which puts forward
a total of 21 initiatives to promote the adoption and growth of DTx, including
building the nation’s leading clinical research capabilities for DTx and accelerating
the registration and approval process of DTx. In addition, China has made increasing
efforts in large-scale early assessment and intervention for various cognitive
impairments. These initiatives are helping to build a supportive ecosystem for
cognitive impairment DTx, paving the way for its sustainable and high-quality
development, which will also increase the market penetration and size of cognitive
impairment DTx.
Competitive Landscape of Cognitive Impairment DTx
Key players in the global cognitive impairment DTx market (outside China) include
companies that offer cognitive training interactive games, cognitive behavioral therapies,
health monitoring systems and other types of cognitive impairment DTx products. As of the
Latest Practicable Date, there were approximately 23 FDA-approved products covering
cognitive impairment induced by various indications by approximately 14 key global players.
In China, as of the Latest Practicable Date, approximately 100 cognitive impairment DTx
products by approximately 50 players, including our Company, had been approved by the
NMPA or its local counterparts, and at least 20 cognitive impairment DTx products by 20
players are currently in the process of clinical trials and obtaining relevant medical device
registration certificates, according to Frost & Sullivan. We have a 25.0% market share in
China’s cognitive impairment DTx market and 91.6% market share in China’s medical-grade
cognitive impairment DTx market in terms of revenue in 2023, according to Frost & Sullivan.
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The following table sets forth the market share and background information of the top players in the cognitive impairment DTx market in China
in the year indicated who are in direct competition with our Company according to Frost & Sullivan, as well as the key distinctions in target
customers and usage scenario.
25
Company Background Market Share,
2023(1)
Medical Grade
Market Share,
2023(2)
Targeted Customers Usage
Scenario Relevant Products Owned Type Approval
Year Property Performance Indicator Targeted Indication
Our
Company
Founded in 2012, a
company that provides a
broad range of cognitive
impairment assessment and
Intervention DTx products
25.00% 91.60%
People with cognitive
impairment, the elderly,
children and adolescents
Hospital & Medical
institution:
Digital
interventions for
cognitive
impairment
Cognitive Ability Supplemental
Screening and Assessment
Software
Self-developed 2022
It is a multi-modal interactive evaluation system based on
digital human and artificial intelligence, which provides
functions such as voice interaction, intention recognition,
and automatic interpretation.
The diagnostic accuracy of patients with
cognitive impairment was 94.3%
(sensitivity = 94.6%, specificity = 78.1%)
Cognitive Function
Basic Cognitive Ability Testing
Software Self-developed 2022
It is a computerized system that assesses the basic
cognitive abilities in comprehensive aspects, with
measuring different cognitive abilities in a task-based
manners.
The system result is highly correlated with
traditional clinical assessment scales.
(p<10^-5)
Cognitive Function
Brain Function Information
Management Platform
Software System
Self-developed 2018
It is a brain health screening and cognitive rehabilitation
intervention system based on the classical research paradigm
of neuropsychology, combined with the cutting-edge theories
of cognitive neuroscience and artificial intelligence
recommendation algorithms.
The assessment part adopts electronic
traditional scales; The intervention part
found that the training effect was more
than 2 times higher for patients with
cognitive impairment.
Mild Cognitive Impairment
(MCI)
Dyslexia Assisted
Screening Management
Software
Self-developed 2023
It is a comprehensive system that includes both systematic
"behavior-reading-cognition" assessments, as well as an
customized, intelligent-based interventions for children
with dyslexia.
Since there is no gold standard scale
in the field of dyslexia, this system fills
the gap as the objective assessment
tool of this disorder.
Dyslexia
Company
A
Founded in 2016, a
company that provides
assessment and
intervention DTx products
for early cognitive
impairment
33.5% 6.1% Elderly people with
cognitive impairment
Individual &
Community:
Early screening
and intervention
treatment for
Alzheimer's
Disease
Intelligent Speech
Cognitive Function
Assessment System
Self-developed
2022
It is a new generation of cognitive function assessment
method using voice as a digital biomarker.
The assessment system result has
significant correlation with the MOCA-B
(Montreal Cognitive Assessment – B, a
widely used screening assessment for
detecting cognitive impairment)
assessment results. (r = 0.89)
MCI, AD
Multidimensional Cognitive
Rehabilitation System Self-developed
An innovative digital therapy with a multi-dimensional
cognitive intervention system as its core. Through the
collection and analysis of posture/video, picture/trajectory,
voice/voiceprint data, and based on cognitive assessment
results, it intelligently matches personalized training tasks
for users.
The cognitive function score of the
intervention group increased by 5.32%,
and the cognitive score of MCI patients
increased by 12.85%
Company
B
Founded in 2016, a
company that provides VR
DTx solutions focusing on
the field of psychology
3.2% 1.2%
People with anxiety and
insomnia, children with
ADHD, autism, drug and
alcohol addicted people
Hospital & Medical
institution:
Mental illness
interventions
VR Cognitive Assessment
and Training Software Self-developed 2023
The system uses the unique immersive, interactive, and
imaginative features of virtual reality technology (VR) and
combines it with the principles and methods of traditional
clinical psychology for the treatment of anxiety disorders.
No public information disclosed
Brain Dysfunction in
Cognition, Speech,
and Psychosomatic
Functions Due to
Brain Injury Disorders
Sleep Disorder Assisted
Therapy Software Self-developed 2023 The system uses virtual reality (VR) technology as an
auxiliary treatment for sleep disorders No public information disclosed Insomnia disorder
Company
C
Founded in 2020, a
company that provides
digital screening and
diagnosis systems,
digital drugs, and digital
vaccines for brain
diseases
1.5% 1.1%
People with cognitive
impairment, people
with anxiety and
depression
Individual &
Community:
Early screening
for Alzheimer’s
Disease and
digital
interventions
for others
mental illness
Cognitive Self-Assessment
Software Self-developed 2024
The system uses AI algorithms and big data analysis to
achieve intelligent screening and analysis of cognitive
impairment. It can quickly complete cognitive risk
assessment within 3 minutes and is suitable for screening
large populations.
The sensitivity of Cognitive Impairment
= 85.3%, and specificity = 95.1% MCI
Company
D
Founded in 2018, a
company that provides
assessment and
intervention DTx
products in the field of
psychology
0.4% 0%
People with mental
illness, children and
adolescents
People in drug
rehabilitation, specific
occupational groups
Hospital &
Medical
institution:
Mental illness
interventions
Cognitive Dysfunction
Treatment Software
No public
information
disclosed
2022
Patients are required to perform specific tasks through
software and games. During the process, the system
collects the user's physiological data and uses specific AI
algorithms to analyze and judge the data as quantitative
evidence for the auxiliary diagnosis status. Specific
stimulation interventions are then used to improve the
corresponding indicators.
The diagnostic accuracy rate of AI
Drug Craving Assessment System is
90%
MCI
68% of participants completed more
than half of the course and had
moderate to high compliance
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Note:
(1) Market Share measured by percentage of 2023 cognitive impairment DTx revenue in China. Total size of China’s cognitive impairment DTx market as me asured by 2023 revenue
was RMB268.6 million.
(2) Market share measured by percentage of 2023 medical-grade cognitive impairment DTx revenue in China. Total size of China’s medical-grade cognit ive impairment DTx market
as measured by 2023 revenue was RMB73.4 million.
(3) Data for Companies A, B, C and D and total market size data were not derived from audited financials; rather , they were prepared by Frost & Sullivan ba sed on non-public
searches and reasonable professional estimates.
Source: Frost & Sullivan Analysis
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According to Frost & Sullivan, the industry standards and regulatory regime covering the
cognitive impairment DTx industry are expected to become more mature, as more players and
products emerge. While this increases the number of players in the industry, maturity in
industry standards and regulatory regime provides more certainty as to how players should
develop technologies and products, and how they should cooperate with upstream and
downstream partners. Leveraging their current competitive advantages in relevant technologies
and relationship with partners along the industry chain, top players are expected to enhance
their R&D efforts and cooperation with upstream and downstream partners, which is expected
to lead to further advantages in technology, economies of scale, cost reduction and business
scale expansion. Thus, the cognitive impairment DTx market is expected to become more
concentrated going forward, and top industry players are expected to enjoy a larger market
share.
In addition, the potential reclassification of cognitive impairment DTx as Class III
medical devices is also expected to affect the industry competitive landscape. Class II medical
devices pose a moderate degree of risk and whose safety and efficacy should be ensured
through strict control and administration. Class III medical devices pose a high degree of risk
and must be ensured through strict control and administration by special measures to ensure
safety and efficacy. As of the Latest Practicable Date, there are three recommendations from
Chinese regulatory authorities regarding the reclassification of DTx medical devices from
Class II to Class III. These represent advice from the relevant experts nationwide and are not
binding regulations on medical device classification as of the Latest Practicable Date,
according to our PRC Legal Advisor. As advised by Frost & Sullivan, such potential
reclassifications would make a difference on the steps of clinical development and obtaining
regulatory approvals that must be undertaken by players in the industry, not necessarily on the
market demands or opportunities for such products. Players with the resources and experience
in carrying out evidence-based clinical research and development would potentially enjoy
competitive advantage with regards to cognitive impairments DTx products that may be
reclassified into Class III medical device, according to Frost & Sullivan. As such, the potential
reclassification of cognitive impairment DTx as Class III medical device in China, while not
currently in effect, is an example of the abovementioned maturing regulatory regime, and top
industry players with more accumulated experience and resources in conducting evidence-
based clinical research is expected to enjoy a more significant edge.
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Growth Drivers of the Cognitive Impairment DTx Market
The development of the cognitive impairment DTx market is expected to be driven
primarily by increasing demand for cognitive impairment treatment, advances in innovative
technologies, supportive regulatory measures and growing awareness of cognitive impairment
DTx as a therapeutic option.
 High demand and large market potential. Driven by an aging population and an
increasing focus on cognitive health, the number of patients seeking treatment for
cognitive impairment is increasing globally. Compared to traditional treatment
options, cognitive impairment DTx offers a more personalized and cost-effective
approach to managing these conditions. With more than 70% of the Chinese
population having access to the Internet and mobile phones, cognitive impairment
DTx can reach a population comparable to or potentially larger than traditional
hospitals.
 Advances in innovative technologies. Innovative technologies are driving the
development of cognitive impairment DTx. Advances in AI are being used to
improve patient treatment outcomes by providing clinically valid assessment and
intervention products that are personalized based on patient data. In addition,
technologies such as VR can create an immersive and engaging environment for
patients to train their cognitive functions and apply their newly acquired skills to
real-life situations, thereby increasing treatment adherence and overall
effectiveness. These innovative technologies are expected to drive the adoption of
cognitive impairment DTx.
 Measures to support the development of cognitive impairment DTx. DTx is gaining
official recognition and support. In recent years, the PRC government has issued
policies to promote DTx, such as the 14th Five-Y ear Plan for National
Informatization (  “ɤ̬ʞ”ʷ஝ྌ) and the Guiding Principles for
Defining the Categorization of Digital Therapy Software Products in the
Rehabilitation Category (Draft for Comments) (ޢ
ۆࡡ(ᅄӋจԈᇃ)). Similarly, the U.S. has established the Digital Health
Center of Excellence to promote digital health innovation. In addition, cognitive
impairment and dementia have become a global public health priority. To address
this issue, WHO has launched the Global Action Plan on the Public Health Response
to Dementia 2017-2025. Several governments have also emphasized the importance
of early screening and intervention for cognitive impairment. This increased focus
on cognitive impairment will drive the development and adoption of cognitive
impairment DTx.
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 Growing recognition of cognitive impairment DTx. Public awareness of cognitive
impairment DTx has grown steadily in recent years. In 2023, the Chinese Expert
Consensus on Cognitive Digital Therapeutics (΍ᗆ
(2023) ) was published, representing the growing recognition of cognitive
impairment DTx by the medical community. More and more medical institutions,
including hospitals and rehabilitation centers, are beginning to use cognitive
impairment DTx to treat cognitive impairment. Leading cognitive impairment DTx
companies are also beginning to participate in the establishment of cognitive centers
in hospitals.
Barriers to Entry of the Cognitive Impairment DTx Market
 Early entrant opportunities. Cognitive impairment DTx is an emerging field. Early
entrants can take advantage of the formative years of the cognitive impairment DTx
industry to influence guidelines and expert consensus and help set industry
standards. They can also establish collaborations with researchers and hospitals for
publications and research opportunities.
 Challenges to achieving evidence-based medicine. Future medical-grade cognitive
impairment DTx products will need to undergo various clinical trials and real-world
studies to verify their efficacy in order to achieve medical-grade safety and efficacy,
and gain consumer confidence and regulatory approval. However, due to the cost
and time required for clinical trials, conducting enough clinical trials and obtaining
sufficient real-world data comparable to existing players is a significant barrier for
new market entrants.
 Data access. cognitive impairment DTx can be enhanced with AI capabilities and
become more effective by improving its algorithm with real-world patient
information. As usage increases, cognitive impairment DTx can collect more patient
information and continually update the algorithms to improve the efficacy of
assessment and intervention. For new entrants with a smaller user base, obtaining
enough patient information to train and improve their AI algorithms is a significant
barrier.
 Customer lock-in. Cognitive impairment DTx typically requires patients to undergo
diagnosis, intervention and feedback in sequential steps over a period of time. As a
result, it is difficult to change therapy mid-stream. Because different cognitive
impairment DTx for cognitive impairment may use different treatment modalities
and intervention exercises, healthcare providers and patients may become
accustomed to certain products, making it difficult to convince them to change and
adopt new products.
INDUSTRY OVERVIEW
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VDCI DTx MARKET
Overview of VDCI
VDCI encompasses a broad spectrum of syndromes ranging from mild cognitive
impairment to dementia. Risk factors for VDCI include age, atherosclerosis, smoking, obesity,
high cholesterol, hypertension, diabetes and a history of heart attack or stroke.
VCI and VCIND
V ascular cognitive impairment (the “ VCI”) is a type of VDCI. V ascular cognitive
impairment no dementia (the “ VCIND ”) is a mild stage of VCI. It is characterized by mild
impairment of concentration and executive function that does not rise to the level of dementia.
Some patients with VCIND may go on to develop vascular dementia, while others may return
to a healthy state of cognitive function. There is currently no approved treatment for VCIND,
but clinical studies have shown that cognitive training through VDCI DTx may be helpful in
improving cognitive function.
Aphasia
Aphasia is a type of cognitive impairment defined as a language disorder that affects the
production or understanding of speech and the ability to read or write. Aphasia usually occurs
suddenly after a stroke or head injury, but it can also develop gradually from a slow-growing
brain tumor or a disease that causes progressive, permanent damage. The severity of aphasia
depends on a number of things, including the cause and extent of the brain damage.
Atrial Fibrillation Induced Cognitive Impairment
Atrial fibrillation (the “ AF”) is a common type of heart arrhythmia that occurs when the
normal sinus rhythm of the atria is replaced by irregular and often rapid electrical
depolarizations. Numerous observational studies over the past 10 years, including several
meta-analyses, provide increasing evidence that AF is associated with cognitive impairment.
AF could lead to cognitive impairment through several mechanisms: cerebral infarcts, reduced
brain volume and cerebral microbleeding. Genetic factors and common risk factors may
contribute to both AF and the associated cognitive impairment.
Hypertension Induced Cognitive Impairment
Hypertension, or high blood pressure, is a common disease affecting a significant
proportion of the world’s population. Prospective cohort studies have reported a positive
association between hypertension and the risk of cognitive impairment. Most of the vascular
changes induced by hypertension contribute to cognitive impairment by causing
hypoperfusion, ischemic and hemorrhagic stroke and white matter injury. No definitive studies
have shown which antihypertensive agents and treatment regimens are optimal for maintaining
cognitive health. There is a need to improve the detection of hypertension in the general
population to reduce the global burden of cognitive impairment.
INDUSTRY OVERVIEW
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Coronary Heart Disease Induced Cognitive Impairment
Coronary heart disease (the “ CHD”) is closely associated with cognitive impairment,
especially in severe cases of heart failure. Patients with cognitive impairment in combination
with coronary artery disease have a more rapid decline in cognitive function and a significantly
increased risk of death. An impaired cardiac systolic function may play a key role in the
relationship between CHD and cognitive impairment among patients with pre-heart failure
conditions.
Treatment Paradigm and Unmet Clinical Needs of VDCI
Currently there is no standard diagnostic scale for the assessment of VDCI. The current
assessment paradigm involves a combination of reviewing the patient’s medical history,
performing neurological exams, and conducting laboratory tests such as blood pressure,
cholesterol, and blood sugar. Brain imaging tests such as magnetic resonance imaging or
computed tomography scans may also be used to diagnose the condition. In addition,
neuropsychiatric tests can assess cognitive function and identify impairments. VDCI DTx can
be a complementary or substitute method to traditional diagnostic methods for VDCI. VDCI
DTx can use big data and AI to tailor the assessment to the patient’s unique characteristics,
such as age, medical history, and education level, resulting in a more accurate
neuropsychological diagnosis. This approach provides a better assessment of disease state and
can improve the accuracy of VDCI diagnosis, leading to better treatment and care for patients.
Once diagnosed, the interventional therapies for VDCI often focus on managing the risk
factors that contribute to the condition. This includes (i) lowering blood pressure, cholesterol,
and blood sugar levels; (ii) preventing blood clots; and (iii) controlling diabetes. These
interventions can slow or in some cases prevent further cognitive decline. In addition,
medications are often used as a treatment options but are limited in their scope and
effectiveness. As such, VDCI DTx is a promising intervention tool for many aspects of VDCI.
VDCI DTx uses computerized, multi-domain, adaptive training to practice impaired functions
and improve cognitive functions. This type of cognitive remediation therapy improves brain
function by practicing specific cognitive domains, which can help treat VDCI. By practicing
these specific brain functions, the corresponding brain areas can improve and restore network
connections between neurons, generate new nerve fibers, regulate trophic factors and
consolidate neuronal remodeling. This results in the construction of specific synaptic
connectivity patterns for specific cognitive functions, thereby improving overall cognitive
abilities for patients with VDCI.
INDUSTRY OVERVIEW
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Prevalence of the Major Types of VDCI
Global
The global prevalence of the major types of VDCI increased from 414.0 million in 2018
to 455.1 million in 2023, representing a CAGR of 1.9% and is expected to reach 471.0 million
in 2025 and further to 511.6 million in 2030, representing CAGRs of 1.7% and 1.7%. The
following graph sets forth the global prevalence of the major types of VDCI during the years
indicated, as well as CAGRs during the indicated years.
Global Prevalence of the Major Types of VDCI, 2018-2030E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
CAGR
18-23
1.9%Total
4.1%Atrial
Fibrillation
Induced CI
Coronary Heart
Disease
Induced CI
Vascular
Cognitive
Impairment
Hypertension
Induced CI
2.6%
1.6%
0.9%
1.7%
3.1%
2.1%
1.6%
0.9%
1.7%
3.3%
1.7%
1.5%
0.8%
CAGR
23-25E
CAGR
25E-30E
414.0
Million
422.5 431.2 438.9 446.7 455.1 462.8 471.0 479.2 487.4 495.6 503.6 511.6
173.5166.3 167.9 169.5 170.8 172.1 175.0 176.5 178.0 179.5 181.0 182.5 183.9
95.4 96.9 98.9 100.1 101.5 103.1 104.7 106.3 108.0 109.7 111.4 113.1 114.8
76.6 78.9 81.0 83.2 85.3 87.2 89.1 91.0 92.7 94.4 96.0 97.6 99.041.4
34.3
43.2
35.6
44.9
36.8
46.7
38.1
48.4
39.4 40.7
50.7 52.0
42.0
53.8
43.4
55.7
44.8
57.6
46.2
59.5
47.7
61.4
49.1
63.3
50.6 3.5%Aphasia 3.3% 3.1%
Notes:
(1) The overall prevalence of the major types of VDCI includes patients with comorbidities.
(2) Aphasia is a type of cognitive impairment.
Source: Frost & Sullivan Analysis
China
The prevalence of the major types of VDCI in China increased from 69.8 million in 2018
to 77.6 million in 2023, representing a CAGR of 2.1% and is expected to reach 80.5 million
in 2025 and further to 88.0 million in 2030, representing CAGRs of 1.9% and 1.8%. The
following graph sets forth the prevalence of the major types of VDCI in China during the years
indicated, as well as CAGRs during the indicated years.
INDUSTRY OVERVIEW
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Prevalence of the Major Types of VDCI in China, 2018-2030E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
CAGR
18-23
2.1%Total
2.0%Atrial
Fibrillation
Induced CI
Coronary Heart
Disease
Induced CI
Vascular
Cognitive
Impairment
Hypertension
Induced CI
4.0%
0.9%
2.0%
1.9%
1.9%
3.4%
0.7%
1.7%
1.8%
2.1%
2.8%
0.7%
1.5%
CAGR
23-25E
CAGR
25E-30E
69.8
Million
71.2 73.1 74.5 76.1 77.6 79.0 80.5 82.0 83.4 84.9 86.4 88.0
37.834.2 34.9 35.8 36.4 37.2 38.5 39.1 39.8 40.4 41.0 41.6 42.2
17.3 17.5 17.7 17.9 18.0 18.1 18.3 18.4 18.5 18.6 18.7 18.9 19.06.2 6.5 6.8 7.1 7.4 7.6 7.9 8.1 8.4 8.6 8.9 9.1 9.3
6.7
5.3
6.8
5.5
7.0
5.8
7.1
6.1
7.3
6.3 6.6
7.4 7.5
6.9
7.7
7.2
7.8
7.5
8.0
7.8
8.2
8.1
8.3
8.5
8.5
8.9 4.5%Aphasia 4.3% 4.3%
Notes:
(1) The overall prevalence of the major types of VDCI includes patients with comorbidities.
(2) Aphasia is a type of cognitive impairment.
Source: Frost & Sullivan Analysis
Competitive Landscape of VDCI DTx
Key players in the global VDCI DTx market (outside China) include at least one player
with two FDA-approved VDCI DTx products as of the Latest Practicable Date. The following
table provides an overview of the FDA-approved VDCI DTx products.
FDA-approved VDCI DTx Products
Product Name Company Indication Pathway Approval Year
MindMotion® GO1
2
MindMaze
Neurorehabilitation
Neurological conditions such
as stroke, brain injury, and
neurodegenerative diseases
510(k)
2018
MindMotion® PRO 2017
Source: FDA, Frost & Sullivan Analysis
In China, a total of approximately 28 VDCI DTx products by approximately 22 players,
including our Company, had been approved by the NMPA or its local counterparts, and at least
five VDCI DTx products by five players were in the process of clinical trials and obtaining
relevant medical device registration certificates, as of the Latest Practicable Date, according to
Frost & Sullivan. The following table provides an overview of the NMPA-approved VDCI DTx
products as of the Latest Practicable Date, all of which are classified as Class II medical
device.
INDUSTRY OVERVIEW
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NMPA-approved VDCI DTx Products
Product Name Company Indication* Approval
Year
1 Cognitive Ability Supplemental Screening and
Assessment Software***
Our Company
Cognitive Function 2022
2 Basic Cognitive Ability Testing Software*** Cognitive Function 2022
3 Brain Function Information Management
Platform Software System***
Clinical Diagnosis,
Treatment and Assessment 2018**
9 Cognitive Rehabilitation Training and
Assessment Software Changsha Longzhijie Technology Co., Ltd Cognitive Impairment Due to Brain Function Injury
or Stroke 2023
7
8
6
5
4
10 VR Cognitive Assessment and Training
Software
Hunan Xinjing Medical Equipment
Co., Ltd
Brain Dysfunction in Cognition, Speech, and
Psychosomatic Functions Due to Brain Injury
Disorders
2023
11 Cognitive Dysfunction Assessment and
Training Software
Hunan Wanwu Chengli Medical
Technology Co., Ltd Cognitive Impairment 2023
12 VR Rehabilitation Software for Cognitive
Function Hunan Saionsi Medical Device Co., Ltd Cognitive Impairment Due to Brain Function Injury
or Stroke 2023
13 Cognitive Function Assessment Training
Software
Changsha Braingine Network Technology
Co., Ltd Mild Cognitive Impairment 2023
14 Speech Cognition Rehabilitation Training
System Shanghai University of Traditional
Chinese Medicine Asset Management
Co., Ltd.
Verbal Cognitive Dysfunction Due to Brain Stroke 2023
15 Cognitive Rehabilitation Training System Cogni tive Impairment Due to Brain Stroke 2023
16 Cognitive Impairment Rehabilitation
Assessment and Training System
Henan Xiangyu Medical Equipment
Co., Ltd Cognitive Impairment Due to Brain Stroke 2023
17 VR Cognitive Rehabilitation Software Hunan Ludian Medical Technology
Equipment Co., Ltd
Cognitive Impairment Due to Brain Function Injury
or Stroke 2023
18 Adult Cognitive Testing and Training
Instrument
Changzhou Qianjing Rehabilitation
Co., Ltd
Mental retardation, Memory impairment, Cognitive
Disorders Due to Brain-injury Disorders 2022
19 Cognitive Ability Testing and Training System Ailite (Hunan) Medical Technology
Co., Ltd Linguistic Cognitive Ability 2022
20 Cognitive Dysfunction Assessment and
Training Software
Nanjing Vishee Medical Technology
Co., Ltd Mild Cognitive Impairment 2022
21 Cognitive Dysfunction Examination and
Correction Software
Hunan Xinkang Medical Technology
Co., Ltd Mild Cognitive Impairment 2022
22 Cognitive Impairment Assessment of
Rehabilitation Software
Guilin Yikang Electronic Technology
Co., Ltd Mild Cognitive Impairment 2022
23 Cognitive Function Assessment and Training
Software Changsha Zhisong Technology Co., Ltd Mild Cognitive Impairment 2022
24 Cognitive Function Assessment and Training
Software
Nanjing JianbrainHealth Technology
Co., Ltd  Cognitive Impairment Due to Brain Function Injury  2022
25
Rehabilitation Training for Cognitive
Impairment and the EEG Stimulation
Treatment System
Jiangxi Huaheng Jingxing Medical
Technology Co., Ltd
Cognitive Impairment, Motor Dysfunction,
Language Disorders (Aphasia), Swallowing
Disorders, and Symptoms of Insomnia, Depression,
and Mood Disorders In Adults and Children
2022
26 Cognitive Rehabilitation Training and
Assessment Software
Hangzhou Jizhi Medical Technology
Co., Ltd
Cognitive Impairment Due to Brain Function Injury
or Stroke 2019
27 Cognitive Ability Test and Training Apparatus Guangzhou Kangze Medical Technology
Co., Ltd
Adult Cognitive Impairment Due to Brain-injurious
Diseases 2019
28 Cognitive Dysfunction Treatment Software Nanjing Vishee Medical Technology
Co., Ltd Mild Cognitive Impairment 2018
Cognitive function screening assessment and
training software Nanjing Brain Health Technology Co., Ltd
Mild Cognitive Impairment (Not Involve Patients with
Schizophrenia, Anxiety, Depression, Mental and
Psychological Diseases)
2024
Cognitive rehabilitation training and evaluation
system
ZD Medical Technology (Zhejiang) Co.,
Ltd
Cognitive Impairment Due to Brain Function Injury
and Stroke 2024
Cognitive function rehabilitation software Changsha Yuanyi Technology Co., Ltd Cognitive Impairment Due to Brain Function Injury
and Stroke 2024
Cognitive Impairment rehabilitation
assessment training system Xiangyu Medical Co., Ltd Mild Cognitive Impairment Due to Stroke 2024
Cognitive function training system Changsha Huaquejing Medical
Technology Co., Ltd
Mild Cognitive Impairment Due to Brain Trauma
and Stroke 2024
Note: All indication descriptions are extracted from the NMP A website and their scopes are related to VDCI.
* As shown on the NMP A website.
** Represents the year in which the System first received regulatory approval for use of the System as a tool of
“assistance of doctors in clinical diagnosis and treatment of patients with brain function impairments caused
by various types of brain damages and diseases, assessment of brain function, and comprehensive management
of medical information and brain function data.”
*** Self-developed, owned and operated by us.
Source: NMP A, Frost & Sullivan Analysis
INDUSTRY OVERVIEW
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NCI DTx MARKET
Overview Of NCI
AD
AD is a neurodegenerative disease that usually starts with mild symptoms that gradually
deteriorate. Approximately 60-70% of cases of dementia were caused by AD. Like other
chronic diseases, AD is not caused by a single factor but is often the result of a combination
of risk factors. Advanced age is the greatest risk factor for AD.
AMCI
AMCI is the most common form of mild cognitive impairment. Its main symptoms are
subtle changes in memory and thinking. People with AMCI have memory problems that are
more severe than normal for their age and education, but not severe enough to interfere with
daily life. The causes of AMCI are not completely understood. Experts believe that many, but
not all, cases result from brain changes that occur in the very early stages of Alzheimer’s
disease or other neurodegenerative diseases that cause dementia.
Treatment Paradigm and Unmet Clinical Needs of NCI
Assessment
Current paradigm for the assessment of NCI involves detecting the underlying
neurodegenerative disease causing the NCI. However, this leaves open significant the unmet
medical needs of as most neurodegenerative diseases lacks a good early-stage assessment
option. Using specific biomarkers, NCI DTx can help physicians accurately diagnose
neurodegenerative diseases or alert patients to seek help. In addition, DTx can also help
physicians speed up the screening process, enabling efficient, large-scale early detection.
Intervention
There are currently no treatments available to stop the progression of the underlying
neurodegenerative disease that causes NCI. Current paradigm for the intervention of NCI
involves the treatment of the underlying neurodegenerative diseases. NCI DTx can provide
cognitive training and help manage risk factors to delay disease progression, making it an
effective complement to medication. NCI DTx has the potential to become a treatment option
that targets specific brain functions to improve cognition and prevent disease progression based
on the principle of neuroplasticity.
INDUSTRY OVERVIEW
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Prevalence of the Major Types of NCI
Global
The global prevalence of the major types of NCI increased from 144.7 million in 2018 to
156.5 million in 2023, representing a CAGR of 1.6% and is expected to reach 161.3 million
in 2025 and further to 174.9 million in 2030, representing CAGRs of 1.5% and 1.6%. The
following graph sets forth the global prevalence of the major types of NCI during the years
indicated, as well as CAGRs during the indicated years.
Global Prevalence of the Major Types of NCI, 2018-2030E
Alzheimer’s
Disease Induced
Cognitive
Impairment
Amnestic Mild
Cognitive
Impairment
4.5%
0.3%
3.4%
0.6%
3.1%
0.8%2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
144.7
Million
146.2 150.4 152.3 154.4 156.5 158.9 161.3 163.8 166.4 169.1 172.0 174.9
CAGR
18-23
1.6%Total 1.5% 1.6%
CAGR
23-25E
CAGR
25E-30E
104.6103.0 103.2 103.4 103.7 104.1 105.1 105.7 106.5 107.3 108.1 109.1 110.1
41.7 43.0 46.9 48.6 50.3 52.0 53.7 55.5 57.3 59.2 61.0 62.9 64.7
Note: The overall prevalence of the major types of NCI includes patients with comorbidities
Source: Frost & Sullivan Analysis
China
The prevalence of the major types of NCI in China increased from 69.6 million in 2018
to 74.1 million in 2023, representing a CAGR of 1.3% and is expected to reach 75.8 million
in 2025 and further to 80.7 million in 2030, representing CAGRs of 1.1% and 1.3%. The
following graph sets forth the prevalence of the major types of NCI in China during the years
indicated, as well as CAGRs during the indicated years.
INDUSTRY OVERVIEW
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Prevalence of the Major Types of NCI in China, 2018-2030E
Alzheimer’s
Disease Induced
Cognitive
Impairment
Amnestic Mild
Cognitive
Impairment
4.6%
0.6%
4.3%
0.3%
4.6%
0.3%
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
69.6
Million
70.5 71.7 72.5 73.3 74.1 74.9 75.8 76.7 77.6 78.6 79.7 80.7
CAGR
18-23
1.3%Total 1.1% 1.3%
CAGR
23-25E
CAGR
25E-30E
60.058.3 58.6 59.2 59.4 59.7 60.2 60.4 60.6 60.8 61.0 61.2 61.4
11.3 11.9 12.5 13.1 13.6 14.2 14.7 15.4 16.2 16.9 17.6 18.5 19.3
Note: The overall prevalence of the major types of NCI includes patients with comorbidities
Source: Frost & Sullivan Analysis
Competitive Landscape of the NCI DTx Market
Key players in the global NCI DTx market (outside China) include at least three players
that offers at least four FDA-approved NCI DTx products as of the Latest Practicable Date. The
following table provides an overview of the FDA-approved NCI DTx products.
FDA-approved NCI DTx Products
Product Name Company Indication Pathway Approval Year
1 Biofeedback (ABS) Software
Development kit (SDK) Better Therapeutics
Future Pain, Post-traumatic
Stress Disorder, Epilepsy, Sleep
Disorders, Immune Diseases,
Parkinson's, Alzheimer’s
Disease
510(k) 2024
2 Stanza Swing Therapeutics
Fibromyalgia Symptoms;
Chronic Pain, Fatigue, Sleep
Disorders, Depression, and
Cognitive symptoms
De Novo 2023
3 MindMotion® GO
MindMaze
Neurorehabilitation
Neurological conditions such as
stroke, brain injury, and
neurodegenerative diseases
510(k)
2018
4 MindMotion® PRO 2017
Source: FDA, Frost & Sullivan Analysis
In China, a total of approximately 36 NCI DTx products by approximately 34 players,
including our Company, had been approved by the NMPA or its local counterparts, and at least
ten more NCI DTx products by at least ten players were in the process of clinical trials and
obtaining relevant medical device registration certificates, as of the Latest Practicable Date,
according to Frost & Sullivan. The following table provides an overview of the NMPA-
approved NCI DTx products, all of which are classified as Class II medical device.
INDUSTRY OVERVIEW
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NMPA-approved NCI DTx Products
Product Name Company Indication* Approval
Year
Our Company
1 Cognitive Ability Supplemental Screening and
Assessment Software*** Cognitive Function 2022
2 Basic Cognitive Ability Testing Software*** Cognitive Function 2022
3 Brain Function Information Management
Platform Software System***
Clinical Diagnosis,
Treatment and Assessment 2018**
18 Cognitive Dysfunction Assessment and
Training Software
Hunan Wanwu Chengli
Medical Technology Co., Ltd Cognitive Impairment 2023
19 Cognitive Assessment and Training Software Changsha S hudan Medical Technology Co., Ltd Cognitive Impairment 2023
20 Cognitive function assessment and training
software Changsha Jisi Mingzhi Technology Co., Ltd
Cognitive Disorders, Schizophrenia,
Bipolar Disorder, Depression, Anxiety,
Alzheimer's Disease, Sleep Disorders,
Autism, ADHD
2023
21 Cognitive Rehabilitation Software Changsha Aidi Biotechnology Co., Ltd Mild Cognitive Impairment 2023
22 Cognitive function assessment and training
software Shenzhen Heling Medical Technology Co., Ltd Cognitive Function 2023
23 VR Cognitive Assessment and Training
Software Hunan Xinjing Medical Equipment Co., Ltd
Brain Dysfunction in Cognition, Speech,
and Psychosomatic Functions Due to
Brain Injury Disorders
2023
24 Cognitive Digital Rehabilitation Software Changsha Lixin Medica l Technology Co., Ltd Mild Cognitive Impairment 2023
25 Cognitive Dysfunction Rehabilitation Software Hunan Boke Medic al Technology Co., Ltd Mild Cognitive Impairment 2023
26 Cognitive Function Assessment Training
Software Changsha Braingine Network Technology Co., Ltd Mild Cognitive Impairment 2023
27 Brain Physiology and Cognitive Function
Assessment System Chengdu Jisi Mingzhi Technology Co Mild Cognitive Impairment 2023
28 Digital Cognitive Function Training Software Changsha Hejia Jiannao Intelligent Technology
Co., Ltd Mild Cognitive Impairment 2023
29 Cognitive Function Assessment and Training
Software Changsha Zhisong Technology Co., Ltd Mild Cognitive Impairment 2022
30 Rehabilitation Training Software for Cognitive
Dysfunction Hunan Aze Medical Technology Co., Ltd
Cognitive Impairment, Schizophrenia,
Bipolar Disorder, Depression, Anxiety,
Alzheimer's Disease, Sleep Disorders,
Autism, ADHD
2022
31 Cognitive Dysfunction Examination and
Correction Software Hunan Xinkang Medical Technology Co., Ltd Mild Cognitive Impairment 2022
32 Cognitive Function Assessment and Training
Software
Changsha Best Covered Cognitive Technology
Co., Ltd Cognitive Impairment 2022
33 Cognitive Dysfunction Treatment Software Hunan Wangli Medical Technology Co., Ltd Mild Cognitive Impairment 2022
34 Cognitive Dysfunction Assessment and
Training Software Nanjing Vishee Medical Technology Co., Ltd Mild Cognitive Impairment 2022
35 Cognitive Impairment Assessment of
Rehabilitation Software Guilin Yikang Electronic Technology Co., Ltd Mild Cognitive Impairment 2022
36
Rehabilitation Training for Cognitive
Impairment and the EEG Stimulation
Treatment System
Jiangxi Huaheng Jingxing Medical Technology
Co., Ltd
Cognitive Impairment, Motor
Dysfunction, Language Disorders
(Aphasia), Swallowing Disorders, and
Symptoms of Insomnia, Depression, and
Mood Disorders In Adults and Children
2022
4 Cognitive Impairment assessment and
training software Hainan Yuanyi Kangjian Medical Technology Co., Ltd Mild Cognitive Impairment 2024
5 Cognitive function assessment and training
software Sichuan Yuan Zhikang Medical Technology Co., Ltd Mild Cognitive Impairment 2024
6 Adult cognitive ability test and training
instrument Changzhou Qian Jing Rehabilitation Co., Ltd
Mental Retardation, Memory Impairment,
and Cognitive Impairment Due to Brain
Injury and Disease
2024
7 Cognitive rehabilitation training and evaluation
system ZD Medical Technology (Zhejiang) Co., Ltd Cognitive Impairment Due to Brain
Function Injury and Stroke 2024
8 Cognitive function rehabilitation software Changsha Yuanyi Technology Co., Ltd Cognitive Impairment Due to Brain
Function Injury and Stroke 2024
9 Cognitive ability training system Hunan Youerkang Medical Technology Co., Ltd
Mental Retardation, Memory Impairment,
and Cognitive Impairment Due to
Traumatic Brain Disease
2024
10 Cognitive dysfunction correction software Hunan Ouning Huix in Technology Co., Ltd Mild Cognitive Impairment 2024
11 Cognitive function rehabilitation software Changsha Yuanyu Oa sis Technology Co., Ltd Mild Cognitive Impairment 2024
12 Cognitive function training software Hunan Feisimaike Medical Technology Co., Ltd Mild Cognitive Impairment 2024
13 Digital cognitive dysfunction rehabilitation
training software Hunan BQBrain Technology Co., Ltd Mild Cognitive Impairment 2024
14 Cognitive function assessment and training
software Hunan Thoven Intelligent Technology Co., Ltd Mild Cognitive Impairment 2024
15 Cognitive function training software Precision Technology of Sight Care (Changsha)
Medical Technology Co., Ltd  Mild Cognitive Impairment 2024
16 Cognitive Impairment assessment and
training software Chengdu Base Interactive Technology Co., Ltd Mild Cognitive Impairment 2024
17 Cognitive function training system Changsha Huaquejing Medical Technology Co., Ltd Cognitive Impairment Due to Brain
Function Injury and Stroke 2024
Note: All indication descriptions are extracted from the NMP A website and their scopes are related to NCI.
* As shown on the NMP A website.
INDUSTRY OVERVIEW
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--- page 189 ---
** Represents the year in which the System first received regulatory approval for use of the System as a tool of
“assistance of doctors in clinical diagnosis and treatment of patients with brain function impairments caused
by various types of brain damages and diseases, assessment of brain function, and comprehensive management
of medical information and brain function data.”
*** Self-developed, owned and operated by us.
Source: NMP A, Frost & Sullivan Analysis
PCI DTx MARKET
Overview of PCI
Psychiatric disorders are conditions in which individuals experience clinically significant
disturbances in cognition, emotional regulation, or behavior. The causes of psychiatric
disorders are complex and multifaceted, involving various factors such as genetics, family
history, life experiences, substance use, and other biological factors. Treatment for cognitive
impairments induced by psychiatric disorders varies depending on the type and severity of the
disorder and often involves a combination of medication and psychotherapy. In addition to
traditional treatment methods, alternative therapies and brain stimulation therapies have been
shown to be effective in treating cognitive impairments induced by psychiatric disorders.
Depression
Depression is a common mental disorder characterized by a long-term depressed mood,
loss of pleasure or interest in activities. In addition to affecting mood and emotions, depression
can alter brain function. Cognitive impairment is a common feature of depression, including
executive dysfunction, impaired learning and memory, decreased attention and concentration,
and reduced processing speed. Cognitive deficits often persist even after other symptoms of
depression have resolved, significantly impacting a patient’s ability to function.
Schizophrenia
Schizophrenia is a chronic and severe mental disorder that affects the way a person thinks,
behaves, expresses emotions, perceives reality and interacts with others. Cognitive impairment
is a central feature of schizophrenia and results in moderate to severe deficits in several areas,
including attention, working memory, verbal learning and memory, and executive functioning.
Cognitive impairment is one of the major barriers to clinical and functional recovery in
schizophrenia. Antipsychotic medications have little effect on cognitive impairment in
schizophrenia. Current antipsychotics not only fail to reverse cognitive dysfunction but may
directly or indirectly worsen it.
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Sleep disorders
Sleep disorders involve difficulties with the quality, duration, and quantity of sleep that
can lead to daytime distress and impaired functioning. Sleep disorders are associated with
cognitive impairment. Reduced sleep duration may also cause cognitive decline by promoting
hippocampal degeneration through several pathways, including changes in neuronal
excitability, reduced synaptic plasticity and decreased neurogenesis.
Treatment Paradigm and Unmet Clinical Needs of PCI
There is currently no available treatment for PCI and it is typically addressed by treating
the underlying psychiatric disorder. A commonly prescribed method of treating psychiatric
disorder is cognitive-behavioral therapy (the “ CBT”). Traditional CBT helps patients become
aware of and respond more effectively to negative thinking and behavior patterns. PCI DTx
provides a digitized version of CBT with additional benefits. For example, patients can access
CBT remotely, providing the same benefits as traditional CBT but saving time and costs. In
addition, virtual human technology can address patients’ needs and collect feedbacks from
patients on behalf of patients, allowing patients to seek help regardless of time or location and
allowing physicians to serve multiple patients at once. Virtual human technology can also
linguistically map psychological problems, and through linguistic analysis, AI can provide
effective interventions tailored to the patient’s needs.
Typically, the assessment of cognitive function in patients with psychiatric disorders
using PCI DTx involves the construction of a model using clinical data and consultation with
medical experts. The models are typically fed with data from two methods of data collection:
patient completion of scales and paradigms to assess global cognitive level and various
cognitive modules, and collection of patient conversations, voice patterns, and facial
expressions through human-computer interaction using AI technology. The collected data,
along with the patient’s own information such as age and gender, is fed into the model to
generate a risk report. The results of the AI analysis are then compared with the physician’s
final diagnosis to continuously improve the PCI DTx model and increase diagnostic accuracy.
Prevalence of the major types of PCI
Global
The global prevalence of the major types of PCI increased from 327.5 million in 2018 to
348.6 million in 2023, representing a CAGR of 1.3% and is expected to reach 356.9 million
in 2025 and further to 376.5 million in 2030, representing CAGRs of 1.2% and 1.1%. The
following graph sets forth the global prevalence of the major types of PCI during the years
indicated, as well as CAGRs during the indicated years.
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Global Prevalence of the Major Types of PCI, 2018-2030E
0
76
152
228
304
380
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
CAGR
18-23
1.3%Total
Sleeping
Disorders
Induced CI
0.9%
1.2%
0.9%
1.1%
0.8%
CAGR
23-25E
CAGR
25E-30E
327.5
Million
332.2 336.4 340.5 344.5 348.6 352.8 356.9 361.0 365.0 368.9 372.8 376.5
Schizophrenia
Induced CI
1.0% 1.0% 0.9%
Depression
Induced CI
1.3% 1.3% 1.1%
257.9 261.9 265.3 268.9 272.2 275.6 279.1 282.6 286.0 289.3 292.6 295.8 298.9
47.9 48.4 48.9 49.3 49.7 50.1 50.6 51.0 51.5 51.9 52.4 52.8 53.221.7 21.9 22.2 22.4 22.6 22.8 23.1 23.3 23.5 23.7 24.0 24.2 24.4
Note: The overall prevalence of the major types of PCI includes patients with comorbidities.
Source: Frost & Sullivan Analysis
China
The prevalence of the major types of PCI in China increased from 45.9 million in 2018
to 50.2 million in 2023, representing a CAGR of 1.8% and is expected to reach 51.5 million
in 2025 and further to 54.6 million in 2030, representing CAGRs of 1.3% and 1.2%. The
following graph sets forth the prevalence of the major types of PCI in China during the years
indicated, as well as CAGRs during the indicated years.
Prevalence of the Major Types of PCI in China, 2018-2030E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
CAGR
18-23
1.8%Total
2.4%
1.3%
1.8%
1.2%
1.6%
CAGR
23-25E
CAGR
25E-30E
45.9
Million
46.8 47.7 48.6 49.3 50.2 50.8 51.5 52.1 52.8 53.4 54.1 54.6
1.7% 1.0% 1.2%
1.5% 1.1% 1.0%
Sleeping
Disorders
Induced CI
Schizophrenia
Induced CI
Depression
Induced CI
26.1 26.5 26.9 27.4 27.7 28.1 28.4 28.7 29.0 29.4 29.6 29.9 30.2
13.0 13.2 13.6 14.0 14.3 14.6 14.8 15.1 15.4 15.6 15.9 16.1 16.3
6.9 7.1 7.1 7.2 7.3 7.5 7.6 7.6 7.7 7.8 8.0 8.0 8.1
Note: The overall prevalence of the major types of PCI includes patients with comorbidities.
Source: Frost & Sullivan Analysis
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Competitive Landscape of PCI DTx Market
Key players in the global PCI DTx market (outside China) include at least 12 players that
offer at least 18 FDA-approved PCI DTx products as of the Latest Practicable Date. The
following table provides an overview of the FDA-approved PCI DTx products.
FDA-approved PCI DTx Products
Approval YearPathwayIndicationCompanyProduct Name
2024FDA approvalGAD (Generalized Anxiety
Disorder)Big HealthDaylightRx1
2024FDA approvalInsomniaSleepioRx2
2024Mild to Moderate Postpartum
Depression (PPD)CurioMamalift Plus3
2024510(k)
510(k)
Future Pain, Post-traumatic Stress
Disorder, Epilepsy, Sleep
Disorders, Immune Diseases,
Parkinson's, Alzheimer’s Disease
Better Therapeuticsbiofeedback (ABS) software
development kit (SDK)4
2024510(k)MDD (Major Depressive Disorder);
Emotional Cognitive Impairment
Otsuka Pharmaceutical,
Co. Ltd. (Otsuka) and
Click Therapeutics, Inc.,
(Click)
Rejoyn®5
2023510(k)PTSD (Post-traumatic stress
disorder)GrayMatters HealthPrism for PTSD6
2023De Novo
Fibromyalgia Symptoms; Chronic
Pain, Fatigue, Sleep Disorders,
Depression, and Cognitive
symptoms
Swing TherapeuticsStanza7
2023EUAInsomniaBig HealthSleepio8
2023EUAAnxietyDaylight9
2023EUAMDD (Major Depressive Disorder)
Feel Therapeutics
01 Depression10
2023EUAGAD (Generalized Anxiety
Disorder)02 Anxiety11
2021EUAAdolescent depressionLimbixSparkRx12
2021EUADepression&AnxietyHappify HealthEnsemble13
2021EUADepression&AnxietyLimbixLIMBIX SparkRx14
2020510(k)Chronic insomniaPear TherapeuticsSomryst (SHUTi)15
2020510(k)DepressionOrexo, GAIA AGDeprexis16
2018510(k)Opioid use disorderPear Therapeutics, Inc.reSET-O17
2017De novoSubstance use disordersReSet18
Source: FDA, Frost & Sullivan Analysis
In China, a total of approximately 32 PCI DTx products by approximately 31 players,
including our Company, have been approved by the NMPA or its local counterparts, and at least
five additional PCI DTx products by at least five players are currently in the process of clinical
trials and obtaining relevant medical device registration certificates, as of the Latest
Practicable Date, according to Frost & Sullivan. The following table provides an overview of
the NMPA-approved PCI DTx products, all of which are classified as Class II medical device.
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NMPA-approved PCI DTx Products
Product Name Company Indication* Approval
Year
1 Cognitive Ability Supplemental Screening and
Assessment Software***
Our Company
Cognitive Function 2022
2 Basic Cognitive Ability Testing Software*** Cognitive Function 2022
3 Brain Function Information Management
Platform Software System*** Mild Cognitive Impairment 2018**
4 Cognitive Dysfunction Assessment and
Training Software
Hunan Wanwu Chengli Medical Technology
Co., Ltd Cognitive Impairment 2023
5 Cognitive Impairment Assessment
Software Hunan Hongjun Intelligent Technology Co., Ltd Mild Cognitive Impairment 2023
6 Psychometric and Cognitive Assessment
Software Hunan Kaesman Technology Co., Ltd Mental and Psychological Condition 2023
7 Cognitive impairment rehabilitation training
software
Hunan Aiyun Digital Medical Technology
Co., Ltd Cognitive Function 2023
8 Cognitive function assessment and training
software Changsha Jisi Mingzhi Technology Co., Ltd
Cognitive Disorders, Schizophrenia, Bipolar
Disorder, Depression, Anxiety, Alzheimer's
Disease, Sleep Disorders, Autism, ADHD 2023
9 Cognitive function assessment and training
software Shenzhen Heling Medical Technology Co., Ltd Cognitive Function 2023
10 VR Cognitive Assessment and Training Software Hunan Xinjing Medical Equipment Co., Ltd
Brain Dysfunction in Cognition, Speech,
and Psychosomatic Functions Due to Brain
Injury Disorders 2023
11 Clinical Management Software for Cognitive
Behavioral Therapy for Insomnia
Hunan Fujie Digital Medical Technology
Co., Ltd Sleeping disorders 2023
12 Cognitive dysfunction rehabilitation training
software
Xidike (Zhengzhou) Intelligent Rehabilitation
Equipment Co., Ltd
Cognitive Impairment due to Brain-Injuring
diseases 2023
13 Cognitive Dysfunction Assessment and Training
Software Nanjing Weisi Medical Technology Co., Ltd Mild Cognitive Impairment 2022
14 Cognitive Dysfunction Examination and
Correction Software Hunan Xinkang Medical Technology Co., Ltd Mild Cognitive Impairment 2022
4 Cognitive Dysfunction Assessment and
Training Software
Hunan Wanwu Chengli Medical Technology
Co., Ltd Cognitive Impairment 2023
5 Cognitive Impairment Assessment
Software Hunan Hongjun Intelligent Technology Co., Ltd Mild Cognitive Impairment 2023
6 Psychometric and Cognitive Assessment
Software Hunan Kaesman Technology Co., Ltd Mental and Psychological Condition 2023
7 Cognitive impairment rehabilitation training
software
Hunan Aiyun Digital Medical Technology
Co., Ltd Cognitive Function 2023
8 Cognitive function assessment and training
software Changsha Jisi Mingzhi Technology Co., Ltd
Cognitive Disorders, Schizophrenia, Bipolar
Disorder, Depression, Anxiety, Alzheimer's
Disease, Sleep Disorders, Autism, ADHD 2023
9 Cognitive function assessment and training
software Shenzhen Heling Medical Technology Co., Ltd Cognitive Function 2023
10 VR Cognitive Assessment and Training Software Hunan Xinjing Medical Equipment Co., Ltd
Brain Dysfunction in Cognition, Speech,
and Psychosomatic Functions Due to Brain
Injury Disorders 2023
11 Clinical Management Software for Cognitive
Behavioral Therapy for Insomnia
Hunan Fujie Digital Medical Technology
Co., Ltd Sleeping disorders 2023
12 Cognitive dysfunction rehabilitation training
software
Xidike (Zhengzhou) Intelligent Rehabilitation
Equipment Co., Ltd
Cognitive Impairment due to Brain-Injuring
diseases 2023
13 Cognitive Dysfunction Assessment and Training
Software Nanjing Weisi Medical Technology Co., Ltd Mild Cognitive Impairment 2022
14 Cognitive Dysfunction Examination and
Correction Software Hunan Xinkang Medical Technology Co., Ltd Mild Cognitive Impairment 2022
16 Cognitive Dysfunction Assessment and
Training Software
Hunan Wanwu Chengli Medical Technology
Co., Ltd Cognitive Impairment 2023
5 Cognitive Impairment Assessment
Software Hunan Hongjun Intelligent Technology Co., Ltd Mild Cognitive Impairment 2023
6 Psychometric and Cognitive Assessment
Software Hunan Kaesman Technology Co., Ltd Mental and Psychological Condition 2023
7 Cognitive impairment rehabilitation training
software
Hunan Aiyun Digital Medical Technology
Co., Ltd Cognitive Function 2023
8 Cognitive function assessment and training
software Changsha Jisi Mingzhi Technology Co., Ltd
Cognitive Disorders, Schizophrenia, Bipolar
Disorder, Depression, Anxiety, Alzheimer's
Disease, Sleep Disorders, Autism, ADHD 2023
9 Cognitive function assessment and training
software Shenzhen Heling Medical Technology Co., Ltd Cognitive Function 2023
10 VR Cognitive Assessment and Training Software Hunan Xinjing Medical Equipment Co., Ltd
Brain Dysfunction in Cognition, Speech,
and Psychosomatic Functions Due to Brain
Injury Disorders 2023
11 Clinical Management Software for Cognitive
Behavioral Therapy for Insomnia
Hunan Fujie Digital Medical Technology
Co., Ltd Sleeping disorders 2023
12 Cognitive dysfunction rehabilitation training
software
Xidike (Zhengzhou) Intelligent Rehabilitation
Equipment Co., Ltd
Cognitive Impairment due to Brain-Injuring
diseases 2023
13 Cognitive Dysfunction Assessment and Training
Software Nanjing Weisi Medical Technology Co., Ltd Mild Cognitive Impairment 2022
14 Cognitive Dysfunction Examination and
Correction Software Hunan Xinkang Medical Technology Co., Ltd Mild Cognitive Impairment 2022
Cognitive Dysfunction Assessment and
Training Software
Hunan Wanwu Chengli Medical Technology
Co., Ltd Cognitive Impairment 2023
17 Cognitive Impairment Assessment
Software Hunan Hongjun Intelligent Technology Co., Ltd Mild Cognitive Impairment 2023
18 Psychometric and Cognitive Assessment
Software Hunan Kaesman Technology Co., Ltd Mental and Psychological Condition 2023
19 Cognitive impairment rehabilitation training
software
Hunan Aiyun Digital Medical Technology
Co., Ltd Cognitive Function 2023
20 Cognitive function assessment and training
software Changsha Jisi Mingzhi Technology Co., Ltd
Cognitive Disorders, Schizophrenia, Bipolar
Disorder, Depression, Anxiety, Alzheimer's
Disease, Sleep Disorders, Autism, ADHD 2023
21 Cognitive function assessment and training
software Shenzhen Heling Medical Technology Co., Ltd Cognitive Function 2023
22 VR Cognitive Assessment and Training Software Hunan Xinjing Medical Equipment Co., Ltd
Brain Dysfunction in Cognition, Speech,
and Psychosomatic Functions Due to Brain
Injury Disorders 2023
23 Clinical Management Software for Cognitive
Behavioral Therapy for Insomnia
Hunan Fujie Digital Medical Technology
Co., Ltd Sleeping disorders 2023
24 Cognitive dysfunction rehabilitation training
software
Xidike (Zhengzhou) Intelligent Rehabilitation
Equipment Co., Ltd
Cognitive Impairment due to Brain-Injuring
diseases 2023
25 Cognitive Dysfunction Assessment and Training
Software Nanjing Vishee Medical Tec hnology Co., Ltd Mild Cognitive Impairment 2022
26 Cognitive Dysfunction Examination and
Correction Software Hunan Xinkang Medical Technology Co., Ltd Mild Cognitive Impairment 2022
27 Rehabilitation Training Software for Cognitive
Dysfunction Hunan Aze Medical Technology Co., Ltd
Cognitive Impairment, Schizophrenia,
Bipolar Disorder, Depression, Anxiety,
Alzheimer's Disease, Sleep Disorders,
Autism, ADHD
2022
28 Cognitive Dysfunction Treatment Software Hunan Wangli Medical Technology Co., Ltd Mild Cognitive Impairment 2022
29 Cognitive Impairment Assessment of
Rehabilitation Software Guilin Yikang Electronic Technology Co., Ltd Mild Cognitive Impairment 2022
30 Rehabilitation Training for Cognitive Impairment
and the EEG Stimulation Treatment System
Jiangxi Huaheng Jingxing Medical Technology
Co., Ltd
Cognitive Impairment, Motor Dysfunction,
Language Disorders (Aphasia), Swallowing
Disorders, and Symptoms of Insomnia,
Depression, and Mood Disorders In Adults
and Children
2022
31 Cognitive Function Assessment and Training
Software Changsha Zhisong Technology Co., Ltd Mild Cogn itive Impairment 2022
32 Rehabilitation Software for Cognitive Function Hangzhou Yikang Medical Technology Co., Ltd Schizophrenia, Schizotypal Disorder, Mood
Disorders 2020
Sichuan Yuan Zhikang Medical Technology
Co., Ltd
4 Cognitive Impairment assessment and training
software
Hainan Yuanyi Kangjian Medical Technology
Co., Ltd Mild Cognitive Impairment 2024
5 Cognitive function assessment and training
software Mild Cognitive Impairment 2024
6 Cognitive rehabilitation training and evaluation
system ZD Medical Technology Co., Ltd Cognitive Impairment Due to Brain Function
Injury and Stroke 2024
7 Cognitive function rehabilitation software Changsha Yuanyi Technology Co., Ltd Cognitive Impairment Due to Brain Function
Injury and Stroke 2024
8 Cognitive dysfunction correction software Hunan Ouning Huixin Technology Co., Ltd Mild Cognitive Impairment 2024
9 Cognitive function rehabilitation software Changsha Yuanyu Oasis Technology Co., Ltd Mild Cognitive Impairment 2024
10 Cognitive function training software Hunan Feisimaike Medical Technology Co., Ltd Mild Cognitive Impairment 2024
11 Digital cognitive dysfunction rehabilitation
training software Hunan BQBrain Technology Co., Ltd Mild Cognitive Impairment 2024
12 Cognitive function assessment and training
software Hunan Thoven Intelligent Technology Co., Ltd Mild Cognitive Impairment 2024
13 Cognitive function training software Precision Technology of Sight Care (Changsha)
Medical Technology Co., Ltd Mild Cognitive Impairment 2024
14 Cognitive Impairment assessment and training
software Chengdu Base Interactive Technology Co., Ltd Mild Cognitive Impairment 2024
15 Cognitive function training system Changsha Huaquejing Medical Technology
Co., Ltd
Cognitive Impairment Due to Brain Function
Injury and Stroke 2024
Note: All indication descriptions are extracted from the NMP A website and their scopes are related to PCI.
* As shown on the NMP A website.
** Represents the year in which the System first received regulatory approval for use of the System as a tool of
“assistance of doctors in clinical diagnosis and treatment of patients with brain function impairments caused
by various types of brain damages and diseases, assessment of brain function, and comprehensive management
of medical information and brain function data.”
*** Self-developed, owned and operated by us.
Source: NMP A, Frost & Sullivan Analysis
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CDDCI DTx MARKETS
Overview Of CDDCI
CDDCI is present at birth and are caused by genetic conditions or brain damage that
occurs during pregnancy or childbirth. Examples include ADHD, dyslexia and autism.
ADHD
ADHD is one of the most common neurodevelopmental disorders in children. The
disorder is characterized by symptoms such as difficulty paying attention, difficulty controlling
impulsive behavior and being overly active. There is no single test to diagnose ADHD;
diagnosis is usually based on hearing and vision tests, information about the patient and family
or ADHD rating scales or psychometric tests. Treatment options for ADHD primarily include
behavioral therapy and drug therapy. Early intervention is important, and the best treatment
plans involve close monitoring, follow-up assessments, and therapy adjustments over time.
Autism
Autism is a neurodevelopmental condition caused by differences in the way the brains of
individuals with Autism are wired and function. These neurodevelopmental differences can
affect the way individuals with Autism process and respond to information, leading to
difficulties with communication, social interaction, and behavior. While the exact nature of
these differences is not fully understood, research suggests that they may be related to a
combination of genetic and environmental factors. People with Autism often have problems
with social communication and interaction, restricted or repetitive behaviors, and different
ways of learning and moving. Doctors look at a child’s developmental history and behavior to
make a diagnosis, which can be made as early as 18 months of age. However, many children
do not receive a final diagnosis until they are much older. Treatments for Autism primarily
include behavioral, developmental, educational, social-relational, pharmacological,
psychological and complementary and alternative therapies.
Dyslexia
Dyslexia is also referred to as reading disability. It is a learning disorder that involves
difficulty reading due to problems identifying speech sounds and learning how they relate to
letters and words. Dyslexia is not a problem of intelligence, hearing or vision, but a result of
individual differences in areas of the brain that process language. Dyslexia appears to be linked
to certain genes that affect how the brain processes reading and language and tends to run in
families. Dyslexia can have negative long-term impact on a child’s educational social
development.
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Treatment Paradigm and Unmet Clinical Needs of CDDCI
The assessment of CDDCI in China is constrained by (i) a lack of education and training
for healthcare providers to inform parents about developmental disorders; (ii) a lack of
resources and difficulty in finding specialists; (iii) long waiting times for diagnosis due to
lengthy diagnostic processes; (iv) multiple required doctor visits; and (v) risk of misdiagnosis.
Furthermore, many patients in China have difficulty accessing quality medical resources
because such resources are typically concentrated in large cities. This lack of access can lead
to poor patient compliance and a significant financial burden on families. In addition,
interventional therapies often require a high level of treatment environment, faculty, and
standardization, making them difficult to implement at scale and resulting in low prevalence
of institutional interventions.
CDDCI DTx incorporates AI to detect human behavior and speech information in images,
videos and games. AI analyzes early behavioral warning signs and characteristics and compares
them to screening guidelines and physician clinical data. The mechanism generates risk
screening reports to aid in diagnosis.
There is currently no available treatment for CDDCI which is typically addressed by
treating the underlying child development deficiency. A commonly used treatment method for
child development deficiency is Applied Behavior Analysis (the “ ABA”). It focuses on
teaching children specific skills in areas such as socialization, academics, communication and
hygiene. Digitizing ABA is possible with CDDCI DTx through the implementation of AI and
VR or augmented reality (the “ AR”) technologies that can guide patients remotely, provide
feedback to therapists and support individualized treatment plans. In addition, CDDCI DTx can
provide a platform to connect patients and their families to support intervention programs and
outcomes analysis through online patient communities. CDDCI DTx can also increase parents’
awareness of developmental disorders through educational materials based on clinical research.
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Prevalence of the Major Types of CDDCI
Global
The global prevalence of the major types of CDDCI increased from 688.1 million in 2018
to 776.1 million in 2023, representing a CAGR of 2.4% and is expected to reach 816.5 million
in 2025 and further to 927.5 million in 2030, representing CAGRs of 2.6% and 2.6%,
respectively. The following graph sets forth the global prevalence of the major types of CDDCI
during the years indicated, as well as CAGRs during the indicated years.
Global Prevalence of the Major Types of CDDCI, 2018-2030E
2018
688.1 704.1 722.1 741.8 757.5 776.1 796.1 816.5 837.3 859.1 881.5 904.3 927.5
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
540.2
88.0 88.1 88.6 89.0 89.4 89.9 90.5 91.2 92.491.8 93.1 93.7 94.3
59.9 64.7 69.7 74.6 79.5 84.6 89.8 95.1 105.8100.4
111.3 116.9 122.5
551.3 563.9 578.2 588.6 601.6 615.7 630.2 645.1 660.9 677.1 693.7 710.7
CAGR
18-23
2.4%Total 2.6% 2.6%
CAGR
23-25E
CAGR
25E-30E
Autism Induced CI 7.2% 6.0% 5.2%
ADHD Induced CI 0.4% 0.7% 0.7%
Dyslexia Induced CI 2.2% 2.4% 2.4%
Million
Note: The overall prevalence of the major types of CDDCI includes patients with comorbidities.
Source: Frost & Sullivan Analysis
China
The following graph sets forth the prevalence of the major types of CDDCI in China in
the years indicated, as well as CAGRs during the indicated years.
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Prevalence of Child Development Deficiency Induced Cognitive
Impairment in China, 2018-2030E
2018
128.9 131.5 135.1 138.0 140.8 143.4 146.0 148.6 151.3 154.1 156.8 159.7 162.6
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
98.4
23.5 24.1 24.8 25.3 25.9 26.4 26.9 27.4 28.427.9 28.9 29.5 30.07.0 7.7 8.5 9.2 9.9 10.8 11.6 12.5 14.413.4 15.4 16.4 17.5
99.7 101.8 103.5 105.0 106.2 107.5 108.7 110.0 111.3 112.5 113.8 115.1
CAGR
18-23
2.2%Total 1.8% 1.8%
CAGR
23-25E
CAGR
25E-30E
Autism Induced CI 9.0% 7.8% 7.0%
ADHD Induced CI 2.3% 1.9% 1.8%
Dyslexia Induced CI 1.5% 1.2% 1.2%
Million
Note: The overall prevalence of the major types of CDDCI includes patients with comorbidities.
Source: Frost & Sullivan Analysis
Competitive Landscape of CDDCI DTx Market
Key players in the global CDDCI DTx market (outside China) include two players that
offer at least three FDA-approved CDDCI DTx products as of the Latest Practicable Date. The
following table provides an overview of the FDA-approved CDDCI DTx products.
FDA-approved CDDCI DTx Products
Approval YearPathwayIndicationCompanyProduct Name
2024510(k)ADHD
Akili Interactive Labs
EndeavorOTC®1
2020De novoADHDEndeavorRx2
2018510(k) exemptAttention impairmentTALI DigitalTALi Train3
Source: FDA, Frost & Sullivan analysis
In China, a total of approximately 25 CDDCI DTx products by at least 22 players,
including our Company, have been approved by the NMPA or its local counterparts, and at least
ten CDDCI DTx products by at least ten players are currently in the process of clinical trials
and obtaining relevant medical device registration certificates, as of the Latest Practicable Date
according to Frost & Sullivan. The following table provides an overview of the NMPA-
approved CDDCI DTx products, all of which are classified as Class II medical device.
INDUSTRY OVERVIEW
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NMPA-approved CDDCI DTx Products
Product Name Company
Basic Cognitive Ability Testing Software***
Our Company
Brain Function Information Management Platform
Software System***
Indication* Approval
Year
2022
2018**
1
2
Dyslexia Supplemental Screening and Assessment Software***3
Cognitive function
Clinical diagnosis,
treatment and assessment
2023Dyslexia
Cognitive function assessment training software Changsha Braingine
Network Technology Co., Ltd 202316 Mild cognitive impairment
Cognitive function assessment and training software Changsha Zhisong Technology Co., Ltd 202217 Mild cognitive impairment
Early screening and assessment of children's cognitive
behavior ability software
Changsha Kang'an Qiyuan Medical
Technology Co., Ltd 202218
Childhood cognitive disorders, developmental
delays, ASD, ADHD, speech and language
disorders, learning disabilities
Rehabilitation training software for cognitive dysfunction Hunan Aze Medical Technology Co., Ltd 202219
Cognitive impairment, schizophrenia, bipolar
disorder, depression, anxiety, Alzheimer's disease,
sleep disorders, autism, ADHD
Cognitive dysfunction examination and correction software Hunan Xinkang Medical Technology Co., Ltd 202220 Mild cognitive impairment
Cognitive dysfunction assessment and training software Nanjing Vishee Medical Technology Co., Ltd 202222 Mild cognitive impairment
Cognitive impairment assessment rehabilitation software Guilin Yikang Electronic Technology Co., Ltd 202223 Mild cognitive impairment
Cognitive ability testing and training system Ailite (Huna n) Medical Technology Co., Ltd 202221 Linguistic cognitive ability
Rehabilitation training for cognitive impairment
and the EEG stimulation treatment system
Jiangxi Huaheng Jingxing Medical
Technology Co., Ltd 202224
Cognitive impairment, motor dysfunction,
language disorders (aphasia), swallowing
disorders, and symptoms of insomnia, depression,
and mood disorders in adults and children
Children's Cognitive Behavioral Ability
Assessment Software
Beijing Peking University Medical Brain
Health Technology Co., Ltd. Liuyang
Rongbo Branch
202225 Mild cognitive impairment
Hunan Wanwu Chengli
Medical Technology Co., LtdCognitive dysfunction assessment and training software 2023Cognitive impairment15
Cognitive function training software Precision Technology of Sight Care
(Changsha) Medical Technology Co., Ltd 202413 Mild cognitive impairment
Cognitive Impairment assessment and
training software
Chengdu Base Interactive Technology Co.,
Ltd 202414 Mild cognitive impairment
Hunan Thoven Intelligent Technology Co.,
Ltd
Cognitive function assessment and training
software 2024Mild cognitive impairment12
Cognitive function training software Hunan Feisimaike Medical Technology Co.,
Ltd 202410 Mild cognitive impairment
Digital cognitive dysfunction rehabilitation
training software Hunan BQBrain Technology Co., Ltd 202411 Mild cognitive impairment
Changsha Yuanyu Oasis Technology Co.,
LtdCognitive function rehabilitation software 2024Mild cognitive impairment9
Cognitive dysfunction correction software Hunan Ouning Huixin Technology Co., Ltd 20248 Mild cognitive impairment
Adult cognitive ability test and training
instrument
Changzhou Qian Jing Rehabilitation Co.,
Ltd
2024Mental retardation, memory impairment, and
cognitive impairment due to brain injury and
disease
7
4 Hainan Yuanyi Kangjian Medical
Technology Co., Ltd
Cognitive Impairment assessment and training
software 2024Mild cognitive impairment
Cognitive function assessment and training
software
Sichuan Yuan Zhikang Medical Technology
Co., Ltd 20245 Mild cognitive impairment
Cognitive ability test and training instrument
for children
Changzhou Qian Jing Rehabilitation Co.,
Ltd
20246
Special children with mental retardation,
memory impairment and cognitive impairment
due to disease
Note: All indication descriptions are extracted from the NMP A website and their scopes are related to CDDCI.
* As shown on the NMP A website.
** Represents the year in which the System first received regulatory approval for use of the System as a tool of
“assistance of doctors in clinical diagnosis and treatment of patients with brain function impairments caused
by various types of brain damages and diseases, assessment of brain function, and comprehensive management
of medical information and brain function data.”
*** Self-developed, owned and operated by us.
Source: NMP A, Frost & Sullivan analysis
INDUSTRY OVERVIEW
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--- page 199 ---
REPORT COMMISSIONED BY FROST & SULLIV AN
In connection with the Global Offering, we have engaged Frost & Sullivan to conduct a
detailed analysis and to prepare an industry report on the DTx market. Frost & Sullivan is an
independent global market research and consulting company founded in 1961 and is based in
the United States. Services provided by Frost & Sullivan include market assessments,
competitive benchmarking, and strategic and market planning for a variety of industries.
We have included certain information from the Frost & Sullivan Report in this Prospectus
because we believe such information facilitates an understanding of the DTx market for
potential investors. Frost & Sullivan prepared its report based on its in-house database,
independent third-party reports and publicly available data from reputable industry
organizations. Where necessary, Frost & Sullivan contacts companies operating in the industry
to gather and synthesize information in relation to the market, prices and other relevant
information. Frost & Sullivan believes that the basic assumptions used in preparing the Frost
& Sullivan Report, including those used to make future projections, are factual, correct and not
misleading. Frost & Sullivan has independently analyzed the information, but the accuracy of
the conclusions of its review largely relies on the accuracy of the information collected. Frost
& Sullivan research may be affected by the accuracy of these assumptions and the choice of
these primary and secondary sources.
We have agreed to pay Frost & Sullivan a fee of RMB580.0 thousand for the preparation
of the Frost & Sullivan Report. The payment of such amount was not contingent upon our
successful listing or on the content of the Frost & Sullivan Report. Except for the Frost &
Sullivan Report, we did not commission any other industry report in connection with the
Global Offering.
Our Directors confirm that after taking reasonable care, there has been no adverse change
in the market information since the date of the report prepared by Frost & Sullivan which may
qualify, contradict or have an impact on the information set forth in this section in any material
respect.
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PRC REGULATORY OVERVIEW
Our business operations are subject to the laws, regulations and policies of the PRC and
extensive supervision by the Chinese government. The following descriptions set out the
relevant PRC laws, regulations and policies we must comply with:
Regulation Relating To Medical Devices
Definition of Medical Devices
In accordance with Regulation on the Supervision and Administration of Medical Devices
(ᔼᐕኜ૛္ຖ၍ଣૢԷ), the term “medical devices” shall refer to the instruments,
equipment, appliances, in vitro diagnostic reagents and calibrators, materials and other similar
or relevant articles directly or indirectly used on the human body, including computer software
needed.
As advised by our PRC Legal Advisor, the System has been characterized as a stand-alone
medical device on the Class II medical device registration certificate issued by the Hunan MPA
in 2018 and renewed in 2023. For details of our communications with the Hunan MPA, see
“Business—Core Product: Brain Function Information Management Platform Software
System—Material Communications with Competent Authorities.”
Classification of Medical Devices
According to the Regulations on the Supervision and Administration of Medical Devices
(ᔼᐕኜ૛္ຖ၍ଣૢԷ), promulgated by the State Council on January 4, 2000, and
effective from April 1, 2000, last amended on February 9 , 2021 and came into effect on June
1, 2021, the NMPA shall be responsible for the supervision of medical devices within the
territory of the PRC. All relevant departments of the State Council shall be responsible for the
supervision of medical devices according to their respective mandate. The NMPA at the county
level and above are responsible for the supervision of medical devices within their own
administrative jurisdictions. The relevant departments of the local people’s governments at the
county level and above are responsible for supervising medical devices according to their
respective mandates.
Medical devices in the PRC are categorized into three groups based on their degree of
risk. Class I medical devices pose a low degree of risk and is safe for routine use while
maintain their efficacy. Class II medical devices pose a moderate degree of risk and whose
safety and efficacy should be ensured through strict control and administration. Class III
medical devices pose a high degree of risk and must be ensured through strict control and
administration by special measures to ensure safety and efficacy.
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Classification of AI Medical Software Products
Pursuant to Guiding Principles for the Classification of AI-based Medical Software
Products (, the “ Principles ”) promulgated by
the NMPA and came into effect on July 1, 2021, AI-based medical software refers to standalone
software whose medical use is achieved based on the data of a medical device and using AI
technologies. The Principles may apply mutatis mutandis to the classification and definition of
medical devices containing components of AI software. AI-based medical software with well
developed algorithms in medical applications (meaning software whose safety and efficacy has
been fully validated) shall be categorized pursuant to the effective Medical Device Catalog
(ᔼᐕኜ૛ʱᗳͦ፽). While the currently effective Medical Device Catalog does not
explicitly categorize DTx products as Class I, II or III, a vast majority of software medical
devices (apart from a few types with mechanism of actions unrelated to DTx) are classified as
either Class II or Class III medical devices. The key factor in judging whether a software
product should be regulated as a medical device is its intended purpose. If the subject of
software product is medical device data, and the product’s core function is the processing,
measurement, model calculation, analysis, etc. of medical device data, and the product is used
for medical purposes, it falls within the definition of medical device under the Regulations on
the Supervision and Administration of Medical Devices ( ᔼᐕኜ૛္ຖ၍ଣૢԷ), and
shall be regulated as such. If the subject of the software product is non-medical device data
(such as main complaint of patients or other information, examination and test reports and
conclusions), or the product’s core function is not to process, measure, perform model
calculation or analyze medical device data, or the product is not used for medical purposes,
such software product shall not be regulated as a medical device.
Registration and Record-Filing of Medical Devices
According to the Administrative Measures on the Registration and Record-filing
of Medical Devices (), promulgated by the SAMR on
August 26, 2021 and came into effect on October 1, 2021, the NMPA is responsible for the
nationwide administration of medical device registration and record-filing.
In the PRC, record-filing is required for Class I medical devices and registration is
required for Class II and Class III medical devices. Record-filing parties of domestic Class I
medical devices shall submit record-filing materials to the drug regulatory authorities at cities
with municipal districts. Domestic Class II medical devices shall be examined by the drug
regulatory authorities of provinces which shall issue the medical device registration certificate
upon approval. Domestic Class III medical devices shall be examined by the NMPA which shall
issue the medical device registration certificate upon approval.
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In accordance with Decree No. 47 of the State Administration for Market Regulation
“Administrative Measures on the Registration and Record-filing of Medical Devices” ( ᔼᐕ
,“ Decree 47 ”), for a Class II or III medical device that has been
registered, in the event that there are material changes to the design, raw materials, production
process, scope of application and method of use thereof, which might affect the safety and
effectiveness of the medical device, the registrant of such medical device shall apply to the
original registration authority for modification of registration; in the event of other changes,
the registrant shall file the changes for record with the original registration authority within 30
days as of the date of change. According to our PRC Legal Advisor, as of the Latest Practicable
Date, Decree 47 is still effective, and the competent authorities had not sought public
comments on it according to public searches on Public Consultation System for Legislation.
For an application for modification of registration, the technical review agency under the
NMPA shall mainly review the modified part and give review opinions on whether the modified
product is safe, effective and of controllable quality. Document on modification of registration
of a medical device shall be used together with the original medical device registration
certificate, and its expiry date shall be the same as that of the original medical device
registration certificate.
The Deep Learning Assisted Decision Making Medical Device Software Review
Highlights (ᓃ), promulgated by the Center for
Medical Device Evaluation of the NMPA on July 3, 2019, is applicable to the registration
declaration of deep-learning assisted decision-making medical device software, including
standalone software and software components. It employs a risk-based, full life-cycle
management approach to address software technical review requirements. This encompasses
aspects such as requirement analysis, data collection, algorithm design, validation and
verification, software updates, including requirements for algorithm performance assessment,
clinical evaluation, and network and data security.
Potential Reclassification of DTx Medical Devices from Class II to Class III
As of the Latest Practicable Date, there are three recommendations from Chinese
regulatory authorities regarding the reclassification of DTx medical devices from Class II to
Class III, none of which affects the System. According to the recommendation of the NMPA ’s
First Medical Device Classification Summary of 2023 ( 2023ޢ
ිᐼ,o rt h e“ 2023 First Summary ”), software for the assessment and treatment of
cognitive impairment that acquires data through magnetic resonance imaging of the brain
(“Brain MRI ”) as well as neurological and psychological assessment of patients was
recommended for classification as a Class III medical device. In addition, based on the
recommendation of the NMPA ’s Second Medical Device Classification Summary of 2023
(2023ිᐼ,o rt h e“ 2023 Second Summary ”),
supplemental depression assessment software used in conjunction with functional near-infrared
spectroscopy (“ fNIRS ”) should be classified as a Class III medical device.
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Lastly, according to the recommendation of the NMPA ’s Third Medical Device
Classification Summary of 2023 ( 2023ිᐼ,o rt h e
“2023 Third Summary ”), software that provides intervention measures such as cognitive
behavioral therapy, mindfulness therapy and exercise therapy should be classified as a Class III
medical device.
As advised by the PRC Legal Advisor, the 2023 First Summary, 2023 Second Summary
and 2023 Third Summary represent advice from the relevant experts nationwide and are not the
binding regulations on medical device classification, as of the Latest Practicable Date. As
advised by our PRC Legal Advisor, as of the Latest Practicable Date, in accordance with
applicable PRC laws and regulations and taking into account the recommendations of the 2023
First Summary, 2023 Second Summary and 2023 Third Summary, our Directors are of the view
that, with the exception of the Depression Treatment Software, the likelihood our products,
namely the System, the Basic Cognitive Ability Testing Software, Cognitive Ability
Supplemental Screening and Assessment Software, Dyslexia Supplemental Screening and
Assessment Software, Covid-19 Induced Cognitive Impairment Assessment and Recovery
Training Software, Attention Deficit Hyperactivity Disorder Assessment and Treatment
Software as well as Quantitative Cognitive Assessment Software for Depression, will be
reclassified from Class II into Class III is relatively low. In contrast, our Depression Treatment
Software has a relatively high possibility of being reclassified from Class II into Class III. We
do not expect a significant change in market demand for the Depression Treatment Software
as a result of such reclassification into Class III. However, such reclassification is expected to
raise the entry barrier for the reclassified product because evidence-based clinical evaluation
would be required to obtain regulatory approval as a Class III medical device. This leads to
competitive advantages for us as we already possess the resources and experience to carry out
evidence-based clinical evaluation for cognitive DTx products, which many competitors do
not, according to Frost & Sullivan.
According to the Regulation on the Supervision and Administration of Medical Devices
(ᔼᐕኜ૛္ຖ၍ଣૢԷ), Class III medical devices are those devices that pose such a high
degree of risk to users that the safety and effectiveness of the medical device can only be
ensured through strict control and supervision of special measures. In line with this view, the
Administrative Measures on the Registration and Record-filing of Medical Devices ( ᔼᐕኜ
) requires Class III medical devices to be examined by the NMPA,
which shall issue the medical device registration certificate only after examination and
approval. Similarly, according to the Measures for the Supervision and Administration of
Medical Devices Manufacture (), those who intend to engage
in the manufacture of Class III medical devices must first be approved by the drug regulatory
authority of a province where they are located and obtain a medical device manufacturing
permit in accordance with law.
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Digital Health Guiding Principles System
On March 7, 2022, the Center for Medical Device Evaluation of NMPA issued Guiding
Principles for the Technical Review of Medical Device Software Registration ( ᔼᐕኜ૛ழ
) (the “ Software Guiding Principles ”), Guiding Principles for the
Technical Review of Medical Device Cybersecurity Registration ( ᔼᐕኜ૛ၣഖτΌൗ̅ᄲ
) (the “ Cybersecurity Guiding Principles ”) and Guiding Principles for the
Technical Review of AI Medical Device Registration (ࡡ
) (the “ AI Guiding Principles ”). The abovementioned three guiding principles are
integral components of the digital health guiding principles system.
In terms of the interrelationships among the abovementioned guiding principles, (i)
Software Guiding Principles is the foundational guiding principle of the digital health guiding
principle system and also serves as the general guiding principle for medical device software,
which aims to provide guidance to applicants for medical device software registration on the
standardized life cycle processes and the preparation of registration application materials for
medical device software; (ii) Cybersecurity Guiding Principles is the general guiding principle
for medical device cybersecurity, which aims to provide direction to applicants for the
standardization of the life cycle processes of medical device cybersecurity and the preparation
of registration application materials for medical device cybersecurity; (iii) and AI Guiding
Principles is the general guiding principle for AI medical device, which aims to provide
instruction to applicants in establishing the life cycle processes of AI-based medical devices
and the preparation of registration application materials for such devices.
In accordance with the Software Guiding Principles, a standalone software shall comply
with the requirements of medical device registration declaration documents and pay special
attention to the following requirements: (i) the product name shall conform to the generic
naming conventions for standalone software that disclose details related to input data, core
functions and intended use; (ii) the registrant shall submit self-developed software research
report, external software environment assessment report (if applicable), and GB/T 25000.51
self-testing report; (iii) the technical requirements for standalone software products shall
clearly specify the software’s name, model specifications, release version and version naming
conventions; and (iv) the user manual for the medical device shall comply with relevant laws,
regulatory documents, national standards and industry standards.
In accordance with Cybersecurity Guiding Principles, the registration declaration
materials shall comply with the requirements of medical device registration declaration
documents, Software Guiding Principles and additionally pay special attention to requirements
of (i) separately submitting a research report on the network security of the self-developed
software; and (ii) include within the manual network security instructions and usage
guidelines.
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In accordance with AI Guiding Principles, the registration declaration materials shall
comply with the requirements of medical device registration declaration documents, Software
Guiding Principles, Cybersecurity Guiding Principles and also pay special attention to the
following requirements: (i) AI standalone software shall conform to generic naming
conventions that disclose details such as input data, target diseases and intended use; (ii) for
novel products with medium or high levels of software security, the software research materials
and algorithm-based reports for each AI algorithm or algorithm combination shall be
submitted; (iii) for products with a high level of software security and intended for use by
patients or in primary healthcare institutions, a separate user training plan shall be provided in
principle; (iv) if the product’s technical requirements include performance metrics based on
evaluation database testing, the basic information of the evaluation database must be specified;
(v) for decision-support products, the user manual must provide a clear summary of the
algorithm performance evaluation for the AI algorithm.
The Guidelines for the Naming of Common Names for Medical Software ( ᔼ͜ழ΁ஷ
), promulgated by the NMPA on July 12, 2021, directs the formulation
of generic names for medical software products. It is applicable to standalone medical software
medical devices, excluding software components (non-independent software).
The Medical Device Software — Software Life Cycle Processes ( ᔼᐕኜ૛ழ΁–ழ΁
͛πմಂཀ೻), promulgated by the NMPA on September 27, 2020 and came into effect on
September 1, 2021, is applicable to the development and maintenance of medical device
software, encompassing software that is a medical device itself or that constitutes embedded
or integral parts of the final medical devices. It provides the expected processes for software
that can be executed on a processor or run through other software (such as interpreters)
operating on a processor.
The AI Medical Devices — Quality Requirements and Evaluation ( ɛʈ౽ঐᔼᐕኜ૛
–Ӌձ൙ᄆ), promulgated by the NMPA on July 1, 2022 and came into effect on
July 1, 2023, includes provisions on (i) terminology for the quality assessment of artificial
intelligence medical devices; (ii) proposing general quality requirements and evaluation
methods for datasets; (iii) introducing quality requirements and evaluation methods for data
annotation processes; (iv) proposing general requirements and evaluation methods for the
traceability of AI medical devices; (v) standardizing safety requirements and evaluation
methods for AI algorithms used in medical devices; (vi) specifying environmental conditions
for the operation of AI medical devices; (vii) strengthening the ability to protect subjects’
privacy; and (viii) achieving ethical requirements for AI at a technical level, and safeguard
human rights.
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Good Clinical Trial Practice for Medical Devices
The Good Clinical Trial Practice for Medical Device ( ᔼᐕኜ૛ᑗґ༊᜕ሯඎ၍ଣ஝
), which was promulgated jointly by the NMPA and the NHC on March 24, 2022 and came
into effect on May 1, 2022, governs the entire medical device clinical trial process, including
protocol design, implementation, monitoring, auditing and inspection, as well as data
collection, recording, storage, analysis, summary and reporting. Clinical trials of medical
devices shall be carried out in clinical trial institutions and only for medical devices that meet
the corresponding conditions and have gone through requisite record-filing processes. Clinical
trials of medical devices are required to be approved by an ethics committee. For Class III
medical devices, the approval of the NMPA is also required, and the clinical trial shall be
carried out in a qualified Class III Grade A medical institution.
The sponsor of a medical device clinical trial shall establish a quality management system
covering the whole process of the clinical trial of medical device to ensure the clinical trial
complies with relevant laws and regulations and protect the rights and interests and safety of
subjects.
Research and Clinical Evaluation of Medical Devices
In accordance with Regulation on the Supervision and Administration of Medical Devices
(ᔼᐕኜ૛္ຖ၍ଣૢԷ) and Administrative Measures on the Registration and Record-
filing of Medical Devices (),the research and development
and experiments of medical devices shall be in compliance with the relevant laws, regulations
and mandatory standards of China.
According to the Administrative Measures on the Registration and Record-filing of
Medical Devices (), promulgated by the SAMR on August
26, 2021 and came into effect on October 1, 2021, clinical evaluation shall be conducted for
the registration or record-filing of medical devices, and clinical evaluation materials shall be
submitted when applying for the registration of medical devices. Clinical evaluation of medical
devices may be carried out through clinical trials or analysis and evaluation of clinical
literature materials and clinical data of medical devices of the same kind to prove the safety
and effectiveness of medical devices in light of product characteristics, clinical risks, existing
clinical data and other circumstances. Clinical trials shall be carried out for medical devices for
which the existing clinical literature materials and clinical data are insufficient to confirm their
safety and effectiveness in the clinical evaluation of medical devices. Clinical trials for medical
devices shall be conducted in clinical trial institutions for medical devices that meet the
corresponding conditions and have been filed for record as required by the good clinical
practice (GCP) for medical devices.
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However, clinical evaluation of a medical device may be exempted when: (1) the medical
device has a clear mechanism of action, a finalized design and a mature production process,
and the medical devices of the same type have been used in clinical use for years without
record of serious adverse events, and the new medical device does not deviate from the general
purpose of the medical device with an established clinical record; or (2) if the safety and
efficacy of the medical device can be proved through non-clinical evaluation. Where clinical
evaluation is exempted, a submission of clinical evaluation materials is not required. The
catalogue of medical devices exempted from clinical evaluation shall be formulated, adjusted
and published by the NMPA.
The Guidelines for the Clinical Evaluation Techniques for Medical Devices ( ᔼᐕኜ૛
), promulgated by the NMPA on September 18, 2021, primarily
introduces the concepts of clinical assessment and clinical evidence, elucidating the
relationships among clinical trials, clinical data, clinical assessment, and clinical evidence. It
guides applicants on how to conduct clinical evaluations, compile associated documentation,
and incorporate them as integral components of the conformity assessment, as well as aims to
instruct regulatory authorities on how to assess the clinical evidence submitted by applicants.
The Hunan MPA, being the relevant authority that reviewed and approved the medical
device registration applications of the System, further clarified the requirements for adding
new indications under development to existing medical device registration certificates in a July
2023 consultation (the “ 2023 Consultation ”) and stated that where clinical literature materials
and clinical data of medical devices of the same kind are not available to evaluate the safety
and efficacy of a medical device for certain indications, the applicant must complete clinical
trials on those indications before applying for modification of the medical device registration
certificate to include such indications.
Production of Medical Devices
According to the Regulations on the Supervision and Administration of Medical Devices
(ᔼᐕኜ૛္ຖ၍ଣૢԷ) and the Measures on the Supervision and Administration of
Medical Devices Production (), which was promulgated by the
SAMR on and effective from July 20, 2004, latest amended on March 10, 2022 and came into
effect on May 1, 2022, in order to engage in the production of medical devices, an entity shall
meet the following conditions: (1) having the production site, environmental conditions,
production equipment and professional technicians that meet the needs of the medical devices
to be produced; (2) having the facility or full-time personnel and testing equipment capable of
testing the quality of the medical devices to be produced; (3) having a system of internal
control that can ensure the quality of medical devices; (4) having the after-sale service
capabilities that meet the needs of the medical devices to be produced; and (5) having the
capability to meet the requirements as prescribed in the documents on product research and
development and production techniques.
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To engage in the production of Class II and Class III medical devices, an entity shall
apply for a manufacturing licensing to the drug regulatory department of the people’s
government of the province where it is located and submit the relevant materials and the
registration certificate of the medical devices to be produced. The manufacturing permit for
medical devices is valid for five years. When it is necessary to renew the permit upon its
expiration, the formalities for renewal shall be completed in accordance with the relevant laws
on administrative licensing.
In accordance with Appendix to Good Manufacturing Practices for Standalone Software
as Medical Devices (፽-ዹͭழ΁, the “ Appendix ”) the
manufacturing quality management system for standalone software as medical devices shall
meet the requirements, including but not limited to personnel, equipment, design development,
procurement, manufacturing management, quality control, sales and after-sales service, of the
Good Manufacturing Practice for Medical Devices ( ᔼᐕኜ૛͛ପሯඎ၍ଣ஝ᇍ) and the
Appendix.
The Medical Devices — Application of Usability Engineering to Medical Device ( ᔼ
Ꮠ͜), promulgated by the NMPA on January 26, 2016 and
came into effect on January 1, 2017, delineates the manufacturer’s procedural framework for
the analysis, determination, design, validation, and confirmation of usability that has a direct
bearing on the safety of medical devices. The usability engineering process is deployed to
assess and mitigate risks associated with normal usage, encompassing both correct and
incorrect utilization. It serves the purpose of identifying, though not actively addressing, risks
related to abnormal usage.
The Medical Devices — Application of Risk Management to Medical Device ( ᔼᐕኜ
૛–Ꮠ͜), promulgated by the SAMR on October 12, 2022 and came
into effect on November 1, 2023, prescribes the terminology, principles, and procedures
governing the risk management of medical devices, encompassing both medical device
software and in vitro diagnostic medical devices. The delineated processes within this
document are structured to aid manufacturers of medical devices in the identification of
hazards associated with such devices, the estimation and assessment of pertinent risks, the
implementation of risk controls, and the ongoing monitoring of the efficacy of these controls.
Operation of Medical Devices
According to the Regulations on the Supervision and Administration of Medical Devices
(ᔼᐕኜ૛္ຖ၍ଣૢԷ) and the Measures for the Supervision and Administration of
Medical Devices Operation (), promulgated by the SAMR on
July 30, 2014 and effective from October 1, 2014, latest amended on March 10, 2022 and came
into effect on May 1, 2022, a business operator shall file for record with the drug regulatory
department of the government for the business operation of Class II medical devices and apply
for operation licensing for the business operation of Class III medical devices. Furthermore, no
business operator or using entity of medical devices may operate or use medical devices that
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have not been registered or filed for record in accordance with the law, or medical devices
without conformity certificates, or expired, invalidated or obsolete. The valid period of the
operating permit for medical devices is five years. Where it is necessary to renew the permit
upon its expiration, the formalities for renewal shall be observed in accordance with the
provisions of relevant laws on administrative licensing.
Post-marketing Responsibility about Medical Devices
In accordance with Regulation on the Supervision and Administration of Medical Devices
(ᔼᐕኜ૛္ຖ၍ଣૢԷ), a registrant or record-filing party of medical devices shall
establish a monitoring system for adverse events of medical devices ( ᔼᐕኜ૛ʔԄԫ΁္಻
᜗ӻ), be equipped with a monitoring body and personnel for adverse events suitable for its
products, take the initiative to monitor adverse events of its products, and report the
information on investigation, analysis, evaluation and product risk control to the technical
monitoring agency for adverse events of medical devices in accordance with the provisions of
the drug regulatory department under the State Council. The manufacturers or business
operators and using entities of medical devices shall assist the registrant or record-filing party
of medical devices in monitoring adverse events of the medical devices produced, operated or
used by them; if any adverse event of medical devices or suspicious adverse event is found, it
shall be reported to the technical monitoring agency for adverse events of medical devices in
accordance with the provisions of the drug regulatory department under the State Council.
In accordance with Administrative Measures on the Registration and Record-filing of
Medical Devices (), a registrant of medical devices shall
take the initiative to carry out post-marketing research, further confirm the safety, effectiveness
and quality controllability of the medical devices and strengthen the continuous management
of the medical devices on the market.
Price Controls
Pursuant to the Notice of Issuing the Opinions on Reform of Pricing System of
Pharmaceuticals and Medical Services (จԈ
), which was jointly promulgated by the National Development and Reform
Commission (the “ NDRC ”), the Ministry of Health of the PRC and the Ministry of Human
Resources and Social Security of the PRC and came into effect on November 9, 2009, the
management on the pricing of medical devices will be strengthened. For high value medical
devices, especially for implantable and interventional medical devices, more reasonable
pricing can be achieved by measures such as limiting price differentiation of the product in
circulation and publishing market price information.
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Advertisements of Medical Devices
Pursuant to the Interim Administrative Measures for the Review of Advertisements for
Drugs, Medical Devices, Health Food and Formula Food for Special Medical Purposes ( ᖹ
), which was
promulgated by the SAMR on December 24, 2019 and came into effect on March 1, 2020,
advertisements for medical devices shall not be released without being reviewed by the
relevant administration for market regulation and drug administration of a province or other
authorized administrative authorities. In addition, advertisers shall be responsible for the
veracity and legitimacy of the contents of advertisements for medical devices.
The contents of a medical device advertisement shall be based on the contents of the
registration certificate or filing certificate approved by the drug administrations, or the
registered or filed product instructions. Where the medical device advertisement involves the
name, scope of application, functional mechanism or structure or composition, etc. of the
medical device, the scopes of the registration certificate or filing certificate, or registered or
filed product instruction shall not be exceeded.
All advertisements for medical devices recommended for personal use must prominently
display a disclaimer stating, “Please read the product instructions carefully or purchase and use
the product as directed by a health care professional.” If the product registration certificate of
the medical device stipulates any contraindications or precautions, the advertisement shall
include a disclaimer in a prominent position stating, “for contraindications and precautions,
please refer to the instructions for details.”
Regulation Relating to Cybersecurity and Artificial Intelligence
AI Algorithms and Deep Synthesis Technology
According to the “Recommended Algorithm Management Provisions for Internet
Information Services” () and “Guiding Opinions on
Strengthening the Comprehensive Governance of Algorithms in Internet Information Services”
(ኬจԈ), algorithm-based recommendation
service providers are responsible for the security of their algorithms. They must have a
management system that includes measures for auditing, ethical review, fraud prevention,
security assessment and data security emergency response. They must also have dedicated
personnel and technical measures. Service providers should regularly review and evaluate their
algorithmic mechanisms, models, data and results, and notify users when an algorithm-based
recommendation service is active and provide effective channels for user complaints and
reports. Service providers should also label content generated or edited by deep synthesis
technology in accordance with the Administrative Provisions on Deep Synthesis in Internet
Information Services ().
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Data Collection
According to the Data Security Law (), data processors must collect data
in a legal and lawful manner and use it only for the purposes and within the limits established
by law or agreed with the user. They may not obtain data by illegal means. The Personal Data
Protection Law () outlines the lawful means and basis for processing
personal data, which include obtaining the individual’s consent, fulfilling a contract,
complying with a legal obligation, responding to public health emergencies, conducting news
reporting for the public interest, and protecting the life, health or property safety of individuals
under emergency circumstances. Before collecting personal information, processors must
inform individuals of various matters, such as the name and contact information of the
processor, the purpose and method of processing the information, and individuals’ rights under
the Personal Information Protection Act. This must be done through a stand-alone notice in
clear and easily understandable language. Individuals must be notified of any changes to this
notice.
Data Integrity and Accuracy
According to the Cybersecurity Law (), a person who constructs,
operates, or provides services through a network must take technical and other necessary
measures to ensure cybersecurity and operational stability, effectively respond to cybersecurity
incidents, prevent cybercrimes and unlawful activities, and maintain the integrity,
confidentiality, and usability of online data, in accordance with the provisions of laws,
administrative regulations, and mandatory requirements of national standards.
Furthermore, according to the Personal Information Protection Law, handling of personal
information must ensure the quality of personal information and avoid adverse effects on the
rights and interests of individuals due to inaccurate and incomplete personal information.
Entrusted Data Processing
The Personal Information Protection Law provides that a trustee entrusted with the
processing of personal information shall, in accordance with relevant laws and administrative
regulations, take necessary measures to ensure the security of personal information and assist
the personal information processor in fulfilling its obligations under the law.
When a personal information processor entrusts personal information to another party for
processing, they must agree on the purpose, time period, processing method, type of personal
information, protection measures, and the rights and obligations of both parties. The personal
information processor must also supervise the other party’s activities in processing personal
information.
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Co-processing of Personal Information
According to the Personal Information Protection Law, when two or more personal
information processors jointly handle personal information, they must agree on their respective
rights and obligations. However, this agreement does not affect an individual’s right to demand
the exercise of his or her rights under the Personal Information Protection Law. If a personal
information processor jointly handles personal information and violates an individual’s rights,
they shall be jointly and severally liable according to law.
Provision of Information to Other Processors
In accordance with the Personal Information Protection Law, when a personal information
processor provides personal information to other processors, it shall inform the individual of
the name and contact information of the recipient, purposes and methods of processing, and
categories of personal information, and obtain the individual’s separate consent or have other
lawful grounds.
Monetization of Public and User-derived Data
Pursuant to the Provisions on the Administration of Medical Records of Medical
Institutions (2013 Edition) (֛2013و)), which was jointly
promulgated by the National Health and Family Planning Commission (the “ NHFPC ”) and the
National Administration of Traditional Chinese Medicine (the “ NATCM”) and came into effect
on January 1, 2014, medical institutions and their staff shall strictly protect the privacy of
patients and are prohibited from disclosing any of the patient’s medical records for purposes
other than medical treatment, teaching or research.
In addition, pursuant to the Administrative Measures for Population Health Information
(for Trial Implementation) (ج(༊Б)) promulgated by the NHFPC on
and effective from 5 May 2014, Population Health Information shall be used for the purpose
of improving the quality of medical research, scientific decision-making and public services.
Any confidential information and personal privacy information shall not be provided to other
processors.
Furthermore, pursuant to the Personal Information Protection Law ()
which came into effect on November 1, 2021, individuals shall be informed if their personal
information is used for direct or indirect monetization (such as improving products and
services, researching and developing new products and providing personal information to other
processors). In addition, the provision of personal information to other processors requires the
individuals’ separate consent.
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According to our data security consultant, as of October 17, 2023, we are not involved in
the unauthorized disclosure of patient data for any purpose other than medical, educational, or
research purposes, nor are we involved in the sale or trade of patient data. We have informed
our users and obtained their consent through our privacy policy when we use DTx data to
improve our products and services and to develop new products. We therefore comply with the
relevant regulatory requirements described above.
Proposed Draft Cybersecurity Regulations
On September 24, 2024, the State Council promulgated the Cyber Data Security
Administrative Regulations ၣഖᅰኽτΌ၍ଣૢԷ (the “Cyber Data Security
Regulation”), which will take effect on January 1, 2025.
The Cyber Data Security Regulation covers a wide range of cybersecurity issues. Most of
the regulatory details under it have already been embodied in the Cybersecurity Law of the
PRC (), the Data Security Law of the PRC ( ʕശɛ͏΍ձ਷
) and the Personal Information Protection Law of the PRC (ࡈ
). New requirements proposed by the Cyber Data Security Regulation
primarily deal with filing and security assessment.
On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC ( ʕശ
), which took effect on September 1, 2021. The Data Security Law
sets forth the regulatory framework, the responsibilities of relevant governmental authorities in
regulating data security and the duties of data processors. On August 20, 2021, the SCNPC
promulgated the Personal Information Protection Law of the PRC (ࢹڦ
), which took effect on November 1, 2021 and aims to protect personal information
rights and interests, regulate the processing of personal information, ensure the orderly and free
flow of personal information and promote reasonable use of personal information.
According to our data security consultant, we have adopted comprehensive data
compliance measures covering multiple aspects and processes of our business and services in
accordance with the relevant requirements of cybersecurity and data compliance laws and
regulations within the PRC. As of the Latest Practicable Date, we are in compliance with all
material aspects of the proposed requirements under the Cyber Data Security Regulation.
Therefore, subject to material changes in the Cyber Data Security Regulation, the
implementation of the Cyber Data Security Regulation upon its final promulgation is unlikely
to have a material adverse impact on our business operations or the proposed Listing.
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On 28 December 2021, the CAC promulgated the Measures for Cybersecurity Review
() (the “ Cybersecurity Review Measures ”), which came into effect on
February 15, 2022. According to the Cybersecurity Review Measures, there are two
mechanisms to trigger cybersecurity review:
(a) V oluntary declarations by enterprises: any (i) critical information infrastructure
operators that intend to purchase network products and services; and (ii) a network
platform operator possessing the personal information of more than one million
people and intends to be listed overseas, may submit for voluntary cybersecurity
review.
(b) Regulatory authority initiated review: If the relevant regulatory authority set up
under the Cybersecurity Review Measures believes that any network product or
service or data processing activity affects or is likely to affect national security, the
Office of Cybersecurity Review shall report such circumstance to the Office of the
Central Cyberspace Affairs Commission for approval, and conduct a review upon
approval. With respect to the review of voluntary declarations by enterprises, we
have consulted with the China Cybersecurity Review Technology and Certification
Center (the “ CCRC ”), the organization commissioned by the Office of
Cybersecurity Review of CAC to undertake specific cybersecurity reviews,
regarding its proposed Listing, which confirmed that we do not need to take the
initiative to report to the regulatory authorities for cybersecurity review.
Whether a cybersecurity review will be initiated by the regulatory authorities depends on
the interpretation of Article 2 of the Cybersecurity Review Measures, specifically the
impact or potential impact of the data processing activities of network platform operators
on national security. National security is defined as the condition in which the state
power, sovereignty, unity, territorial integrity, people’s welfare, sustainable economic and
social development and other vital state interests are not threatened internally or
externally. The Cybersecurity Review Measures also outline various national security risk
factors in the area of cybersecurity, including:
(i) The risk that the use of products and services could result in the unlawful control of,
disruption to, or destruction of critical information infrastructure (“ CII”);
(ii) The harm to the business continuity of CII due to disruptions in the delivery of
products and services;
(iii) The security, openness, transparency, and diversity of sources of products and
services, the reliability of supply channels and the risk of supply disruptions due to
political, diplomatic and trade factors;
(iv) Product and service providers’ compliance with laws, administrative regulations and
departmental rules of the PRC;
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(v) The risk that core data, important data or large amounts of personal information will
be stolen, leaked, corrupted or illegally used or illegally exported;
(vi) The risk that CII, core data, important data or large amounts of personal information
will be influenced, controlled or maliciously used by foreign governments as a result
of the listing; and
(vii) Other factors that may affect the security of CII, cybersecurity and data security.
As of the Latest Practicable Date, we had not received any notice from any competent
authority within the industry or any regulatory department requiring us to perform a
cybersecurity review.
According to our data security consultant, although the possibility that our data
processing activities have an impact on national security cannot be completely ruled out, it is
unlikely for the regulatory authorities to initiate a cybersecurity review against us given the
type, nature, purpose, scale and other characteristics of our business operations. Therefore the
Cybersecurity Review Measures is unlikely to have a material adverse impact on our business
operations or the proposed Listing.
Laws and Regulations on Bribery and Corruption
In accordance with the Anti-Unfair Competition Law of the PRC ( ʕശɛ͏΍ձ਷ˀʔ
) and the Interim Regulations of the State Administration for Industry and
Commerce on Prohibition of Commercial Bribery (),
the business operator shall not provide or promise to provide economic benefits (including
cash, other property or by other means) to a counter-party in a transaction or a third party that
may be able to influence the transaction, in order to entice such party to secure a transactional
opportunity or competitive advantages for the business operator. Any business operator
breaching the relevant anti-bribery rules abovementioned may be subject to administrative
punishment or criminal liability depending on the seriousness of the cases.
In accordance with the Criminal Law (), whoever gives any
property to a staff member of a company, enterprise or other entity for any improper benefit,
if the amount is relatively huge, shall be sentenced to fixed-term imprisonment of not more
than 3 years or criminal detention and shall be fined; if the amount is huge, he shall be
sentenced to fixed-term imprisonment from 3 to 10 years and shall be fined. Where any entity
commits a crime as provided for in the preceding paragraph, it shall be fined, and its person
directly in charge and other directly liable persons shall be penalized according to the provision
of the above. In accordance with the Regulations on the Establishment of Adverse Records with
Respect to Commercial Briberies in the Medicine Purchase and Sales Industry (ͭᔼ
), where a manufacturer of drugs, medical devices and
medical disposables, an enterprise, an agency or an individual offers staff of a medical
institution any items of value or other benefits, the enterprise should be listed in the adverse
records with respect to commercial bribery if relevant circumstances exist.
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In accordance with the Notice on Promulgation of the Key Points for the Work of
Correcting Malpractice in the Medicine Purchase and Sales Field and Medical Services in 2023
(Ι೯2023), it demands
(i) rectifying the problems of malpractice in industrial organizations, especially the disguised
apportionment in the name of donation, academic activities, holding or participation in
conferences, etc., providing platforms for illegal tunneling, and illegal receipt of donations and
funding; (ii) rectifying the malpractice in the purchase and sales of medical products,
especially giving rebates to the practitioners of medical institutions, and tunneling to relevant
institutions in the guise of various forms.
REGULATION RELATING TO PRODUCT QUALITY AND PRODUCTION SAFETY
Product Quality
The Product Quality Law of the PRC (), as amended by
the Standing Committee of the National People’s Congress (the “ SCNPC ”) and effective as of
December 29, 2018, applies to all production and sale activities in the PRC. Pursuant to the
Product Quality Law of the PRC, products offered for sale must satisfy relevant quality and
safety standards. Violations of state or industrial standards for health and safety and any other
related violations may result in civil liabilities and administrative penalties, such as
compensation for damages, fines, suspension or shutdown of business, as well as confiscation
of products illegally produced and sold and the proceeds from such sales. Severe violations
may subject the responsible individual or enterprise to criminal liabilities. Where a defective
product causes physical injury to a person or damage to another person’s property, the victim
may claim compensation from the manufacturer or the seller of the product. Where the
responsibility for product defects lies with the manufacturer, the seller, after compensating the
victim, is entitled to recover such compensation from the manufacturer, and vice versa.
Pursuant to the PRC Civil Code (Part VII Liability for Tort) (ج
Պ(ᛆப΂)) which was promulgated by the National People’s Congress
(the “ NPC”) on May 28, 2020 and came into effect on January 1, 2021, a patient may make
claims against a medical institution or manufacturer of medical devices for any damage arising
from a medical device defect. For any claim made by a patient, the medical institution is
entitled to make claims against the manufacturer of medical devices after the settlement of the
compensation payable to the patient.
Production Safety
Pursuant to the Production Safety Law of the PRC (),
promulgated by the SCNPC on June 29, 2002, latest amended by on June 10, 2021 and came
into effect on September 1, 2021, the market entities shall (1) comply with this law and other
laws and regulations on safety production, strengthen the management of safety production,
enhance accountability for safe production for all employees and strengthen rule-makings on
safety production; (2) increase the investment and guarantee of safety production funds,
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materials, technologies, and personnel, improve safety production conditions, and boost safety
production standardization and informatization; (3) establish a dual prevention mechanism for
safety risk classification and control, and for the investigation and treatment of hidden dangers,
and improve the risk prevention and resolution mechanism to improve production safety
standards and ensure production safety. Any entity that fails to provide required production
safety conditions is prohibited from engaging in production activities.
Regulation Relating To Foreign Investment
The establishment, operation and management of corporate entities in the PRC are
governed by the Company Law of PRC (), or the Company Law,
which was promulgated by the SCNPC on December 29, 1993, latest amended on December
29, 2023 and became effective on July 1, 2024. A foreign-invested company is also subject to
the Company Law unless otherwise provided by the foreign investment laws.
On March 15, 2019, the NPC promulgated the Foreign Investment Law of the PRC ( ʕ
), or the Foreign Investment Law, which became effective on
January 1, 2020 and replaced the major former laws and regulations governing foreign
investment in the PRC. Pursuant to the Foreign Investment Law, “foreign investments” refer
to investment activities conducted by foreign investors directly or indirectly in the PRC.
The Foreign Investment Law of the PRC and its implementing rules created a system of
pre-entry national treatment and a negative list with respect to foreign investment
administration. The pre-entry national treatment refers to granting to foreign investors and
their investments, in the stage of investment access, the treatment no less favorable than that
granted to domestic investors and their investments. The negative list refers to special
administrative measures for access of foreign investment in specific fields as stipulated by the
State. Foreign investors shall not invest in the prohibited industries, and must satisfy certain
conditions stipulated in the negative list for investment in the restricted industries. The current
industry entry clearance requirements governing investment activities in the PRC by foreign
investors are set out mainly in the Special Administrative Measures (Negative List) for Foreign
Investment Access (2024 version) (݄(૶ఊ)(2024و))
and the Encouraged Industry Catalog for Foreign Investment (2022 version) ( ོᎸ̮ਠҳ༟
ପุͦ፽(2022و)). Industries not listed in these two categories are generally deemed
“permitted” for foreign investment unless otherwise restricted by other PRC laws.
On December 30, 2019, the MOFCOM and the SAMR jointly promulgated the Measures
for Information Reporting on Foreign Investment (), effective on
January 1, 2020, pursuant to which, where a foreign investor directly or indirectly carries out
investment activities in China, the foreign investor or the foreign-invested enterprise shall
submit the investment related information to the competent commerce authority through the
enterprise registration system and the national enterprise credit information publicity system
for further handling.
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Regulations Relating To The Merger And Acquisition Of Domestic Enterprises By Foreign
Investors And Overseas Listings
According to the Provisions on Merger and Acquisition of Domestic Enterprises by
Foreign Investors () (the “ M&A Rules ”) which were
jointly promulgated by the MOFCOM, the State Administration of Foreign Exchange (the
“SAFE ”) and four other ministries on August 8, 2006, took effect on September 8, 2006 and
amended on June 22, 2009, “mergers and acquisitions of domestic enterprises by foreign
investors” refers to: (1) a foreign investor converting a non-foreign invested enterprise
(domestic company) to a foreign invested enterprise by purchasing the equity interest from the
shareholder of such domestic company or subscribing for the increased capital of the domestic
company (the “ Equity Merger and Acquisition ”); or (2) a foreign investor establishing a
foreign invested enterprise to purchase the assets from a domestic enterprise by agreement and
operates the assets therefrom; or (3) a foreign investor purchasing the assets of a domestic
enterprise by agreement and uses these assets to establish a foreign invested enterprise for the
purpose of operating such assets ((2) and (3) collectively as the “ Assets Merger and
Acquisition ”).
The M&A Rules provides that mergers and acquisitions of domestic enterprises by foreign
investors shall be subject to the approval of the MOFCOM or its delegates at provincial level.
For instance, the approval from MOFCOM shall be obtained in circumstances where overseas
companies established or controlled by PRC enterprises or residents acquire affiliated domestic
companies. Any circumvention of the rules including through the domestic re-investment of a
foreign invested enterprise is not allowed.
Regulation Relating To Overseas Listing
The CSRC promulgated Trial Administrative Measures of the Overseas Securities
Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ̹၍ଣ༊Б፬
) (the “ Overseas Listing Trial Measure s”) and five relevant guidelines on February 17,
2023, which has become effective on March 31, 2023. The Overseas Listing Trial Measures
regulates both direct and indirect overseas offering and listing by PRC domestic companies’ by
adopting a filing-based regulatory regime.
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to
offer and list securities in overseas markets, either in direct or indirect means, are required to
complete the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that no overseas offering and listing shall be made when: (1)
such securities offering and listing is explicitly prohibited by provisions in the laws,
administrative regulations and relevant state rules; (2) the intended securities offering and
listing may endanger national security as reviewed and determined by competent authorities
under the State Council in accordance with the laws; (3) the domestic company intending to
make the securities offering and listing, its controlling shareholder or its actual controller, have
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committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of
property or undermining the order of the socialist market economy during the past three years;
(4) the domestic company intending to make the securities offering and listing is currently
under investigation for suspected criminal offenses or alleged serious violations of laws and
regulations, and no conclusion has yet been made thereof; or (5) there are material ownership
disputes over equity held by the domestic company’s controlling shareholder and/or by other
shareholder controlled by the controlling shareholder and/or the actual controller.
The Overseas Listing Trial Measures also provides that if the issuer meets both of the
following criteria, the overseas securities offering and listing conducted by such issuer will be
deemed as indirect overseas offering subject to the filing procedure set forth under the
Overseas Listing Trial Measures: (1) 50% or more of the issuer’s operating revenue, total
profit, total assets or net assets as documented in its audited consolidated financial statements
for the most recent fiscal year is accounted for by domestic companies; and (2) the issuer
conducts a substantial part of its business activities within Mainland China, or its principal
place of business are located in Mainland China, or the senior managers in charge of its
business operations and management are mostly Chinese citizens or domiciled in Mainland
China. Where an issuer applies for an initial public offering with the competent overseas
regulators, such issuer must file with the CSRC within three business days after such
application is submitted to relevant overseas authorities. The Overseas Listing Trial Measures
also requires subsequent reports to be filed with the CSRC on material events, such as change
of control or voluntary or forced delisting of issuer who have completed overseas offerings and
listings.
Regulation Relating To Intellectual Property Rights
Patent
The Patent Law of the PRC () (the “ Patent Law ”) has been
further amended by the SCNPC on October 17, 2020 and came into effect on June 1, 2021.
According to the current Patent Law, when the invention or utility model patent is granted,
unless otherwise stipulated in the Patent Law, without the approval of the patent owner, no
entity or person shall implement the relevant patent, that is, manufacture, use, offer to sell, sell
or import the patented products for business purpose, or use the patented method and use, offer
to sell, sell or import the products directly obtained with the patented method. Implementing
the patent without the approval of the patent owner constitutes the infringement of patent
rights. Any dispute in connection with this shall be resolved by the relevant parties through
negotiation. If the relevant parties refuse to negotiate or the negotiation fails, the patent owner
or the relevant stakeholders may file a lawsuit in the people’s court or turn to the patent
administration authorities for handling.
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Copyright
Copyright in the PRC, including copyrighted software, is principally protected under the
Copyright Law of the PRC () and related rules and regulations.
Under the Copyright Law of the PRC, the term of protection for copyrighted software is 50
years. On November 11, 2020, the SCNPC promulgated the newly amended Copyright Law, or
the New Copyright Law, which took effect on June 1, 2021. The New Copyright Law increased
the cost of infringement violations and expanded its protection coverage. The Regulation on
the Protection of the Right to Information Network Communication (ᚐૢ
Է), which was latest amended on January 30, 2013, provides specific rules on fair use,
statutory license, and a safe harbor for use of copyrights and copyright management technology
and specifies the liabilities of various entities for violations, including copyright holders,
libraries and Internet service providers. In order to further implement the Regulations on the
Protection of Computer Software (ᚐૢԷ) promulgated by the State Council
on June 4, 1991, lastly amended on January 30, 2013 and came into effect on March 1, 2013,
the State Copyright Bureau issued the Registration of Computer Software Copyright
Procedures () on February 20, 2002, which applies to software
copyright registration, license contract registration and transfer contract registration with
respect to software copyright.
Trademark
Registered trademarks are protected under the Trademark Law of the PRC ( ʕശɛ͏
), promulgated by the SCNPC on April 23, 2019 and effective on November 1,
2019, and related rules and regulations. Trademarks are registered with the State Intellectual
Property Office, formerly the Trademark Office of the SAIC. Where registration is sought for
a trademark that is identical or similar to another trademark that has already been registered
or given preliminary examination and approval for use in the same or similar category of
commodities or services, the application for registration of this trademark may be rejected.
Trademark registrations are effective for a renewable ten-year period unless otherwise revoked.
Domain Name
Domain names are protected under the Administrative Measures on Internet Domain
Names () promulgated by the MIIT on August 24, 2017 and effective
as of November 1, 2017. Domain name registrations are handled through domain name service
agencies established under the relevant regulations, and applicants become domain name
holders upon successful registration. The domain name registration also follows the principle
of “first file, first registration.”
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Regulation Relating To Tax
Enterprise Income Tax
The PRC enterprise income tax, or EIT, is calculated based on the taxable income
determined under the applicable EIT Law of the PRC () (the
“EIT Law ”) and its implementation rules, both of which became effective on January 1, 2008
and were latest amended by the SCNPC on December 29, 2018 and April 23, 2019,
respectively. The EIT Law generally imposes a uniform enterprise income tax rate of 25% on
all resident enterprises in China, including foreign-invested enterprises. The EIT Law and its
implementation rules permit certain High and New Technologies Enterprises, or the HNTEs, to
enjoy a reduced 15% enterprise income tax rate if they meet certain criteria and are officially
acknowledged.
V alue Added Tax
On March 23, 2016, the MOF and the STA jointly issued the Notice on the Pilot Program
for Overall Implementation of the Collection of V A T Instead of Business Tax (પ
), or the Circular 36, which took effect on May 1, 2016.
Pursuant to the Circular 36, all of the companies operating in construction, real estate, finance,
modern service or other sectors which were required to pay business tax are required to pay
value-added tax, or V A T, in lieu of business tax. A V A T rate of 6% applies to revenue derived
from the provision of certain services. Unlike a business tax, a taxpayer is allowed to offset the
qualified input V A T paid on taxable purchases against the output V A T payable on the revenue
from services provided.
On March 20, 2019, the MOF, the STA and the General Administration of Customs issued
the Announcement on Policies for Deepening the V A T Reform (݁
ʮѓ), or the Announcement 39, which came into effect on April 1, 2019, to further slash
V A T rates. According to the Announcement 39, (1) the 16% or 10% V A T previously imposed
on sales and imports by general V A T taxpayers is reduced to 13% or 9% respectively; (2) the
10% purchase V A T credit rate allowed for the procured agricultural products is reduced to 9%;
(3) the 13% purchase V A T credit rate allowed for the agricultural products procured for
production or commissioned processing is reduced to 10%; and (4) the 16% or 10% export V A T
refund rate previously granted to the exportation of goods or labor services is reduced to 13%
or 9%, respectively.
Regulation Relating To Foreign Exchange And Dividend Distribution
The principal regulations governing foreign currency exchange in China are the Foreign
Exchange Control Regulations of the PRC ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ), or the Foreign
Exchange Regulations, promulgated by the State Council on January 29, 1996 and latest
revised and effective on August 5, 2008. Under the Foreign Exchange Regulations and other
PRC rules and regulations on a currency conversion, Renminbi is freely convertible for
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payments of current account items, such as trade and service-related foreign exchange
transactions and dividend payments, but not freely convertible for capital account items, such
as direct investment, loan or investment in securities outside China unless prior approval of the
SAFE or its local counterpart is obtained.
The SAFE promulgated the Circular on Further Simplifying and Improving Foreign
Exchange Administration Policies of Direct Investment (ટҳ༟̮
) on February 13, 2015, which was amended on December 30, 2019,
which prescribed that the bank instead of SAFE can directly handle the foreign exchange
registration and approval under foreign direct investment while SAFE and its branches
indirectly supervise the foreign exchange registration and approval under foreign direct
investment through the bank.
The SAFE promulgated the Circular on Reforming the Management Approach regarding
the Foreign Exchange Settlement of Capital of Foreign-invested Enterprise (̮ਠҳ
) (the “ SAFE Circular 19 ”) on March 30, 2015,
which was last amended on December 30, 2019, and further issued the Circular on Reforming
and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account
() (the “ SAFE Circular 16 ”) on June 9,
2016, amended on December 4, 2023. Pursuant to the SAFE Circular 19 and the SAFE Circular
16, the flow and use of the Renminbi capital converted from foreign currency denominated
registered capital of a foreign-invested company shall not be used for purpose beyond its
business scope, or to provide loans to persons other than affiliates unless otherwise permitted
under its business scope.
On October 23, 2019, the SAFE released the Circular on Further Promoting Cross-border
Trade and Investment Facilitation (), which
amended on December 4, 2023, allows non-investment foreign-invested enterprises to use their
capital funds to make equity investments in China, provided that such investments do not
violate the negative list and the target investment projects are genuine and in compliance with
the laws.
According to the Circular on Optimizing Administration of Foreign Exchange to Support
the Development of Foreign-related Business (ஷ
) issued by the SAFE on April 10, 2020, under the prerequisite of ensuring true and
compliant use of funds and compliance and complying with the prevailing administrative
provisions on use of income from capital projects, enterprises which satisfy the criteria are
allowed to use income under the capital account, such as capital funds, foreign debt and
overseas listing, etc., for domestic payment, without the need to provide proof of veracity to
the bank beforehand for each transaction.
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Regulation Relating To Safe Circular 37
SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange
Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment
through Special Purpose V ehicles (೻ҳ༟
), or the SAFE Circular 37, on July 4, 2014, which replaced the
former circular commonly known as the “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, referred to
in SAFE Circular 37 as a “special purpose vehicle,” for the purpose of overseas investment and
financing, with their legally owned assets or equity interests in domestic enterprises or offshore
assets or interests. 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 PRC shareholder holding interests in a
special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiary 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. Furthermore, failure to comply with the various SAFE registration
requirements described above could result in liability under PRC law for evasion of foreign
exchange controls. On February 13, 2015, SAFE released “SAFE Circular 13” (̮ි၍
), under which qualified local
banks will examine and handle foreign exchange registration for overseas direct investment,
including the initial foreign exchange registration and amendment registration, from June 1,
2015.
Regulation Relating To Labor Laws And Social Insurance
Pursuant to the Labor Law of the PRC (), promulgated by the
SCNPC on July 5, 1994 and amended and came into effect on December 29, 2018 and the
Labor Contract Law of the PRC () promulgated by the SCNPC
on June 29, 2007 and amended on December 28, 2012 and came into effect on July 1, 2013 and
the Implementation Rules of the Labor Contract Law of the PRC ( ʕശɛ͏΍ձ਷௶ਗΥΝ
ૢԷ) promulgated by the State Council and came into effect on September 18, 2008,
employers shall establish and improve labor rules and regulations according to the laws and
regulations and shall strictly comply with the national standards, provide training to its
employees, protect their labor rights and perform its labor obligations. Employers shall execute
written labor contracts with full-time employees. Labor contracts shall be categorized into
labor contracts with fixed term, labor contracts without fixed term and labor contracts to be
expired upon completion of certain tasks. All employers must comply with local minimum
wage standards. Violations of the Labor Contract Law of the PRC and/or the Labor Law of the
PRC may result in the imposition of fines and/or other administrative and criminal liability in
the case of serious violations.
REGULATORY OVERVIEW
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In addition, according to the Social Insurance Law of the PRC (ڭ
) promulgated by the SCNPC on October 28, 2010, amended and came into effect on
December 29, 2018 and the Regulations on the Administration of Housing Funds (ʮጐ
၍ଣૢԷ) amended by the State Council and came into effect on March 24, 2019 and the
Provisional Regulations on Collection and Payment of Social Insurance Premiums (ڭ
ᎈ൬ᅄᖮᅲБૢԷ) amended by the State Council and came into effect on March 24, 2019,
employers in China shall pay premium for basic pension plans, medical insurance,
unemployment insurance, maternity insurance, work-related injury insurance, and housing
funds for their employees at the applicable rates based on the amounts stipulated by the laws.
If they fail to pay required amount of premiums to local administrative authorities on time or
in full, they may be required to settle the overdue amount, subject to fine or be compulsory
enforced by the court.
U.S. REGULATORY OVERVIEW
Regulations Relating to Medical Devices
In the United States, the FDCA, FDA regulations and other federal and state statutes and
regulations govern, among other things, medical device design and development, preclinical
and clinical testing, premarket clearance or approval, registration and listing, manufacturing,
labeling, storage, advertising and promotion, sales and distribution, export and import, and
post-market surveillance. The FDA regulates the design, manufacturing, servicing, sale and
distribution of medical devices, including molecular diagnostic test kits and instrumentation
systems. Failure to comply with applicable U.S. requirements may subject a company to a
variety of administrative or judicial sanctions, such as FDA refusal to approve pending
applications, warning letters, product recalls, product seizures, total or partial suspension of
production or distribution, injunctions, fines, civil penalties and criminal prosecution.
Unless an exemption applies, each medical device we wish to distribute commercially in
the United States will require marketing authorization from the FDA prior to distribution. The
two primary types of FDA marketing authorization applicable to a device are premarket
notification, also called 510(k) clearance, and premarket approval, also called PMA approval.
The type of marketing authorization is generally linked to the classification of the device. The
FDA classifies medical devices into one of three classes (Class I, II or III) based on the degree
of risk the FDA determines to be associated with a device and the level of regulatory control
deemed necessary to ensure the device’s safety and effectiveness. Devices requiring fewer
controls because they are deemed to pose lower risk are placed in Class I or II. Class I devices
are deemed to pose the least risk and are subject only to general controls applicable to all
devices, such as requirements for device labeling, premarket notification and adherence to the
FDA ’s current Good Manufacturing Practices, or cGMP , known as the Quality System
Regulations, or QSR. Class II devices are intermediate risk devices that are subject to general
controls and may also be subject to special controls such as performance standards,
product-specific guidance documents, special labeling requirements, patient registries or
post-market surveillance. Class III devices are those for which insufficient information exists
REGULATORY OVERVIEW
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to assure safety and effectiveness solely through general or special controls and include life
sustaining, life-supporting or implantable devices, devices of substantial importance in
preventing impairment of human health, or which present a potential, unreasonable risk of
illness or injury.
Most Class I devices and some Class II devices are exempted by regulation from the
510(k) clearance requirement and can be marketed without prior authorization from the FDA.
Some Class I devices that have not been so exempted and Class II devices are eligible for
marketing through the 510(k) clearance pathway. By contrast, devices placed in Class III
require PMA approval prior to commercial marketing. The PMA approval process is more
stringent, time-consuming and expensive than the 510(k) clearance process, however, the
510(k) clearance process has also become increasingly stringent and expensive.
If FDA has not issued a regulation classifying a particular type of device as Class I, and
if there is no known predicate for a device, the device is automatically Class III, regardless of
the risk the device poses. If a device is automatically/statutorily classified into Class III in this
manner, a company can petition FDA to reclassify the category of devices into Class II or Class
I via a process known as the De Novo Classification Request process. This direct De Novo
process allows a company to request that a new product classification be established without
the company first submitting a 510(k) notification for the device. When FDA agrees that the
device is Class II or Class I and grants a De Novo Request, the device may then be marketed
under the FDCA and can serve as a predicate for future 510(k) submissions.
EUROPEAN UNION REGULATORY OVERVIEW
Regulation Relating to Medical Devices
The EU consists of member states residing in the European Union and has a coordinated
system for the authorization of medical devices. As of May 26, 2021, the EU has adopted
Regulation (EU) 2017/745 of the European Parliament and of the Council of 5 April 2017 on
medical devices, amending Directive 2001/83/EC, Regulation (EC) No 178/2002 and
Regulation (EC) No 1223/2009. The Medical Device Regulation 2017/745, or EU MDR repeals
Directive 93/42/EEC, which concerns medical devices, and Directive 90/385/EEC, which
concerns active implantable medical devices, as of 26 May 2021. The EU allows a transition
period from Directive 93/42/EEC and Directive 90/385/EEC to Regulation (EU) 2017/745, that
will end 26 May 2024.
REGULATORY OVERVIEW
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The EU MDR aims to ensure the smooth functioning of the internal market as regards
medical devices, taking as a base a high level of protection of health for patients and users, and
considering the small- and medium-sized enterprises that are active in this sector. At the same
time, this Regulation sets high standards of quality and safety for medical devices in order to
meet common safety concerns as regards such products. Both objectives are being pursued
simultaneously and are inseparably linked whilst one not being secondary to the other. As
regards Article 114 of the Treaty on the Functioning of the European Union (the “ TFEU ”), this
Regulation harmonizes the rules for the placing on the market and putting into service of
medical devices and their accessories on the Union market thus allowing them to benefit from
the principle of free movement of goods. As regards Article 168(4)(c) TFEU, this Regulation
sets high standards of quality and safety for medical devices by ensuring, among other things,
that data generated in clinical investigations are reliable and robust and that the safety of the
subjects participating in a clinical investigation is protected.
The system of regulating medical devices operates by way of a certification for each
medical device. Each certificated device is marked with CE mark which shows that the device
has a Certificat de Conformité. There are national bodies known as Competent Authorities in
each member state which oversee the implementation of the EU MDR within their jurisdiction.
The means for achieving the requirements for CE mark varies according to the nature of the
device. Devices are classified in accordance with their perceived risks, similarly to the U.S.
system. The class of a product determines the requirements to be fulfilled before CE mark can
be placed on a product, known as a conformity assessment. Each member state can appoint
Notified Bodies within its jurisdiction. If a Notified Body of one member state has issued a
Certificat de Conformité, the device can be sold throughout the European Union without
further conformance tests being required in other member states.
REGULATORY OVERVIEW
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OVERVIEW
Our Group commenced business operations in September 2012 through BrainAurora
Zhejiang, a limited liability company established in the PRC by a group of individuals,
including science experts and initial investors interested in the field of brain science. For
details of the establishment of BrainAurora Zhejiang, see “Establishment and Major
Shareholding Changes of our Group — 1. Establishment of BrainAurora Zhejiang” below.
Our Company was incorporated as an exempted company with limited liability in the
Cayman Islands on April 25, 2023. In preparation for the Listing, we conducted the
Reorganization, after which our Company became the holding company of our Group. Details
of the Reorganization are set out in “Reorganization” below.
After years of development, we have built up our business to its current form as we have
become a seasoned player in China’s cognitive impairment DTx market and the first company
in China that has developed a medical-grade DTx product for cognitive impairment, combining
brain science with advanced artificial intelligence technologies, according to Frost & Sullivan.
For details, please refer to the section headed “Business.”
KEY MILESTONES
The following table summarizes the key business development milestones of our Group:
Y ear Event
2012 BrainAurora Zhejiang was founded in the PRC.
2014 We cooperated with Chinese Association for Mental Health ( ʕ਷
ːଣሊ͛՘ึ) in relation to qualification training sessions for
cognitive training.
2017 We cooperated with Xuanwu Hospital in relation to conducting
research on cognitive training clinics.
2018 We obtained the initial Class II medical device registration
certificate for the Brain Function Information Management
Platform Software System, our Core Product, from the Hunan
MPA.
2020 We extended the scope of the medical device registration
certificate for our Core Product to include eight indications,
including vascular cognitive impairment, Alzheimer’s disease,
aphasia, depression, schizophrenia, sleep disorder, ADHD and
autism.
We cooperated with Chaoyang Hospital to help establish the first
cognitive center adopting DTx in China.
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Y ear Event
2021 We cooperated with National Health Commission Capacity
Building and Continuing Education Center (ሊ͛਄ੰ։ঐɢ
ணձᘱᚃ઺ԃʕː) in relation to cognitive disorder diagnosis
and treatment specialist capacity building.
2022 We obtained a Class II medical device registration certificate for
the Cognitive Ability Supplemental Screening and Assessment
Software from the Hunan MPA.
We obtained CE mark for our Cognitive Impairment Treatment
Software in the EU.
We obtained a Class II medical device registration certificate for
the Basic Cognitive Capability Assessment Testing Software from
the Hunan MPA.
2023 We obtained a Class II medical device registration certificate for
Dyslexia Supplemental Screening and Assessment Software from
the Hunan MPA.
OUR MAJOR SUBSIDIARIES
The principal business activities, place and date of establishment of each of our Major
Subsidiaries that made a material contribution to our results of operations during the Track
Record Period are shown below:
Name of Subsidiary
Place of
Establishment
Date of
Establishment and
Commencement of
Business Principal Business Activities
BrainAurora Zhejiang PRC September 21, 2012 Provision of training and
technology services for
cognitive impairment digital
therapeutics
Beijing Zhijingling PRC September 23, 2014 Research, development,
commercialization and
provision of technology
services for cognitive
impairment digital therapeutics
Changsha Zhijingling PRC August 11, 2017 Provision of technology
services for cognitive
impairment digital therapeutics
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MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
During the Track Record Period and up to the Latest Practicable Date, we did not conduct
any acquisitions, disposals or mergers that we consider to be material to us.
ESTABLISHMENT AND MAJOR SHAREHOLDING CHANGES OF OUR GROUP
1. Establishment of BrainAurora Zhejiang
BrainAurora Zhejiang was established in the PRC on September 21, 2012 as a limited
liability company by a group of individuals, including science experts and initial investors who
were interested in the field of brain science and became acquainted with each other through an
online community related to brain science research in 2011. Upon establishment, the beneficial
ownership of BrainAurora Zhejiang was as follows:
Name of Beneficial Owner
(1)
Amount of
Registered
Capital
Approximate
Beneficial
Ownership
Percentage
(RMB)
Dr. Wang (1) 340,800 33.91%
Dr. Xiang Huadong (؇“() Dr. Xiang ”)(1)(2) 294,500 29.30%
Ms. Y e Baiyuan ( ໢Ժ෤)( “ Ms. Y e”)(1) 160,300 15.95%
Ms. Y uan Yi ( ঺ᖵ)( “ Ms. Yuan ”)(1) 139,800 13.91%
Ms. Gao Y uli ( ৷͗ͭ)( “ Ms. Gao ”)(1) 40,200 4.00%
Mr. Wang Qingquan (Mr. Wang Qingquan,
together with Ms. Y e, Ms. Y uan and Ms. Gao,
the “ Initial Investors ”)
(1) 29,400 2.93%
Total 1,005,000 100%
Notes:
1. Upon the establishment of BrainAurora Zhejiang, in order to facilitate business development and
simplify corporate governance, voting and approval procedures of the Group, each of Dr. Wang and the
Initial Investors entrusted the registered capital of BrainAurora Zhejiang they beneficially owned to Dr.
Xiang as a nominee except for the registered capital of RMB5,000 (0.50%) directly held by Dr. Wang.
Each of the Initial Investors is an Independent Third Party. All amounts of registered capital of
BrainAurora Zhejiang were fully paid up upon its establishment in the forms of cash and in-kind
contributions by Dr. Xiang, Dr. Wang, and the Initial Investors, using their own respective funds sourced
from remuneration from employment, and investments and savings and Dr. Xiang’s non-patented
intellectual property rights (as the case may be).
By December 2020, Dr. Xiang had transferred all his direct shareholding in BrainAurora Zhejiang to
Shuhui LP and all entrustment arrangements described above had been unwounded. Immediately
following the unwinding of such entrustment arrangements, (i) Dr. Wang held certain of his interests in
BrainAurora Zhejiang directly and his remaining interests indirectly as a limited partner of each of
Shuhui LP and Zhipan LP , and (ii) each of Dr. Xiang and the Initial Investors held their interests in
BrainAurora Zhejiang indirectly as limited partners of Shuhui LP .
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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2. Dr. Xiang is a scholar in the field of brain science and the former general manager of our Group and
the chairman of the board of directors and the legal representative of BrainAurora Zhejiang who
resigned in July 2020 (“ Dr. Xiang’s Resignations ”). Dr. Xiang ceased to hold any position in our Group
after his resignation on his own accord to pursue an alternative career path to focus on non-medical-
grade DTx products. To facilitate his pursuit of such alternative career path following his resignation,
in July 31, 2020, Dr. Wang and Dr. Xiang entered into an equity adjustment agreement pursuant to which
the parties agreed on, among others, the transfer of the entire equity interests of BrainAurora Zhejiang
in its then wholly-owned subsidiary, Nanjing Y unzhong Ruihai Biotechnology Co., Ltd. (ԯථʕ๿ऎ
ʮ̡), a company primarily engaged in the provision of non-medical services to
residential communities, elderly nursing care organization customers, and certain individual customers,
to Dr. Xiang, at nil purchase price (the “ Yunzhong Ruihai Share Transfer ”). The commercial rationale
for the Y unzhong Ruihai Share Transfer is that (i) Y unzhong Ruihai had not commenced substantial
business operation at the material time; (ii) Dr. Xiang’s Resignations were agreed; (iii) Dr. Xiang further
agreed to transfer, at nil purchase price, all of his then direct shareholding in BrainAurora Zhejiang to
Shuhui LP as detailed in Note 1 above; and (iv) Dr. Xiang’s past contributions to the Group. To the best
knowledge of our Directors, Y unzhong Ruihai was not involved in any material non-compliant incidents,
claims or litigations in all material respects since its inception and up to the date of Y unzhong Ruihai
Share Transfer, and the Y unzhong Ruihai Share Transfer complied with the relevant PRC laws and
requirements.
As of the Latest Practicable Date, Dr. Xiang is a minority shareholder of Neurobright Limited, which
in turn held 2.80% of the total issued share capital of our Company.
2. Initial Shareholding Changes, Series Angel and Series A Pre-IPO Investments in
BrainAurora Zhejiang
From May 2014 to June 2016, BrainAurora Zhejiang underwent a series of initial
shareholding changes, including conducting the Series Angel and Series A Pre-IPO Investments
through the subscription of its increased registered capital by certain Pre-IPO Investors. For
details, see “Pre-IPO Investments” below.
3. Further Pre-IPO Investments in BrainAurora Zhejiang by Mr. Tan and other
Pre-IPO Investors
From December 2020 to April 2023, BrainAurora Zhejiang conducted several rounds of
further Pre-IPO Investments through the subscription of its increased registered capital and
acquisition of equity interests from existing shareholders by certain Pre-IPO Investors. For
details, see “Pre-IPO Investments” below.
In particular, Mr. Tan, who became acquainted with Dr. Wang and acquired initial
knowledge of our Company’s products in May 2020 through the introduction by a partnering
hospital of our Company and envisaged market potential in the cognitive impairment digital
therapeutics market. After further understanding the Group’s business and research and
development, and analyzing such information using his industry experience and insights
accumulated in the healthcare and medical field through working with various pharmaceutical
companies in the past 20 years, he decided to (i) invest in our Group as a Pre-IPO Investor in
the Series B financing of BrainAurora Zhejiang from December 2020 to September 2021 with
his own funds sourced primarily from his remuneration from employment and personal
investment and (ii) actively participate in the management of our Company leveraging on his
wealth of management experience as an executive director and chairman of the board of a
company listed on the Stock Exchange, namely Immunotech. For details of the investments in
BrainAurora Zhejiang made by Mr. Tan, see “Pre-IPO Investments” below.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Since investing in our Group as a Pre-IPO Investor, Mr. Tan has proactively taken a
leading role in the management and operation of the Group in collaboration with Dr. Wang. In
October 2020, to further leverage Mr. Tan’s knowledge and resources in healthcare sectors, Dr.
Wang, through Shuhui LP , transferred his beneficial interests in BrainAurora Zhejiang
representing registered capital of RMB1,383,803 in BrainAurora Zhejiang to Mr. Tan at a cash
consideration of RMB4,500,000. Mr. Tan is currently our chairman of the Board, executive
Director and chief strategy officer. See “Directors and Senior Management — Directors” for
details of Mr. Tan’s positions and responsibilities in our Group.
REORGANIZATION
The following chart sets out a simplified corporate structure of our Group immediately
prior to the commencement of the Reorganization:
BrainAurora
Zhejiang
(PRC)
Beijing Zhijingling
(PRC)
BrainAurora Medical
Technology (Liaoning)
Co., Ltd.
(Ҧ
(፱ྐྵ)ʮ̡)
(“BrainAurora
Liaoning”)(1)
(PRC)
100%
70% 80%
BrainAurora Medical
Technology (Shaanxi)
Co., Ltd.
(Ҧ
(৯Г)ʮ̡)
(“BrainAurora
Shaanxi”)(2)
(PRC)
Beijing BrainArea
Technology Co., Ltd.
(ʮ̡)
(“BrainArea
Technology”)(4)
(PRC)
BrainAurora Medical
Technology (Nanjing)
Co., Ltd.
(Ҧ
(ԯ)ʮ̡)
(“BrainAurora
Nanjing”)
(PRC)
Beijing Hongze
Technology Development
Co., Ltd.
 (Ҧ೯
ʮ̡)
(“Hongze Technology”)
(PRC)
Beijing Wanxiang
Aurora Technology
Co., Ltd.
ʮ̡
(“Wanxiang Aurora”)(3)
(PRC)
BrainAu
Medical
Technology
(Delaware)
Co., LLC
(United States)
100%
Changsha Zhijingling
(PRC)
100%
80% 92% 100% 100%
Notes:
1. As of the date of this Prospectus, BrainAurora Liaoning is owned as to (i) 85% by Beijing Zhijingling, an
indirectly wholly-owned subsidiary of the Company, and (ii) 15% by Shenyang Y ouyang Future Technology
Co., Ltd. (ʮ̡), which is controlled by Wang Ningning ( ˮྐྵྐྵ). To the best
knowledge of our Directors, each of Shenyang Y ouyang Future Technology Co., Ltd. and Wang Ningning is
an Independent Third Party and not a connected person at the subsidiary level, taking into account that
BrainAurora Liaoning is an insignificant subsidiary for the purpose of Rule 14A.09 of the Listing Rules.
2. As of the date of this Prospectus, BrainAurora Shaanxi is owned as to (i) 80% by Beijing Zhijingling, an
indirectly wholly-owned subsidiary of the Company, and (ii) 20% by Zhang Zhiwei ( ੵқਃ). To the best
knowledge of our Directors, Zhang Zhiwei is an Independent Third Party, and not a connected person at the
subsidiary level, taking into account that BrainAurora Shaanxi is an insignificant subsidiary for the purpose
of Rule 14A.09 of the Listing Rules.
3. Immediately prior to the commencement of the Reorganization, Wanxiang Aurora is owned as to (i) 80% by
Beijing Zhijingling, an indirectly wholly-owned subsidiary of the Company, and (ii) 20% by Beijing Ruian
Enzhuo Biotechnology Co., Ltd. (ʮ̡), which is wholly owned by Beijing Fanhai
Wanxiang Technology Co., Ltd. (ʮ̡), and thus in turn controlled by Li Deming ( ҽ
ᅃΤ). To the best knowledge of our Directors, each of Beijing Ruian Enzhuo Biotechnology Co., Ltd. and Li
Deming is an Independent Third Party, and not a connected person at the subsidiary level, taking into account
that Wanxiang Aurora is an insignificant subsidiary for the purpose of Rule 14A.09 of the Listing Rules. As
of the Latest Practicable Date, Wanxiang Aurora is owned as to approximately (i) 70% by Beijing Zhijingling,
and (ii) 30% by Beijing Ruian Enzhuo Biotechnology Co., Ltd. (ʮ̡). For details,
please refer to “— Our Corporate Structure — Corporate Structure Immediately Before the Completion of the
Share Subdivision and the Global Offering”.
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4. As of the date of this Prospectus, BrainArea Technology is owned as to (i) 92% by Beijing Zhijingling, an
indirectly wholly-owned subsidiary of the Company, and (ii) 8% by Congji Beijing Technology Co., Ltd. ( ᓉ
ਿ(̏ԯ)ʮ̡), which is wholly owned by Chen Huarong ( ௓ശ࿲). To the best knowledge of our
Directors, each of Congji Beijing Technology Co., Ltd. and Chen Huarong is an Independent Third Party, and
not a connected person at the subsidiary level, taking into account that BrainArea Technology is an
insignificant subsidiary for the purpose of Rule 14A.09 of the Listing Rules.
a. Establishment of the Beijing Yihui
On April 18, 2023, Beijing Yihui Technology Co. Ltd. (ʮ̡)( “Beijing
Yihui ”) was established by certain then shareholders of BrainAurora Zhejiang in preparation
for Group’s future business development. As of the Latest Practicable Date, Beijing Yihui has
not commenced any business.
Upon its establishment, Beijing Yihui has an initial registered capital of RMB1 million,
and was owned as to 38.59%, 16.17%, 14.27%, 12.97%, 5.82%, 5.28%, 3.98%, 1.46%, 0.98%
and 0.48% by Mr. Tan, Tianjin Tianjian, Dr. Wang, Tianjin Kangsheng, Zhipan LP , Tianjin
Chengye, Shuhui LP , Anji Shundian, Ms. Li Qing and Ms. Wang Jie, respectively.
b. Incorporation of our Company, BVI Subsidiary, HK Subsidiary and WFOE
On April 25, 2023, our Company was incorporated in the Cayman Islands as an exempted
company with limited liability and the ultimate holding company of our Group. Upon
incorporation, our Company had an authorized share capital of US$50,000 divided into
500,000,000 ordinary Shares of a par value of US$0.0001 each. On the date of incorporation,
our Company allotted and issued one ordinary Share to ICS Corporate Services (Cayman)
Limited, our then registered office services provider and an Independent Third Party, which
was then transferred to ZTan Limited, a BVI business company wholly owned by Mr. Tan, at
par value.
On April 28, 2023, the BVI Subsidiary was incorporated as a company in the British
Virgin Islands as a direct wholly-owned subsidiary of our Company.
On May 11, 2023, the HK Subsidiary was incorporated as a limited company in Hong
Kong as a direct wholly-owned subsidiary of the BVI Subsidiary.
On June 16, 2023, WFOE was established as a limited liability company in the PRC and
became a direct wholly-owned subsidiary of the HK Subsidiary.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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c. Increase of Beijing Yihui’s registered capital subscribed by BrainAurora Zhejiang
On June 14, 2023, BrainAurora Zhejiang subscribed for the increased registered capital
of Beijing Yihui in the amount of RMB50,000,000 at a consideration of RMB50,000,000,
which was fully paid on August 7, 2023. Upon completion of such increase of Beijing Yihui’s
registered capital, Beijing Yihui was owned as to approximately 98.04%, 0.76%, 0.32%,
0.28%, 0.25%, 0.11%, 0.10%, 0.08%, 0.03%, 0.02% and 0.01% by BrainAurora Zhejiang, Mr.
Tan, Tianjin Tianjian, Dr. Wang, Tianjin Kangsheng, Zhipan LP , Tianjin Chengye, Shuhui LP ,
Anji Shundian, Ms. Li Qing and Ms. Wang Jie, respectively, and thus became a subsidiary of
BrainAurora Zhejiang.
d. Allotment and Issuance of Shares of Our Company to Pre-Reorganization
Shareholders of BrainAurora Zhejiang
In order to reflect and mirror the shareholding structure of BrainAurora Zhejiang prior to
the Reorganization at the offshore level, our Company allotted and issued to the then
shareholders of BrainAurora Zhejiang (the “ Pre-Reorganization Shareholders ”) or their
affiliates, a total of 1,000,000 Shares between April 2023 and August 2023.
The following table sets out the shareholding structure of (i) BrainAurora Zhejiang
immediately before the Reorganization, and (ii) our Company immediately after the
Reorganization.
Shareholding structure of BrainAurora Zhejiang
Immediately before the Reorganization
Shareholding structure of Our Company
Immediately after the Reorganization
Name of the
Pre-Reorganization
Shareholder
Amount of
the Registered
Capital
Ownership
Percentage
Name of the
Shareholder (being a
Pre-Reorganization
Shareholder or its
affiliate, whichever
applicable) Class of Shares
Number
of Shares
Ownership
Percentage
(RMB)
Controlling Shareholders
Mr. Tan
(1)(5) 4,391,561 29.49% Mr. Tan:
ZTan Limited (1)(6)
Ordinary Shares 294,912 29.49%
Dr. Wang (2)(5) 1,623,901 10.91% Dr. Wang:
Wispirits Limited (2)(6)
Ordinary Shares 109,052 10.91%
Zhipan LP (3)(5) 662,695 4.45% Wiseforward Limited (3) Ordinary Shares 44,503 4.45%
Shuhui LP (4)(5) 452,681.4 3.04% Neurobright Limited (4) Ordinary Shares 30,400 3.04%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Shareholding structure of BrainAurora Zhejiang
Immediately before the Reorganization
Shareholding structure of Our Company
Immediately after the Reorganization
Name of the
Pre-Reorganization
Shareholder
Amount of
the Registered
Capital
Ownership
Percentage
Name of the
Shareholder (being a
Pre-Reorganization
Shareholder or its
affiliate, whichever
applicable) Class of Shares
Number
of Shares
Ownership
Percentage
(RMB)
Pre-IPO Investors
Tianjin Tianjian Medical
Technology Co. Ltd. (ݵ
ʮ̡)
(“Tianjin Tianjian ”)
(7)
1,839,456 12.35% Crusky Limited (7) Ordinary Shares 123,527 12.35%
Hainan Synthesis Medical
Information Consulting Co.
Ltd. (ፔ༔
ʮ̡)( “ Hainan
Synthesis ”)
(8)
1,044,499 7.01% China Frontier Capital
Holding Limited ( ʕ਷
ʮ
̡)( “ CFCH ”)
(8)
Ordinary Shares 70,143 7.01%
Tianjin Kangsheng
Management Consulting
Partnership (Limited
Partnership) (ੰସ၍ଣ
ፔ༔ΥྫΆุ(Υྫ))
(“Tianjin Kangsheng ”)
(9)
1,475,764 9.91% Healthblooming
Limited (9)
Ordinary Shares 99,104 9.91%
Tianjin Chengye Information
Consulting Partnership
(Limited Partnership) (ݵ
ፔ༔ΥྫΆุ(ࠢ
Υྫ)) (“ Tianjin
Chengye ”)
(10)
600,515 4.03% Integriness Limited (10) Ordinary Shares 40,327 4.03%
Anji Shundian Equity
Investment Partnership
(Limited Partnership) ( τΛ
ᛆҳ༟ΥྫΆุ(ࠢ
Υྫ)) (“ Anji
Shundian ”)
(11)
166,041 1.12% Anji Shundian
Limited (11)
Ordinary Shares 11,150 1.12%
Ms. Li Qing (12) 111,718 0.75% Ambertech Limited (12) Ordinary Shares 7,502 0.75%
Ms. Wang Jie (13) 54,664 0.37% Jenny Wang Limited (13) Ordinary Shares 3,671 0.37%
Mr. Huang Guangwei 111,718 0.75% Mr. Huang Guangwei Ordinary Shares 7,502 0.75%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 235 ---
Shareholding structure of BrainAurora Zhejiang
Immediately before the Reorganization
Shareholding structure of Our Company
Immediately after the Reorganization
Name of the
Pre-Reorganization
Shareholder
Amount of
the Registered
Capital
Ownership
Percentage
Name of the
Shareholder (being a
Pre-Reorganization
Shareholder or its
affiliate, whichever
applicable) Class of Shares
Number
of Shares
Ownership
Percentage
(RMB)
Shanghai Pegasus Equity
Investment Center (Limited
Partnership) (ٰࣚ
ᛆҳ༟ʕː(Υྫ))
(“Shanghai Pegasus ”)
(14)
256,260 1.72% Beijing Pegasus Travel
Star Enterprise
Management Center
(Limited Partnership)
(Άุ
၍ଣʕː(Υྫ)
(“Beijing Pegasus ”)
(14)
Ordinary Shares 17,209 1.72%
Shenzhen Fengrui Dingxing
Equity Investment Fund
Partnership (Limited
Partnership) ( ଉέ㋘๿ཻጳ
ΥྫΆุ(ࠢ
Υྫ)) (“ Shenzhen
Fengrui ”)
210,623 1.41% Shenzhen Fengrui Ordinary Shares 14,144 1.41%
IMMENSE V ANTAGE
LIMITED
(15)
1,889,000.6 12.69% Northern Light Strategic
Fund IV L.P .
(“NLSF ”)
(15)
Series A-1
Preferred
Shares
7,191 0.72%
Series A-2
Preferred
Shares
2,323 0.23%
Northern Light V enture
Fund IV L.P .
(“NLVF”)
(15)
Series A-1
Preferred
Shares
87,469 8.75%
Series A-2
Preferred
Shares
28,260 2.83%
Northern Light Partners
Fund IV L.P .
(“NLPF ”)
(15)
Series A-1
Preferred
Shares
1,218 0.12%
Series A-2
Preferred
Shares
393 0.04%
Total 14,891,097 100% Total 1,000,000 100%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 236 ---
Notes:
1. ZTan Limited is a BVI company which is wholly-owned by Mr. Tan.
2. Wispirits Limited is a BVI company which is wholly-owned by Dr. Wang.
3. Zhipan LP is a limited partnership established in the PRC, of which (i) Tianjin Liuhui Biotechnology Co., Ltd
(ʮ̡) (formerly known as Shanghai Liuhui Biotechnology Co., Ltd. (߅ي
ʮ̡)( “ Liuhui Biotech ”)), a wholly-owned company of Dr. Wang, is the general partner; and (ii) Dr.
Wang, Mr. Jin Y edong (؇and Mr. Guan Song ( ၍෽) are the limited partners thereof. Each of Mr. Jin
Y edong and Mr. Guan Song is an Independent Third Party.
Wiseforward Limited is a BVI company held by Dr. Wang, Mr. Jin Y edong and Mr. Guan Song in the same
proportion of beneficial interests as those they respectively held in Zhipan LP . Dr. Wang controls all voting
rights in Wiseforward Limited through (a) direct shareholding in Wiseforward Limited, and (b) proxy of the
voting rights of all remaining shares of Wiseforward Limited granted by the remaining shareholders thereof
to Dr. Wang.
4. Shuhui LP is a limited partnership established in the PRC, of which (i) Liuhui Biotech, a wholly-owned
company of Dr. Wang, is the general partner; and (ii) Dr. Wang, Dr. Xiang, Mr. Lin Xiang (ജ), Mr. Wang
Qingquan and Mr. Wang Sen ( ˮಌ) are the limited partners thereof. Mr. Lin Xiang and Mr. Wang Sen, each
an Independent Third Party, invested in Shuhui LP in December 2020.
Neurobright Limited is a BVI company held by Dr. Wang, Dr. Xiang, Mr. Lin Xiang, Mr. Wang Qingquan and
Mr. Wang Sen in the same proportion of beneficial interests as those they respectively held in Shuhui LP . Dr.
Wang controls all voting rights in Neurobright Limited through (a) direct shareholding in Neurobright Limited,
and (b) proxy of the voting rights of all remaining shares of Neurobright Limited granted by the remaining
shareholders thereof to Dr. Wang.
5. Prior to the Reorganization, Mr. Tan, Dr. Wang, Shuhui LP and Zhipan LP were acting in concert at the board
and general meeting of BrainAurora Zhejiang pursuant to the Onshore AIC Agreement, details of which are
set out in “Acting in Concert Arrangements — Onshore AIC Agreement” below.
6. Since the commencement of the Reorganization, Mr. Tan, Dr. Wang, ZTan Limited and Wispirits Limited have
been acting in concert at the board and general meeting of our Company pursuant to the Offshore AIC
Agreement are set out in “Acting in Concert Arrangements — Offshore AIC Agreement” below.
7. Crusky Limited is wholly owned by one of our non-executive Directors, namely Ms. Li Mingqiu, the sole
shareholder of Tianjin Tianjian.
8. CFCH is a BVI company with limited liability, which indirectly wholly owns Hainan Synthesis.
9. Mr. Zhao Y ujie ( Ⴛρ௫), Mr. Zhang Ben ( ੵֆ), Mr. Fu Rong ( ௩࿲), Ms. Zhang Xueting ( ੵ௛ణ), Ms. Xing
Dan ( Ԝʗ), Ms. He Dingjuan (ࢇ֛Mr. Guo Xiaohua ( ெወശ), Ms. Sun Fan (ɭ) and Mr. Chen
Shuwang (׶ࣣbeing the limited partners of Tianjin Kangsheng, an institutional investor established in the
PRC and an Independent Third Party (including its general and limited partners), which became acquainted
with and decided to make onshore investments in BrainAurora Zhejiang through the introduction by Mr. Tan
and other investors, incorporated Healthblooming Limited in the BVI, to reflect their respective beneficial
interests in Tianjin Kangsheng. Mr. Zhao Y ujie, being the largest limited partner of Tianjin Kangsheng, holds
39.96% of the registered capital therein, and no other limited partner holds 20% or more of the registered
capital therein. Mr. Jin Y edong (؇holding less than 10% of the registered capital therein, is the general
partner of Tianjin Kangsheng. Pursuant to the V oting Proxy Agreement dated August 6, 2023, Mr. Tan is
entitled to exercise, in his sole discretion, all rights as the shareholders of the Company on behalf of
Healthblooming Limited. See “Relationship with Our Controlling Shareholders — Our Controlling
Shareholders — V oting Proxy Agreement” for details of the V oting Proxy Agreement.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 237 ---
10. Integriness Limited is an affiliate of Tianjin Chengye, an institutional investor established in the PRC and an
Independent Third Party (including its general and limited partners), which became acquainted with and
decided to make onshore investments in BrainAurora Zhejiang through the introduction by Mr. Tan and other
investors therein. There are 17 limited partners of Tianjin Chengye with two of them, namely Mr. Shu Fang
(׳and Mr. Song Lei ( ҂ᓍ), being the largest limited partners thereof, each holding 18.43% of the
registered capital therein and no other limited partners thereof holds more than 10% of the registered capital
therein. Ms. Su Xiaohang ( ᘽወঘ), holding less than 10% of the registered capital therein, is the general
partner of Tianjin Chengye. Historically, Integriness Limited entered into (i) a voting proxy agreement and (ii)
a deed of undertaking with Mr. Tan pursuant to which (a) Mr. Tan is entitled to exercise, in his sole discretion,
all rights as the Shareholder of our Company on behalf of Integriness Limited, in relation to all Shares held
by Integriness Limited, and (b) Integriness Limited will not dispose of any Share subject to the said deed of
undertaking since the date thereof without first acquiring written consent of Mr. Tan. Such voting proxy
agreement and the deed of undertaking were terminated on December 23, 2024 at the request of Integriness
Limited.
11. Anji Shundian Limited is an affiliate of Anji Shundian.
12. Ambertech Limited is wholly owned by Ms. Li Qing.
13. Jenny Wang Limited is wholly owned by Ms. Wang Jie.
14. Beijing Pegasus is the affiliate of Shanghai Pegasus, details of which are set out in “Pre-IPO Investments —
Information about Our Pre-IPO Investors” below.
15. NLSF, NLVF and NLPF (together, the “ NLVC Shareholders ”), each a limited partnership established in the
Cayman Islands, own as to approximately 7.50%, 91.23% and 1.27% equity interests in IMMENSE V ANTAGE
LIMITED respectively. See “Pre-IPO Investments — Information about Our Pre-IPO Investors” below for
details of the NLVC Shareholders.
e. Increase of BrainAurora Zhejiang’s Registered Capital Subscribed by and Transfer
of BrainAurora Zhejiang to the WFOE
On June 27, 2023, WFOE subscribed for RMB1,654,566 of the increased registered
capital of BrainAurora Zhejiang, representing 10% of the enlarged registered capital of
BrainAurora Zhejiang, at a consideration determined based on the net asset of the Group as of
April 30, 2023.
On June 30, 2023, WFOE acquired the remaining 90% of the registered capital of
BrainAurora Zhejiang from the then shareholders of the BrainAurora Zhejiang, at a
consideration determined based on the net asset of the Group as of April 30, 2023.
Upon completion of such subscription and transfer of registered capital, BrainAurora
Zhejiang became wholly-owned by WFOE, and thus an indirectly wholly-owned subsidiary of
our Company.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 238 ---
The following chart sets forth our Group’s corporate and shareholding structure
immediately following the completion of the Reorganization:
Our Company
(Cayman Islands)
BrainAurora
Zhejiang
(PRC)
Beijing Zhijingling
(PRC)
Changsha Zhijingling
(PRC)
BrainAurora
Shaanxi(2)
(PRC)
BrainAurora
Liaoning(1)
(PRC)
BrainArea
Technology(4)
(PRC)
BrainAurora
Nanjing
(PRC)
Hongze
Technology
(PRC)
100% 100%
92% 100% 100%70% 80% 80%
Wanxiang Aurora(3)
(PRC)
BrainAu
Medical
Technology
(Delaware)
Co., LLC
(United States)
100%
Beijing Yihui(6)
(PRC)
97.80%
HK Subsidiary
(Hong Kong)
WFOE
(PRC)
BVI Subsidiary
(BVI)
Sichuan Huiyu Aurora Medical
Technology Co., Ltd. (ᩆ
࢘ެݶ)
“(Sichuan Huiyu”)(5)
(PRC)
80%
Notes:
1-4. Please refer to the notes to the table under “Reorganization”.
5. Sichuan Huiyu is a limited liability company established in the PRC on May 22, 2023. As of the date
of this Prospectus, it is owned as to (i) 80% by Beijing Zhijingling, an indirectly wholly-owned
subsidiary of the Company, and (ii) 20% by Chengdu Kerui Dite Enterprise Management Co., Ltd. ( ϓ
ʮ̡), a company owned as to 50% and 50% by Cao Jiaxuan (܁࢕and
Wang Xiumin ( ˮӸઽ) respectively. To the best knowledge of our Directors, each of Chengdu Kerui
Dite Enterprise Management Co., Ltd., Cao Jiaxuan and Wang Xiumin is an Independent Third Party,
taking into that Sichuan Huiyu is an insignificant subsidiary for purpose of Rule 14A.09 of the Listing
Rules.
6. In July 2023, each of Mr. Tan, Tianjin Tianjian, Dr. Wang, Tianjin Kangsheng, Hainan Synthesis, Zhipan
LP , Tianjin Chengye, Shuhui LP , Anji Shundian, Ms. Li Qing and Ms. Wang Jie subscribed for
RMB44,680, RMB18,715, RMB16,522, RMB15,014, RMB10,627, RMB6,742, RMB6,110, RMB4,606,
RMB1,689, RMB1,137 and RMB556 of the increase registered capital of Beijing Yihui respectively,
for a cash considerations of RMB26,282,198.12, RMB11,008,575.74, RMB9,718,581.37,
RMB8,832,027.73, RMB6,251,058.70, RMB3,966,053.14, RMB3,593,982.22, RMB2,709,121.84,
RMB993,674.41, RMB668,569.10 and RMB327,155.06 respectively, which were fully paid on
August 7, 2023. As of the date of this Prospectus, Beijing Yihui is owned as to approximately (i) 97.80%
by the Company, (ii) 0.84% by Mr. Tan, the chairman of the Board, an executive Director and chief
research officer, (iii) 0.35% by Tianjin Tianjian, (iv) 0.31% by Dr. Wang, our founder, an executive
Director, CEO and chief research officer, (v) 0.28% by Tianjin Kangsheng, (vi) 0.13% by Zhipan LP ,
a company controlled by Dr. Wang, (vii) 0.12% by Tianjin Chengye, (viii) 0.09% by Shuhui LP , a
company controlled by Dr. Wang, (ix) 0.03% by Anji Shundian, (x) 0.02% by Ms. Li Qing, (xi) 0.02%
by Hainan Synthesis and (xii) 0.01% by Ms. Wang Jie. Save for Mr. Tan, Dr. Wang, Zhipan LP and
Shuhui LP , other minority shareholders of Beijing Yihui are Independent Third Parties.
As advised by our PRC Legal Advisor, all required regulatory approvals or filings in
relation to the Reorganization in the PRC described above have been obtained in accordance
with the PRC laws and regulations. Our PRC Legal Advisor further advised that the equity
transfers and capital increases in the PRC as described above have been properly and legally
completed in accordance with PRC Laws.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 239 ---
PRE-IPO INVESTMENTS
Overview
Our Group has conducted multiple rounds of Pre-IPO Investments, which are summarized below:
Relevant Pre-IPO Investors
Method of acquisition of
registered capital of
BrainAurora Zhejiang
or Shares
(whichever applicable)
Registered capital of
BrainAurora Zhejiang
or Shares acquired
or subscribed
(whichever applicable)
Date of
the subscription/
transfer agreement
Date on which
the consideration
was fully and
irrevocably settled
Date of completion
of PRC filing
formalities
(where applicable)
Amount of
consideration paid
Post-money
valuation after each
round of financing or
transfer of Shares
(whichever applicable)
(approximation)
(1)
Cost per unit
of registered
capital paid or
cost per Share
paid (whichever
applicable)
(approximation) (2)
Discount to the
Offer Price (3)
Series Angel (4)
Shanghai Pegasus Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB163,605 March 2, 2015 March 18, 2015 June 24, 2015 RMB2,564,000 RMB36,628,504
(6) RMB15.67 97.50%
Zhongwei Growth (Shanghai)
V enture Capital Partnership
(Limited Partnership) (ڗ
(ɪऎ)௴ุҳ༟ΥྫΆุ(Υ
ྫ)) (“ Zhongwei Growth ”)
Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB163,605 March 2, 2015 April 1, 2015 June 24, 2015 RMB2,564,000 RMB15.67 97.50%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 240 ---
Relevant Pre-IPO Investors
Method of acquisition of
registered capital of
BrainAurora Zhejiang
or Shares
(whichever applicable)
Registered capital of
BrainAurora Zhejiang
or Shares acquired
or subscribed
(whichever applicable)
Date of
the subscription/
transfer agreement
Date on which
the consideration
was fully and
irrevocably settled
Date of completion
of PRC filing
formalities
(where applicable)
Amount of
consideration paid
Post-money
valuation after each
round of financing or
transfer of Shares
(whichever applicable)
(approximation)
(1)
Cost per unit
of registered
capital paid or
cost per Share
paid (whichever
applicable)
(approximation) (2)
Discount to the
Offer Price (3)
Series A (5)
IMMENSE V ANTAGE LIMITED Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB1,427,733 June 21, 2016 August 18, 2016 August 9, 2016 US$3,000,000 RMB128,785,914
(6)(8) RMB13.96 (5) 93.02%
Explorer Three Limited Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB475,911 June 21, 2016 August 24, 2016 August 9, 2016 US$1,000,000 RMB13.96
(5) 93.02%
Series B (7)
Mr. Tan Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB1,537,559 December 18, 2020 July 25, 2022
(20) June 29, 2021 RMB50,000,000 RMB399,999,922 (8)(10) RMB32.52 83.73%
Tianjin No. 7 No. 8 Artificial
Intelligence Medical Technology
Co. Ltd. (ɖ໮ɞ໮ɛʈ౽ঐ
ʮ̡)
(“Tianjin No. 7 No. 8 ”)
Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB1,537,559 December 18, 2020 February 1, 2021 June 29, 2021 RMB50,000,000 RMB32.52 83.73%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 241 ---
Relevant Pre-IPO Investors
Method of acquisition of
registered capital of
BrainAurora Zhejiang
or Shares
(whichever applicable)
Registered capital of
BrainAurora Zhejiang
or Shares acquired
or subscribed
(whichever applicable)
Date of
the subscription/
transfer agreement
Date on which
the consideration
was fully and
irrevocably settled
Date of completion
of PRC filing
formalities
(where applicable)
Amount of
consideration paid
Post-money
valuation after each
round of financing or
transfer of Shares
(whichever applicable)
(approximation)
(1)
Cost per unit
of registered
capital paid or
cost per Share
paid (whichever
applicable)
(approximation) (2)
Discount to the
Offer Price (3)
IMMENSE V ANTAGE LIMITED Acquisition of registered
capital of BrainAurora
Zhejiang from Shuhui
LP
RMB461,268 December 18, 2020 August 25, 2022
(21) June 29, 2021 RMB10,500,000 RMB22.76 88.61%
Mr. Tan Acquisition of registered
capital of BrainAurora
Zhejiang from Explorer
Three Limited
RMB475,911 December 18, 2020 September 6, 2022
(21) June 29, 2021 RMB11,607,075 RMB24.39 87.80%
Mr. Tan Acquisition of registered
capital of BrainAurora
Zhejiang from Shanghai
Pegasus
RMB256,260 December 18, 2020 April 5, 2021 June 29, 2021 RMB6,250,050 RMB24.39 87.80%
Mr. Tan Acquisition of registered
capital of BrainAurora
Zhejiang from Shuhui
LP
RMB738,028 September 8, 2021 March 11, 2022 December 30, 2021 RMB18,000,000 RMB24.39 87.80%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 242 ---
Relevant Pre-IPO Investors
Method of acquisition of
registered capital of
BrainAurora Zhejiang
or Shares
(whichever applicable)
Registered capital of
BrainAurora Zhejiang
or Shares acquired
or subscribed
(whichever applicable)
Date of
the subscription/
transfer agreement
Date on which
the consideration
was fully and
irrevocably settled
Date of completion
of PRC filing
formalities
(where applicable)
Amount of
consideration paid
Post-money
valuation after each
round of financing or
transfer of Shares
(whichever applicable)
(approximation)
(1)
Cost per unit
of registered
capital paid or
cost per Share
paid (whichever
applicable)
(approximation) (2)
Discount to the
Offer Price (3)
Hainan Synthesis Acquisition of registered
capital of BrainAurora
Zhejiang from Shuhui
LP
RMB904,084 September 8, 2021 February 25, 2022 December 30, 2021 RMB21,045,000 RMB23.28 88.35%
Series B+
(9)
Shenzhen Fengrui Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB210,623 September 8, 2021 December 17, 2021 January 26, 2022 RMB7,705,421 RMB513,739,243
(10)(22) RMB36.59 81.69%
Tianjin Kangsheng Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB1,475,764 September 8, 2021 December 24, 2021 January 26, 2022 RMB53,989,317 RMB36.59 81.69%
Ms. Wang Jie Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB54,664 September 8, 2021 December 13, 2021 January 26, 2022 RMB2,000,000 RMB36.59 81.69%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 243 ---
Relevant Pre-IPO Investors
Method of acquisition of
registered capital of
BrainAurora Zhejiang
or Shares
(whichever applicable)
Registered capital of
BrainAurora Zhejiang
or Shares acquired
or subscribed
(whichever applicable)
Date of
the subscription/
transfer agreement
Date on which
the consideration
was fully and
irrevocably settled
Date of completion
of PRC filing
formalities
(where applicable)
Amount of
consideration paid
Post-money
valuation after each
round of financing or
transfer of Shares
(whichever applicable)
(approximation)
(1)
Cost per unit
of registered
capital paid or
cost per Share
paid (whichever
applicable)
(approximation) (2)
Discount to the
Offer Price (3)
Tianjin Tianjian Acquisition of registered
capital of BrainAurora
Zhejiang from Tianjin
No. 7 No. 8
RMB1,537,559 September 8, 2021 December 13, 2021 December 30, 2021 RMB60,000,000 RMB39.02 80.48%
Series B++
(11)
Hainan Synthesis Acquisition of registered
capital of BrainAurora
Zhejiang from
Zhongwei Growth
RMB140,415 January 28, 2022
(11) March 9, 2022 April 15, 2022 RMB5,287,600 RMB528,764,225 (22)(14) RMB37.66 81.16%
Tianjin Tianjian Acquisition of registered
capital of BrainAurora
Zhejiang from
Zhongwei Growth
RMB372,105 January 28, 2022
(11) March 9, 2022 April 15, 2022 RMB14,012,400 RMB37.66 81.16%
Mr. Huang Guangwei Acquisition of registered
capital of BrainAurora
Zhejiang from Tianjin
Tianjian
RMB70,208 January 28, 2022
(11) December 29, 2022 (23) April 15, 2022 RMB2,643,836 RMB37.66 81.16%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
– 234 –


--- page 244 ---
Relevant Pre-IPO Investors
Method of acquisition of
registered capital of
BrainAurora Zhejiang
or Shares
(whichever applicable)
Registered capital of
BrainAurora Zhejiang
or Shares acquired
or subscribed
(whichever applicable)
Date of
the subscription/
transfer agreement
Date on which
the consideration
was fully and
irrevocably settled
Date of completion
of PRC filing
formalities
(where applicable)
Amount of
consideration paid
Post-money
valuation after each
round of financing or
transfer of Shares
(whichever applicable)
(approximation)
(1)
Cost per unit
of registered
capital paid or
cost per Share
paid (whichever
applicable)
(approximation) (2)
Discount to the
Offer Price (3)
Ms. Li Qing Acquisition of registered
capital of BrainAurora
Zhejiang from Zhipan
LP
RMB70,208 January 28, 2022
(11) May 6, 2022 April 15, 2022 RMB2,643,836 RMB37.66 81.16%
Series C (12)
Anji Shundian Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB332,082 March 18, 2022 June 7, 2022 May 19, 2022 RMB60,000,000
(13) RMB2,675,013,671 (14)(16) RMB180.68 9.61%
Tianjin Chengye Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB348,686 March 18, 2022 March 29, 2023 May 19, 2022 RMB63,000,000 RMB180.68 9.61%
Mr. Huang Guangwei Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB41,510 March 18, 2022 April 3, 2023 May 19, 2022 RMB7,500,000 RMB180.68 9.61%
Ms. Li Qing Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB41,510 March 18, 2022 April 27, 2022 May 19, 2022 RMB7,500,000 RMB180.68 9.61%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
– 235 –


--- page 245 ---
Relevant Pre-IPO Investors
Method of acquisition of
registered capital of
BrainAurora Zhejiang
or Shares
(whichever applicable)
Registered capital of
BrainAurora Zhejiang
or Shares acquired
or subscribed
(whichever applicable)
Date of
the subscription/
transfer agreement
Date on which
the consideration
was fully and
irrevocably settled
Date of completion
of PRC filing
formalities
(where applicable)
Amount of
consideration paid
Post-money
valuation after each
round of financing or
transfer of Shares
(whichever applicable)
(approximation)
(1)
Cost per unit
of registered
capital paid or
cost per Share
paid (whichever
applicable)
(approximation) (2)
Discount to the
Offer Price (3)
Series C+ (15)
Tianjin Chengye Subscription of increased
registered capital of
BrainAurora Zhejiang
RMB85,788 February 15, 2023 March 31, 2023 April 11, 2023 RMB15,500,000 RMB2,690,513,792
(16) RMB180.68 9.61%
Tianjin Chengye Acquisition of registered
capital from Anji
Shundian of
BrainAurora Zhejiang
RMB166,041 February 15, 2023 March 31, 2023 April 11, 2023 RMB30,000,000 RMB180.68 9.61%
Transfer of Shares from ZTan
Limited to CICC Healthcare
(17)
CICC Healthcare Investment Fund,
L.P . (“CICC Healthcare ”)
Acquisition of Shares
from ZTan Limited
19,444
ordinary Shares (19)
August 4, 2023 August 7, 2023 Not applicable US$7,000,000 US$390,668,690 (17)(18) US$360.01 13.06%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Notes:
1. The post-money valuation for each round of financing (except for the Transfer of Shares from ZTan Limited
to CICC Healthcare which took place after the Reorganization) represents the total number of registered capital
of BrainAurora Zhejiang immediately upon completion of such round of financing multiplies the cost per unit
of the increased registered capital of BrainAurora Zhejiang paid during such round of financing.
2. The cost per unit of registered capital paid is calculated by dividing the total investment amount by the unit
of registered capital of BrainAurora Zhejiang subscribed (except for the Transfer of Shares from ZTan Limited
to CICC Healthcare which took place after the Reorganization).
3. The discount to the Offer Price is calculated based on (i) the assumption that the Offer Price is HK$3.22 per
Share, assuming the conversion of each of the Series A Preferred Shares into ordinary Shares on a one-to-one
basis immediately prior to the completion of the Global Offering, and (ii) the exchange rate as set out in the
section headed “Information about this Prospectus and the Global Offering.”
4. On March 2, 2015, BrainAurora Zhejiang entered into an investment agreement with Shanghai Pegasus,
Zhongwei Growth and the then shareholders of BrainAurora Zhejiang, pursuant to which each of Shanghai
Pegasus and Zhongwei Growth each agreed to subscribe for RMB163,605 increased registered capital of
BrainAurora Zhejiang at a cash consideration of RMB2,564,000.
5. On June 21, 2016, BrainAurora Zhejiang entered into a capital increase agreement with IMMENSE V ANTAGE
LIMITED, Explorer Three Limited, among others, and the then shareholders of BrainAurora Zhejiang,
pursuant to which IMMENSE V ANTAGE LIMITED and Explorer Three Limited agreed to subscribe for
RMB1,427,733 and RMB475,911 increased registered capital of BrainAurora Zhejiang respectively, at cash
considerations of US$3 million and US$1 million respectively. The cost per share paid of series A financing
is calculated (i) based on the exchange rate on the date on which the series A financing was fully settled, and
(ii) taking consideration of our capital reserve conversion in 2016, through which the amount of registered
capital each of the then shareholders of BrainAurora Zhejiang held enlarged proportionally through a
conversion of capital reserve of BrainAurora Zhejiang, resulting in a decrease of cost per unit of registered
capital of BrainAurora Zhejiang.
6. The valuation of the Company increased significantly during the period between our Series Angel financing
and Series A financing, primarily based on the significant progress of preclinical trials of the System, our Core
Product, and market interest in the digital health industry.
7. On December 18, 2020, BrainAurora Zhejiang entered into a capital increase agreement with Mr. Tan, Tianjin
No. 7 No. 8 and the then shareholders of BrainAurora Zhejiang, pursuant to which Mr. Tan and Tianjin No.
7 No. 8 each agreed to subscribe for RMB1,537,559 increased registered capital of BrainAurora Zhejiang, at
a cash consideration of RMB50 million.
On the same day, IMMENSE V ANTAGE LIMITED entered into a capital transfer agreement with Shuhui LP ,
pursuant to which IMMENSE V ANTAGE LIMITED agreed to acquire RMB461,268 registered capital of
BrainAurora Zhejiang from Shuhui LP at a cash consideration of RMB10.5 million.
On the same day, Mr. Tan entered into capital transfer agreements with Explorer Three Limited and Shanghai
Pegasus respectively, pursuant to which, Mr. Tan agreed to acquire RMB475,911 and RMB256,260 registered
capital of BrainAurora Zhejiang from Explorer Three Limited and Shanghai Pegasus respectively, at cash
considerations of RMB11,607,075 and RMB6,250,050 respectively.
8. The valuation of the Company increased significantly during the period between our Series A financing and
Series B financing, primarily because the System received Class II medical device registration certificate from
the Hunan MPA, and in May 2019, we published the clinical trial data of the trial on the effectiveness of the
System on a leading peer-reviewed journal on cognitive impairment clinical research, the A&D Journal, which
sets forth a comprehensive analysis on its safety and effectiveness.
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9. On September 8, 2021, BrainAurora Zhejiang entered into a capital increase agreement with Shenzhen Fengrui,
Tianjin Kangsheng, Ms. Wang Jie and the then shareholders of BrainAurora Zhejiang, pursuant to which
Shenzhen Fengrui, Tianjin Kangsheng and Ms. Wang Jie agreed to subscribe for RMB210,623, RMB1,475,764
and RMB54,664 increased registered capital of BrainAurora Zhejiang, respectively, at cash considerations of
RMB7,705,421, RMB53,989,317 and RMB2,000,000, respectively.
On the same day, Shuhui LP entered into capital transfer agreements with Mr. Tan and Hainan Synthesis
respectively, pursuant to which Mr. Tan and Hainan Synthesis agreed to acquire RMB738,028 and
RMB904,084 registered capital of BrainAurora Zhejiang from Shuhui LP respectively, at cash considerations
of RMB18 million and RMB21.045 million respectively.
On the same day, Tianjin Tianjian entered into a capital transfer agreement with Tianjin No. 7 No. 8, pursuant
to which Tianjin Tianjian agreed to acquire RMB1,537,559 of BrainAurora Zhejiang’s registered capital from
Tianjin No. 7 No. 8, at a cash consideration of RMB60 million.
10. The valuation of the Company increased significantly during the period between our Series B financing and
Series B+ financing, primarily because of the commencement of commercialization of the System in several
leading hospitals in China, including Anzhen Hospital.
11. On January 28, 2022, Zhongwei Growth entered into capital transfer agreements with Hainan Synthesis and
Tianjin Tianjian respectively, pursuant to which Hainan Synthesis and Tianjin Tianjian agreed to acquire
RMB140,415 and RMB372,105 registered capital of BrainAurora Zhejiang from Zhongwei Growth
respectively, at cash considerations of RMB5,287,600 and RMB14,012,400 respectively.
On the same day, Tianjin Tianjian and Zhipan LP entered into capital transfer agreements with Mr. Huang
Guangwei and Ms. Li Qing respectively, pursuant to which Mr. Huang Guangwei and Ms. Li Qing agreed to
acquire RMB70,208 and RMB70,208 registered capital of BrainAurora Zhejiang from Tianjin Tianjian and
Zhipan LP respectively, at cash considerations of RMB2,643,836 and RMB2,643,836 respectively.
The major commercial terms (including the cost per unit of registered capital) of Series B++ financing were
agreed between the relevant parties to the above transactions in September 2021, which was around the dates
of the investment agreements with the Pre-IPO Investors under the Series B+ financing. Such major
commercial terms were formally documented by the agreements with Hainan Synthesis, Tianjin Tianjian, Mr.
Huang Guangwei and Ms. Li Qing in January 2022 due to administrative filing formalities.
12. On March 18, 2022, BrainAurora Zhejiang entered into a capital increase agreement with Anji Shundian,
Tianjin Chengye, Mr. Huang Guangwei, Ms. Li Qing and the then shareholders of BrainAurora Zhejiang,
pursuant to which Anji Shundian, Tianjin Chengye, Mr. Huang Guangwei and Ms. Li Qing agreed to subscribe
for RMB332,082, RMB348,686, RMB41,510, and RMB41,510 increased registered capital of BrainAurora
Zhejiang respectively, at cash considerations of RMB60 million, RMB63 million, RMB7.5 million and
RMB7.5 million respectively.
13. Among the total consideration of RMB60,000,000, RMB30,000,000 was paid by Anji Shundian on June 7,
2022, and the remaining RMB30,000,000 was paid by Tianjin Chengye after RMB166,041 registered capital
of BrainAurora Zhejiang was transferred from Anji Shundian to Tianjin Chengye. See note 15 below for details
of such transfer of registered capital of BrainAurora Zhejiang.
14. The valuation of the Company increased significantly during the period between our Series B++ financing and
Series C financing, primarily because, at the material time, we have (i) laid down the foundation of our
business model by having cooperated with more than 10 medical institutions on technology services relating
to cognitive digital therapies to market our products, (ii) attained significant increase of the Group’s revenue
despite the disruptions of Covid-19, and (iii) by serving as the organizer of the NHC project, obtained the
opportunity to reach more hospitals by helping them establish cognitive centers, primarily for the purpose of
promoting awareness of DTx as a viable solution to the assessment and intervention of cognitive impairments
among China’s medical community and expanding the potential customer base for our Company’s cognitive
impairment DTx products.
15. On February 15, 2023, BrainAurora Zhejiang entered into a capital increase agreement with the then
shareholders of BrainAurora Zhejiang, pursuant to which Tianjin Chengye agreed to subscribe for RMB85,788
increased registered capital of BrainAurora Zhejiang, at a cash consideration of RMB15,500,000.
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On the same day, Tianjin Chengye entered into a capital transfer agreement with Anji Shundian, pursuant to
which Tianjin Chengye agreed to acquire RMB166,041 of BrainAurora Zhejiang’s unpaid registered capital
from Anji Shundian at nil consideration, and Tianjin Chengye agreed to pay RMB30,000,000 to BrainAurora
Zhejiang for such unpaid registered capital.
16. The difference of the post money valuation between Series C financing and Series C+ financing denotes the
sum of the consideration paid during the Series C+ financing.
17. On August 4, 2023, CICC Healthcare entered into a share purchase agreement with Mr. Tan and ZTan Limited,
pursuant to which CICC Healthcare agreed to acquire 19,444 ordinary Shares from ZTan Limited, at a cash
consideration of US$7,000,000. The consideration of the aforementioned transfer of existing Shares was
determined based on arm’ length negotiations between the parties thereof with references to the strategical and
reputational advantages that CICC Healthcare will bring about to our Group’s Shareholder profile. Given CICC
Healthcare’s unique position and renowned reputation (as the healthcare investment division of China
International Capital Corporation Limited (ʮ̡)) in the PRC capital markets, it is
expected that its inclusion in our Shareholder profile would help facilitate our capital and business expansion,
through improving our marketing and branding awareness, and helping to secure confidence of investors in our
Company. For details of CICC Healthcare as a Pre-IPO Investor, see “History, Reorganization and Corporate
Structure — Information about our Pre-IPO Investors”.
18. The difference of the valuation of our Company for the transfer of Shares from ZTan Limited to CICC
Healthcare and the Global Offering was primarily due to the following business breakthroughs and favorable
expectations to be materialized before or shortly after the Listing:
(i) an expected increase in indication coverage by the System: we are planning to submit application to
expand the scope of our 2023 Renewed Certificate to include amnestic mild cognitive impairment in the
second quarter of 2025;
(ii) attaining significant progress of research and development of other products, including but not limited
to:
 COVID-19 Induced Cognitive Impairment Assessment and Recovery Training Software: we have
completed the clinical trial in October 2023 and submitted Class II medical device registration for
this product candidate in the second quarter of 2024; and
 Quantitative Cognitive Assessment Software for Depression: we have initiated a clinical trial to
evaluate the safety and efficacy of Quantitative Cognitive Assessment Software for Depression
on the assessment of cognitive impairment induced by depression in cooperation with Anding
Hospital, and expect to complete the trial by the first quarter of 2025; and
(iii) expected breakthroughs in commercializing our approved products including but not limited to:
 products in relation to child development deficiencies: in September 2023, we have entered into
a business partnership with a children’s hospital in China in relation to establishment of cognitive
center, which has commenced operation in October 2023; and
(iv) communication and expected cooperations with hospitals, taking into account the rapid growth in the
number of the cooperated hospitals. As of the Latest Practicable Date, we had helped more than 120
hospitals establish cognitive centers in China, including several leading hospitals with “National
Medical Center” (ᔼኪʕː) certification for various medical specialties by the NHC.
19. The Transfer of Shares took place after the Reorganization. The subject of the Transfer of Shares was 19,444
ordinary shares of the Company, being a Cayman company to which the concept of “registered capital” is not
applicable.
20. Pursuant to a statement of capital contribution made by Mr. Tan and BrainAurora Zhejiang, it was mutually
agreed between the parties that the considerations for the relevant investment shall be settled by Mr. Tan no
later than the completion of the Series C financing.
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21. Amid COVID-19 interruptions, BrainAurora Zhejiang initiated the relocation of its registered office from
Nanjing city, PRC to Shaoxing city, PRC, in early 2021, and completed the relevant regulatory filing
formalities in September 2021. Following the completion of the filing of the aforementioned formalities, the
ensuing filing of the foreign exchange business registration for the settlement of consideration involving a
foreign registered entity as a transaction party was completed in March 2022. The consideration was then
irrevocably settled thereafter upon the banks of both the payor and the payee had completed the relevant
internal approval process.
22. The difference of the post money valuation between Series B+ financing and Series B++ financing denotes the
valuation of BrainAurora Zhejiang at the material time as agreed between Pre-IPO investors of Series B++
financing for transfers of existing registered capital therein.
23. The date of settlement of consideration reflects the additional requirements relating to PRC regulatory filing
formalities involving Mr. Huang as a Hong Kong citizen.
Principal terms of the Pre-IPO Investments and Pre-IPO Investors’ rights
Basis of determining the
consideration paid
The consideration for each round of the Pre-IPO
Investments was determined based on arm’s length
negotiations between our Company and the Pre-IPO
Investors on the one hand (with respect to subscriptions
of increased registered capital), and between the Pre-IPO
Investors on the other hand (with respect to transfer of
registered capital or Shares between Pre-IPO Investors),
after taking into consideration factors including, among
others, the timing of the relevant Pre-IPO Investments,
our valuation when the investment agreement was
entered into and the business operations and financial
performance of our Group.
Lock-up period The Pre-IPO Investors are not subject to lock-up
arrangement under the relevant agreements in relation to
the Pre-IPO Investments. For further information about
lock-up arrangements by the Pre-IPO Investors to the
Underwriters, please refer to the section headed
“Underwriting — Underwriting Arrangements — Hong
Kong Public Offering — Undertakings by existing
Shareholders” in this Prospectus.
Use of proceeds from the
Pre-IPO Investments
We utilized the proceeds for clinical development,
commercialization, R&D, business development and
general operation. As of the Latest Practicable Date,
approximately 94% of the net proceeds from the Pre-IPO
Investments has been utilized.
Strategic benefit from the
Pre-IPO Investments to
our Group
At the time of each of the Pre-IPO Investments, our
Directors were of the view that our Company could
benefit from the Pre-IPO Investors’ investment
knowledge and experience in healthcare sectors and the
Pre-IPO Investments demonstrated the Pre-IPO
Investors’ confidence in the operation and development
of our Group.
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Special Rights of the Pre-IPO Investors
Pursuant to the Shareholders Agreement entered into between, among others, our
Company and the Pre-IPO Investors (the “ Shareholders Agreement ”), and the memorandum
of association and articles of association of our Company currently in effect, special rights are
enjoyed by certain Shareholders, including the following:
(i) NLVC Shareholders, as the holders of Series A Preferred Shares, have, among other
rights, redemption rights, director appointment rights, veto rights on certain
important corporate matters, rights of first refusal, co-sale rights, information and
inspection rights, anti-dilution rights, liquidation rights and etc.; and
(ii) the Controlling Shareholders have, among other rights, director appointment rights
and veto rights on certain important corporate matters.
All special rights granted shall be automatically terminated upon Listing, except for the
redemption rights granted to NLVC Shareholders, which shall be automatically terminated
upon the first submission of the Company’s listing application, provided that such rights shall
be automatically and immediately reinstated and restored upon the earlier of (i) the date when
the Company’s listing application is withdrawn by the Company; (ii) the Listing is not
consummated on a date falling within 16 calendar months after the first submission of the
Company’s listing application to the Stock Exchange; (iii) the rejection, return and/or
termination of the Company’s listing application and/or the filing application by the Stock
Exchange and/or the CSRC (as the case may be); and (iv) the Listing is not consummated on
or before June 30, 2026.
Compliance with Pre-IPO Investment Guidance
The last round of the Pre-IPO Investments was completed on August 7, 2023. On the basis
that (i) the Listing Date, being the first day of trading of the Shares on the Stock Exchange,
will take place no earlier than 120 clear days after completion of the Pre-IPO Investments, and
(ii) all special rights granted to the Pre-IPO Investors will be terminated upon completion of
the Global Offering, the Joint Sponsors confirm that the Pre-IPO Investments are in compliance
with the guidance in Chapter 4.2 of the Guide for New Listing Applicants.
Information about our Pre-IPO Investors
Our Pre-IPO Investors include Sophisticated Investors identified pursuant to Chapter 2.3
of the Guide for New Listing Applicants issued by the Stock Exchange, namely the NLVC
Shareholders. The background information of our Pre-IPO Investors is set out below.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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NLVC Shareholders
Each of NLVC Shareholders is an exempted limited partnership established in the
Cayman Islands, whose general partner is Northern Light Partners IV L.P . (“ NL Partners ”).
NL Partners is an exempted limited partnership established in the Cayman Islands, whose
general partner is Northern Light V enture Capital IV , Ltd., a company controlled by Mr. Deng
Feng, our non-executive Director. NLSF has 4 limited partners, including (i) Greylock XIV
Limited Partnership holding 59.40% of its partnership interests, (ii) New Enterprise Associates
15, L.P . holding 33.00% of its partnership interests, and (iii) other two limited partners, each
holding 3.30% of its partnership interests. NLVF has 26 limited partners, none of which holds
more than 30% of its partnership interests. NLPF has 8 limited partners, including (i) The D
& H Family Trust Dated December 7th, 2001 holding 53.38% of its partnership interests, and
(ii) other 7 limited partners, each holding less than 30% of its partnership interests. Each of
NLVC Shareholders is managed by Northern Light V enture Capital (“ NLVC”), a venture
capital firm with several funds in USD and RMB targeting early stage opportunities in
enterprise, healthcare, and consumer sectors. The assets under management of NLVC was
approximately HK$40.58 billion as at December 31, 2023. We became acquainted with NLVC
in 2016 through the roadshow of our Pre-IPO financing. NLVC has made meaningful
investments in our Company since 2019, and will be interested in approximately 10.02% of the
total issued share capital of our Company through NLVC Shareholders immediately after
completion of the Share Subdivision and the Global Offering (assuming the Over-allotment
Option is not exercised). The companies currently or historically included in NLVC’s
investment portfolio are iRay Technology Company Limited, a biotech company listed on the
Shanghai Stock Exchange (stock code: 688301), Anji Microelectronics Tech (Shanghai) Co.,
Ltd., an advanced technology company listed on the Shanghai Stock Exchange (stock code:
688019), Thunder Software Technology Co., Ltd., an advanced technology company listed on
the Shenzhen Stock Exchange (stock code: 300496), Meituan Dianping, a retail technology
company listed on the Stock Exchange (stock code: 03690), and Zhejiang He Chuan
Technology Corporation Limited (ʮ̡), an advanced technology
company listed on the Shanghai Stock Exchange (stock code: 688320). Therefore, NLVC
Shareholders are considered Sophisticated Investors of the Company.
Crusky Limited
Crusky Limited is a company incorporated in the British Virgin Islands with limited
liability on April 20, 2023, primarily engaging in equity investments. Crusky Limited is wholly
owned, and thus ultimately beneficially owned, by Ms. Li Mingqiu, our non-executive
Director. We became acquainted with Ms. Li Mingqiu in June 2021 through the introduction
of Tianjin No. 7 No. 8, a previous shareholder of BrainAurora Zhejiang which invested in our
Group during Series B financing.
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Healthblooming Limited
Healthblooming Limited, having the identical shareholder base and percentage of
holdings as those of its onshore counterpart prior to the completion of the Reorganization,
namely Tianjin Kangsheng, is a company incorporated in the British Virgin Islands with limited
liability on April 20, 2023, primarily engaging in equity investments. As of the Latest
Practicable Date, the Company is the sole investee of Healthblooming Limited, and Beijing
Yihui is the sole investee of Tianjin Kangsheng. We became acquainted with Tianjin
Kangsheng, being the affiliate of Healthblooming Limited investing in BrainAurora Zhejiang
before the Reorganization, in June 2021 through the introduction of Mr. Tan and other
investors. Healthblooming Limited is owned as to approximately (i) 39.96% by Mr. Zhao Y ujie
(Ⴛρ௫), an Independent Third Party, and (ii) 60.04% by nine individual minority shareholders
collectively, each holding less than 20% equity interests in Healthblooming Limited
respectively who are all Independent Third Parties. Pursuant to the V oting Proxy Agreement
dated August 6, 2023, Mr. Tan is entitled to exercise, in his sole discretion, all rights as the
Shareholders of the Company on behalf of Healthblooming Limited. See “Relationship with
Our Controlling Shareholders — Our Controlling Shareholders — V oting Proxy Agreement”
for details of the V oting Proxy Agreement.
CFCH
CFCH is a company incorporated in British Virgin Islands with limited liability, primarily
engaging in equity investments. We became acquainted with Hainan Synthesis, being the
affiliate of CFCH investing in BrainAurora Zhejiang before the Reorganization, in 2020
through the introduction of Mr. Tan. CFCH is wholly owned by Mr. Lv Y ajun (ࠏTo the
best knowledge of our Directors, each of CFCH and Mr. Lv Y ajun is an Independent Third
Party.
Integriness Limited
Integriness Limited, having the identical shareholder base and percentage of holdings as
those of its onshore counterpart prior to the completion of the Reorganization, namely Tianjin
Chengye, is a company incorporated in the British Virgin Islands with limited liability on April
26, 2023, primarily engaging in equity investments. As of the Latest Practicable Date, the
Company is the sole investee of Integriness Limited, and Beijing Yihui is the sole investee of
Tianjin Chengye. We became acquainted with Tianjin Chengye, being the affiliate of
Integriness Limited investing in BrainAurora Zhejiang before the Reorganization, in February
2022 through the introduction of Mr. Tan and other investors. Integriness Limited has 18
shareholders, including 12 individual shareholders and six corporate shareholders, and none of
them holds more than 20% of its equity interests and all of them (including their respective
ultimate beneficial owner in the case of a corporate shareholder) are Independent Third Parties.
Historically, Integriness Limited entered into (i) a voting proxy agreement and (ii) a deed of
undertaking with Mr. Tan pursuant to which (a) Mr. Tan is entitled to exercise, in his sole
discretion, all rights as the Shareholder of our Company on behalf of Integriness Limited, in
relation to all Shares held by Integriness Limited, and (b) Integriness Limited will not dispose
of any Share subject to the said deed of undertaking since the date thereof without first
acquiring written consent of Mr. Tan. Such voting proxy agreement and the deed of undertaking
were terminated on December 23, 2024 at the request of Integriness Limited.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Beijing Pegasus
Beijing Pegasus is a limited partnership established in the PRC primarily engaging in
equity investments. We became acquainted with Shanghai Pegasus, being the affiliate of
Beijing Pegasus investing in BrainAurora Zhejiang before the Reorganization, in the roadshow
of our Pre-IPO financing in 2015. Beijing Pegasus is owned as to 99% by Shanghai Pegasus
as its limited partner, and 1% by Shanghai East Pegasus Equity Investment Fund Management
Center (Limited Partnership) (“ Shanghai East Pegasus ”) (၍ଣʕ
ː(Υྫ)) as its general partner. Shanghai Pegasus is a limited partnership established in
the PRC, which is owned as to approximately (i) 0.90% by its general partner Shanghai East
Pegasus, and (ii) 99.10% by 10 limited partners, none of which owns more than 30%
partnership interests. Shanghai East Pegasus is a limited partnership established in the PRC,
which is owned as to (i) 1% by its general partner, Shanghai Y uanyang Investment Management
Co., Ltd. (ʮ̡)( “Shanghai Yuanyang ”), and (ii) 33% by each of Y uan
Yu e (֪Zhang Fengying (ߵand Y ang Zhenyu (ρ) respectively. Shanghai
Y uanyang is owned as to 50% by each Y uan Y ue and Y ang Zhenyu respectively. To the best
knowledge of our Directors, each of Beijing Pegasus, Shanghai Pegasus, Shanghai East
Pegasus, Shanghai Y uanyang, Y uan Y ue, Zhang Fengying, and Y ang Zhenyu is an Independent
Third Party.
The shares held by Beijing Pegasus were previously held by Beijing Pegasus Travel Star
Enterprise Management Co., Ltd. (ʮ̡)( “ Beijing Pegasus
Travel Star ”). Due to the internal corporate restructuring of Shanghai Pegasus, the shares held
by Beijing Pegasus Travel Star were transferred to Beijing Pegasus on August 29, 2023. The
ownership structure and ultimate beneficial owners of Beijing Pegasus are identical to those of
Beijing Pegasus Travel Star.
Shenzhen Fengrui
Shenzhen Fengrui is a limited partnership established in the PRC primarily engaging in
equity investments. We became acquainted with Shenzhen Fengrui in 2021 through the
introduction of the lessor of the office we leased back then. Shenzhen Fengrui is owned as to
approximately (i) 0.15% by its general partner, Shenzhen Ruisheng Equity Investment Fund
Partnership (Limited Partnership) (ΥྫΆุ(Υྫ)) (“ Shenzhen
Ruisheng ”), (ii) 75.01% by its largest limited partner, Beijing Shunyuan Investment
Management Co., Ltd. (ʮ̡)( “ Beijing Shunyuan ”), and (iii) 24.84%
by one minority limited partner. Shenzhen Ruisheng is a limited partnership established in the
PRC, which is owned as to approximately (i) 25.42% by its general partner, Beijing Zhongzhi
Ronghui Investment Consulting Co., Ltd. (ʮ̡)( “ Beijing
Zhongzhi ”), and (ii) 74.58% by its limited partner, Hainan Jizhi Enterprise Management
Consulting Partnership (Limited Partnership) (Λ౽Άุ၍ଣፔ༔ΥྫΆุ(Υྫ))
(“Hainan Jizhi ”). Beijing Zhongzhi is ultimately controlled Li Xueying ( ҽ௛ᆦ). To the best
knowledge of our Directors, each of Shenzhen Fengrui, Shenzhen Ruisheng, Beijing Shunyuan,
Beijing Zhongzhi, Hainan Jizhi and Li Xueying is an Independent Third Party.
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Anji Shundian Limited
Anji Shundian Limited is a company incorporated in the British Virgin Islands with
limited liability on April 24, 2023, primarily engaging in equity investments. We became
acquainted with Anji Shundian, being the affiliate of Anji Shundian Limited investing in
BrainAurora Zhejiang before the Reorganization, in the roadshow of our Pre-IPO financing in
January 2022. Anji Shundian Limited is wholly owned by Anjispring Limited. Anjispring
Limited is owned as to approximately (i) 61.80% by Mr. Guo Jianan (یܔii) 35.18% by
Mr. Liang Guanfei (࠭and (iii) 3.03% by two minority shareholders. To the best
knowledge of our Directors, each of Anji Shundian Limited, Mr. Guo Jianan and Mr. Liang
Guanfei is an Independent Third Party.
Ambertech Limited
Ambertech Limited is a company incorporated in the British Virgin Islands with limited
liability on April 20, 2023, primarily engaging in equity investments. Ambertech Limited is
wholly owned, by Ms. Li Qing, an Independent Third Party. We became acquainted with Ms.
Li Qing in 2021 through the introduction of our existing investor.
Mr. Huang Guangwei
Mr. Huang Guangwei is an individual investor of our Company and an Independent Third
Party. As of the Latest Practicable Date, Mr. Huang is the owner of a private company engaged
in the property management and lease business in the PRC. He also makes investments with
his own funds in certain primary equity markets. We became acquainted with Mr. Huang
Guangwei in September 2021 through the introduction of Mr. Deng Feng, an non-executive
Director who controls the NLVC Shareholders.
Jenny Wang Limited
Jenny Wang Limited is a company incorporated in the British Virgin Islands with limited
liability on April 20, 2023, primarily engaging in equity investments. Jenny Wang Limited is
wholly owned, and thus ultimately beneficially owned, by Ms. Wang Jie, an Independent Third
Party. We became acquainted with Ms. Wang Jie in September 2021 through the introduction
of our existing investor.
CICC Healthcare
CICC Healthcare is an investment fund established in the Cayman Islands with more than
US$300 million capital commitment and focusing on equity investment opportunities in core
industries such as new medical technologies, new healthcare models and innovative medicines.
The investment portfolio of CICC Healthcare includes public companies specialised in the
healthcare industry, such as MicroPort Scientific Corporation (stock code: 00853), Giant
Biogene Holding Co., Ltd (stock code: 2367), JD Health International Inc. (stock code: 6618)
and others. CICC Healthcare’s general partner is CICC Healthcare Investment Management
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Limited (“ CICC Healthcare Limited ”). CICC Healthcare Limited is indirectly wholly owned
by CICC Capital (Cayman) Limited, an indirect subsidiary of China International Capital
Corporation Limited (ʮ̡)( “CICC Limited ”), whose shares are listed
on the Shanghai Stock Exchange (stock code: 601995) and the Stock Exchange (stock code:
3908). To the best knowledge of our Directors, each of CICC Healthcare, CICC Healthcare
Limited and CICC Limited is an Independent Third Party.
ACTING IN CONCERT ARRANGEMENTS
To streamline and optimize the shareholding structure and to ensure the stable ownership
and business development of our Group, Mr. Tan and Dr. Wang, together with their respective
controlled entities, entered into acting-in-concert agreements before and after the
Reorganization.
Onshore AIC Agreement
On December 20, 2020, the Onshore AIC Parties, namely Mr. Tan, Dr. Wang, Shuhui LP
and Zhipan LP , entered into the Onshore AIC Agreement, pursuant to which, among others, the
Onshore AIC Parties agreed to (i) act in concert for so long as they remain interested in the
shares of BrainAurora Zhejiang; (ii) consult each other and reach a consensus before voting at
the board meetings and shareholders’ meetings of BrainAurora Zhejiang; and (iii) in case the
parties fail to reach a consensus, vote based on the opinion of Mr. Tan.
Offshore AIC Agreement
On August 6, 2023, the Offshore AIC Parties, namely Mr. Tan, Dr. Wang, ZTan Limited
and Wispirits Limited, entered into the Offshore AIC Agreement, pursuant to which, among
others, the Offshore AIC Parties (i) acknowledged and confirmed that, the Offshore AIC Parties
have acted in concert with respect to the management of BrainAurora Zhejiang during the
period when BrainAurora Zhejiang was the holding company of our Group prior to the
Reorganization and with respect to the management of our Company since it became the
holding company of our Group after the Reorganization; and (ii) agreed to act in concert for
so long as they remain interested in the Shares of our Company, consult each other and reach
a consensus before voting at the board meetings and Shareholders’ meetings of our Company,
and in case the parties fail to reach a consensus, vote based on the opinion of Mr. Tan.
SHARE SUBDIVISION AND SHARE CONVERSION
On December 24, 2024, our Shareholders resolved to, among other things, conduct the
Share Subdivision pursuant to which each share in our then issued and unissued share capital
was split into 1,000 shares of the corresponding class with nominal value of US$0.0000001
each effective upon the conditions of the Global Offering being fulfilled.
Our Shareholders also resolved to, immediately upon completion of the Share
Subdivision, automatically convert each issued and unissued Series A Preferred Shares into
ordinary Shares on a 1:1 basis by way of re-designation upon Listing.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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PUBLIC FLOAT
Upon completion of the Share Subdivision and the Global Offering (assuming the
Over-allotment Option is not exercised), Shares held by certain of our Shareholders will not
count towards the public float for the purpose of Rule 8.08 of the Listing Rules. Details of these
Shareholders and their respective shareholding upon completion of the Share Subdivision and
the Global Offering (assuming Over-allotment Option is not exercised) are set out below:
 ZTan Limited, a Controlling Shareholder and a BVI company wholly owned by Mr.
Tan, an executive Director, chairman of the Board and chief strategy officer of our
Company, holding 21.75% of the total issued Shares;
 Wispirits Limited, a Controlling Shareholder and a BVI company wholly owned by
Dr. Wang, an executive Director, CEO and chief research officer of our Company,
holding 8.61% of the total issued Shares;
 Healthblooming Limited, the Proxy Grantor having granted voting rights in our
Company to Mr. Tan pursuant to the V oting Proxy Agreement, holding 7.83% of the
total issued Shares;
 Wiseforward Limited and Neurobright Limited, each a close associate of Dr. Wang,
an executive Director, CEO and chief research officer of our Company, holding
3.51%, and 2.40% of the total issued Shares respectively;
 Wisdomspirit Holding Limited, a wholly owned entity of Trident Trust Company
(HK) Limited, the trustee of the trust established pursuant to the Pre-IPO Share
Award Scheme of which Mr. Tan and Dr. Wang is each a beneficiary, holding 6.73%
of the total issued Shares;
 Crusky Limited, a company wholly owned by Ms. Li Mingqiu, our non-executive
Director, holding 9.76% of the total issued Shares; and
 NLVC Shareholders, each a company ultimately controlled by Mr. Deng Feng, our
non-executive Director, holding 10.02% of the total issued Shares in aggregate.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Accordingly, upon completion of the Share Subdivision and the Global Offering
(assuming the Over-allotment Option is not exercised), the public float of the Company will be
29.39%, details of which are set out below:
Shareholders to be counted
towards public float
Number of Shares upon
completion of the Share
Subdivision and the
Global Offering
(1)
Shareholding percentage
upon completion of the
Share Subdivision and
the Global Offering (1)
CFCH 70,143,000 5.54%
Integriness Limited 40,327,000 3.18%
CICC Healthcare 19,444,000 1.54%
Beijing Pegasus 17,209,000 1.36%
Mr. Huang Guangwei 17,161,000
(2) 1.36%
Shenzhen Fengrui 14,144,000 1.12%
Anji Shundian Limited 11,150,000 0.88%
Ambertech Limited 7,502,000 0.59%
Jenny Wang Limited 3,671,000 0.29%
Other investors taking part in
the Global Offering
(3) 171,453,000 13.54%
Total 372,204,000 29.39%
Notes:
1. Based on the assumption that each of the Series A Preferred Shares will be converted into ordinary
Shares on a one-to-one basis immediately before the completion of the Share Subdivision and the Global
Offering.
2. Consist of (i) 7,502 ordinary Shares held by Mr. Huang Guangwei as of the date of this Prospectus which
will be converted to 7,502,000 Shares upon completion of the Share Subdivision and (ii) 9,659,000
Shares to be subscribed for by Mr. Huang Guangwei as a Cornerstone Investor. For details, see
“Cornerstone Investors”.
3. Excludes Mr. Huang Guangwei, who will subscribe for 9,659,000 Shares as a Cornerstone Investor. For
details, see “Cornerstone Investor”.
Therefore, immediately upon completion of the Share Subdivision and the Global
Offering, (i) over 25% of our Company’s total issued Shares will be held by the public
(including such number of shares to be subscribed for by the Cornerstone Investors) in
accordance with Rule 8.08(1)(a) and (ii) the three largest public Shareholders will not hold
more than 50% of the Shares held in the public hands at the time of Listing in compliance with
Rules 8.08(3) and 8.24 of the Listing Rules. In addition, our Company will have a market
capitalization of at least HK$375 million held by the public (excluding the market
capitalization of such number of Shares to be subscribed for by the Cornerstone Investors) as
required under Rule 18A.07 of the Listing Rules.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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CAPITALIZATION
The below table summarizes the capitalization of our Company as of the date of this
Prospectus, and immediately prior to the Global Offering, and immediately upon completion
of the Share Subdivision and the Global Offering (assuming the Over-allotment Option is not
exercised).
Shareholders
Number of Shares as of the date
of this Prospectus
Shareholding
percentage as of
the date of this
Prospectus and
immediately prior
to the Share
Subdivision and the
Global Offering
Total number of
Shares upon
completion of the
Share Subdivision
and the Global
Offering (1)
Shareholding
percentage upon
completion of the
Share Subdivision
and the Global
Offering (1)
Ordinary
Shares
Series A-1
Preferred
Shares
Series A-2
Preferred
Shares
ZTan Limited 275,468 – – 25.38% 275,468,000 21.75%
Crusky Limited 123,527 – – 11.38% 123,527,000 9.76%
Wispirits Limited 109,052 – – 10.05% 109,052,000 8.61%
Healthblooming
Limited 99,104 – – 9.13% 99,104,000 7.83%
Wisdomspirit Holding
Limited 85,166 – – 7.85% 85,166,000 6.73%
CFCH 70,143 – – 6.47% 70,143,000 5.54%
Wiseforward Limited 44,503 – – 4.10% 44,503,000 3.51%
Integriness Limited 40,327 – – 3.72% 40,327,000 3.18%
Neurobright Limited 30,400 – – 2.80% 30,400,000 2.40%
CICC Healthcare 19,444 – – 1.79% 19,444,000 1.54%
Beijing Pegasus 17,209 – – 1.59% 17,209,000 1.36%
Shenzhen Fengrui 14,144 – – 1.31% 14,144,000 1.12%
Anji Shundian Limited 11,150 – – 1.03% 11,150,000 0.88%
Ambertech Limited 7,502 – – 0.69% 7,502,000 0.59%
Mr. Huang Guangwei 7,502 – – 0.69% 17,161,000
(2) 1.36%
Jenny Wang Limited 3,671 – – 0.34% 3,671,000 0.29%
NLSF – 7,191 2,323 0.88% 9,514,000 0.75%
NLVF – 87,469 28,260 10.66% 115,729,000 9.14%
NLPF – 1,218 393 0.15% 1,611,000 0.13%
Other investors taking
part in the Global
Offering
(3) – – – – 171,453,000 (3) 13.54%
Total 958,312 95,878 30,976 100.00% 1,266,278,000 100.00%
Notes:
1. Based on the assumption that (i) each of the Series A Preferred Shares will be converted into ordinary
Shares on a one-to-one basis immediately before the completion of the Share Subdivision and the Global
Offering, and (ii) the Over-allotment Option is not exercised.
2. Consist of (i) 7,502 ordinary Shares held by Mr. Huang Guangwei as of the date of this Prospectus which
will be converted to 7,502,000 Shares upon completion of the Share Subdivision and (ii) 9,659,000
Shares to be subscribed for by Mr. Huang Guangwei as a Cornerstone Investor. For details, see
“Cornerstone Investors”.
3. Excludes Mr. Huang Guangwei, an existing Shareholder who will subscribe for 9,659,000 Shares as a
Cornerstone Investor. For details, see “Cornerstone Investor”.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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LOCK-UP ARRANGEMENTS
Our Controlling Shareholders will be subject to the lock-up requirements under Rule
10.07 of the Listing Rules. For details, please refer to the section headed “Underwriting —
Underwriting Arrangements — Hong Kong Public Offering — Undertaking to the Stock
Exchange pursuant to the Listing Rules — Undertakings by the Controlling Shareholders” in
this Prospectus. Apart from such requirements, each of our Controlling Shareholders has
voluntarily undertaken to our Company, the Joint Sponsors, the Joint Global Coordinators and
the Overall Coordinators that subject to certain exceptions, and without prior written consent
of the Company, the Joint Sponsors, the Joint Global Coordinators and the Overall
Coordinators, it/he will not, at any time during the period ending on, and including, the date
falling 12 months after the Listing Date, dispose of, nor enter into any agreement to dispose
of or otherwise create any options, rights, interests or encumbrances in respect of, any of the
Shares held by the Controlling Shareholders on the date of the Prospectus.
For the lock-up arrangements for other existing Shareholders, please refer to the section
headed “Underwriting — Underwriting Arrangements — Hong Kong Public Offering —
Undertakings by existing Shareholders” in this Prospectus.
PRE-IPO SHARE A W ARD SCHEME
Our Company adopted the Pre-IPO Share Award Scheme on July 30, 2023. The purpose
of the Pre-IPO Share Award Scheme is to recognise and reward the contributions of certain
eligible employees of the Group, and incentivize them for their future contribution to the
continual operation and development of the Company. See “Appendix IV — Statutory and
General Information — Pre-IPO Share Award Scheme” for details.
As of the date of this Prospectus, a total of 85,166 Shares (to be adjusted to 85,166,000
pursuant to the Share Subdivision), representing approximately 7.85% of the issued share
capital of our Company, have been allotted and issued to Wisdomspirit Holding Limited, a
company wholly owned by Trident Trust Company (HK) Limited (“ Trident ”), the trustee of the
trust set up by the Company to facilitate the administration of the Pre-IPO Share Award
Scheme, of which the Company is the settlor. Such number of Shares correspond to awards
granted to specific participants of the Pre-IPO Share Award Scheme prior to the Listing, and
no further grant will be made under the Pre-IPO Share Award Scheme after the Listing.
PRC REGULATORY REQUIREMENTS
M&A Rules
The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign
Investors ()( “ M&A Rules ”) jointly issued by
MOFCOM, the SASAC, the STA, the CSRC, the SAIC (currently known as the SAMR) and the
SAFE on August 8, 2006, effective as of September 8, 2006 and amended on June 22, 2009
with immediate effect, require that a special purpose vehicle, formed for overseas listing
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 260 ---
purposes and controlled directly or indirectly by PRC companies or individuals through
acquisitions of shares of or equity interests in PRC domestic companies, shall obtain the
approval of the CSRC prior to the listing and trading of such special purpose vehicle’s
securities on an overseas stock exchange.
Unless new laws and regulations are enacted or the MOFCOM, the CSRC or other
government authorities publish new provisions or interpretations on the M&A Rules to the
contrary in the future, our PRC Legal Advisor are of the view that our Listing is not subject
to approval from the MOFCOM or the CSRC under the M&A rules.
SAFE Registration
Pursuant to the Circular of the SAFE on Foreign Exchange Administration of Overseas
Investment, Financing and Round-trip Investments Conducted by Domestic Residents through
Special Purpose V ehicles (೻ҳ༟̮ි၍ଣϞ
ٝ“() SAFE Circular 37 ”), promulgated by SAFE on July 4, 2014 and which
replaced the Notice on Issues Relating to the Administration of Foreign Exchange in
Fund-Raising and Round-Trip Investment Activities of Domestic Residents Conducted via
Offshore Special Purpose Companies (೻ҳ༟̮
ٝ“() SAFE Circular 75 ”), (a) a PRC resident must register with the local
SAFE branch before he or she contributes assets or equity interests to an overseas special
purpose vehicle (the “ Overseas SPV ”) that is directly established or indirectly controlled by
the PRC resident for the purpose of conducting investment or financing, and (b) following the
initial registration, the PRC resident is also required to register with the local SAFE branch for
any major change, in respect of the Overseas SPV , including, among other things, a change of
Overseas SPV’s PRC resident shareholder(s), the name of the Overseas SPV , terms of
operation, or any increase or reduction of the Overseas SPV’s capital, share transfer or swap,
and merger or division. Pursuant to SAFE Circular 37, failure to comply with these registration
procedures may result in penalties.
Pursuant to the Circular of the SAFE on Further Simplification and Improvement in
Foreign Exchange Administration on Direct Investment (ટҳ༟̮ි
ٝ)SAFE Circular 13 ”), promulgated by SAFE on February 13, 2015 and
became effective from June 1, 2015, the power to accept SAFE registration was delegated from
local SAFE to local banks where the assets or interests in the domestic entity are located.
As advised by our PRC Legal Advisor, Mr. Tan and Dr. Wang have completed
registrations under the SAFE Circular 37 and SAFE Circular 13 as of the Latest Practicable
Date.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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OUR CORPORATE STRUCTURE
Corporate Structure Immediately Before the Completion of the Share Subdivision and the Global Offering
The following chart sets forth our Group’s corporate structure immediately prior to the completion of the Share Subdivision and the Global
Offering, assuming that all of the Series A Preferred Shares have been converted to ordinary Shares on a one-to-one basis:
0.69%0.69%1.03%1.31%1.59%1.79%2.80%3.72%4.10%6.47%9.13%10.05%11.38%0.15%10.66% 0.88%
Ambertech
LimitedShenzhen FengruiCICC HealthcareIntegriness LimitedCFCHWispirits Limited
NLSF
NLPF
25.38%
ZTan
Limited
NLVF
Crusky Limited Neurobright Limited Mr. Huang Guangwei
7.85%
Wisdomspirit Holding
Limited(10)Beijing Pegasus Anji Shundian
Limited
Wiseforward
Limited
Healthblooming
Limited
0.34%
Jenny Wang
Limited
Beijing Zhijingling
(PRC)
Changsha Zhijingling
(PRC)
100%
100%70%(7) 70%(8)80%85% 92%
BrainAurora Zhejiang
(PRC)
WFOE
(PRC)
BVI Subsidiary
(BVI)
Beijing Yihui(6)
(PRC)
97.80%
100%
100%
100%
100%
100%
HK Subsidiary
(Hong Kong)
Our Company
(Cayman Islands)
100%
BrainAurora Jiangsu(12)
(PRC)
100%
Wanxiang Aurora(3)
(PRC)
BrainAurora Nanjing
(PRC)
BrainArea Technology(5)
(PRC)
BrainAurora Liaoning(1)
(PRC)
BrainAurora Shaanxi(2)
(PRC)
BrainAu Medical Technology
(Delaware) Co., LLC
(United States)
Hongze Technology
(PRC)
80%
Sichuan Huiyu(4)
 (PRC)
Shenzhen BrainAurora(9)
(PRC)
100%
BrainAurora Sichuan(11)
(PRC)
100%
BrainAurora Hebei(13)
(PRC)
100%
BrainAurora Luzhou(14)
(PRC)
100%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 262 ---
Notes:
(1)-(6) Please refer to the notes to the table under “Reorganization” on page 216 above.
(7) Subsequent to the completion of the Reorganization, on August 3, 2023, Beijing Zhijingling transferred its RMB0.1 million equity interests of Wa nxiang Aurora to Beijing
Ruian Enzhuo Biotechnology Co., Ltd. (ʮ̡). Accordingly, and as of the date of this Prospectus, Wanxiang Aurora is owned as to (i) 70%
by Beijing Zhijingling, and (ii) 30% by Beijing Ruian Enzhuo Biotechnology Co., Ltd. (ʮ̡).
(8) Subsequent to the completion of the Reorganization, on September 12, 2023, the registered share capital of Hongze Technology increased by RMB428 ,600 from RMB1
million to RMB1.4286 million, which is subscribed by Beijing Anyi Huidong Medical Technology Co., Ltd. (ʮ̡). Accordingly, following
the subscription, and as of the date of this Prospectus, Hongze Technology is owned as to approximately (i) 70% by Beijing Zhijingling, an indirectly w holly-owned
subsidiary of the Company, and (ii) 30% by Beijing Anyi Huidong Medical Technology Co., Ltd. (ʮ̡), which is wholly owned by Shoudu
Huizhi Medical Technology Outcome Transformation Academy (Ӻ৫), a social institute under the authority of Beijing Municipal Health
Commission, a PRC government body. To the best knowledge of our Directors, Beijing Anyi Huidong Medical Technology Co., Ltd. and its ultimate benefic ial owner
is an Independent Third Party, and not a connected person at the subsidiary level, taking into account that Hongze Technology is an insignificant subs idiary for the purpose
of Rule 14A.09 of the Listing Rule.
(9) Shenzhen BrainAurora was established in the PRC on October 17, 2023.
(10) On August 2, 2023, a total of 85,166 Shares (to be adjusted to 85,166,000 Shares pursuant to Share Subdivision) were allotted and issued to Wisdoms pirit Holding Limited,
a company wholly owned by Trident, the trustee of trust set up by the Company to facilitate the administration of the Pre-IPO Share Award Scheme. See “Hi story,
Reorganization and Corporate Structure — Pre-IPO Share Award Scheme” and “Appendix IV — Statutory and General Information — Pre-IPO Share Award Sche me”
for details.
(11) Sichuan BrainAu Medical Technology Co., Ltd.* (ʮ̡)( “ BrainAurora Sichuan ”) was established in the PRC on November 15, 2023.
(12) Jiangsu BrainAurora Medical Technology Co., Ltd. (ʮ̡)( “ BrainAurora Jiangsu ”) was established in the PRC on August 8, 2024.
(13) BrainAurora Medical Technology (Hebei) Co., Ltd. ( ໘ਗ฽Έ(̏)ʮ̡)( “ BrainAurora Hebei ”) was established in the PRC on July 26, 2024.
(14) Luzhou BrainAu Medical Technology Co., Ltd.* (ʮ̡)( “ BrainAurora Luzhou ”) was established in the PRC on January 12, 2024.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Corporate Structure Immediately Following the Completion of the Share Subdivision and the Global Offering
The following chart sets forth our Group’s corporate structure immediately following the completion of the Share Subdivision and the Global
Offering, assuming that (i) all of the Series A Preferred Shares have been converted to ordinary Shares on a one-to-one basis, and (ii) the
Over-allotment Option is not exercised:
1.36% 0.29% 6.73% 13.54%0.59%0.88%1.12%1.36%1.54%2.40%3.18%3.51%5.54%7.83%8.61%9.76%0.13%0.75%
Ambertech
Limited(7)
Shenzhen
Fengrui(10)CICC Healthcare(10)Integriness LimitedCFCH(10)Wispirits Limited
NLSF
NLPF
9.14%21.75%
ZTan
Limited
NLVF
Crusky Limited Neurobright Limited Mr. Huang
Guangwei(10)
Wisdomspirit
Holding(10)Beijing Pegasus(10) Anji Shundian
Limited(10)
Wiseforward
Limited
Healthblooming
Limited
Jenny Wang
Limited(10)
Other public
Shareholders(10)
70%(8)
Beijing Zhijingling
(PRC)
Changsha Zhijingling
(PRC)
100%
92%70%(7) 100% 100%80%85%
BrainAurora Zhejiang
(PRC)
WFOE
(PRC)
BVI Subsidiary
(BVI)
Beijing Yihui(6)
(PRC)
97.80%
100%
100%
100%
100%
HK Subsidiary
(Hong Kong)
Our Company
(Cayman Islands)
100%
BrainArea Technology(5)
(PRC)
Wanxiang Aurora(3)
(PRC)
BrainArea Liaoning(1)
(PRC)
BrainAurora Shaanxi(2)
(PRC)
BrainAu Medical Technology
(Delaware) Co., LLC
(United States)
Hongze Technology
(PRC)
BrainAurora Nanjing
(PRC)
80%
Sichuan Huiyu(4)
(PRC)
Shenzhen BrainAurora(9)
(PRC)
100%
BrainAurora Jiangsu(12)
(PRC)
100%
BrainAurora Hebei(13)
(PRC)
BrainAurora Sichuan(11)
(PRC)
100%
100%
BrainAurora Luzhou(14)
(PRC)
100%
Notes:
(1) to (9) and
(11) to (14)
For details of these subsidiaries, see “Corporate Structure Immediately Before the Completion of the Share Subdivision and the Global Offering” in t his section.
(10) Shares held by these Shareholders will be counted towards public float. For details, see “Public Float” in this section.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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OVERVIEW
We are a seasoned player in China’s cognitive impairment digital therapeutics (the
“DTx”) market. We are the first company in China that has developed a medical-grade DTx
product for cognitive impairment, combining brain science with advanced artificial
intelligence (the “ AI”) technologies, according to Frost & Sullivan. Our product pipeline
covers both the assessment and intervention of a broad range of cognitive impairments induced
by vascular diseases, neurodegenerative diseases, psychiatric disorders, and child development
deficiencies, among others. Our Core Product is the first cognitive impairment DTx product
that has obtained regulatory approval in China, according to Frost & Sullivan. As a testimony
of our breakthrough achievement, we published the clinical trial results of the Brain Function
Information Management Platform Software System (the “ System ”) in May 2019 on
“Alzheimer’s & Dementia” (the “ A&D Journal ”), a leading peer-reviewed journal of clinical
studies in cognitive impairment. The article was the first one worldwide to demonstrate the
effectiveness of DTx on vascular cognitive impairment no dementia (the “ VCIND ”) through
evidence-based data from randomized controlled clinical trials, according to Frost & Sullivan.
We have also been deeply involved in the publications of the first four expert consensus in the
field of DTx in China. In March 2023, we co-authored the “Chinese expert consensus on digital
therapeutics for cognitive impairment (2023 edition)” (΍ᗆ
(2023) ), which for the first time in China systematically defined cognitive impairment DTx,
and has earned us widespread recognition by top hospitals and medical professionals in China,
according to Frost & Sullivan. We believe our market position and expertise in DTx research
and development have created high entry barriers for potential competitors.
We are a commercial stage company. As of the Latest Practicable Date, the System had
been included in the provincial health insurance reimbursement lists of 30 provinces in China.
We are also the first organizer of a project initiated by the NHC, according to Frost & Sullivan,
under which we are tasked with helping hospitals to establish cognitive centers in over 2,100
public hospitals across China and promoting the development of cognitive impairment DTx
market in China. We also collaborate with hospitals to establish cognitive centers outside of the
NHC project to help us build long-term business relationship with the participating hospitals.
We invest in this strategy by providing the System, the hardware on which the System operates,
as well as the funding for renovating the cognitive center premises. As of the Latest Practicable
Date, we had helped more than 120 hospitals establish cognitive centers in China, including
several leading hospitals with “National Medical Center” (ᔼኪʕː) certification for
various medical specialties by the NHC. We are committed to making achievements in the
brain scientific research to DTx products that benefit cognitive impairment patients.
We have established a broad DTx product pipeline. The System had been commercialized
for eight indications from four major types of cognitive impairment and is under development
for several other cognitive impairment indications as of the Latest Practicable Date. We had
three other products with regulatory approvals in China, one other product with regulatory
approval in the EU and six product candidates under different stages of preclinical and clinical
development or registration process as of the Latest Practicable Date. We enjoy rights with
respect to our products and product candidates in jurisdictions where we receive regulatory
approvals.
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OUR PIPELINE
The following chart summarizes the development status of the System under various indications, as well as other products and product
candidates in our pipeline as of the Latest Practicable Date.
Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Reg istration Commercialization
Vascular disease
induced cognitive
impairment
Vascular cognitive impairment Assessment + Intervention China
Aphasia Assessment + Intervention China
Atrial fibrillation induced cognitive
impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026
June 2020
June 2020
China
Hypertension induced cognitive
impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Coronary heart disease induced
cognitive impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Post-cardiac surgery
rehabilitation Assessment + Intervention 2025 Q1 Clinical Trial
Initiation
2026 China
Heart failure induced cognitive
impairment Assessment + Intervention 2026 H1 Clinical Trial
Initiation 2028
June 2020
China
Neurodegenerative
disease induced
cognitive impairment
Alzheimer’s disease Assessment + Intervention China
Amnestic mild cognitive
impairment Assessment + Intervention 2025 Data Analysis
Completion 2026 China
Parkinson’s disease Assessment + Intervention 2026 Q2
Clinical Trial Initiation 2027
June 2020
June 2020
June 2020
China
Psychiatric disorder
induced cognitive
impairment
Depression Assessment + Intervention China
Schizophrenia Assessment + Intervention China
Sleep disorders Assessment + Intervention China
Anxiety Assessment + Intervention 2025 Q1 Clinical Trial
Initiation 2026 China
Brain Function
Information
Management
Platform Software
System
BUSINESS
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Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Regis tration Commercialization
Child development
deficiency induced
cognitive impairment
Attention deficit hyperactive
disorder Assessment + Intervention ChinaJune 2020
Autism Assessment + Intervention ChinaJune 2020
Language delay Assessment + Intervention 2025 Q2 Clinical Trial
Initiation 2026 China
Cerebral palsy Assessment + Intervention 2025 Q2 Clinical Trial
Initiation 2026 China
Dyslexia Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Other disorders
Epilepsy Assessment + Intervention
2025 Q2
Clinical Trial
Initiation
2026 China
Bone fracture induced pain Assessment + Intervention
2025 Q4
Clinical Trial
Completion
2026 China
Diabetes Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Phenylketonuria induced
cognitive impairment Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Kidney disease induced cognitive
impairment Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Multiple sclerosis Asse ssment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Hepatic encephalopathy Assessment + Intervention
2025 Q3
Clinical Trial
Initiation
2026 China
Post-breast cancer surgery
rehabilitation Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Post-lung cancer surgery
rehabilitation Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Drug addiction Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
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Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Reg istration Commercialization
Basic Cognitive
Ability
Testing
Software
Cognitive impairment Assessment China
Cognitive Ability
Supplemental
Screening and
Assessment
Software
Cognitive impairment Assessment China
Dyslexia
Supplemental
Screening and
Assessment
Software
Child development
deficiency induced
cognitive impairment
Dyslexia Assessment 2025 H2 Full
Commercialization
2026
Commencement of
Commercialization
2025 H2 Full
Commercialization
2025 H2 Full
Commercialization
2025
2025
2025
China
Covid-19 Induced
Cognitive
Impairment
Assessment and
Recovery
Training Software
Other disorders Covid-19 induced cognitive
impairment Assessment + Intervention
2025 H2
Registration
Approval
2025 China
Attention Deficit
Hyperactivity
Disorder
Assessment and
Treatment Software
Child development
deficiency induced
cognitive impairment
Attention deficit hyperactivity
disorder Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2025 China
Quantitative
Cognitive
Assessment
Software for
Depression
Psychiatric disorders Depression Assessment
2025 Q1
Clinical Trial
Completion
2025 China
Depression
Treatment
Software
Psychiatric disorders D epression Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Cognitive
Impairment
Assessment
Software
Cognitive impairment Assessment
2025
Registration
Submission
2026 EU
2025 H2
Registration
Submission
2026 US
Cognitive
Impairment
Treatment
Software
Cognitive impairment Intervention
2026 EU
2026 US
Core
Product
Commercialized
Product/Indication
Product exempt from clinical
trials under current relevant
re
gulations
2025
Registration
Submission
Regulatory approvals obtained through
submission of clinical evaluation materials
on the S
ystem conducted by third parties
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We have built end-to-end capabilities ranging from R&D to commercialization.
 R&D and Technology . We have assembled a dedicated and multi-disciplinary R&D
team of 120 members with 26 holding a masters degree and two holding PhDs as of
the Latest Practicable Date. The team closely tracks the medical data and
information from patients generated by the System and our other products and
updates the underlying algorithms and AI technology to adjust and customize
training tasks based on patients’ specific conditions and stage of recovery. Our
extensive technological capabilities enable us to flexibly and rapidly expand the
indications coverage of our System, as well as to develop other assessment and
intervention DTx products, in a cost-effective manner. Our strong R&D capabilities
have resulted in a rich intellectual property portfolio. As of the Latest Practicable
Date, we held 63 granted patents and 136 patent applications in China and four
pending patent applications overseas. We have developed two core underlying
technologies, namely the virtual human technology and AI technology, which serve
as the foundation of our System and other products and product candidates. Our
virtual human technology can perform medical assessment and communicate with a
large number of patients at once. Our AI technology enables our System and other
products and product candidates to analyze patient information and diagnose
patients. When applied to our intervention products, our AI-based adaptive
collaborative intervention model uses the information collected from patients,
including their historical training performance scores and performance details from
previous training tasks of varying difficulty levels, to dynamically adjust the content
of the training sessions to achieve personalized interventions. The adaptive
collaborative intervention model accomplishes this by selecting from millions of
possible module combinations, enabled by our library of over 300 training modules,
to design the optimal training session to activate the appropriate brain regions for
the best therapeutic effect.
 Commercialization . We believe our commercialization capabilities are largely
attributable to our achievements in evidence-based academic and scientific research
in the fields of cognitive impairment, and the performance of our System and other
products, which have gained us wide recognition by customers and accelerated the
commercialization of our System. The completion of our evidence-based research
contributed to high credibility and acceptance of our products among hospitals and
physicians, paving the way for nation-wide adoption and commercialization of our
products. We have established an experienced sales and marketing team dedicated to
academic promotion to further enhance our market position. As a testimony of our
strong commercialization capabilities, our revenue has experienced rapid growth
from RMB2.3 million in 2021 to RMB11.3 million in 2022, and to RMB67.2 million
in 2023.
We believe that our diversified product portfolio, together with our end-to-end
capabilities across R&D to commercialization, will create high entry barriers, solidify our
industry position and fuel a strong growth trajectory.
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OUR COMPETITIVE STRENGTHS
Seasoned player in China’s cognitive impairment DTx market with significant market
opportunities
We are a seasoned player in China’s cognitive impairment DTx market. We are the first
company in China that has developed medical-grade DTx product for cognitive impairment,
leveraging achievements in brain science and advanced AI technologies, according to Frost &
Sullivan. As a testimony of our breakthrough achievement, we published the clinical trial
results of our System in May 2019 on A&D Journal, a leading peer-reviewed journal
representing a high academic level of clinical studies in cognitive impairment. The article was
the first one worldwide to demonstrate the effectiveness of DTx on VCIND through
evidence-based data from randomized controlled clinical trials, according to Frost & Sullivan.
Our Core Product, the System, is the first cognitive impairment DTx product that has obtained
regulatory approval in China, according to Frost & Sullivan. We have built high entry barriers
on product development, technologies, academic recognition and commercialization, which
enable us to establish our position in China’s cognitive impairment DTx market.
We have achieved early success in gaining acceptance for and commercializing our DTx
product. In September 2020, we helped establish a cognitive center in Chaoyang Hospital,
which was the first cognitive center adopting DTx in China, according to Frost & Sullivan.
Since then, we had helped more than 120 hospitals establish cognitive centers in China as of
the Latest Practicable Date, including several top hospitals with “National Medical Center” ( ਷
ᔼኪʕː) certification for various medical specialties by the NHC, a certification
selectively granted to very few top hospitals in each specialty. These hospitals include Xuanwu
Hospital (certified in neurology), Anzhen Hospital (certified in cardiology) and Anding
Hospital (certified in psychiatrics). The top hospitals adopt and use our System for the medical
assessment and intervention of various types of cognitive impairment, which has led to wide
recognition and acceptance of our System by hospitals and medical professionals nationwide,
paving the way for our potential collaboration with more hospitals and solidifying our market
position.
We also drive the development of China’s cognitive impairment DTx industry. We have
been deeply involved in the publications of the first four expert consensus in the field of
cognitive impairment DTx in China. In particular, in March 2023, we co-authored the “Chinese
expert consensus on digital therapeutics for cognitive impairment (2023 edition)” (ᅰο
΍ᗆ(2023) ) which for the first time in China systematically defined cognitive
impairment DTx, according to Frost & Sullivan. In addition, three expert consensuses and one
guideline published from 2021 to 2023 referred to our article published on A&D Journal, in
2019. We have also participated in seven national level research and development projects
organized by the Ministry of Science and Technology (ኪҦஔ௅) under
China’s 13th and 14th Five-Y ear Plan for Economic and Social Development of the PRC ( ʕ
ʞϋ஝ྌ). The NHC has entered into
a cooperation with us to, over the next five years, (i) train approximately 500 to 1,000 cognitive
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impairment specialists each year; and (ii) help to establish over 2,100 cognitive centers. We are
also the first organizer providing trainings to medical professionals on professional medical
treatments using DTx, according to Frost & Sullivan. As of the Latest Practicable Date, we
assisted with 29 training sessions to over 3,100 attendees from over 800 hospitals in China.
We enjoy significant market potential in China’s cognitive impairment DTx industry. Our
System primarily addresses the assessment and intervention of four major types of cognitive
impairments: vascular disease induced cognitive impairment, neurodegenerative disease
induced cognitive impairment, psychiatric disorder induced cognitive impairment, and child
development deficiency induced cognitive impairment. According to Frost & Sullivan, the
number of patients suffering from the above types of cognitive impairments has exceeded over
1,736.3 million worldwide as of the end of 2023. Currently there is no effective intervention
and preventive therapies for cognitive impairment: the currently prevailing drug therapies are
only administered when the cognitive impairment reaches late-stage, and often demonstrate
limited efficacy. As such, DTx as an innovative treatment has significant growth potential in
a vast and underserved cognitive impairment market.
We are well positioned to seize significant market opportunities with our market position
in China’s cognitive impairment DTx market as well as our DTx product. Leveraging our
technologies on virtual human and AI, as well as our abundant theoretical and clinical research
in brain science, we are prepared to rapidly expand the application of the System on new
cognitive impairment indications, as well as to further develop and commercialize our other
products in a cost-efficient manner.
Comprehensive coverage of cognitive impairment indications with rapid pipeline
expansion
We have established a comprehensive DTx product pipeline covering both assessment and
intervention of a broad range of cognitive impairment indications. Our Core Product, the
System, has been commercialized for eight indications, and is under development for several
other cognitive impairment indications, including cognitive impairments induced by atrial
fibrillation, hypertension, coronary heart disease, Parkinson’s disease, anxiety, language delay,
cerebral palsy, dyslexia, epilepsy and diabetes, among others.
The System provides both medical assessment and intervention for an extensive range of
cognitive impairments. For cognitive impairment intervention, our System provides a novel
and effective therapeutic approach which has been highly recognized by a large number of
hospitals and medical professionals. Our System also serves as an assessment and screening
tool for cognitive impairments, which enables it to enter more hospitals and cover more target
population. The “assessment + intervention” model has significantly broadened our
commercialization channels and contributed to our industry position.
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Our System targets a variety of cognitive impairment indications, covering the assessment
and intervention of four major types of cognitive impairment: vascular disease induced
cognitive impairment, neurodegenerative disease induced cognitive impairment, psychiatric
disorder induced cognitive impairment, and child development deficiency induced cognitive
impairment.
 V ascular disease induced cognitive impairment. We have successfully
commercialized the System for vascular cognitive impairment and cognitive
impairment induced by aphasia. We have initiated three randomized controlled trials
in collaboration with Anzhen Hospital on mild cognitive impairment induced by
atrial fibrillation, hypertension and coronary heart disease, respectively. We are also
under preclinical research on post-cardiac surgery rehabilitation and heart failure
induced cognitive impairment. V ascular disease induced cognitive impairment (the
“VDCI ”) DTx product enjoys significant market potential, with a prevalence of
approximately 77.6 million and 445.1 million in 2023 in China and globally for the
major types of VDCI, according to Frost & Sullivan.
 Neurodegenerative disease induced cognitive impairment. We have successfully
commercialized the System for cognitive impairment induced by Alzheimer’s
disease. We have also initiated a clinical trial on amnestic mild cognitive
impairment. In addition, we are also conducting preclinical research on mild
cognitive impairment induced by Parkinson’s disease. The System is the first
cognitive impairment DTx that targets such cognitive impairments, according to
Frost & Sullivan. Neurodegenerative disease induced cognitive impairment (the
“NCI”) DTx product enjoys significant market potential, with a prevalence of NCI
of approximately 74.1 million and 156.5 million in 2023 in China and globally for
the major types of NCI, according to Frost & Sullivan.
 Psychiatric disorder induced cognitive impairment . We have successfully
commercialized the System for cognitive impairment induced by depression,
schizophrenia and sleep disorders. We are under preclinical research on cognitive
impairment induced by anxiety. Psychiatric disorder induced cognitive impairment
(the “ PCI”) DTx product enjoys significant market potential, with a prevalence of
approximately 50.2 million and 348.6 million in 2023 in China and globally for the
major types of PCI, according to Frost & Sullivan.
 Child development deficiency induced cognitive impairment . We have successfully
commercialized the System for cognitive impairment induced by attention deficient
hyperactivity disorder (the “ ADHD ”) and autism. We are under preclinical research
on cognitive impairment induced by language delay, cerebral palsy and dyslexia.
Child development deficiency induced cognitive impairment (the “ CDDCI ”) DTx
product enjoys significant market potential, with prevalence of CDDCI of
approximately 143.4 million and 776.1 million in 2023 in China and globally for the
major types of CDDCI, according to Frost & Sullivan.
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Besides these four major types of cognitive impairments, we are also conducting research
and development of the System for application in cognitive impairment induced by ten other
diseases, such as epilepsy, bone fracture induced pain, diabetes and multiple sclerosis, among
others.
In addition to the System, we have developed and obtained regulatory approval for other
cognitive impairment DTx products, namely our Basic Cognitive Ability Testing Software (the
“BCAT”), the Cognitive Ability Supplemental Screening and Assessment Software (the
“SAS”) and the Dyslexia Supplemental Screening and Assessment Software (the “ DSS”), all
helping physicians with assessment of various types of cognitive impairments, as well as the
Cognitive Impairment Treatment Software for which we obtained the CE mark in the EU in
2022. We are also developing various types of cognitive impairment assessment and
intervention software products, such as COVID-19 Induced Cognitive Impairment Assessment
and Recovery Training Software, Attention Deficit Hyperactivity Disorder Assessment and
Treatment Software (the “ ADHD Software ”), Quantitative Cognitive Assessment Software for
Depression and Depression Treatment Software. For the COVID-19 Induced Cognitive
Impairment Assessment and Recovery Training Software, we have completed the clinical trial
in October 2023 and submitted Class II medical device registration for this product candidate
in the second quarter of 2024 and expect to receive registration approval in the second half of
2025.
We are also expanding our pipeline to potentially enter overseas markets. We are
developing our Cognitive Impairment Assessment Software and Cognitive Impairment
Treatment Software in the U.S. in preparation for regulatory filings under Section 510(k).
R&D capabilities and core technologies supported by multidisciplinary team
We have assembled a dedicated R&D team with multidisciplinary experience, including
brain sciences, algorithms and AI, among other scientific fields. Our R&D team is led by Dr.
Wang, who has been our CEO and chief research officer. Our key R&D staff have on average
over six years of relevant experience in the DTx industry.
We have developed two core underlying technologies, namely virtual human and AI
technologies, which serve as the foundation of our System and other products and product
candidates. Our AI technology enables physicians to perform assessment and intervention in a
highly standardized and user-friendly manner, which we believe contributes to its rapid
acceptance and adoption in primary hospitals across China. Leveraging our core technologies,
we are well-positioned to tackle a variety of pain points in China’s cognitive impairment DTx
market.
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 Diagnosis accuracy and efficiency . Our virtual human technology enables
physicians to perform medical assessment and communicate with a large number of
patients at once. Our AI technology helps medical professionals analyze information
collected from patients and diagnose patients with an accuracy rate
1 of over 90%.
Furthermore, we conduct assessment after patients finish trainings on our System,
which then enables the System to develop new self-adapting training sessions based
on assessment results.
In particular, our virtual human technology can break through certain constraints of
traditional clinical assessment standards such as the Mini-Mental State Examination
(the “ MMSE ”) and the Montreal Cognitive Assessment (the “ MoCA ”), and offer
more accurate assessment results. MMSE and MoCA typically require medical
professionals to personally conduct one-on-one assessments, which could be
influenced by their subjective judgment and lack efficiency as medical professionals
need to ask, record and explain assessment questions and responses. Patients may
also provide responses that do not accurately reflect their conditions due to
subjective factors such as their moods. Our System and other assessment DTx
products adopt various AI technologies such as natural language processing and
image processing to accurately determine the responsiveness of patients’ input and
enable medical professionals to assess multiple patients at once, which significantly
enhances assessment efficiency.
 Treatment Efficacy. Traditional treatment of cognitive impairment primarily relies
on drug therapies, which are typically not available until later stages of cognitive
impairment. Efficacy of these traditional drug therapies can be limited, and they
cannot be applied to certain indications such as neurodegenerative diseases or
gradual mild cognitive impairment. The System’s adaptive collaborative
intervention model selects from millions of possible module combinations, enabled
by our library of over 300 training modules, to design the optimal training session
to activate the appropriate brain regions for the best therapeutic effect.
The AI technology also allows the System to analyze patients’ response time and
accuracy rate when using the System and flexibly adjusts training scenarios and
difficulties accordingly by choosing from millions of possible module combinations,
making the training session highly customized and self-adaptive for each patient. We
also embedded features to make the training sessions more fun and enjoyable for
patients, which we believe leads to better patient compliance and loyalty. Based on
results from preclinical studies, patients who complete the self-adaptive training
1 The AI model involved in the System is trained based on the historical assessment data of participants. The
historical assessment data includes samples of correct and incorrect answers from participants. Based on these
samples, corresponding AI models are constructed for the corresponding assessment questions. These models
can automatically judge whether the current participant’s answer is correct. It has been evaluated and verified
on a set of 2,300 users’ historical assessments, and the accuracy of the AI model’s performance is higher than
that of manual evaluation. The model accuracies are all above 90%.
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sessions enabled by our AI technologies demonstrate over 60% higher level of brain
capability improvement compared to patients who complete non-adaptive training
sessions without AI-enabled adjustments or analysis.
The treatment efficacy by our System has been demonstrated by its clinical trial
results which were published on the industry leading, peer-reviewed journal A&D
Journal, and featured on the cover page of the issue. At the end of the seven-week
intervention, the patients who used our System for multi-domain, adaptive cognitive
training showed significant improvement in global cognitive function measured by
the average MoCA score from 21.87 before the 7-week intervention to 25.22 after,
out of a total score of 30 (a score of 25 and above is considered normal), while the
patients in the active control group who received non-adaptive trainings did not
experience such increase in MoCA score (21.23 before intervention to 21.15 after,
out of a total score of 30).
Our extensive technological capabilities also enable us to flexibly and rapidly expand the
indication coverage of our System and to develop other DTx products and product candidates
in a cost-effective manner. See “—Our Technologies” for more details on our current R&D
efforts to further improve our technological capabilities.
Our strong R&D capabilities have resulted in a strong intellectual property portfolio. As
of the Latest Practicable Date, we had 183 registered trademarks, 63 granted patents,
78 registered software copyrights and filed 136 patent applications in China, as well as four
pending patent applications overseas.
Strong commercialization capabilities and accelerated commercialization momentum
propelled by academic and industry achievements
We believe our strong commercialization capabilities are largely attributable to our
achievements in evidence-based research and academic achievements in the fields of cognitive
impairment, and the outstanding performance of our System and other products with regulatory
approvals, which have gained us wide recognition by customers and significantly accelerated
the commercialization of our products. We have established an experienced sales and
marketing team dedicated to academic promotion to further enhance our market position.
 Evidence-based research and academic achievements. In December 2015, we
initiated a randomized controlled trial in cooperation with Xuanwu Hospital (the
best hospital in neurology in China) (the “ Xuanwu Trial ”), which generated
favorable safety and efficacy data that demonstrated the System’s effectiveness in
the assessment and intervention of vascular cognitive impairment. The Xuanwu
Trial received recommendation of Nature Reviews Disease Primers (the “ NRDP
journal ”), an internationally leading academic journal with an SCI Impact Factor of
65.038 in 2023. The results of the Xuanwu Trial were published in May 2019 on
A&D Journal, which was the first article worldwide to demonstrate the effectiveness
of DTx on VCIND through evidence-based data from randomized controlled clinical
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trials, according to Frost & Sullivan. The completion of the Xuanwu Trial also
facilitated our commercialization of the System as a large number of top hospitals
in China recognized the System as a viable assessment and intervention therapy for
cognitive impairment.
 Industry recognition and acceptance. Our System has gained wide industry
recognition as an effective therapy for the assessment and intervention of various
types of cognitive impairment. In March 2023, we co-authored the “Chinese expert
consensus on digital therapeutics for cognitive impairment (2023 edition)” (ٝ
΍ᗆ(2023) ) which for the first time in China systematically
defined cognitive impairment DTx, according to Frost & Sullivan. In addition, three
expert consensus and one guideline published from 2021 to 2023 referred to our
article published on “Alzheimer’ & Dementia” in 2019. Our achievements in the
cognitive impairment field has also enabled us to be at the forefront of establishment
of industry standard and development of the DTx market in China. We have been
deeply involved in the publications of the first four expert consensus in the field of
DTx in China during 2018 to 2021. In 2022, we jointly participated in setting the
technical standards for data security, privacy and system on information technology
safety protection together with the Ministry of Industry and Information Technology,
the NHC, and other government agencies. We are also the first organizer of a project
initiated by the NHC, according to Frost & Sullivan, under which we are tasked with
helping to establish cognitive centers in over 2,100 public hospitals across China
and promoting the development of cognitive impairment DTx market in China.
We have a track record of successful commercialization. Since the first cognitive center
we helped establish in Chaoyang Hospital in September 2020, we had helped more than 120
hospitals establish cognitive centers in China, and had served over 516,750 patients
cumulatively as of the Latest Practicable Date. In addition to hospitals, we also offer the
System integral software solutions out of hospitals to individual patients. Largely attributable
to the outstanding performance of our System, many patients who have completed treatments
utilizing our System in hospitals choose to continue to use our System at home.
As a result of the above, our revenue experienced significant growth during the Track
Record Period. Our revenue increased significantly from RMB2.3 million in 2021 to RMB11.3
million in 2022, and to RMB67.2 million in 2023.
Visionary management team with rich experience in brain sciences, AI technologies, and
business development
Our visionary management team with rich experience in brain sciences, AI technology
and business development has been the bedrock of our success to date. With an average of over
ten years of industry experience, our management team has a track record of successfully
developing and launching new products to seize market opportunities and adapt to a rapidly
evolving industry. They have been committed to the innovation, sustainability and long-term
development of our business.
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Our Chief Executive Officer, Dr. Wang, has more than 20 years of academic and
professional experience in brain and cognitive sciences. He is widely recognized as a leading
scientist in China’s cognitive impairment DTx industry. Dr. Wang has authored or co-authored
over 40 academic articles on cognitive impairment assessment and intervention research. He
has also led and hosted tens of scientific research projects, and participated in the invention of
18 issued patents, over 40 patent applications, and over 40 software copyrights. Our Chief
Technology Officer, Mr. Longjun Cai, has approximately 15 years of academic and
professional experience and extensive know-hows in product development, data, and
algorithms, and has contributed significantly to our AI capabilities. Mr. Cai participated in the
invention of over 40 patents in China, and has published numerous academic articles on leading
journals and during industry conferences.
OUR STRATEGIES
Continue indication expansion of the System and development of other product
candidates to further solidify our position in China’s cognitive impairment DTx market
We plan to accelerate the development, registration, and commercialization processes to
expand our System to more cognitive impairment indications by developing upgraded versions
of the System or developing new products. We believe this will enable us to provide
customized and effective medical solutions to more cognitive impairment patients. In
particular, we plan to focus on the following categories of indications:
 V ascular disease induced cognitive impairment : we have launched three clinical
trials to evaluate the System’s safety and efficacy on mild cognitive impairment
induced by several types of vascular diseases, such as atrial fibrillation,
hypertension and coronary heart disease. We have completed data collection and
cleaning for these trials in October 2024. We expect to complete data analysis by the
second quarter of 2025. We are also under preclinical research for post-cardiac
surgery rehabilitation and heart failure-induced cognitive impairment indications
and aim to initiate clinical trials in 2025 and 2026, respectively.
 Neurodegenerative disease induced cognitive impairment : we have completed a
clinical trial to evaluate the System’s safety and efficacy on amnestic mild cognitive
impairment and expect to complete data collection and analysis in 2025. We are also
under preclinical research for Parkinson’s disease indication and aim to initiate
clinical trial in 2026.
 Psychiatric disorder induced cognitive impairment : we plan to upgrade the System’s
application on cognitive impairment induced by depression (which has been
commercialized) to develop a more comprehensive solution for such indication. We
are also under preclinical research for anxiety indication and aim to initiate clinical
trial in 2025.
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 Child development deficiency induced cognitive impairment : We are under
preclinical research for cognitive impairment induced by language delay, cerebral
palsy and dyslexia and aim to initiate clinical trials in 2025.
 Other disease. In addition to the four fields of cognitive impairments above, we also
plan to conduct more research and development of the System for application in
cognitive impairment induced by other diseases, such as bone fracture induced
pains, diabetes and other metabolic diseases, and aim to initiate clinical trials in the
next three years.
Besides the System, we also plan to conduct further preclinical and clinical research and
development on our other products and product candidates to provide more specialized
assessment and intervention of various types of cognitive impairment and psychiatric disorders
(such as depression). For example, we are conducting a clinical trial to evaluate the safety and
efficacy of Quantitative Cognitive Assessment Software for Depression on the assessment of
cognitive impairment induced by depression in cooperation with Anding Hospital. We expect
trial completion by the first quarter of 2025. We also plan to develop DTx products that focus
on cognitive impairments as well as neurological and psychiatric symptoms (such as signs of
depression, anxiety and Symptoms of post-traumatic stress disorder (“ PTSD ”)) arising out of
orthopedics and endocrine related injuries and/or diseases. In addition, we also intend to
develop DTx products to help manage the rehabilitation plan design and daily execution for
bone fracture and other orthopedic patients.
Accelerate commercialization of the System and other products and enhance market
penetration
We intend to build on our existing commercialization success and capabilities to
accelerate and initiate commercialization of the System and other products with various
business customers. We plan to focus our commercialization efforts on hospitals, rather than
specific departments of these hospitals, as we believe business relationships at the hospital
level will allow us to cooperate with various departments within these hospitals. In particular,
our strategic focus is to cooperate with nationally leading hospitals and help establish cognitive
centers, which we believe will showcase the advantages and value of our products. Cooperation
with top hospitals will also help us accumulate product research and development experience
and broaden our industry influence and recognition, which we believe will further expand our
cooperation and commercialization with lower-tier hospitals across China. Over the next five
years, we intend to cooperate with the NHC to (i) train approximately 500 to 1,000 cognitive
impairment specialists each year; and (ii) help to establish over 2,100 cognitive centers.
We plan to enhance our customer service and customer experience. In addition to our
products, we also provide hospitals with technical support and staff trainings. We believe this
will help hospitals to better understand and become inclined to adopt our products. It will also
provide better user experience and convenience for patients.
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We intend to recruit more talents with academic and professional experiences in the field
of cognitive impairment DTx to expand our commercialization team and enhance the team’s
academic and marketing capabilities. Leveraging our extensive clinical research experience,
academic achievements in publishing research papers on top academic journals and our
recognition among industry experts, we intend to further solidify our long-term relationships
with leading hospitals and physicians as well as regulatory authorities by sponsoring more
academic conferences, and actively participating in the establishment of industry standards. We
believe such relationships will further enhance market penetration of our DTx product.
Further improve our research and development capabilities
We believe DTx will bring a transformation in the prevention, assessment, diagnosis,
treatment, and recovery of cognitive impairment related diseases. To further broaden the
application and indication coverage of our DTx product, we will continue to upgrade and
optimize our existing technologies and cooperate with top research and medical institutions to
continuously improve our research and development capabilities. We believe the enhanced
research and development capabilities will enable us to develop products with higher efficiency
and lower costs.
Specifically, we intend to further refine our virtual human and AI technologies to improve
the effectiveness and efficiency of our System as well as our other products and product
candidates in facilitating physicians assess patients’ conditions. We also intend to refine the
algorithms that underlie our products to make them more adaptive to each patients’ conditions
and recovery stages.
We will further expand our multidisciplinary R&D team by recruiting more talents with
background in brain science and algorithms. We plan to establish brain science and DTx
research centers in collaboration with academic institutions and hospitals. We believe our
strengthened relationships with these academic institutions and hospitals will provide us a
sustainable supply of talent and intelligence, which will further support our continuous product
research and clinical development to broaden the indication coverage of our System and the
development of our other product candidates. We plan to co-author or become deeply involved
in the release of future expert consensus on the use of medical-grade DTx as an effective
therapy for the assessment and intervention of cognitive impairment. We believe the medical
professionals in China give high regards to such expert consensus, and our involvement could
lead to higher recognition by these professionals and our industry position.
Expand our international footprint and build global influence
We aspire to become a world leader and respected trailblazer in brain science application,
providing meaningful and effective therapies for cognitive impairment patients. To that end, we
intend to target our market expansion in the U.S., Europe, Southeast Asia, Middle East and
One-Belt-One-Road nations. We believe establishing a global presence can effectively reduce
the risk of dependence on one single market, and can lead to favorable economic return. We
also plan to expand overseas by developing our Cognitive Impairment Assessment Software
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and Cognitive Impairment Treatment Software in the EU and the U.S. We obtained the CE
mark in the EU for our Cognitive Impairment Treatment Software in 2022. We are also
developing our Cognitive Impairment Treatment Software and Cognitive Impairment
Assessment Software in the U.S. in preparation for regulatory filings under Section 510(k).
Specifically, our overseas expansions in terms of further clinical development and
product commercialization includes two stages: in the first phase, we plan to conduct pilot
programs in Hong Kong and overseas cities with large Chinese populations, where our existing
algorithms and models are most compatible with the local Chinese population. From the end
of 2025, we intend to use the CE mark of the System to promote our System to the research
community in Hong Kong, and to seek collaboration with medical universities and medical
research institutions in Hong Kong to conduct research related to the System and further
strengthen the academic recognition of the System in a jurisdiction outside the NMPA. We then
plan to establish similar research collaborations in overseas cities with large ethnic Chinese
populations, such as Singapore and appropriate cities in Canada. In the second phase, we may
collaborate with overseas medical or research institutions to jointly develop our DTx products
specifically tailored for non-Chinese populations. We anticipate to start the second phase in the
second half of 2027.
Strategically seek merger and acquisition opportunities
We intend to grow our business by strategically selecting targets for mergers and
acquisitions. We may consider acquiring hardware companies to supplement our hardware
capabilities, enhance the functionality, comprehensiveness and effectiveness of our products
and product candidates. We believe our established network with and direct access to key
opinion leader(s), person(s) (the “ KOL(s) ”), hospitals and physicians gives us the best
knowledge of strategic opportunities which could complement or improve our existing product
offerings. As of the Latest Practicable Date, we had not identified any specific acquisition
targets.
OUR PRODUCT PIPELINE
We are a seasoned player in China’s cognitive impairment DTx market. We are the first
company in China that has developed medical-grade DTx product for cognitive impairment,
combining brain science with advanced AI technologies, according to Frost & Sullivan. Our
product pipeline covers both the assessment and intervention of a broad range of cognitive
impairment indications, primarily including VDCI, NCI, PCI and CDDCI. Our Core Product,
the System, is the first cognitive impairment DTx product that has obtained regulatory approval
in China, according to Frost & Sullivan. We have established a broad DTx product pipeline,
including the System (which has been commercialized for eight indications from four major
types of cognitive impairment and is under development for several other cognitive impairment
indications), four other products with regulatory approvals, and six product candidates under
different stages of preclinical and clinical development or registration process as of the Latest
Practicable Date.
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OUR PIPELINE
The following chart summarizes the development status of the System under various indications, as well as other products and product
candidates in our pipeline as of the Latest Practicable Date.
Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Reg istration Commercialization
Vascular disease
induced cognitive
impairment
Vascular cognitive impairment Assessment + Intervention ChinaJune 2020
June 2020
June 2020
June 2020
June 2020
June 2020
Aphasia Assessment + Intervention China
Atrial fibrillation induced cognitive
impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Hypertension induced cognitive
impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Coronary heart disease induced
cognitive impairment Assessment + Intervention 2025 Q2 Data
Analysis Completion 2026 China
Post-cardiac surgery
rehabilitation Assessment + Intervention 2025 Q1 Clinical Trial
Initiation
2026 China
Heart failure induced c ognitive
impairment Assessment + Intervention 2026 H1 Clinical Trial
Initiation 2028 China
Neurodegenerative
disease induced
cognitive impairment
Alzheimer’s disease Assessment + Intervention China
Amnestic mild cognitive
impairment Assessment + Intervention 2025 Data Analysis
Completion 2026 China
Parkinson’s disease Assessment + Intervention 2026 Q2
Clinical Trial Initiation 2027 China
Psychiatric disorder
induced cognitive
impairment
Depression Assessment + Intervention China
Schizophrenia Assessment + Intervention China
Sleep disorders Assessment + Intervention China
Anxiety Assessment + Intervention 2025 Q1 Clinical Trial
Initiation 2026 China
Brain Function
Information
Management
Platform Software
System
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Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Regis tration Commercialization
Child development
deficiency induced
cognitive impairment
Attention deficit hyperactive
disorder Assessment + Intervention ChinaJune 2020
June 2020Autism Assessment + Intervention China
Language delay Assessment + Intervention 2025 Q2 Clinical Trial
Initiation 2026 China
Cerebral palsy Assessment + Intervention 2025 Q2 Clinical Trial
Initiation 2026 China
Dyslexia Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Other disorders
Epilepsy Assessment + Intervention
2025 Q2
Clinical Trial
Initiation
2026 China
Bone fracture induced pain Assessment + Intervention
2025 Q4
Clinical Trial
Completion
2026 China
Diabetes Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Phenylketonuria induced
cognitive impairment Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Kidney disease induced cognitive
impairment Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Multiple sclerosis Asse ssment + Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Hepatic encephalopathy Assessment + Intervention
2025 Q3
Clinical Trial
Initiation
2026 China
Post-breast cancer surgery
rehabilitation Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Post-lung cancer surgery
rehabilitation Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
Drug addiction Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2027 China
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Product Disease Area Indication Assessment/
Intervention
Phase
Upcoming
Milestone
Estimated and
Actual Time of
Commercialization
Commercialization
Country/RegionPreclinical Clinical Trial Reg istration Commercialization
Basic Cognitive
Ability
Testing
Software
Cognitive impairment Assessment China
Cognitive Ability
Supplemental
Screening and
Assessment
Software
Cognitive impairment Assessment China
Dyslexia
Supplemental
Screening and
Assessment
Software
Child development
deficiency induced
cognitive impairment
Dyslexia Assessment 2025 H2 Full
Commercialization
2026
Commencement of
Commercialization
2025 H2 Full
Commercialization
2025 H2 Full
Commercialization
2025
2025
2025
China
Covid-19 Induced
Cognitive
Impairment
Assessment and
Recovery
Training Software
Other disorders Covid-19 induced cognitive
impairment Assessment + Intervention
2025 H2
Registration
Approval
2025 China
Attention Deficit
Hyperactivity
Disorder
Assessment and
Treatment Software
Child development
deficiency induced
cognitive impairment
Attention deficit hyperactivity
disorder Assessment + Intervention
2025 Q1
Clinical Trial
Initiation
2025 China
Quantitative
Cognitive
Assessment
Software for
Depression
Psychiatric disorders Depression Assessment
2025 Q1
Clinical Trial
Completion
2025 China
Depression
Treatment
Software
Psychiatric disorders D epression Intervention
2025 Q1
Clinical Trial
Initiation
2026 China
Cognitive
Impairment
Assessment
Software
Cognitive impairment Assessment
2025
Registration
Submission
2026 EU
2025 H2
Registration
Submission
2026 US
Cognitive
Impairment
Treatment
Software
Cognitive impairment Intervention
2026 EU
2026 US
Core
Product
Commercialized
Product/Indication
Product exempt from clinical
trials under current relevant
re
gulations
Regulatory approvals obtained through
submission of clinical evaluation materials
on the S
ystem conducted by third parties
2025
Registration
Submission
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The target indications of the System and our other pipeline products are classified based
on standards such as the International Classification of Diseases (the “ ICD”), the Diagnostic
and Statistical Manual of Mental Disorders Fifth Edition (the “ DSM-5 ”) and expert consensus
and clinical guidelines in China. The ICD is a standard developed and published by the World
Health Organization and used worldwide in medical research to ensure consistent disease
statistics and diagnostic standards. The ICD contains a wealth of disease-related classification
and coding information, providing physicians with accurate definitions and classifications for
various diseases. The DSM-5, published by the American Psychiatric Association, provides
detailed descriptions, classifications, and diagnostic criteria for mental disorders. It serves as
an authoritative reference for the diagnosis and study of mental illness worldwide.
China’s expert consensus, clinical guidelines and other similar standards, such as the
China Guidelines for the Diagnosis and Treatment of Mental Diseases (ط
یܸthe Guidelines for the Diagnosis and Treatment of Neurological Diseases (߅
یܸand the China Guidelines for the Diagnosis and Treatment of Dementia
and Cognitive Impairment (یܸطprovide guidance for the diagnosis
and treatment of mental and neurological diseases based on the latest clinical practice and
scientific research.
OUR BUSINESS MODEL
We primarily offer the System to hospitals for cognitive assessment and intervention of
their patients and to individual patients for cognitive trainings out of hospitals. The following
chart illustrates the business relationships of the above business lines.
Operational
Service Provider Hospital In-hospital Patients
Out-of-hospital Patients
• Provide operational support on behalf
of the Company to hospitals
• Perform cognitive assessment
and intervention
• May continue to use the System at their own homes after
initially receiving cognitive impairment assessment and
intervention in hospitals
• Provide the System integral software solutions
out of hospitals
• Provide pre-configured hardware to run the System
• Engaged as the
Operational Service
Provider (cost
recorded as our
cost of sales)
• Provide the System integral software solutions and related operational support
(revenue generating, cost recorded as cost of sales)
• Help establish cognitive centers, including center premise renovation, hardware,
and data roaming packages (non-revenue generating; spending capitalized with
depreciation recorded as cost of sales)
• Pay a fee per use of the System in hospital
• Pay per use of the System
• Pay periodic subscription fee
• Pay a predetermined percent of
amount from patients
• Remit full amount
received from hospital
• Pay operational service fees
Business Relationship
Flow of funds
Business relationship and flow of funds among
the Company, Operational Service Provider and
the hospital under the circumstances that the
Operational Service Provider is en
gaged
Cognitive Center
We offer the System integral software solutions to hospitals which enables the hospitals
to offer assessment and intervention to their cognitive impairment patients. In order to promote
and facilitate the usage of our System by the hospitals, we help hospitals establish cognitive
centers (which typically consist of a few rooms within the hospitals) by renovating these
rooms, purchasing hardware (such as tablets and computers) and data roaming packages for the
cognitive centers. Hospitals generally use the System in these cognitive centers to conduct
cognitive assessment and intervention for their patients. We generate revenue from hospitals
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which pay us based on the amount of in-hospital use by patients and the pricing set based on
negotiations between us and the hospitals with reference to the relevant provincial health
insurance reimbursement lists. We generated revenue of RMB1.0 million, RMB4.1 million,
RMB41.2 million, RMB15.2 million and RMB35.3 million from the provision of the system
integral software solutions in hospitals in 2021, 2022, 2023, and the six months ended June 30,
2023 and 2024, respectively resulting in gross profits of RMB0.5 million, RMB0.7 million,
RMB20.4 million, RMB7.2 million and RMB16.5 million for the same periods, respectively.
Along with our offering of the System, we also provide operational support to ensure the
smooth operation of the System in these cognitive centers. We sometimes engage third-party
service providers to provide operational support in cognitive centers of these hospitals on our
behalf. We have also provided operational services ourselves during the Track Record Period.
Operational services are necessary for hospitals to use the System smoothly and come together
with the System which we sell to the hospitals. Thus, the operational services should be viewed
as an integral part of what is offered to hospitals in exchange for revenue. Our ability to offer
operational services ourselves and our cooperation with multiple third-party service providers
therefore indicate that we do not have material reliance on a single third-party service provider
to provide such operational services and to make sales of the System integral software
solutions business. See “—Sales and Marketing—Our Marketing Model—Collaborations with
Top Hospitals and Research Institutions” for more details on cognitive center approach and the
roles and arrangements with such service providers.
To a lesser extent, we also offer the System integral software solutions directly to
individual patients out of hospitals who pay us periodic subscription fees during the period they
use the System. Patients obtain the computers and/or tablets from us after we make certain
configurations. The patients can then access and conduct cognitive trainings on those hardware
at their own homes. The pricing we charge individual patients are not limited by any health
insurance reimbursement lists, and are determined based on market conditions.
In addition to selling the System to hospitals and individual patients, we also offer
research projects services by providing the System as well as technical and operational support
services to help universities, hospitals and research institutions conduct research projects,
which we believe leads to wider adoption of our System within the medical community as a
viable therapy for cognitive impairment. We also began offering training facilitation service in
2023 where we assist our customer and the organizer of the training sessions in performing the
organizational and logistical groundwork, such as (i) co-designing the training curriculum,
standards, and attendance certificates; (ii) contacting training session lecturers; (iii) promoting
the training sessions among potential attendees; (iv) handling the logistics of setting up the
training sessions; (v) providing attendee after-sale services; and (vi) maintaining the website
and online portals in relation to the trainings. The customer and organizer is a public institution
dedicated to advancing the knowledge and capabilities of physicians and other medical
professionals in China. As requested by the customer, we charge service fees from attendees
instead of from the customer/organizer of the training sessions. The service fee from each
training is based on the type and number of training attendees when they sign up for the
training. We record training facilitation service revenue at the completion of each training. We
ceased offering training facilitation service in January 2024, and entered into a termination
agreement with the customer in April 2024.
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Historically, we also sold hardware equipment with our System pre-installed together
with user accounts which enable customers to use the System on the hardware equipment. Sale
of hardware is no longer our prevailing business model, and is only made upon existing
customers’ requests.
Our Product’s Value Proposition
We have been committed to the development of DTx products for the assessment and
intervention of cognitive impairment since our founding and have devoted significant
resources to building our R&D capabilities and technological infrastructure. As a result of our
investment in R&D, we have independently developed critical components of the System,
including adaptive collaborative intervention, large language models, multimodal cognitive
and affective computing models, as well as speech correction, intention recognition, and
automated assessment technology for virtual human interactions. For additional details on the
research and development of our Core Product, see “—Research and Development” and
“—Our Technologies.”
Leveraging the System, physicians in hospitals can perform medical assessment and
communicate with a large number of patients at once. Physicians can also use the System to
diagnose patients with an accuracy rate of over 90%. The technology underlying the System
also helps break through certain constraints of traditional clinical assessment standards, such
as MMSE and MoCA, offering more efficient and accurate assessment. In addition, the System
helps hospitals and physicians offer effective cognitive intervention to patients, leveraging its
adaptive collaborative intervention model which selects from millions of possible module
combinations, enabled by our library of over 300 training modules, to design the optimal
training session to activate the appropriate brain regions for the best therapeutic effect.
Hospitals typically learn about our products as a result of our growing reputation through
our work with the NHC, information provided by expert consensus on DTx treatment options,
collaborations with us on clinical research and product development, our sales initiative to visit
and showcase our products, referrals from recognized experts and KOLs and meetings at
national or regional industry or academic conference.
CORE PRODUCT: BRAIN FUNCTION INFORMATION MANAGEMENT PLATFORM
SOFTW ARE SYSTEM
Overview
Our Core Product, the System, is an evidence-based, medical-grade DTx product, and the
first cognitive impairment DTx product in China to receive regulatory approval, according to
Frost & Sullivan. In September 2018, we obtained the initial Class II medical device
registration certificate (the “ 2018 Certificate ”) from the Hunan Medical Products
Administration (the “ Hunan MPA ”) for the System. In June 2020, we obtained an amended
certificate (the “ 2020 Amended Certificate ”) from the Hunan MPA to include the screening,
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assessment, recovery and data analysis of eight specific indications. In May 2023, we renewed
the 2020 Amended Certificate with the Hunan MPA (the “ 2023 Renewed Certificate ”), which
contains the same indication coverage as the 2020 Amended Certificate. See “—Material
Communications with Competent Authorities” for detailed descriptions.
We categorize products by medical device registration certificates, namely each medical
device registration certificate represents one product. Based on the 2023 Consultation, the 2018
Certificate, the 2020 Amended Certificate and the 2023 Renewed Certificate are deemed to be
the same certificate bearing the same registration number, and the approval of additional
indications would not require us to obtain a new certificate. As such, consistent with the
relevant provisions in Administrative Measures on the Registration and Record-filing of
Medical Devices (), the System, with its eight existing
indications added in the 2020 Amended Certificate, as well as the potential new additional
indications, is considered “one product” since it has only one certificate. Patients that use the
System typically suffer from cognitive impairment, which is what the System addresses. Such
cognitive impairments may be induced by many classes of diseases, such as vascular diseases,
neurodegenerative diseases, psychiatric disorders and child development deficiencies. In
addition, the clinical trials that have been undertaken on the System as described below
demonstrate the safety and efficacy of the System in improving patients’ cognitive functions
(such as speed, attention, perception, long-term memory, working memory, calculation,
executive control, reasoning and problem solving, among other parameters), not the inducing
diseases themselves. Therefore, despite the variety in the diseases that could induce cognitive
impairment, the eight existing indications as well as the potential new indications are
considered indication expansion of the System and can be added to the same medical device
registration certificate.
Core Product Development Timeline
The following timeline sets forth the milestone events in the development of the System.
Y ear Milestone Company Roles
2016 We filed an invention patent
application for an online cognitive
assessment method based on a
hierarchical assessment concept of
cognitive assessment. The patent
was granted in April 2018. See
“—Intellectual Property” for
details.
Patent applicant
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Y ear Milestone Company Roles
December 2015 –
May 2017
We conducted a multi-center
randomized controlled trial in
collaboration with Xuanwu
Hospital to evaluate the
effectiveness of the System in
patients with VCIND (Trial
Registration: NCT02640716).
Our role: extensive responsibilities
similar to that of a sponsor
October 2018 We collaborated with Xuanwu
Hospital to publish a paper on the
Journal of Medical Forum on the
effect of comprehensive cognitive
intervention training using the
System in patients with vascular
cognitive impairment after surgical
operation for ischemic stroke.
Sole corporate participant
April 2019 We collaborated with the Suqian City
People’s Hospital to publish a
paper on the Cardiovascular
Disease Journal of integrated
traditional Chinese and Western
Medicine on the effect of
computer-assisted training using
the System combined with
rehabilitation training treatment.
Sole corporate participant
May 2019 We collaborated with the Zhujiang
Hospital of the Southern Medical
University to publish a paper on
the Guangdong Medical Journal on
the clinical effect of computer-
assisted cognitive training using
the System on post-stroke
cognitive impairment.
Sole corporate participant
November 2019 –
January 2024
We collaborated with Xuanwu
Hospital and other clinical trial
institutions to evaluate our System
in a multi-center study for patients
with AMCI (Trial Registration:
NCT04063956).
Sole corporate participant
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Y ear Milestone Company Roles
April 2020 We submitted an application to
amend the scope of the 2018
Certificate to include offline or
online clinical diagnosis,
treatment, cognitive language
psychological screening testing
training and brain functional data,
as well as other specific
indications.
Applicant
September 2021 We conducted the 2021 Consultation
with the Hunan MPA on the
granting of the 2018 Certificate
and the 2020 Amended Certificate
Registration certificate holder
2022 We completed a development project
on the virtual human technology
that uses natural language
processing to interpret users’ voice
commands and semantic intent.
Project developer
September 2022 –
March 2024
We collaborated with the Anzhen
Hospital and six other clinical trial
institutions to evaluate our System
in application to atrial fibrillation
induced cognitive impairment
(Trial Registration:
NCT05374642).
Sole corporate participant
January 2023 –
May 2024
We collaborated with the Anzhen
Hospital and seven other clinical
trial institutions to evaluate our
System in application to coronary
heart disease induced cognitive
impairment in a randomized
controlled trial in patients with
coronary heart disease induced
cognitive impairment (Trial
Registration: NCT05735041).
Sole corporate participant
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Y ear Milestone Company Roles
March 2023 –
April 2024
We conducted a clinical trial focused
on hypertension induced cognitive
impairment in collaboration with
several hospitals led by the
Anzhen Hospital (Trial
Registration: NCT05704270).
Sole corporate participant
May 2023 We renewed the 2020 Amended
Certificate with the Hunan MPA,
which is now valid until June
2028.
Applicant
July 2023 We conducted the 2023 Consultation
with the Hunan MPA to clarify the
clinical evaluation requirements for
indications currently under
development.
Registration certificate holder
These abovementioned collaborations do not affect the ownership of intellectual
properties in relation to the virtual human technology, the AI technology or the algorithms that
underlie the System, and we enjoy sole ownership of such intellectual properties. See
“—Intellectual Property” for details.
Mechanism of Action
The System is a software that provides clinical assessment and intervention for various
types of cognitive impairment induced by vascular diseases, neurodegenerative diseases,
psychological disorders and child development deficiencies, among other types of cognitive
impairments.
The System provides cognitive impairment patients with cognitive trainings that are
designed to stimulate the neural networks involved in attention, memory, executive function
and other cognitive abilities in patients’ brains at the appropriate frequency and dosage to
produce a therapeutic effect. According to the principle of neuroplasticity, continuous and
regular brain stimulation can promote the release of neurotransmitters between the patient’s
synapses, resulting in the growth of nerve fibers and a corresponding increase in the number
of synapses. The new neural connections can form a compensatory neural pathway and improve
the structure and functional connections of the patient’s neural network.
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Patients with cognitive impairment symptoms begin their journey with the System with
consultations with physicians, who may decide to conduct cognitive assessment using the
System. Physicians then identify the types of the patients’ cognitive functions that are impaired
with the assistance of the System and then direct the System to assign the relevant cognitive
training tasks. Patients’ training results each day are fed into the DNN model to determine the
training tasks for the next day. After a certain period of time of conducting the cognitive
trainings, patients undergo follow-up cognitive assessment to evaluate whether the impaired
cognitive functions experienced any improvements and provide feedback to enable
readjustment of training tasks in order to further improve cognitive training efficacy. The
following diagram sets forth a flowchart setting forth the different stages of how the System
serves patients.
Patients with cognitive impairment symptoms
Cognitive Assessment
Identification of Cognitive Impairment Type and Impaired Cognitive Functions
• VDCI
• NCI
• PCI
• CDDCI
Cognitive Intervention and Training
• Seven daily cognitive training tasks based on identified cognitive impairment and
   impaired cognitive functions.
• Tasks selected from millions of possible combinations using DNN-based algorithm.
Follow-up Assessment
Upon assessment order from physicians
Physicians prescribe the System based on identification
Provide feedback to enable readjustment of
Provide basis for physicians
Patients conduct daily trainings
• MOCA/MMSE
• Patients demographic information
• Other medical diagnosis and records
• Continuous attention ability and attention span
• Short-term and long-term memory
• Spatial and other sensory capabilities
• Mood and impulse control
The System has been commercialized for eight indications from four major types of
cognitive impairment and is under development for several other cognitive impairment
indications as of the Latest Practicable Date. At the identification stage, physicians are able to
determine the patients’ specific cognitive impairment indications. This leads to differences in
how the training tasks are assigned to provide tailored medical solutions to patients suffering
from different indications. Specifically, our DNN-based algorithms use the type of patient
cognitive impairment as a critical input in determining what training task combinations are
optimal for patient treatment. See “—Cognitive Intervention and Training” for details on the
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underlying brain science theories and the mechanism of this recommendation process. The risk
that the System may be applied to patients of indications other than these eight approved
indications is highly remote, because patients can only begin to use the System’s cognitive
intervention training pursuant to prescriptions by physicians after diagnosis, therefore patients
who do not suffer from the approved indication would not be eligible to begin to receive the
System’s cognitive intervention and training.
Cognitive Assessment and Identification of Cognitive Impairment Type
The System performs an initial assessment of patients with the aid of our virtual human
technology and digitized versions of psychometric scales such as the MoCA and MMSE. The
initial assessment takes into account the patients’ MoCA and MMSE scores, with a MoCA
score of less than 26 and a MMSE score of less than 27 being considered cognitively impaired
according to industry norms. In addition, other dimensions of the patients’ cognitive abilities
are considered, including perception, memory and language. Because the MoCA and MMSE
psychometric scales are generalized screening scales for cognitive impairment and do not
assess specific aspects of the patients’ cognitive ability, a medical professional at the hospital
will assign targeted assessments to further evaluate each dimension of the patients’ cognitive
ability. For example, if a patient’s total score on the MMSE is below 27 and the patient’s
perceptual score is also below the score of a healthy individual based on the initial assessment,
the medical professional will assign a perceptual assessment for further evaluation. The
following screenshot shows the interface available to medical professionals for selecting a
customized assessment package for patients.
Patient Information and Assessment  Selection
Basic Patient Information (Hypothetical)
Paid or Free Assessment Selection
Assessment Difficulty and Length Selection
Assessment Task Selection
Assessment Type Selection
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The System then evaluates the patients’ response to the assessment package, taking into
account their accuracy and response time and generates an assessment report for each patient.
In combination with other patient demographics and medical information, physicians can use
this report to identify the type of cognitive functions that have been impaired, and use the
System to provide tailored cognitive training tasks. The following screenshot shows what this
type of report typically includes.
Basic Cognitive Assessment Results
Score Percentile versus
Healthy IndividualsAssessment Task Type
Cognitive Ability Tested
Patient Score
Radar Chart of Patient's
Cognitive Abilities (Blue)
versus Healthy Individuals
(Orange)
2. Basic Cognitive Function
Radar Chart
1. Basic Cognitive Function
Assessment Results
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Cognitive Intervention and Training
The System includes a library of more than 300 training tasks, each designed to stimulate
specific aspects of the patient’s cognitive function. Different training tasks are designed based
on different psychological paradigms, which are conceptual frameworks that link the patient’s
use of specific cognitive functions to the targeted activation of specific neural networks. For
example, the number line estimation paradigm, first proposed by Siegler, R. S., & Opfer, J. E.
in 2003, associates the maintenance of a mental representation of numerical magnitude with the
activation of the brain’s executive, sensory motor and visual networks. A training task designed
around the number line estimation paradigm can therefore specifically activate these associated
neural networks and the corresponding brain regions, including the parietal lobe, occipital lobe,
posterior part of the superior temporal gyrus, inferior frontal gyrus and middle frontal gyrus.
The following diagram shows a schematic representation of the neural networks activation
associated with the number line paradigm.
Visual Network
(including the occipital lobe)
Back
Front
Sensory Motor Network
(including the precentral gyrus
and the postcentral gyrus)
Executive Control Network
(including the dorsolateral
prefrontal cortex)
Due to the structural and functional plasticity of the brain, neurons in repeatedly activated
brain regions can form new connections, increasing the volume of gray matter in these brain
regions and improving the functional connectivity of neural networks within these regions. As
a result, the overall efficiency of information transfer within the brain improves, leading to
improvements in cognitive function. Based on the patients’ assessed cognitive deficiencies, the
System adjusts its intervention strategy and assign different types of training tasks to best
target the corresponding neural networks.
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The following screenshot demonstrates the functioning of the River Crossing Training
Task, which was designed based on the number line estimation paradigm, from the patients’
perspective.
River Crossing Training Task
Training Task:
Cut the Tree into the Appropriate LengthPause/Help Score
Task Instruction:
Move the Tree Trunk
with Your Fingers
Task Difficulty:
High
The above training task asks the patient to help the in-game character to cut trees at the
right height to cross the river. For a patient who has been identified by the System as having
cognitive deficiencies related to their executive, sensory motor or visual networks, the targeted
stimulation provided by this task could improve cognitive function.
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Another example of a psychological paradigm that we use to target specific neural
networks is the visual search paradigm, which associates the cognitive task of finding a target
stimulus among a variety of other stimuli with the activation of the brain’s attentional network.
A training task designed around the visual search paradigm can therefore specifically activate
the attentional network and the corresponding brain regions, including the posterior parietal
lobe and the frontal oculomotor area of the posterior frontal lobe. The following diagram shows
a schematic representation of neural networks activation during the visual search task.
Attentional Network
(including the posterior parietal cortex)
Parietal
Occipital
Temporal
Frontal
Front Back
The following screenshot demonstrates the functioning of the Patrolling the Pasture
Training Task, which was designed based on the visual search paradigm, from the patients’
perspective.
Patrolling the Pasture Training Task
Training Task:
Quickly Count the Number of AnimalsPause/Help
Task Difficulty:
Medium Score
Task Instruction:
"How many cows are
on the farm?"
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The above training task asks the patient to quickly identify the number of a specific
animal species from a group of different animals. For a patient who has been identified by the
System as having cognitive deficiencies related to their attentional networks, stimulation
provided by this task could improve cognitive function.
While these training tasks are capable of improving a patient’s cognitive abilities on their
own, the System enhances treatment efficacy by tailoring them to the individual patient
through its DNN-based recommendation algorithm. According to the 2022 Chinese Expert
Consensus on Cognitive Digital Therapeutics (΍ᗆ (2022) ), the
effect of cognitive training is influenced by individual differences. These differences are
primarily reflected in the degree of cognitive impairment in individuals and their sensitivity to
the training tasks. These individual differences can produce varying results, even if patients are
trained on the same tasks. For example, some patients may need to train ten times to see a
significant improvement in a task score, while others may achieve the same improvement with
only five training sessions. Therefore, a static recommendation system can only meet the
training needs of some patients. In contrast, the DNN-based recommendation algorithm
utilized by the System enables personalized adjustments to the training program, ultimately
improving training efficacy. As shown in a clinical trial of patients with VCIND at Xuanwu
Hospital, the dynamic adjustment of training scenarios is able to produce statistically
significant benefits in the cognitive improvement of VCIND patients over a static training
scenario, as measured by MoCA scores.
Time to Achieving Clinically Significant Effects
To measure the treatment effects of the System, we have conducted randomized
controlled trials, the gold standard in clinical trial design for measuring efficacy, to test the
effects of the System. For example, a randomized controlled trial conducted in collaboration
with Xuanwu Hospital, the results of which were published in Alzheimer’s & Dementia in
2019, found that after seven weeks of continuous training with the System, test subjects saw
clinically significant improvements as measured by improvements in their Montreal Cognitive
Assessment scores, the industry standard for assessing cognitive impairment. While it was
likely that subjects would have experienced clinically significant improvements prior to the
seven week end point, the clinical trial demonstrated that the System can achieve its intended
effects at least as early as the end of the seventh week of training.
For additional details on this trial, see “—Core Product: Brain Function Information
Management Platform Software System—Summary of Clinical Results—Xuanwu Trial.”
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Technologies Related to the System
The System utilizes two underlying technologies, namely the virtual human and AI
technologies to enhance its assessment and intervention capabilities. Our virtual human
technology brings value to the assessment process by automating physician-patient interactions
through a series of technological capabilities, which enable physicians to perform medical
assessment and communicate with a large number of patients at once. Our AI technology
enables our development of DNN algorithms, a powerful category of ML algorithms, which
helps the System more accurately assess patients’ conditions without the influence of
subjective judgment by medical professionals.
In addition to assessment function, our DNN algorithms (enabled by AI technology) also
enables the System to offer improved intervention efficacy by using patient information
(including their historical training performance scores and performance details from previous
training tasks of varying difficulty levels) to dynamically adjust the content of the training
sessions to achieve personalized interventions. The AI technology allows the System to analyze
patients’ response time and accuracy rate when using the System and flexibly adjusts training
scenarios and difficulties accordingly by choosing from millions of possible training module
combinations of a library of approximately 300 training modules that are designed to activate
the appropriate brain regions for the best therapeutic effect, making the training session highly
customized and self-adaptive for each patient. Such highly self-adaptive and personalized
intervention trainings target specific brain functions, improve the corresponding brain areas
and restore network connections between neurons, generate new nerve fibers, regulate trophic
factors and consolidate neuronal remodeling. This results in the construction of specific
synaptic connectivity patterns for specific cognitive functions, thereby improving patients’
overall cognitive abilities.
See “—Our Technologies” for more details on the virtual human and AI technologies.
Competitive Advantages
Supported by our core technologies of virtual human and AI, our System features two
primary competitive advantages, namely assessment efficiency and treatment efficacy.
 Assessment Efficiency. Our virtual human technology can perform medical assessment
and communicate with a large number of patients at once. Our artificial intelligence
technology enables physicians to perform assessment and intervention in a streamlined
and user-friendly manner.
 Treatment Efficacy. By dynamically identifying and recommending the most suitable
training out of millions of different possible combinations, our DNN algorithms enable
the System to offer self-adaptive and personalized trainings that lead to more favorable
enhancement of cognitive functions for patients who use the System together with drug
therapies compared to patients under drug therapies alone, as measured by patients’
response time, accuracy rate, improvement in training performance scores and length of
user stay. For example, pursuant to our clinical study in relations to the ADHD indication,
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patients who undergo software-based cognitive trainings as well as drug therapies (the
intervention group) demonstrate more favorable recovery data compared to patients who
undergo drug therapies alone (the control group). Specifically, under the ADHD Rating
Scale, patients in the intervention group demonstrates more favorable (i) overall
reduction ratio (which measures improvement in symptoms of attention deficiency and
hyperactivity) of 31.12% (p < 0.05) compared to 19.04% (p < 0.05) for the control group;
(ii) response time under the Flanker test (a test that evaluates patients’ capabilities in
visual attention focus) of 1,106.3 ms compared to 1,336.2 ms (p < 0.05) for the control
group; and (iii) performance score in paper folding test (a test that measures the patients’
visual and special sensory capabilities and evaluates the patients’ perception of shape,
size, and distance) of 12.76 compared to 10.67 for the control group (p < 0.05).
These advantages have been demonstrated by our success in gaining acceptance for and
commercializing our DTx products. In September 2020, we helped establish a cognitive center
in the Chaoyang Hospital, which was the first cognitive center in China that adopted DTx,
according to Frost & Sullivan. Since then, we had helped more than 120 hospitals establish
cognitive centers in China as of the Latest Practicable Date, including several leading hospitals
with “National Medical Center” (ᔼኪʕː) certification for various medical specialties by
the NHC, a designation reserved for only top departments of select few hospitals in China, such
as Xuanwu Hospital (certified in neurology), Anzhen Hospital (certified in cardiology) and
Anding Hospital (certified in psychiatrics). The System’s competitive advantage is also
demonstrated by wide-spread industry recognition. In particular, we have participated in the
establishment of a series of expert consensus, which set the industry standard for the DTx
market in China.
System Efficacy
The System’s efficacy has been evaluated in several clinical trials, including the Xuanwu
Trial, the Aphasia Trial and the Schizophrenia Trial, and the positive outcomes of these trials
highlight the potential of the System as a valuable intervention tool in improving cognitive
function.
In the Xuanwu Trial, the System demonstrated favorable safety and efficacy data in the
assessment and intervention of vascular cognitive impairment. The cognitive intervention
group showed significant improvement in global cognitive function as measured by the
Montreal Cognitive Assessment (MoCA) compared to the control group.
The Aphasia Trial, which as an investigator initiated trial conducted by the Jiangsu
Provincial People’s Hospital, evaluated the efficacy of the System in the treatment of aphasia.
The trial showed that the intervention group had significantly improved language function and
practical communication skills compared to the control group. Western Aphasia Battery (W AB)
scores indicated that the intervention group demonstrated larger improvements in the Aphasia
Quotient, fluency, content, auditory comprehension, repetition, naming, and Communicative
Abilities in Daily Living Test (CADL) compared to the control group. This suggests that the
System may be an effective tool in promoting recovery from aphasia.
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Similarly, in the investigator initiated Schizophrenia Trial conducted by Ningbo
Kangning Hospital, the System demonstrated a significant improvement in the overall
cognitive function of schizophrenic patients. The Wechsler Memory Scale (WMS) was used to
measure cognitive capacity before and after six weeks of treatment. The results showed that the
WMS scores of the intervention group were significantly higher compared to the control group.
This indicates that the System can effectively enhance cognitive function in schizophrenic
patients.
Market Opportunities and Competitive Landscape
The market size of the cognitive impairment DTx in China reached RMB268.6 million in
2023 and is expected to increase to RMB1,046.7 million in 2025 and RMB8,927.4 million in
2030, representing CAGRs of 97.4% and 53.5%, respectively. The market for cognitive
impairment DTx is expected to grow due increasing demand for cognitive impairment
treatment, advances in innovative technologies, supportive regulatory measures and growing
awareness of cognitive impairment DTx as a therapeutic option.
In China, as of the Latest Practicable Date, approximately 100 cognitive impairment DTx
products by approximately 50 players, including our Company, had been approved by the
NMPA or its local counterparts, and at least 20 cognitive impairment DTx products by
approximately 20 players are currently in the process of clinical trials and obtaining relevant
medical device registration certificates, as of the Latest Practicable Date, according to Frost &
Sullivan. We are the first company in China that has developed a medical-grade DTx product
for cognitive impairment.
Key players in the global cognitive impairment DTx market (outside China) include
companies that offer cognitive training interactive games, cognitive behavioral therapies,
health monitoring systems and other types of cognitive impairment DTx products. As of the
Latest Practicable Date, there were approximately 23 FDA-approved products by
approximately 14 key global players covering cognitive impairment induced by various
indications.
Our System targets a variety of cognitive impairment indications, covering the assessment
and intervention of four major types of cognitive impairment: VDCI, NCI, PCI and CDDCI.
VDCI DTx Competitive Landscape
Key players in the global VDCI DTx market (outside China) include at least one player
with two FDA-approved VDCI DTx products. In China, a total of approximately 28 VDCI DTx
products by approximately 22 players, including our Company, had been approved by the
NMPA or its local counterparts, and at least five VDCI DTx products by five players were in
the process of clinical trials and obtaining relevant medical device registration certificates, as
of the Latest Practicable Date, according to Frost & Sullivan. For more information, see
“Industry Overview—VDCI DTx Market—Competitive Landscape of VDCI DTx.”
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NCI DTx Competitive Landscape
Key players in the global NCI DTx market (outside China) include three players that
offers at least four FDA-approved NCI DTx products. In China, a total of approximately 36
NCI DTx products by approximately 34 players, including our Company, had been approved
by the NMPA or its local counterparts, and at least ten more NCI DTx products by at least ten
players were in the process of clinical trials and obtaining relevant medical device registration
certificates, as of the Latest Practicable Date, according to Frost & Sullivan. For more
information, see “Industry Overview—NCI DTx Market—Competitive Landscape of the NCI
DTx Market.”
PCI DTx Competitive Landscape
Key players in the global PCI DTx market (outside China) include at least 12 players that
offer at least 18 FDA-approved PCI DTx products. In China, a total of approximately 32 PCI
DTx products by approximately 31 players, including our Company, have been approved by the
NMPA or its local counterparts, and at least five additional PCI DTx products by at least five
players are currently in the process of clinical trials and obtaining relevant medical device
registration certificates, as of the Latest Practicable Date, according to Frost & Sullivan. For
more information, see “Industry Overview—PCI DTx Market—Competitive Landscape of PCI
DTx Market.”
CDDCI DTx Competitive Landscape
Key players in the global CDDCI DTx market (outside China) include at least two players
that offer at least three FDA-approved CDDCI DTx products. In China, a total of
approximately 25 CDDCI DTx products by at least 22 players, including our Company, have
been approved by the NMPA or its local counterparts, and at least ten CDDCI DTx products
by at least ten players are currently in the process of clinical trials and obtaining relevant
medical device registration certificates, as of the Latest Practicable Date according to Frost &
Sullivan. For more information, see “Industry Overview—CDDCI DTx Market—Competitive
Landscape of CDDCI DTx Market.”
Competitive Advantage Over Industry Competitors
We differentiate ourselves from our competitors by integrating our virtual human and AI
technologies into our DTx products. Our virtual human technology automates patient
interactions and other processes by integrating speech recognition, correction, intent
recognition and automated assessment and analysis capabilities. We are one of the few
companies in the cognitive impairment DTx industry in China that incorporate this type of
automated patient interaction system in their product line, according to Frost & Sullivan.
Benefiting from the large amount of usage of our products by patients, the AI algorithms
underlying our products undergo rapid iterations, which leads to improved assessment accuracy
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and more favorable intervention efficacy. In particular, our DNN algorithms, used to power our
adaptive collaborative intervention model, allows our DTx products to better handle complex
and high-dimensional data, enabling us to monitor patient progress and gain deeper insights
into our patients’ needs. According to Frost & Sullivan, AI solutions enhanced with DNN
algorithms have the advantage of overcoming the problems of slow training and error
susceptibility by adopting a new type of data learning method that is more efficient and better
able to capture correlations and implicit operating patterns between data. We are one of the few
companies in the cognitive impairment DTx industry in China that enhances our AI capabilities
with DNN algorithms. Due in part to these advantages, our DNN algorithms show intervention
efficacy of over 60% improvement over non-AI based interventions.
We also enjoy competitive advantage over our competitors in terms of hospital
collaborations. According to Frost & Sullivan, sale to hospitals has become and is expected to
remain the dominant sales channel for cognitive impairment DTx companies in China, and
deep collaborations with hospitals beyond simply selling and delivering products are often
required to establish and maintain business relationship with hospitals and remain competitive
in China’s cognitive impairment DTx industry. As of the Latest Practicable Date, we have
helped over 120 hospitals establish cognitive centers, and we are the first organizer of a project
initiated by the NHC under which we are tasked with helping to establish cognitive centers in
over 2,100 public hospitals across China and promoting the development of cognitive
impairment DTx market in China over the next five years. Our extensive existing and planned
collaboration with hospitals through our cognitive center collaborations results in a large use
volume of our products, which allows us to make continuous iterative improvements and
increase the assessment accuracy and interventional efficacy of our products. In addition, our
collaborations with hospitals through our cognitive centers allow us to gather valuable
feedback from physicians and hospital administrators to further improve our products and meet
the needs of our collaborating hospitals.
We are also distinguished from our peers in our ability to navigate the evolving landscape
of cognitive impairment DTx medical device regulations. We are the first cognitive impairment
DTx medical device company in China to receive NMPA approval and have the broadest
indication coverage for approved and in-development products among all cognitive impairment
DTx companies in China, according to Frost & Sullivan.
Summary of Clinical Results
Several clinical trials were conducted to evaluate the safety and efficacy of the System
with respect to several cognitive impairment indications. Results of key clinical trials of the
System is presented below.
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Xuanwu Trial
Overview
We conducted a multi-center, randomized controlled investigator initiated trial on the
effectiveness of the System in patients with VCIND in collaboration with the Xuanwu Hospital
from December 2015 to May 2017 (the “ Xuanwu Trial ”) (Trial Registration: NCT02640716),
and obtained ethics approval in October 2015. The Xuanwu Trial successfully demonstrated the
safety and efficacy of the System for treating VCIND. In September 2021, we conducted a
consultation with the Hunan MPA (the “ 2021 Consultation ”) on the granting of the 2020
Amended Certificate. According to the 2021 Consultation, the information and data we
submitted in relation to the Xuanwu Trial successfully demonstrated the safety and
effectiveness of the System and played an essential role in the Hunan MPA ’s decision to grant
the 2020 Amended Certificate.
For the Xuanwu Trial, we undertook extensive responsibilities similar to those of a
sponsor because (i) our System was the only trial therapy evaluated for safety and efficacy in
the treatment of VCIND and all software and hardware used were supplied by us; (ii) we
determined and designed the details of the study plan for the control and study groups; (iii) we
prepared informed consent and case report forms; and (iv) we conducted facilitative imaging
tests, psychological assessments and patient follow-up throughout the study period.
This trial is the first international cognitive training intervention trial for VCIND,
according to Frost & Sullivan. One of the trial’s design goals was to facilitate a Class II
medical device registration approval and, therefore, the trial has a risk profile consistent with
what is required for such approvals. The trial included 60 patients with VCIND, with the
intervention group receiving cognitive training for seven consecutive weeks, five days a week,
30 minutes a day, while the control group received simple computer operation tasks of fixed
level of difficulty at the same time. The results indicate that the intervention group had higher
MoCA scores, a commonly used assessment of cognitive ability, than the control group. In
addition, connectivity between the cognitive network and the executive control network
significantly improved in the intervention group, and the changes between improved
neuroconnectivity and increased MoCA scores were highly correlated. The trial demonstrated
that the System can significantly improve the overall cognitive function of patients with
subcortical VCIND. As of the Latest Practicable Date, the trial is associated with four of our
patents or patent applications.
Trial Design
In October 2016, the trial design was published on ClinicalTrials.gov and peer-reviewed
by experts in the international cognitive impairment clinical studies community. The trial
enrolled a total of 60 patients, 30 of whom were randomly assigned to the intervention group
and the other 30 to the active control group. A consensus panel was utilized to select patient’s
with VCIND. Patients in the intervention group received a computerized, multi-domain,
adaptive training program provided by our System for seven weeks. The training domains
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included processing speed, attention, perception, long-term memory, working memory,
calculation, executive control, reasoning and problem solving. Participants were required to
complete 30 minutes of training per day (five two-minute tasks completed thrice), five days a
week. Within each task, high accuracy (>80%) was required to progress to the next difficulty
level. The active control group performed five processing speed and attention tasks similar in
nature to those in the intervention group, but without the adaptive difficulty change provided
by our system. The active control group also completed 30 minutes of training per day.
The training of all participants was completed at home and remotely supervised by an
independent neurologist to ensure patient compliance. Neuropsychological assessment and
functional and structural MRI were performed before and after seven weeks of training. The
brain MRI was performed using an optimized protocol.
Trial Status
The trial was completed in May 2017. A total of 54 participants with (27 each in the
intervention group and the active control group) finished the training. A total of 44 participants
(23 in the intervention group and 21 in the active control group) completed the six-month
follow-up. Of the ten participants (16.7% of the total participants) who withdrew from the
study, four cited health issues, one cited time constraints, three cited dissatisfactions with the
trial and two cited personal issues.
Trial Data
As of the data cut-off date of May 8, 2017, no Treatment-related Adverse Events (the
“TRAE s”) had been reported.
The primary outcome measures were global cognitive function as measured by the
MoCA, and executive function as measured by the Trail Making Test B-A (the “ TMT B-A ”);
both were centrally assessed. There was a significant group x time interaction in MoCA at the
end of the intervention period. At the end of the seven-week training, the System has achieved
its intended effects, as demonstrated by the following data: MoCA had significantly improved
in the cognitive intervention group from an average score of 21.87 points to 25.22 points (out
of a total possible score of 30) relative to the active control group which saw little change from
an average score of 21.23 to 21.15, with an effect size of 0.637 (95% CI 0.115 –1.153)
compared to the control group. This difference did not persist at the six-month follow-up.
MoCA is an overall cognitive impairment assessment scale that summarizes patients’
performance in terms of several cognitive functions that are closely related to the daily lives
of patients, including visuospatial and executive functioning, naming, immediate recall,
attention, language, abstract thinking, delayed recall and orientation. MoCA score represents
the accuracy of patients’ responses to the assessment scale. As such, the abovementioned
improvement in MoCA score demonstrates patients’ improved accuracy in responding to the
MoCA assessment scale, which in turn demonstrates patients’ improvement in one or more of
the abovementioned cognitive functions. No significant group x time interaction was found for
TMT B-A. Compared to the active control condition, the cognitive training intervention led to
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a significant improvement in global cognitive function, as measured by the MoCA, but not in
executive function, as measured by the TMT B-A, by the end of the seven-week intervention.
The following charts set forth the changes from the baseline to the end of the seven-week
intervention and from the baseline to the end of the six-month follow-up for the primary
outcomes.
Secondary outcome measures were the effects of the intervention on other cognitive
domains. Results showed that cognitive training significantly improved language function as
measured by the Boston Naming Test (the “ BNT”). A significant improvement in the BNT was
observed at the end of the seven-week intervention (effect size = 0.560, P = 0.028), indicating
that the training improves verbal function in addition to overall cognitive function.
The cognitive intervention group showed significant increases in functional connectivity
(the statistical relationship between specific physiological signals in time) between the left
dorsolateral prefrontal cortex (the “ DLPFC.L ”) and the medial prefrontal cortex (the
“MPFC ”) by the end of the intervention. Specifically, the intervention group showed a
significant improvement in functional connectivity between DLPFC.L and MPFC (P = 0.049).
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Since the MPFC is the main brain region activated during the resting state and the DLPFC is
the main area activated during problem solving, higher functional connectivity between MPFC
and DLPFC indicates an improvement in cognitive capacity.
In May 2019, we published the data of this trial on a leading peer-reviewed journal on
cognitive impairment clinical research, A&D Journal, titled “ The effects of 7-week cognitive
training in patients with vascular disease induced cognitive impairment, no dementia (the
Cog-VACCINE study): A randomized controlled trial ,” and it has been prominently featured on
the cover page of the issue. The paper sets forth a comprehensive analysis on the safety and
effectiveness of the System. The A&D Journal is the official journal of the International
Alzheimer’s Association in cognitive impairment worldwide with an SCI Impact Factor of
21.566 in 2020. The trial also received the attention and recommendation of Nature Reviews
Disease Primers (the “ NRDP Journal ”), an internationally leading academic journal with an
SCI Impact Factor of 65.038 in 2023. The above publications demonstrate the innovativeness
and originality of the System in the field of cognitive impairment intervention treatment.
We generally request patients using the System to retake the MoCA scale every three
months during their respective treatment courses to obtain a quantitative measure of their
cognitive function improvement.
Trial Design Limitations
The trial design had the following limitations. The intervention in the trial was of short
duration with limited number of participants, and results from the six-month follow-up suggest
that a longer intervention may be needed to assess long-term outcomes. In addition, the trial
design may not fully eliminate the potential impact of regular disease progression of patients
with VCIND, which is characterized with cognitive decline with age, and may therefore
partially erode the efficacy achieved through the System. The trial design excluded patients
with comorbid AD, which could introduce uncertainty into the trial results. The trial design
used two primary outcome measures, the MoCA and the TMT B-A. A single primary outcome
measure could potentially increase data accuracy.
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Aphasia Trial
Overview
An investigator initiated trial to further study the efficacy of the System for aphasia (the
“Aphasia Trial ”) was conducted by the Jiangsu Provincial People’s Hospital, and we obtained
ethics approval in April 2016. Aphasia is an acquired language disorder due to brain damage,
including damage due to stroke. While there are several therapies that target speech-language
pathology, recent theoretical developments and empirical evidence have suggested adding
nonverbal cognitive training as part of speech-language recovery. In November 2018, the
design and results of the Aphasia Trial was published on “Frontiers in Psychology.” One of the
trial’s design goals was to facilitate a Class II medical device registration approval and,
therefore, the trial has a risk profile consistent with what is required for such approvals.
Trial Design
A total of 40 aphasia inpatient and discharged patients were enrolled, 22 of whom were
diagnosed with cerebral infarction and 18 cases cerebral hemorrhage. Within the inpatient
group and within the discharge group, participants were randomly assigned to the intervention
or the control subgroup, resulting in ten participants in each subgroup. The length of trial was
14 days for inpatient subgroups and 30 days for discharged subgroups. The inpatient control
group was provided with routine treatment twice a day, while the inpatient intervention group
received the computerized speech-language and cognitive training through the System. The
discharged control group engaged in family topics communication for 30 min a session, twice
a day for 30 days, and the discharged intervention group engaged in family topics
communication for 30 min a day, with additional cognitive training through the System,
delivered via telerehabilitation, for 30 minutes a day for 30 consecutive days.
Trial Data
Compared with the control group, the intervention group had significantly more improved
language function as assessed by the Western Aphasia Battery (the “ WA B”) and practical
communication skills as assessed by the Communicative Abilities in Daily Living Test (the
“CADL ”). The CADL requires administrator to ask the patient 22 questions to assess a variety
of communication skills. Across the 22 items, there are 34 sub-items, each scored from zero
to four points.
The results showed that for the inpatient group, the improvement in inpatient control and
inpatient intervention subgroups was 14.1 and 26.5, respectively; and for the discharge group,
the improvement in the discharged control group and discharged intervention group was 7.1
and 19.8, respectively. Specifically, for each of the inpatient group and discharged group,
patients in the intervention subgroups demonstrated larger improvement than the control
subgroups in the Aphasia Quotient (the “ AQ”), fluency, content, auditory comprehension,
repetition, naming, and CADL.
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The Aphasia Trial showed that for both hospitalized and discharged patients, combined
form of computerized training adopting the System promoted aphasia recovery more
effectively than traditional training for the control subgroups without the System.
Trial Design Limitations
The trial had the following design limitations. The trial had a small sample size and was
a single-center trial. The trial enrolled both inpatient and outpatient subjects and the two
patient groups received differing lengths of cognitive training which could reduce data
accuracy.
Schizophrenia Trial
Overview
An investigator initiated trial to further study the efficacy of the System for Schizophrenia
(the “ Schizophrenia Trial ”) was conducted by the Ningbo Kangning Hospital from January
2020 to June 2020, and we obtained ethics approval in January 2020. The Wechsler Memory
Scale (the “ WMS”) was administered before and after six weeks of treatment to measure the
patients’ cognitive capacity. The results showed that the WMS score of the intervention group
was higher compared to those of the control group. The study demonstrated that the System can
significantly improve the overall cognitive function of schizophrenic patients. One of the
trial’s design goals was to facilitate a Class II medical device registration approval and,
therefore, the trial has a risk profile consistent with what is required for such approvals. The
Schizophrenia Trial did not directly lead to any of our patents but was a part of the background
knowledge that eventually contributed to three of our Schizophrenia related patents or patent
applications.
Trial Design
The trial enrolled a total of 80 patients suffering from schizophrenia, 40 of whom were
randomly assigned to the intervention group and 40 to the control groups. The intervention
group receiving cognitive training using the System for six consecutive weeks, five days a
week, 30 minutes a day. The active control group received computerized cognitive training
consisted of moving dot clicking, alphabet screening and flying saucer capturing, while the
passive control group received standard cognitive trainings and anti-psychotic medications.
Trial Status
In June 2020, the trial was completed. A total of 67 participants (37 in the intervention
group and 30 in the active control group) finished the training. Of the 13 participants (16.25%
of the total participants) who withdrew from the study, two cited adverse reactions, eight has
failed to complete all trainings, three voluntarily removed themselves from hospitalization
without specifying a reason.
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Trial Data
As of the data cut-off date of June 2020, two AEs relating to patient’s continued use of
non-trial related psychiatric medication has been reported, both of which arose from the intake
of medications instead of the use of the System.
The 1-100 scale and the 100-1 scale under the WMS scale indicate a patient’s long-term
memory, while the mnemonic, recognition, and regeneration scales indicated a patient’s
short-term memory, and the memorization scale indicates a patient’s instantaneous memorizing
capacity. In this study, in terms of total WMS score or score under each sub-WMS scales
(100-1 and 100-1 scales, mnemonic scale, recognition scale, regeneration scale, and
memorization scale), the intervention group scored significantly higher than the control group
(all P < 0.050) after treatment.
Trial Design Limitations
The trial had the following design limitations. The trial had a small sample size and was
a single-center trial. The trial was not randomized but assigned subjects to intervention and
control groups based on order of enrollment; there was a difference in the dropout rate between
the intervention and control groups of 7.5% and 25%, respectively, which may have resulted
in an unbalanced distribution between the two groups and introduced confounding factors.
Amnestic Mild Cognitive Impairment
Overview
We are collaborating with the Xuanwu Hospital on clinical trials focused on
neurodegenerative diseases. One of the studies we conducted in collaboration with the Xuanwu
Hospital was a multi-center, randomized single-blind, positive-controlled, adaptive and
multi-domain cognitive training study in patients with amnestic mild cognitive impairment (the
“AMCI trial ”) (Trial Registration: NCT04063956), and obtained ethics approval in January
2022. We have completed the trial with 244 subjects in January 2024. Data cleaning and
analysis will be performed after completion of all data collection, which is expected in 2025.
One of the trial’s design goals was to facilitate a Class II medical device registration approval
and, therefore, the trial has a risk profile consistent with what is required for such approvals.
Based on the final results data of this trial, we plan to submit application to expand the scope
of our 2023 Renewed Certificate to include amnestic mild cognitive impairment in the second
quarter of 2025. As of the Latest Practicable Date, the trial is associated with two of our patents
or patent applications.
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Trial Design
The AMCI trial is designed to assess the efficacy of tablet-based cognitive training
program for improving cognitive abilities in patients with AMCI. A total of 247 eligible
participants were randomized into two groups. The intervention group received multi-domain
adaptive cognitive training embedded in a tablet. The control group used the same tablet for
basic cognitive training. The intervention frequency (40 minutes each time, four times per
week) and duration (12 weeks) was the same between the two groups.
Trial Status
The trial was initiated in February 2022 and completed in January 2024. Data analysis is
expected to be completed in 2025. A total of 247 participants took part in the trial. Of the 43
participants (17.4% of the total number participants) who withdrew from the study, and none
cited adverse reactions.
Trial Design Limitations
Trial design limitations will be assessed after data cleaning and analysis is completed.
Atrial Fibrillation Induced Cognitive Impairment Trial
Overview
We have conducted a clinical trial focused on atrial fibrillation induced cognitive
impairment (no dementia) (Trial Registration: NCT05374642) in collaboration with several
hospitals led by the Anzhen Hospital and obtained ethics approval in April 2022. The trial is
a multi-center, double-blind, parallel-designed, randomized controlled trial in patients with
atrial fibrillation induced cognitive impairment (no dementia). One of the trial’s design goals
was to facilitate a Class II medical device registration approval and, therefore, the trial has a
risk profile consistent with what is required for such approvals. Based on the final results data
of this trial, we plan to submit application to expand the scope of our 2023 Renewed Certificate
to include atrial fibrillation induced cognitive impairment in the second quarter of 2025. As of
the Latest Practicable Date, the trial is associated with two of our patents or patent
applications.
Trial Design
The trial enrolled a total of 200 patients who were randomly assigned to either the
intervention group or the active control group. All patients enrolled were diagnosed with atrial
fibrillation induced cognitive impairment. Patients in the intervention group received a
computerized training program based on the System, which involves training sessions on
attention, memory, executive function, thinking, processing speed, sensory perception. The
control group received training tasks with a fixed level of difficulty. The BCA T was performed
before, during and after the training period to measure the patients’ cognitive capacity.
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Trial Status
The trial was initiated in September 2022 and completed in March 2024. Data analysis is
expected to be completed by the second quarter of 2025. A total of 200 participants took part
in the trial. Of the nine participants (4.5% of the total number participants) who withdrew from
the study, none cited adverse reactions.
Trial Design Limitations
Trial design limitations will be assessed after data analysis is completed.
Hypertension Induced Cognitive Impairment Trial
Overview
We have conducted a clinical trial focused on hypertension induced cognitive impairment
(Trial Registration: NCT05704270) in collaboration with several hospitals led by the Anzhen
Hospital, and obtained ethics approval in October 2022. The trial is a multi-center,
double-blind, parallel-designed, randomized controlled trial in patients with hypertension
induced cognitive impairment. One of the trial’s design goals was to facilitate a Class II
medical device registration approval and, therefore, the trial has a risk profile consistent with
what is required for such approvals. Based on the final results data of this trial, we plan to
submit application to expand the scope of our 2023 Renewed Certificate to include
hypertension induced cognitive impairment in the second quarter of 2025. As of the Latest
Practicable Date, the trial is associated with two of our patents or patent applications.
The trial enrolled a total of 225 patients who were randomly assigned into either the
intervention group or the active control group. All patients enrolled were diagnosed with
hypertension induced cognitive impairment. Patients in the intervention group received a
computerized training program based on the System, which involves training sessions on
attention, memory, executive function, thinking, processing speed, sensory perception. In
contrast, the active control group received training tasks with a fixed level of difficulty. The
BCA T was performed before, during and after the training period to measure changes in the
patients’ cognitive capacity.
Trial Status
The trial was initiated in March 2023 and completed in April 2024. Data analysis is
expected to be completed by the second quarter of 2025. A total of 225 participants took part
in the trial. Of the 15 participants (6.7% of the total number participants) who withdrew from
the study, none cited adverse reactions.
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Trial Design Limitations
Trial design limitations will be assessed after data cleaning and analysis has been
completed.
Coronary Heart Disease Induced Cognitive Impairment Trial
Overview
We have conducted a clinical trial focused on coronary heart disease induced cognitive
impairment (Trial Registration: NCT05735041) in collaboration with several hospitals led by
the Anzhen Hospital, and obtained ethics approval in October 2022. The trial is a multi-center,
double-blind, parallel-designed, randomized controlled trial of DTx in patients with coronary
heart disease induced cognitive impairment in Anzhen Hospital. One of the trial’s design goals
was to facilitate a Class II medical device registration approval and, therefore, the trial has a
risk profile consistent with what is required for such approvals. Based on the final results data
of this trial, we plan to submit application to expand the scope of our 2023 Renewed Certificate
to include coronary heart disease induced cognitive impairment in the second quarter of 2025.
As of the Latest Practicable Date, the trial is associated with two of our patents or patent
applications.
Trial Design
The trial enrolled a total of 224 patients that were randomly assigned to the intervention
group or the active control group. All patients enrolled were diagnosed with coronary heart
disease induced cognitive impairment. Patients in the intervention group received a
computerized training program based on the System with adaptively varying difficulties. In
contrast, the active control group received training sessions with a fixed level of difficulty. The
BCA T was performed before, during and after the training period to measure the patients’
cognitive capacity.
Trial Status
The trial was initiated in January 2023 and completed in May 2024. Data analysis is
expected to be completed by the second quarter of 2025. A total of 224 participants took part
in the trial. Of the 19 participants (8.5% of the total number participants) who withdrew from
the study, none cited adverse reactions.
Trial Design Limitations
Trial design limitations will be assessed after data cleaning and analysis has been
completed.
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Future Development Plans for Our System
In addition to the eight commercialized indications, the System is also at various stages
of preclinical and clinical development for many additional indications. In particular, we are
conducting the following clinical trials in connection with the System in the assessment and
intervention of cognitive impairment induced by bone fracture induced pain, and plan to
initiate additional clinical trials in order to expand the indication scope of the 2023 Renewed
Certificate to include new indications.
Bone Fracture Induced Pain
We are conducting a clinical trial to evaluate the application of the System as an enhanced
recovery after surgery (“ ERAS ”) protocol for postoperative rehabilitation in patients with bone
fractures in collaboration with Beijing Jishuitan Hospital (Trial Registration Pending), and
obtained ethics approval in December 2023. This trial is a single-center, prospective, and
randomized controlled trial. One of the trial’s design goals was to facilitate a Class II medical
device registration approval and, therefore, the trial has a risk profile consistent with what is
required for such approvals. As of the Latest Practicable Date, the trial is associated with seven
of our patents or patent applications. The trial will enroll a total of 960 subjects with a single
limb fracture combined with postoperative cognitive impairment. Subjects will be divided into
two groups: the DTx ERAS group and the traditional ERAS group. Subjects in the DTx ERAS
group will receive 12 weeks of continuous DTx therapy via the System, and the subjects in the
traditional ERAS group will receive the standard ERAS treatment used in the department of
orthopedics at Beijing Jisuitang Hospital. The primary outcome measures of the trial is to
assess the improvement in the daily living activity index and overall cognitive function of the
DTx and traditional ERAS groups after 12 weeks of intervention. We initiated this trial in the
first half of 2024 and expect to complete the trial in the fourth quarter of 2025.
Anxiety
For anxiety, we are currently in the pre-clinical stage with the goal of starting clinical
trials in the first quarter of 2025 and achieving commercialization in 2026.
Dyslexia
For dyslexia, we are currently in the pre-clinical stage with the goal of starting clinical
trials in the first quarter of 2025 and achieving commercialization by 2025.
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Material Communications with Competent Authorities
In September 2018, we obtained the 2018 Certificate for the System from the Hunan
MPA, which allows the use of the System in assisting physicians in the comprehensive
management of medical information for patients with brain dysfunction caused by various
brain injuries and diseases, including clinical diagnosis, treatment and brain function
evaluation. The scope of the 2018 Certificate was, in relevant part, “assistance of doctors in
clinical diagnosis and treatment of patients with brain function impairments caused by various
types of brain damages and diseases, assessment of brain function, and comprehensive
management of medical information and brain function data.” The principal purpose of the
System under the 2018 Certificate was to serve as a tool to facilitate doctors’ clinical work and
research activities, instead of commercialization and monetization. As such, as provided in the
relevant laws and regulations, as well as confirmed by the Hunan MPA during the 2021
Consultation, we were not required to submit clinical data to the Hunan MPA for the
application and approval of the 2018 Certificate. We were only required to provide materials
to demonstrate that the System was capable of offering the functions in the scope of the 2018
Certificate.
In April 2020, we submitted an application to amend the above scope described on the
2018 Certificate to include offline or online clinical diagnosis, treatment, cognitive language
psychological screening test training and brain functional data, and to include specific
indications such as vascular cognitive impairment, Alzheimer’s disease, aphasia, depression,
schizophrenia, sleep disorder, ADHD and autism (the “ Amended Scope ”). The Hunan MPA
then requested us to submit the supplementary materials in relation to the clinical trial
evaluation data related to the indications in the Amended Scope. In response, we submitted the
clinical trial evaluation data from the Xuanwu Trial to the Hunan MPA. After reviewing the
abovementioned materials, the Hunan MPA granted the 2020 Amended Certificate on June 23,
2020.
In September 2021, we conducted the 2021 Consultation with the Hunan MPA on the
granting of the 2018 Certificate and the 2020 Amended Certificate. According to the 2021
Consultation, (i) we were not required to submit clinical data to the Hunan MPA for the
application and approval of the 2018 Certificate; (ii) the clinical trial evaluation data from the
Xuanwu Trial was a key part of the application (which also included scientific literature by
others that address the safety and efficacy of the System on all indicators in the Amended
Scope) for the 2020 Amended Certificate required by the Hunan MPA and formed an
essential basis for the Hunan MPA ’s decision to grant the 2020 Amended Certificate which
included the Amended Scope. See “Regulatory Overview—Regulation Relating to Medical
Devices—Research and Clinical Evaluation of Medical Devices”; and (iii) due to the
innovativeness of DTx products, the existing laws and regulations had not yet required the
categorization of our DTx product as Class III medical devices, and the System should be
classified as a Class II medical device.
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In May 2023, we renewed the 2020 Amended Certificate with the Hunan MPA, which is
now valid until June 2028.
In July 2023, we conducted a consultation with the Hunan MPA on the relationships of
the 2018 Certificate, the 2020 Amended Certificate, and the 2023 Renewed Certificate, and
clarified the requirements regarding clinical evaluation for the potential indications of the
System that are under development (the “ 2023 Consultation ”). According to the 2023
Consultation, Hunan MPA confirmed that (i) the 2018 Certificate, the 2020 Amended
Certificate and the 2023 Renewed Certificate are deemed to be the same certificate, bearing the
same registration number; (ii) the approval of the new cognitive impairment indications of the
System that are currently under various stages of development would not require us to obtain
new medical device registration certificate, but those new indications, once approved, will be
added to the application scope of the existing 2023 Renewed Certificate; and (iii) for approval
of these new indications, we would be required to conduct clinical trials or provide clinical
evaluation materials related to these new indications, which would form an essential basis for
the Hunan MPA to approve such addition. During the 2023 Consultation, the Hunan MPA noted
the relevant requirements under the Supervision and Administration of Medical Devices ( ᔼ
ᐕኜ૛္ຖ၍ଣૢԷ) and related regulations, which state, among other provisions, that
(i) evaluation of medical devices may be carried out through clinical trials or analysis and
evaluation of clinical literature materials and clinical data of medical devices of the same kind
to prove the safety and effectiveness of medical devices in light of product characteristics,
clinical risks, existing clinical data and other circumstances; and (ii) clinical trials shall be
carried out for medical devices for which the existing clinical literature materials and clinical
data are insufficient to confirm their safety and effectiveness in the clinical evaluation of
medical devices. Based on interpretation of the above requirements, the Hunan MPA confirmed
that because existing clinical literature and clinical data of medical devices of the same kind
as the System completed by third parties are insufficient to confirm the safety and effectiveness
of the System for the new indications, we are required to carry out clinical trials on these new
indications before submitting applications to amend scope of the 2023 Renewed Certificate to
include the new indications. See “Regulatory Overview—Regulation Relating to Medical
Devices—Research and Clinical Evaluation of Medical Devices.”
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The following chart sets forth a summary of the requirement on clinical trials as a result
of the above regulatory requirements and confirmation by the Hunan MPA for each of the
approved indications and new indications under development.
Number Indication* Status
Plans and requirements
on clinical trials
1. V ascular cognitive
impairment
Regulatory approval
received
Clinical trials required and
conducted by us in
collaboration with Xuanwu
Hospital
2. Aphasia
Regulatory approval
received
Clinical trial not conducted by
us. Regulatory approval
received through analysis and
evaluation of clinical literature
materials.
3. Alzheimer’s disease
4. Depression
5. Schizophrenia
6. Sleep disorders
7. ADHD
8. Autism
9. Atrial fibrillation
Regulatory approval not
yet applied for
Clinical trial required to be
conducted by us because
existing clinical literature
materials and clinical data are
insufficient to confirm their
safety and effectiveness in the
clinical evaluation of medical
devices
10. Hypertension
11. Coronary heart disease
12. Post-cardiac surgery
rehabilitation
13. Heart failure
14. AMCI
15. Parkinson’s disease
16. Anxiety
17. Language delay
18. Cerebral palsy
19. Dyslexia
20. Epilepsy
21. Bone fracture induced
pain
22. Diabetes
23. Phenylketonuria
24. Kidney disease
25. Multiple sclerosis
26. Hepatic encephalopathy
27. Post-breast cancer
surgery rehabilitation
28. Post-lung cancer
surgery rehabilitation
29. Drug addiction
Note:
* Unless specifically noted otherwise, indications refer to cognitive impairments induced by the listed
diseases or conditions, not the diseases or conditions themselves.
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As of the Latest Practicable Date, no material adverse changes had occurred with respect
to the System since the date of the 2023 Renewed Certificate.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET THE
SYSTEM WITH NEW INDICATIONS SUCCESSFULLY.
OTHER PRODUCTS AND PRODUCT CANDIDATES
As of the Latest Practicable Date, four of our products besides the System had obtained
regulatory approvals in China or abroad, including, among others, BCA T, SAS and DSS. All
three of these products were developed based on the technology framework of the assessment
function of the System. We also conducted additional R&D on the BCA T and the SAS to make
cognitive impairment assessment by physicians more accurate and efficient.
We categorize products by medical device registration certificates, namely each medical
device registration certificate represents one product. We typically apply for separate medical
device registration certificates for the following purposes:
 Commercial purpose : having separate certificates (and therefore separate products)
may help us better position the target users of each product sales and marketing
plans with higher precision. Certain hospitals may also prefer having a separate and
specific certificate for the product they purchase, even if the functions may also be
covered by the certificate for the System, which is more comprehensive in terms of
functions and indications. We incorporate in these separate products certain
enhancements and upgrades from the System which are specific to the intended
usage scenarios by customers. Examples include BCA T, SAS, DSS, COVID-19
Induced Cognitive Impairment Assessment and Recovery Training Software and
Quantitative Cognitive Assessment Software for Depression;
 Regulatory purpose : we may also apply for separate certificates for certain
indications of the System, such as cognitive impairments induced by certain
psychiatric diseases and ADHD. This is to prepare for potential future changes in
medical device regulations which may require separate registration or
reclassification of certain indications which are currently under Class II to Class III
under the Medical Device Catalog due to the higher risks involved for these
indications. Examples include the ADHD Software; and
 Technical purpose : we may develop and commercialize products that address
indications beyond cognitive impairments, such as the Depression Treatment
Software, which targets depression itself instead of cognitive impairment induced by
depression. This type of products involve different technical parameters and/or
mechanism of actions, which may require separate registration certificates.
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BCAT
Overview
BCA T is designed to facilitate healthcare professionals’ assessment of patients’ basic
cognitive capacity by enabling patients to self-administer tests of their cognitive capacities
relating to processing speed, working memory, episodic memory, visual-spatial ability and
verbal comprehension. We obtained a Class II medical device registration certificate from the
Hunan MPA for the BCA T in October 2022. After obtaining regulatory approval in 2022, we
have been and are undergoing further research and preparing additional scientific literature
with regards to BCA T, which we believe would be conducive to improving its market
recognition and acceptance by the medical community. We have commenced the initial
commercialization of BCA T and expect to reach full commercialization in the first half of
2025. See “Future Plans and Use of Proceeds” for additional details. The BCA T can improve
the efficiency of medical assessment by medical professionals, promote cost-efficient
diagnostic paradigms and improve patient’s treatment experience.
Mechanism of Action
The BCA T categorizes cognitive function assessment trainings based on the following
five dimensions: processing speed, working memory, episodic memory, visual-spatial ability
and verbal comprehension. In particular, the BCA T can (i) test a patient’s processing speed
through digit-symbol and symbol search tasks; (ii) evaluate working memory through
operational and symmetry span tasks; (iii) assess episodic memory through word pairing
memorization and facial memorization tasks; (iv) measure visual-spatial ability through paper
folding tests and cube rotation tasks; and (v) assess verbal comprehension through vocabulary
tests.
After assessing patient’s performances, the BCA T collects such data and produce a brief
and comprehensive evaluation. The evaluation and data are then transmitted via the internet to
a server for storage and processing. The stored data on the BCA T can be accessed on the server
side to provide reference information for clinical diagnosis and can also be printed as test
results for the patients’ reference.
Summary of Clinical Evaluation
We completed the evaluation of BCA T from March 2022 to October 2022 through a
clinical comparison with the System, which concluded that the BCA T uses similar technical
methods and targets similar underlying biology as the System and is comparable to the System
in terms of safety and efficacy. One of the trial’s design goals was to facilitate a Class II
medical device registration approval and, therefore, the trial has a risk profile consistent with
what is required for such approval.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET BCAT
SUCCESSFULLY.
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SAS
Overview
SAS is designed to facilitate healthcare professionals’ assessment of patients’ cognitive
capacity by enabling patients to self-administer MMSE and MoCA tests. We obtained a Class
II medical device registration certificate from the Hunan MPA for the SAS in December 2022
after submitting relevant clinical evaluation materials. After obtaining regulatory approval in
2022, we have been and are undergoing further research and preparing additional scientific
literature with regards to SAS, which we believe would be conducive to improving its market
recognition and acceptance by the medical community. We have commenced the initial
commercialization of SAS and expect to reach full commercialization in the first half of 2025.
See “Future Plans and Use of Proceeds” for additional details. Similar to the System, to
streamline the testing process, the software provides a user-friendly interface for patients to log
into the system, manage personal data and keep track on testing progress. Though the SAS is
no substitute for human judgment and cannot on its own automatically derive diagnostic
conclusions, it can improve the efficiency of medical assessment by medical professionals,
promote cost-efficient diagnostic paradigms and improve patient’s treatment experience.
Mechanism of Action
The SAS is a cognitive ability assessment tool based on MMSE and MoCA, which are
examinations that have been used extensively in clinical and research settings to measure
cognitive impairment. Compared to traditional cognitive assessment delivered in paper form,
the SAS, though the use of visual, voice, handwritten and action recognition technologies,
enable patients to self-administer MMSE and MoCA scales, and automatically grade patients’
performances without the need manual intervention before the results are reviewed and
confirmed by a healthcare professional. The entire input and output process is digitized and the
patient-facing interface has been optimized to simplify the examination process and increase
the efficiency of the MMSE and MoCA screening process.
Competitive Advantages
Compared to the MMSE and MoCA tests traditionally administered in paper form, the
SAS, through the implementation of speech, handwriting and action recognition technologies,
is able to automatically score and evaluate the patient’s input and record relevant data for the
medical professional’s review. This significantly reduce the time and cost of the assessment
process, improve the patient’s treatment experience and facilitate the patient’s self-monitoring
of health conditions.
Summary of Clinical Evaluation and Ongoing Clinical Trial
We completed the evaluation of the SAS from July 2022 to September 2022 through a
clinical comparison with the System, which concluded that the SAS uses similar technical
methods and targets similar underlying biology as the System and is comparable to the System
in terms of safety and efficacy. One of the trial’s design goals was to facilitate a Class II
medical device registration approval and, therefore, the trial has a risk profile consistent with
what is required for such approval.
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To further test our SAS against traditional paper MMSE and MoCA tests, we collaborated
with Xuanwu Hospital to conduct a multi-center, non-interventional, self-paired, post-approval
research in patients with cognitive impairment induced by various causes (Trial Registration:
ChiCTR2300067886), and completed filing by Hunan MPA in October 2022. As the trial was
non-intervention, it had a minimal risk profile. Patients who meet the inclusion criteria from
the participating medical institutions was enrolled and participants was randomly assigned to
either Group A or Group B. Patients in Group A underwent a cognitive assessment based on the
SAS under the guidance of the researchers. Two weeks later, trained professional raters used
the paper version of the MoCA and the MMSE to assess the cognitive function of patients in
Group A. Patients in Group B underwent a cognitive assessment using paper tests, and two
weeks later a cognitive assessment based on the SAS was performed under the guidance of
medical professionals. The MoCA and MMSE scores obtained from patients with similar
conditions but different assessment methods was then be paired and evaluated to assess the
consistency and accuracy of our SAS. We have completed the trial and data analysis in 2023
and have published the trial results on the Chinese Medical Journal ( ʕശᔼኪᕏႦ)i n
February 2024. Analysis of the trial data showed that, after controlling for basic demographic
information, there was no statistically significant difference between patients tested with our
SAS and patients tested with traditional paper-based MMSE and MoCA tests, demonstrating
that our SAS is a viable substitute that could potentially provide efficiencies in the
administration of these psychometric tests.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET THE SAS
SUCCESSFULLY.
In addition to the BCA T and the SAS, for which we had obtained regulatory approval, we
are also under various stages of preclinical and clinical development for the following products
and product candidates.
Dyslexia Supplemental Screening and Assessment Software
Overview
Dyslexia Supplemental Screening and Assessment Software (the “ DSS”) is designed to
facilitate the assessment of risk of DD in children. We received a Class II medical device
registration certificate for DSS in September 2023 from the Hunan MPA. In support of our
application for the above Class II medical device registration certificate, we submitted a
clinical comparison with the System. We aim to demonstrate that both the System and DSS
enable the assessment of cognitive functions. While the System and the DSS are based on
different traditional scale designs, we intend to show that both products can provide cognitive
function assessment for dyslexia patients and share similar mechanisms of action, thereby
demonstrating that DSS would not pose any issues of safety or efficacy. We have commenced
the initial commercialization of DSS and expect to reach full commercialization in the first half
of 2025. See “Future Plans and Use of Proceeds” for additional details.
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Mechanism of Action
The DSS is based on a well-validated Chinese children reading assessment task system
that has tested more than 240,000 children. The paper-based assessment includes reading
ability tests and cognitive ability tests. It can comprehensively and accurately test the reading
ability and related cognitive development levels of children of different ages and can
accurately distinguish dyslexic children from normal children. The DSS screens children for
DD through three tiers of assessment: the Preliminary Risk Assessment, the Dyslexia Risk
Assessment and the Core Cognitive Skills Assessment. Typically, a child begins with the
Preliminary Risk Assessment and progresses through these assessments in order. Children who
are identified as high risk in the Preliminary Risk Assessment then take the Dyslexia Risk
Assessment. If a child scores below average on the Dyslexia Risk Assessment, the child will
take the Core Cognitive Assessment for a final assessment of dyslexia.
The Preliminary Risk Assessment consists of a total of 30 questions that focus on eight
dimensions, including word recognition, Chinese character writing, essay writing, oral
expression, verbal memory, motivation and attitude, concentration and mathematics. The
Dyslexia Risk Assessment includes five tests that focus on Chinese character recognition,
one-minute text reading, text reading aloud, Chinese character dictation, and rapid reading,
which measures a child’s word processing, reading accuracy, reading fluency and reading
comprehension skills. The final Core Cognitive Skills Assessment consists of six tests,
including phonological awareness, morpheme generation, rapid digit naming, digit
memorization, character shape determination and pinyin pronunciation. If a child’s score on
any of the above cognitive assessment tests is one standard deviation below the peer average,
the software flags the child as being at high risk for dyslexia.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET DSS
SUCCESSFULLY.
COVID-19 Induced Cognitive Impairment Assessment and Recovery Training Software
Overview
We collaborated with Xuanwu Hospital on a clinical trial focused on cognitive decline
due to COVID-19 infection, commonly referred to as “COVID-19 brain fog.” One of the trial’s
design goals was to facilitate a Class II medical device registration approval and, therefore, the
trial has a risk profile consistent with what is required for such approvals. The trial enrolled
a total of 60 patients, 30 of whom will be randomly assigned to the intervention group and the
other 30 to the blank group. All patients enrolled were diagnosed with Covid-19 induced
cognitive impairment. Patients in the intervention group received a computerized training
program that last 30 minutes each time, four times a week, for eight weeks, while the patients
in the blank group did not receive any cognitive training. Tests was be performed before,
during and after the training period to measure the patients’ cognitive capacity.
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We obtained ethics approval in July 2022, completed the clinical trial in October 2023 and
submitted Class II medical device registration in the second quarter of 2024 and expect to
receive registration approval in the second half of 2025. Once approved, we plan to promote
the commercialization of this product through existing sales channels. As of the Latest
Practicable Date, the trial is associated with two of our patents or patent applications.
Mechanism of Action
A high percentage (17%-38%) of individuals experience a decline in cognitive capacity
post-COVID, such as memory loss and a decline in one’s attention span. Leveraging the
synergy between multiple cognitive domains and the principal of neuroplasticity, this product
will provide patients with personalized, individualized cognitive training sessions based on a
patient’s age and past medical history.
Competitive Advantage
The key advantage of this product is its ability to provide personalized rehabilitation
solutions tailored to each patient’s individual needs based on the use of our algorithms. In
particular, the product is able to (i) formulate individualized training solutions in light of each
patient’s age, injury history and severity and individual characteristics and (ii) update the
training task and difficulty level based on each patient’s past training statistics. Our AI-based
adaptive collaborative intervention model accomplishes this by selecting from millions of
possible module combinations, enabled by our library of over 300 training modules, to design
the optimal training session to activate the appropriate brain regions for the best therapeutic
effect.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET COVID-19
INDUCED COGNITIVE IMPAIRMENT ASSESSMENT AND RECOVERY TRAINING
SOFTW ARE SUCCESSFULLY.
ADHD Software
We are currently under preclinical development of the ADHD Software. The ADHD
Software has two main components: (i) the task-based cognitive assessment system; and (ii) the
digitized question-based assessment system. The tasks in the task-based cognitive assessment
system will cover cognitive domains including perception, attention, memory, action execution
and mood regulation, while the question-based system will supplement the task-based
cognitive assessments with our digitized version of traditional ADHD and cognitive
dysfunction screening scales, including the Tests based on ADHD Rating Scale – IV (the
“ADHD RS-IV ”) and the Achenbach Child Behavior Checklist, a test widely used to detect
behavioral and emotional problems in children and adolescents. On the intervention front, the
ADHD Software focuses on training working memory, cognitive flexibility, attention, planning
and problem solving capabilities. It alleviates ADHD symptoms by (i) stimulating the relevant
cerebral regions related to attention, such as frontoparietal brain areas, to modify sustained
attention; (ii) inducing activities of orbitofrontal, superior and inferior frontal, and middle
temporal cortices; and (iii) reducing activation level of subcortex regions, such as insula and
striato-thalamic regions, in order to improve efficiency of working memory.
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Competitive Advantages
Given the manifestations of cognitive deficits in ADHD patients are complex and diverse,
currently, there is no targeted intervention cognitive training product specifically designed for
ADHD patients offering a comprehensive evaluation of cognitive impairment, both
domestically and internationally. Our product can provide multidimensional cognitive
assessments for ADHD patients to provide evidence-based support for the optimization of a
comprehensive treatment strategies for patients with ADHD.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET ADHD
SOFTW ARE SUCCESSFULLY.
Quantitative Cognitive Assessment Software for Depression
Overview
We are conducting a clinical trial for the quantitative cognitive assessment software for
depression, which is an electronic cognitive function assessment tool developed based on the
latest scientific development on an understanding of human intelligence and cutting-edge
clinical research on cognitive dysfunction associated with depression, and obtained ethics
approval in February 2024. To assess cognitive dysfunction associated with depression, a total
of seven cognitive tests have been included. Among them, the visual search test and the
audiovisual attention distribution test seek to assess a patient’s level of attention, the Stroop
color and word test aims to assess capacity of execution, the spatial memory test will assess
memory, while the digit-symbol conversion test looks to assess information processing speed.
These tests can be self-administered by patients on a tablet under the guidance of the
researcher. We have initiated the clinical trial and expect trial completion by the first quarter
of 2025.
Mechanism of Action
Cognitive symptoms persist throughout the course of depression. Not only do they
interfere with the efficacy and cure rate of antidepressant treatment and increase the risk of
depression recurrence, but they also result in the inability of depressed patients to return to
normal social functioning, resulting in an enormous social and economic burden. Current
clinical research focuses on four areas: executive function, attention, memory and information
processing speed.
This product is an electronic cognitive assessment tool developed based on the latest
theories of intelligence and the results of clinical studies of cognitive dysfunction in
depression, using human-computer interaction to complete the assessment. It is used to assess
the cognitive function of depressed patients.
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The quiz items in this product have good reliability and validity. It covers the four
common aspects of cognitive impairment in patients with depression with seven assessment
tasks. The split-half reliability coefficients of the seven subtests range from 0.814 to 0.996 (out
of a maximum of 1.000), indicating that the subtests have good internal consistency reliability.
In addition, most of the tasks used in this test set are classic paradigms in the field of
intelligence measurement, which are representative of the relevant basic cognitive abilities,
thus strongly supporting the content validity of this product.
Competitive Advantage
Compared to other cognitive assessment tools currently in widespread use for the MDD
population, the tests administered by our software are more comprehensive. Unlike other
similar products, our product’s reliability and validity study includes a normal control group
which, when combined with the results of the classic paradigm measurement, allows for the
calculation of cut-off scores. Our product can cover seven dimensions of cognitive decline.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET
QUANTITATIVE COGNITIVE ASSESSMENT SOFTW ARE FOR DEPRESSION
SUCCESSFULLY.
Depression Treatment Software
Overview
We are currently under preclinical development of the depression treatment software,
called “Mind Island Aurora,” which is a computerized system utilizing a combination of
game-playing and Computerized Cognitive Behavioral Therapy (the “ CCBT ”) to improve the
symptoms related to depression. The software aims at deepening patients’ understanding about
emotional rationalization and interpersonal skills in an interest-inspiring way, drawing from the
idea that “everyone can find inner safety in the midst of chaos.” The game-playing component
combines a captivating background story with various training tasks, which can be used as a
stand-alone psychotherapy for depressed patients or used concurrently with other
psychotherapies. We expect to initiate clinical trial in the first quarter of 2025.
Mechanism of Action
The product was designed after consultation with a large number of patients diagnosed
with depression. The game is set on a gray, barren and dilapidated island to reflect the mental
state, behavioral patterns and problems faced by depression patients. The patient works
through the tasks to restore the island to its original state. This setting helps allow patients to
focus on skills development and reduce their negative thinking.
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Second, based on latest developments on CBT, the product integrates multiple
psychological strategies such as positive thinking meditation, behavioral activation, cognitive
reconstruction and cognitive restructuring tasks to boost its efficacy.
Third, the product uses gamification of the CBT treatment process to elicit patient interest
in participation. The CBT-based tasks are then materialized in the game as main quests or side
quests. For example, in level 5 of the game, distorted thinking is materialized as a monster with
a distorted mind and face that can be defeated by the patient’s rhythmic action, which
represents the recognition of meaningless thoughts. By providing immersive experiences, the
product enhances the patient’s motivation to learn, improves attention and problem-solving
skills, and increases social engagement.
This system objectively evaluates the patient’s progress in the background. At the same
time, the assessment data also provides personalized information to patients during their
training sessions and enables the product to apply multi-targeted adaptive synergistic
interventions that adapt to the patient’s individual characteristics.
Competitive Advantage
Compared to traditional CCBT, which is mostly rendered in lecture form with after-class
assignments, our game-oriented software is more likely to elicit patient’s interest in
participation and lead to more prolonged treatment and is thereby more effective.
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET
DEPRESSION TREATMENT SOFTW ARE SUCCESSFULLY.
Cognitive Impairment Assessment Software and Cognitive Impairment Treatment
Software
In order to expand our international footprint and build global influence, we are
developing the following products for the U.S. and the EU: Cognitive Impairment Assessment
Software and Cognitive Impairment Treatment Software. On July 22, 2022, we obtained the CE
mark in the EU for our Cognitive Impairment Treatment Software, which is exempted from
clinical trial requirements under EU’s Medical Device Regulation and allows for its
commercialization in the EU that is expected to commence in 2026. We are also developing our
Cognitive Impairment Treatment Software and Cognitive Impairment Assessment Software in
the U.S. in preparation for regulatory filings under Section 510(k).
WE MAY NOT BE ABLE TO ULTIMATELY DEVELOP AND MARKET
COGNITIVE IMPAIRMENT ASSESSMENT SOFTW ARE AND COGNITIVE
IMPAIRMENT TREATMENT SOFTW ARE SUCCESSFULLY.
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OUR TECHNOLOGIES
Virtual human and AI technologies are the technology foundation of our System and other
products and product candidates. Our virtual human technology enables physicians to perform
medical assessment and communicate with a large number of patients at once. Our AI
technology enables physicians to perform assessment and intervention in a highly consistent
and user-friendly manner, which we believe contributes to its rapid acceptance and adoption in
primary hospitals across China.
We are currently focused on providing assessment and intervention DTx products to our
customers and do not currently sell, nor do we currently intend to sell, the data models,
components and technologies of the System as separate and distinct products or medical
devices.
Virtual Human
Virtual human technology automates patient interaction and other processes that were
traditionally performed by physicians with patients on a one-on-one basis, which enables
physicians to assess a large number of patients at once. Our virtual human technology
comprises a series of technological capabilities obtained from third parties or independently
developed by us. These capabilities include (i) speech recognition and correction; (ii) intention
recognition; and (iii) automated assessment and analysis.
 Speech Recognition and Correction : We incorporate speech recognition product
which enables the System to receive verbal responses from patients and convert
them into meaningful semantics for the System’s further processing. Based on
readily available speech recognition product, we also independently developed
enhancements to improve accuracy and correct the results of speech recognition
under certain assessment scenarios. For example, we made corrections on speech
recognition results related to certain key words and phrases that frequently appear
in memory assessments to reduce the chance of mis-recognition by the System. We
do not further develop the speech recognition product itself as part of the System.
As advised by our PRC Legal Advisor, (i) the speech recognition product had been
properly in-licensed; (ii) the relevant in-licensing agreement allows us to use such
product for commercial purpose on the basis of complying with PRC laws,
regulations, rules and other government normative documents; and (iii) liability for
mis-assessment arising from the in-licensed product shall lie with us;
 Intention Recognition : Our intent identification capability enables the System to
identify whether the verbal response from the patient was made to answer the
question, or to request clarification of the assessment question. The System can then
proceed to analyze patient response or provide clarification, as appropriate;
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 Automatic Assessment and Analysis : Upon receiving input information from users,
the System uses AI models to automatically evaluate the accuracy of the answers and
generates summary reports of assessment results, which could serve as a critical
basis for diagnosis by physicians. See “—Artificial Intelligence” for details on the
AI models.
We independently developed the key operative technology components of the virtual
human technology, namely speech correction, intention recognition and automated assessment
and analysis technologies. As a result of the abovementioned automated processes, our virtual
human technology breaks through the constraints of traditional clinical assessment standards
such as the MMSE and MoCA. These traditional standards typically require medical
professionals to personally conduct one-on-one assessments, which lack efficiency as medical
professionals can only ask, record and explain assessment questions and responses for one
patient at a time.
Artificial Intelligence
Our artificial intelligence (“ AI”) technology enables more accurate cognitive impairment
assessment, and provides more self-adaptive cognitive trainings to achieve higher intervention
and treatment efficacy. AI technology underlies different types of models comprising algorithm
sets independently developed by us, which enable the System to achieve the above features in
terms of assessment accuracy and treatment efficacy.
Multimodal Cognitive Computing Model
We are in the process of independently developing the multimodal cognitive computing
model, which comprises a set of algorithms that are designed to more accurately assess patient
input (including both verbal responses and other physical input such as body gestures).
Traditional one-on-one medical assessment under MMSE and MoCA typically requires medical
professionals to personally conduct one-on-one assessments, which could be influenced by
their subjective judgment. Patients may also provide responses that do not accurately reflect
their conditions due to subjective factors such as their moods. The multimodal cognitive
computing model includes algorithms on natural language processing and image processing,
which enable the System to accurately determine the responsiveness of patients’ input without
being misled by irrelevant input from patients that could affect the accuracy of the assessment
outcome.
Adaptive Collaborative Intervention Model
The System offers trainings to patients that are designed to stimulate the neural networks
in relation to patients’ cognitive ability on attention, memory, executive function and others at
the appropriate frequency and dosage. Continuous and regular brain stimulation can promote
the release of neurotransmitters between the patient’s synapses, resulting in the growth of nerve
fibers and a corresponding increase in the number of synapses. The new neural connections can
form a compensatory neural pathway and improve the structure and functional connections of
the patient’s neural network.
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We have independently developed the adaptive collaborative intervention model, which
is designed to ensure that the training content stimulates the appropriate neural network based
on the patients’ individual cognitive impairment conditions. It comprises the deep neural
networks (“ DNN”) algorithms, which are trained with a large amount of information on patient
demographics, clinical assessment, diagnosis and information collected during patients’
participation in training tasks at diverse difficulty levels. The DNN algorithms undergo
constant iteration and training to dynamically adjust the content of the training tasks, and can
identify the most suitable training out of millions of different possible combinations, building
on over 300 training modules that are designed to stimulate and activate the appropriate brain
regions and neural network. By dynamically identifying and recommending the most suitable
training out of millions of different possible combinations, our DNN algorithms enable the
System to offer self-adaptive and personalized trainings that lead to more favorable
enhancement of cognitive functions for patients.
We are in the process of improving our collaborative intervention model to be more
causal-based, which is expected to further improve the System’s ability to predict patient future
performance (the effect) based on past responses (the cause), thereby recommending the most
suitable training tasks that make the cognitive training more personalized and effective in the
stimulation and repair of patients’ neural network.
Multimodal Affective Computing Model
We are in the process of independently developing the multimodal affective computing
model, which is a set of algorithms that capture and analyze patients’ changes in emotions and
moods when responding to assessment questions or when conducting cognitive trainings. This
is expected to allow the System to generate more self-adaptive and targeted cognitive trainings
based on not only the patients’ verbal responses, but also subtle changes in emotions and moods
which can be difficult to capture and process under conventional methods.
Large Language Model
Our large language model involves algorithms on semantic analysis and response
interpretation, which allows the System to not simply receive the voices from patients, but also
truly understand what patients mean. We are in the process of developing our large language
model which is the result of our adaptation of an open-source large language model to enable
the System to more accurately interpret patient responses and to provide useful clarification
and assistance to patients during the cognitive assessment.
RESEARCH AND DEVELOPMENT
We focus our R&D efforts on developing innovative cognitive impairment medical
technologies and solutions to assess and intervene in patients’ cognitive impairment caused by
a variety of diseases. We have devoted significant resources to building up our R&D
capabilities and technological infrastructure, enabling us to stay abreast of the latest
technology trend in the DTx industry, provide clinically advanced new products and enhance
the efficacy, ease of use, safety and reliability of our products, as well as expand their
applications, as appropriate.
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We are also investing in integrating new advances in AI technology to improve our
System, such as pursuing the multimodal cognitive computing models that are based on
task-based assessment, which requires a technology capability to detect abnormalities within
a few hundred milliseconds. As a result of our efforts, we have built AI-based DNN algorithms,
which enable the System to become highly self-adaptive. The DNN algorithms can identify the
most suitable training out of millions of different possible combinations, building on over 300
training modules that are designed to activate the appropriate brain regions for the best
therapeutic effect. We believe this dynamic and self-adaptive training leads to more
personalized treatment and more favorable enhancement of cognitive functions for patients
than traditional drug therapies, as measured by the MoCA scores and patients’ response time,
accuracy rate, improvement in training performance scores and length of user stay. See “—Our
Technologies” for more details.
These R&D efforts also help us maintain the advantages of the System and facilitate the
development of other products and product candidates. For example, these efforts will enable
us to expand the use of the System to other indications, thereby increasing the versatility of the
System compared to other cognitive DTx products. Our R&D efforts will also aim to build a
multimodal cognitive computing model to enable more accurate assessment and diagnosis, a
causal-based adaptive collaborative intervention model to stimulate multi-regional synergistic
interventions, a multimodal affective computing model and a large language model focused on
cognitive skills. See “—Our Technologies” for details. These R&D efforts have the potential
to improve the user experience of the System by facilitating more genuine human-machine
interactions, more accurate assessment and more personalized intervention, thereby helping us
to maintain the advantage of our products, and facilitate further expansion of our product
pipelines.
In 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024, our research and
development expenses amounted to RMB32.8 million, RMB67.6 million, RMB90.7 million,
RMB34.4 million and RMB64.2 million, respectively. During the same periods, we incurred
research and development expense for the System of RMB32.8 million, RMB62.9 million,
RMB54.6 million, RMB25.0 million and RMB36.2 million, respectively.
Our R&D Team
We have a strong multi-disciplinary in-house R&D team of 120 professionals with 26
holding a masters degree and two holding PhDs as of the Latest Practicable Date. Our R&D
team is led by Dr. Wang, who has been our CEO and chief research officer. Our key R&D staff
have on average over six years of relevant experience in the DTx industry. Our R&D team
frequently participates in academic and industry conferences and engages with industry and
clinical experts to bring us up-to-date insights and innovations from a global perspective.
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Our R&D team is divided into the following three groups:
 Brain Research Institute: focusing on basic research and theory development. The
Brain Research Institute consists of the Scientific Research Project Department, the
Pediatrics Research Department, the Aging Research Department, the Regulatory
Approval Department, the Clinical Trial Department, the Emotion Research
Department and the Basic Research and Cognitive Computing Department. Each
department of the Brain Research Institute reports to the CEO;
 Product Innovation Center: focusing on overall planning, design and progress
control of DTx products. The Product Innovation Center consists of the Geriatric
Product Technology Department, Pediatrics Products Department, Art Design
Department and the Task Planning Department. Each department of the Product
Innovation Center reports to the CTO who in turn reports to the CEO; and
 Technology Research Center: focusing on product development and testing. The
Technology Research Center consists of the Training Task R&D Department, the
Platform Technology Team, the Operations, Maintenance and Equipment
Management Department, the Android Team, the Testing Team, the Project Team,
the Front-end Team, the Data Science Department, the Algorithm Department, the
Safety Department, and the Back-end Teams One and Two. Each department of the
Technology Research Center reports to the CTO who in turn reports to the CEO.
As of the Latest Practicable Date, none of the above teams has any standalone business
relationships with third parties other than through or for and on behalf of our Group.
Externally, we have established long-term relationships with KOLs, including
well-known medical professionals and clinical experts in China. Leveraging their insights and
recommendations, we are able to focus our R&D process on unmet clinical needs and explore
frontier and breakthrough technologies.
Product Design and Preclinical Development
We have established and strictly followed an internal protocol that governs the design and
development of our products. Our internal protocol was formulated based on applicable NMPA
regulations and ISO 13485.
To start with a product development project, we conduct market research to analyze
market prospects and patient’s need and formulate a development proposal that describes the
target medical need, potential risks and specific product functions. After obtaining approvals
from our management on the project, we will then formulate a detailed development plan,
which includes the product functionalities and applications, labor and budget planning and
begin the development process.
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To ensure the quality development of our product, we have established a streamlined
R&D system that prioritizes scientific validity, patient compliance and R&D efficiency.
Specifically, we focus on the three key phases of our R&D process.
 The first phase is basic research. The Brain Research Institute, an internal group of
talents within our R&D team, conducts scientific research and design based on
scientific paradigms and literature. The scientific team conducts complete research
and discussion to ensure that the design parameters of new products adheres to the
latest scientific principles and clinical data.
 The second phase is planning. The Product Innovation Center creates product
designs based on the parameters prepared by the Brain Research Institute. To make
our products more engaging, the team adds fun elements such as games while
adhering to the scientific research framework and paradigm understanding.
 The third phase is development and testing, which is handled by the Technology
Research Center. We create an internal beta version based on the designs for testing.
Users test the product and provide feedback via questionnaires, and we use the data
to determine whether our products are complete, interesting and effective in
stimulating the appropriate brain function. Our products are revised according to the
feedback data.
Clinical Trials
Our clinical affairs department has significant experience in conducting clinical trials for
our products. As of the Latest Practicable Date, we had organized a dedicated regulatory and
clinical affairs department consisting of seven members, with extensive experience in medical
device industry. Dr. Wang, our CEO, has over 20 years of academic and professional
experience in brain and cognitive sciences, as well as extensive experience in handling medical
device regulatory affairs.
We also set up a separate regulatory affairs team in charge of regulatory communications.
Our regulatory affairs team is mainly responsible for sorting and reviewing registration
materials of our products, as well as submitting such materials to the relevant government
agencies.
We conduct clinical trials of new indications and products in order to obtain the requisite
regulatory approvals and collect access-controlled data that can improve the design and
features of our products. The goal of a clinical trial is to measure the clinical safety and
efficacy of a device. Primary parameters for clinical trials are selected based on the intended
use of the medical device.
Some of our products may be exempt from clinical trials in the relevant jurisdictions
based on their classifications and applicable laws and regulations. For those requiring clinical
trials, we collaborate with leading hospitals in China and globally to conduct clinical trials for
our products. Our clinical data and practices are designed to meet the good clinical practice
(the “ GCP”) standards.
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Collaboration with Clinical Trial Institutions
The NMPA maintains a catalog of hospitals filed as clinical trial institutions, from which
we select a number of leading hospitals with desirable expertise, patient samples, technology
and equipment to conduct our clinical trials. We meet with the selected participating hospitals
to discuss the trial’s goals and requirements, as well as to select the leading institution for the
trial, which typically will be the largest and best-equipped hospital of the participating
hospitals.
We typically enter into an agreement with each selected hospital for each clinical trial,
under which we and the participating hospitals prepare a clinical trial protocol following GCP
standards. We submit the protocol to the ethics committee of each participating hospital for
review. The ethics committees may ask us to revise the clinical trial protocol or other
documents before their approval. Once the protocol is approved, amendments can only be made
with the prior written consent of all parties. Where required by applicable laws, regulations, or
relevant national policies, amendments to the protocol must be approved by the ethics
committee and/or the relevant regulatory authority.
Pursuant to the agreement, each participating hospital is obligated to conduct clinical
trials following the protocol and at the end of the clinical trial, issues a case report based on
the collected data. We make payments according to the agreed schedules and items for the
hospitals’ services. Each participating hospital has the right to publish academic papers,
provided it gives us prior written notice and we do not object in writing within seven days. We
own all intellectual property rights arising from the clinical trial collaborations. Each
participating hospital may enter into separate agreements with us regarding the arrangement of
intellectual property rights. As of the Latest Practicable Date, we had not entered into such an
agreement.
Relationships with CROs
We collaborate with reputable CROs to manage, conduct and seek their support for our
clinical trials. We select our CROs based on various factors, such as their qualifications,
academic credentials and professional experience of their employees and their industry
reputations. We generally enter into an agreement with the CRO for the relevant clinical trial.
We closely monitor our CROs to help ensure their performance will comply with our protocols
and applicable laws, regulations and guidelines, which in turn protect the integrity and
authenticity of the data from our clinical trials. We have worked with CROs for our clinical
trials in China, including clinical trials for the System. As of the Latest Practicable Date, we
had engaged two CROs in the research and development of our products and product
candidates.
Under the agreements with our CROs, we are responsible for the trial preparation,
monitoring subject enrollment, trial implementation and management, while the CROs take
responsibility for record keeping and report preparation to guarantee the compliance of the
clinical trial process with applicable regulations or standards. In return for their services, we
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make payments in accordance with the payment schedule agreed by parties. Our CROs may
further assist us in trial preparation and management pursuant to our particular request, for
which extra fees will be incurred. Under the agreements, we generally own all intellectual
property and trial results and the CROs must maintain strict confidentiality with respect to the
information they acquired from us during clinical trials. Under the agreements, the CROs are
obligated to keep all non-public information and data from the trials confidential, and return
related materials, if any, to us at the end of our contract term.
Division of Responsibility
When collaborating with clinical trial institutions and CROs, we carefully review their
credentials and clearly set forth our respective responsibilities, roles, timetable and work
assignments in the relevant agreements. During the clinical trials, we closely monitor the work
by clinical trial institutions and CROs to ensure that the actual trials are conducted according
to the trial design, that the data collected are reliable and accurate, that patient rights are
safeguarded and that these third parties comply with the applicable laws and regulations. If we
detect issues through the above monitoring process, we would timely inform the clinical trial
institutions and CROs of our findings and demand immediate rectifications. The following
table sets forth a typical division of responsibility among us, clinical trial institutions and
CROs, as applicable.
Responsibility Our Role
Role of the Clinical
Trial Institution Role of the CRO
Clinical Trial
Design
Determining and designing
trial plan details for the
control and trial groups,
including (i) the specific
types and content of the
neurological and
psychological
assessment; (ii) specific
parameters of primary
outcomes and secondary
outcomes; and (iii)
cognitive training
modules for the control
group and the trial
group.
Confirming the assessment
parameters for the
control and trial groups,
the primary and
secondary outcomes.
N/A
Informed consent
and case report
forms
Preparing informed
consent and case report
forms
Confirming and
administering informed
consent and case report
Assisting in the review
of informed consent
and case report
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Responsibility Our Role
Role of the Clinical
Trial Institution Role of the CRO
Enrollment of
human subjects,
clinical trial
execution
Training patients on using
the System, as well as
providing continuous
follow-up technical
support and training to
ensure patients can
properly operate the
System and complete the
trial
Enrolling human subjects,
conducting trials,
controlling quality of the
clinical trial process,
and optimizing various
clinical trial procedures
on a continuous basis
Assisting in conducting
clinical trials,
including patient
enrollment,
information collection
and filing, and
quality monitoring
Data Analysis Conducting literature
research, parameter
design for data analysis
and sample data analysis
Confirming data analysis
plan, and conducting
periodic data analysis
In some cases, CROs
prepare draft data
analysis and reports
Collaborations Regarding the Xuanwu Trial
Due to the public funding nature of the Xuanwu Trial, only public bodies, including
Xuanwu Hospital and other public hospitals, can be listed as sponsors. However, we served as
a promoter of the Xuanwu Trial, and undertook extensive responsibilities similar to those of a
sponsor. For example, we were the sole provider of the medical device product, the System,
and were deeply involved in the clinical trial design and execution. Throughout the execution
of the Xuanwu Trial and the administration of cognitive training modules among patients, the
System was the only product used by the control group and the experimental group. All
software and hardware equipment used during the Xuanwu Trial were supplied by us. We
shared the responsibilities with the public hospitals of training the clinical trial personnel, and
facilitating and following up with patients’ family members. Our role is similar to the role of
a sponsor in a typical clinical trial sponsored by private companies.
In order to demonstrate our key contributions in the Xuanwu Trial, the following table
sets forth a comparison of the responsibilities of ours and of public hospitals during the
Xuanwu Trial compared to those of a typical clinical trial.
In a typical study
Our role in the Xuanwu
Trial
Design and development of
the trial device
Sponsor We designed and
developed the System as
the sole trial device for
the Xuanwu Trial
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In a typical study
Our role in the Xuanwu
Trial
Clinical trial design Principal investigator
(“PI”) and sponsor
We collaborated with the
public hospitals in
formulating and revision
of trial designs,
protocols, and
preparation of informed
consent and case report
forms
Data and clinical
information collection
Organized by clinical sites
and executed by PI
Public hospitals
Providing trial medical
device and training on
device use
Sponsor We provided the System as
well as trainings on the
use of the System by
trial personnel
throughout the trial. We
also supplied all
hardware and software
used during the trial
Testing of the device and
examination of the
patients
Organized by sponsor and
executed by clinical
laboratories
We shared the
responsibilities with the
public hospitals in
testing human subjects
and following up with
test results and the
continuous carrying out
of the tests under the
System
Data analysis and complete
the clinical summary
report
PI (on execution and
preparation of the
report) and sponsor (on
coordination and
assistance)
Public hospitals (on
execution and
preparation of the
report). We bore the
coordination and
assistance
responsibilities
Meanwhile, the public hospitals were in charge of patient enrollment, multi-trial site
coordination, clinical diagnosis, medical imaging and testing, clinical data analysis and report
drafting.
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Our Hardware Research and Development Collaborations
Our R&D capabilities have significantly contributed to the development and
commercialization of the System among other products during the Track Record Period. To
strengthen our R&D capabilities, we have cooperated with two third-party vendors to explore
the application of cognitive impairment DTx software on VR hardware. We entered into a
framework agreement to purchase VR hardware from one vendor, Guangzhou Kuanheng
Information Technology Co., Ltd. (ʮ̡), which provides that (i) the
term of the agreement is 18 months; (ii) we intend to purchase approximately 1,000 units, the
quantity of which shall not be binding on us, and the exact quantity shall be determined by
actual orders placed within the 18-month period; (iii) we shall pay a fixed unit price for each
unit of VR hardware purchased; (iv) we may terminate the purchase agreement if the vendor
fails to deliver within 90 days of the stipulated delivery date; and (v) other standard quality and
compliance terms.
We also entered into a service agreement with a software vendor, Shenzhen Iridium
Medical Technology Co., Ltd. (ʮ̡), to purchase software
customization, customized development of back-end system, and testing services for 30 units
of VR equipment on the VR hardware we purchased pursuant to the abovementioned
agreement. The service agreement sets forth the fixed total service price to be paid in
installments and a performance period of approximately three months. The service agreement
also sets forth the mode of service delivery, under which we provide the vendor with 30 units
of VR hardware for development purposes, which will be returned upon completion of the
software services by the software vendor. Both parties are obligated to comply with relevant
laws and regulations regarding privacy and medical data protection and to prevent any
unlawful use, disclosure or processing of medical data. Additionally, the agreement grants the
non-breaching party the right to terminate the agreement with a 10-day notice. We also have
the right to terminate the agreement with the consent of the vendor or if we suffer material
damages as a result of the vendor’s breach. In addition, the vendor may terminate the
agreement by paying a stipulated cost. The above agreements do not affect our independent
research and development capabilities, because VR hardware is only one of the many types of
hardware on which the System can run, which includes consumer electronics such as computers
and tablets, and there are other vendors of similar VR hardware and related services.
Unless otherwise agreed, the intellectual property rights arising from the performance of
the agreements in relation to the application of our DTx software products on VR hardware
shall belong exclusively to us. All parties are bound by confidentiality provision which
prohibits either party to disclose certain confidential information without the express written
consent of the other party. We do not have any business relationships with these two vendors
other than those set out in the agreements described above.
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SALES AND MARKETING
We had commercialized our System for eight indications and obtained regulatory
approvals for three additional products as of the Latest Practicable Date. For details of our
products with regulatory approvals, see “—Our Product Pipeline.”
Our Marketing Model
We focus our selling efforts on establishing relationships with hospitals, which were our
primary customers during the Track Record Period. We seek to raise the profile of our
technologies and products in the medical community and encourage their adoption, primarily
through (i) collaborations with top hospitals; (ii) academic and research collaborations with
KOLs; (iii) regular organization and participation in various academic conferences and (iv)
promotional efforts to individual patients who have experienced our products in hospitals and
may wish to continue purchasing our products for use in their homes.
Collaborations with Top Hospitals and Research Institutions
As of the Latest Practicable Date, we had helped more than 120 hospitals establish
cognitive centers in China, including several leading hospitals with “National Medical Center”
(ᔼኪʕː) certification for various medical specialties by the NHC. We offer the System
to hospitals which enables hospitals to provide assessment and intervention to their cognitive
impairment patients.
Background of Our Cognitive Center Collaboration Approach
Our adoption of the cognitive center cooperation approach was primarily driven by the
following considerations. Since 2019, the government has been releasing periodic policy
guidelines in support of the prevention and treatment of cognitive impairment diseases such as
AD due to the aging of the Chinese population and the increasing prevalence of these diseases.
Hospitals have responded to these calls by exploring opportunities to establish in-hospital
cognitive impairment treatment capabilities, providing opportunities for players in China’s
cognitive impairment DTx market, such as ourselves, to expand commercialization of their
DTx products. In addition, the experts in China’s medical community also react favorably to
establishing in-hospital assessment and intervention capabilities on cognitive impairment as a
supplemental therapy to traditional drug treatment, as highlighted in the Chinese Expert
Consensus on Cognitive Training (΍ᗆ) published in the Chinese Medical
Journal in January 2019.
In response to the above, we began implementing our cognitive center approach by
partnering with Chaoyang Hospital to establish the first cognitive training center in 2020. In
April 2021, we further expanded our cognitive center approach by establishing the second
cognitive training center with Anzhen Hospital. Encouraged by the success of these
collaborations, we decided in 2021 to formally adopt the cognitive center cooperation model
for the commercialization of our DTx products in hospitals.
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Commercial Rationale for Cognitive Center Collaboration
We help hospitals establish cognitive centers primarily to provide the System integral
software solutions to those hospitals for use in assessing and treating cognitive impairment
patients. We also offer the System integral software solutions directly to patients out of
hospitals who choose to continue to use our System at their own homes after initially receiving
cognitive impairment assessment and/or intervention utilizing the System in hospitals.
Under the cognitive center collaboration, we incurred costs for (i) premise renovation; (ii)
hardware purchases, such as tablets and computers on which the System runs; and (iii)
purchases of data roaming packages for the cognitive centers premises. We own the intangible
assets arising from the renovation of cognitive center premises as well as the hardware made
available to the cognitive centers and the hospitals own or make available the property for use
during cognitive center collaboration to host the cognitive centers. Through premise
renovation, we ensure the consistency of the style of each cognitive center premise, which we
believe is conducive to bringing an ideal environment to care for cognitive impairment patients
and to enhancing our brand image. We incurred costs for hardware and data roaming packages
to provide infrastructure support and ensure the proper functioning and operations of the
System. We incurred RMB0.3 million, RMB0.9 million, RMB2.4 million, RMB1.2 million and
RMB2.6 million in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024,
respectively, in cost of sales for provision of the System integral software solutions in hospitals
in relation to cognitive center collaboration.
Salient Terms of the Cognitive Center Collaboration Agreements
Pursuant to the terms of the cognitive center collaboration agreements, the hospitals shall
be responsible for (i) providing the necessary premises for the cognitive centers with sufficient
floor space, air conditioning, ventilation, internet access, and other basic conditions; (ii)
overall management of the cognitive centers, including supervising our work and demanding
replacement of the technical support staff we send; (iii) supervising the renovation of cognitive
centers and the work of support staff we send to the cognitive centers; (iv) providing medical
services to patients, conducting patient follow-ups, and charging patients medical service fees
based on the number of times patients use the System, among other applicable standards; (v)
paying fees for using the System; and (vi) handling investigations or other legal proceedings
arising from medical services provided by or disputes caused by the hospitals.
We shall be responsible for (i) making the System available for use at the cognitive
centers; (ii) maintaining the proper operations, maintenance and upgrades of the System; (iii)
providing necessary funding on premise renovation, hardware, and data roaming packages; (iv)
sending support staff at our expense to provide operational support to assist the hospitals in
using the System to provide medical services to patients, and handling complaints that arise
from their work; and (v) assisting hospitals in patient and medical data management and in
complying with regulatory requirements on personal data and privacy matters. As advised by
our PRC Legal Advisor, the hospitals are not legally obligated to exclusively use the System
or promote the System to their patients in their cognitive centers pursuant to the relevant
cognitive center cooperation agreements.
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The amount of payment from hospitals to us is based on the number of times and the
specific functions of the System used in hospitals. The pricing is set based on negotiations
between us and the hospitals with reference to the relevant provincial health insurance
reimbursement list. Hospitals shall confirm the amount of usage and settle the payments with
us periodically. We shall also take measures to ensure that the System complies with relevant
laws and regulations on cybersecurity and data privacy.
The contract period of the above agreements ranges from two to five years, and the
agreements can be terminated by the non-breaching party in case of material breach by one
party.
In particular, during the Track Record Period, one of the providers of operational support
(the “ Operational Service Provider ”), an Independent Third Party, played two primary roles:
(i) providing operational support such as guidance and technical support on the after-sale
utilization and operations of our System to hospitals, and other services to ensure smooth
operations of cognitive centers that adopt our System; and (ii) providing payment related
services (which the Operational Service Provider provides free of charge) such as issuing sales
invoices to hospitals based on the amount of usage within the relevant cognitive centers,
collecting payments from hospitals on our behalf, and then settling the payments to us in full.
Relationship between the Operational Service Provider and Hospitals
The Operational Service Provider is a technology company with a registered capital of
RMB8.0 million dedicated to offering clinical screening and testing services and research and
development services. It was engaged by several hospitals to help them launch R&D projects,
implement R&D results, and develop screening projects to satisfy clinical needs. The scope of
services covers reproductive health, genetic disease screening, precision medicine, DTx,
among other fields. The Operational Service Provider is primarily responsible for providing the
necessary equipment, consumables and personnel, while the hospitals are responsible for
providing the venue for conducting the projects, and assigning qualified personnel to serve on
the expert advisory committee to oversee and advice on the projects. The Operational Service
Provider may cooperate with certain third parties, such as ourselves, to help conduct the
projects. The hospitals are obligated to pay a portion of the income arising from the projects
(such as fees from patients who use screening services) to the Operational Service Provider.
Overview of Our Arrangement with Hospitals and Operational Service Provider
The arrangement involves three primary parties: the hospital, the Operational Service
Provider and us. We provide our products directly to the hospital for the treatment of its
patients. Based on the use of our products, the hospital makes payments to us, which are
collected by the Operational Service Provider and remitted to us without deduction.
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In addition to its payment-related services, the Operational Service Provider also provides
operational services to hospitals on our behalf, including guidance, technical support and
ensuring the smooth operation of cognitive centers that adopt our System. The Operational
Service Provider provides qualified personnel to the cognitive centers, handles complaints and
feedback and provides us with information on the competitive landscape. We make payments
to the Operational Service Provider for the payment-related services it provides to us and for
the operational services it provides to hospital’s cognitive center on our behalf.
The operational service fee rate we pay the Operational Service Provider is calculated as
a percentage of sales of the System integral software solutions made by hospitals to patients
in hospitals. For sales of the System integral software solutions out of hospitals, the fee rate
is calculated as the same percentage of sales made by us to patients who typically use the
System first in hospitals and then decide to continue using it for cognitive training at their own
homes. See “—Our Business Model” for a flow chart illustrating this arrangement.
The hospitals are liable for medical disputes, administrative penalties, and other legal
liabilities caused by the hospitals in relation to cognitive centers. Such legal liabilities may
include those arising from medical consultation or other services offered by the hospitals
within the cognitive centers over which we or the Operational Service Provider has no control.
We are liable for any labor disputes, injuries, accidents and related labor and personnel
management issues that may occur during the assignment of our staff to cognitive centers. The
Operational Service Provider is liable for any labor disputes, injuries, accidents and related
labor and personnel management issues that may occur during the assignment of its staff to
cognitive centers. As advised by our PRC Legal Advisor, as of the Latest Practicable Date, the
Operational Service Provider is not required to obtain any special license (except for general
business license) for providing the abovementioned operational support and payment related
services to us.
In the collaboration agreement between the hospitals and the Operational Service
Provider, it is clearly provided that we shall be the provider of the System. In another word,
while, as a matter of form, the hospitals pay the Operational Service Provider for the System
instead of directly making payments to us, the Operational Service Provider is obligated to
repay the full amount to us without right to retain any portion thereof, indicating that the
payment is made to us as a matter of substance. Therefore, the relationship among the
hospitals, the Operational Service Provider and us is not one where the Operational Service
Provider outsources or transacts any projects with the hospitals to us; rather, we are the party
that directly work with the hospitals as stipulated in the collaboration agreement.
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This arrangement has several advantages. First, the Operational Service Provider’s
management of payment-related services streamlines the financial process. By handling
billing, collection and settlement, they reduce the administrative burden on our organization,
allowing us to focus on our core business activities. Second, the provision of operational
services by the Operational Service Provider ensures that hospitals adopting our System
receive guidance and technical support, contributing to the smooth operation of cognitive
centers. This support enhances the overall user experience and enables hospitals to maximize
the benefits of our System.
We have begun to and expect to focus on providing operational services to hospitals by
ourselves going forward without third-party service providers such as the Operational Service
Provider. This is subject to further negotiations with existing third-party service providers and
the hospitals as well as actual circumstances when approaching new hospital customers after
Listing. We believe our ability to independently provide such operational services reduces our
reliance on third parties and leads to more seamless integration of the System software and the
operational services and smoother usage experience.
As of the Latest Practicable Date, we had three contracts with the Operational Service
Provider to provide operational services to hospitals in China. The total revenue generated
from hospitals where the Operational Service Provider is involved to provide operational
services was RMB0.9 million, RMB2.3 million, RMB11.3 million, RMB4.4 million and
RMB8.1 million in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024,
respectively.
Operational Support
We entered into a contract with the Operational Service Provider which sets forth that (i)
the Operational Service Provider shall send qualified personnel to cognitive centers to facilitate
cognitive center operations and usage of the System, handle patient and hospital complaints
and feedback, provide us with information on updated competitive landscape, among others,
and shall not provide cognitive screening, assessment, intervention, or operational support to
others; and (ii) we shall provide necessary training on the usage and mechanism of actions of
the System, relevant operating procedures, and industry, product and technological
advancements to the Operational Service Provider and the hospitals, and timely pay for
operational support provided by the Operational Service Provider, among others. The amount
of payments we pay Operational Service Provider is calculated as a percentage of the amount
paid by hospitals to the Operational Service Provider, which in turn is based on the amount of
usage of the System by the hospitals. See “Financial Information—Description of Selected
Components of Statements of Profit or Loss—Revenue” for more information.
The contract on operational support is valid for five years upon signing, unless renewed
prior to expiration. Such agreement can be terminated upon expiration, or by non-breaching
party upon material breach of either party.
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Payment Collection and Reconciliation
We also entered into another agreement with the Operational Service Provider which sets
forth that (i) the Operational Service Provider shall introduce the System to hospitals under its
cooperation with hospitals pursuant to its separate cooperation agreements with hospitals,
collect sales proceeds from and issues invoices to hospitals that use our System, and pay the
whole amount received from hospitals to us. The Operational Service Provider only covers
hospital customers with which it has separate cooperation and all hospitals under this
arrangement with the Operational Service Provider were initially introduced by the Operational
Service Provider. We directly introduce the System (without the introduction by the
Operational Service Provider) to hospital customers who do not have cooperation with the
Operational Service Provider; and (ii) we shall authorize the hospitals to use the System in
assessment and intervention of cognitive impairments of their patients, handle the operations
of the System in the hospitals (even though we fulfilled this obligation in part by entering into
the separate abovementioned contract with the Operational Service Provider), and issue
invoices to the Operational Service Provider and demand payment of the full amount it
collected from hospitals. The Operational Service Provider does not have any obligations to
send payments to us if the hospitals do not make payments to the Operational Service Provider
with respect to the usage of our System, making the Operational Service Provider an entity
through which payments pass in full from hospitals to us. The role played by the Operational
Service Provider is not that of purchaser of our System for resale to hospitals. As such, we do
not deem the Operational Service Provider as our customers. We do not incur any costs or
expenses in relation to its payment related activities.
The agreement on payment collection is valid for five years upon signing, unless renewed
prior to expiration. Such agreement can be terminated upon expiration, or by mutual consent
in writing.
We and the Operational Service Provider usually prepare and submit a detailed list of
usage amount of the System to the hospitals for review on a quarterly basis. The hospitals
reconcile the list with their own records and discuss and confirm any reconciliation with us and
the Operational Service Provider. After the list is confirmed among us, the Operational Service
Provider and the hospitals, we invoice the Operational Service Provider using our name, who
then invoice the hospitals using its name. Amount of both of these invoices are identical. After
the hospitals receive invoices from the Operational Service Provider, hospitals pay the
Operational Service Provider the amount invoiced, and the Operational Service Provider then
promptly pay us the same amount within ten days of receiving payment from hospitals and
receiving the invoice from us. This means that the Operational Service Provider must repay the
full amount to us without the right to retain any portion. We have the right to claim against the
Operational Service Provider if it does not pay us the full amount received from hospitals
within such ten days. In the event of default by the hospitals, we are entitled to initiate
negotiations with the relevant hospitals through the Operational Service Provider instead of
claiming against the relevant hospitals directly.
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The cooperation agreements between the Operational Service Provider and the hospitals
set forth the payment and settlement arrangements between the hospitals to the Operational
Service Provider. Such cooperation agreements also include a provision where a breaching
party (including breach of obligation to timely make payments by the hospitals) is liable to the
non-breaching for any damages arising from breaches. In addition, pursuant to the cooperation
agreement between us and the Operational Service Provider, we are entitled to demand the
Operational Service Provider to request and collect payment for the System from the hospitals
on our behalf from time to time. We do not have direct recourse against the hospitals regarding
the hospitals’ payment obligations.
Reasons for the Above Transactions
The Operational Service Provider has been in cooperation with several hospitals in China
to provide services that strengthen the hospitals’ abilities to offer quality medical care under
various medical specialties. Pursuant to the payment collection agreement above, the
Operational Service Provider shall introduce the System to hospitals under such cooperation.
Because of the cooperation between the hospitals and the Operational Service Provider, these
hospitals are required by the internal policies of their management committees, legal
departments and finance departments to only make payment to the Operational Service
Provider, even though we are the party responsible for selling and delivering the System to the
hospitals. To reflect this commercial reality, the Operational Service Provider agreed to timely
remit the whole amount received from these hospitals to us without any withholding or
deductions. We do not believe we have material reliance on the Operational Service Provider
with respect to payment settlement, because we also sell the System to a large number of
hospitals without the involvement of the Operational Service Provider. Even for the sales made
through the Operational Service Provider, the funds originate from the hospitals, not the
Operational Service Provider.
Because the Operational Service Provider provides operational services and charges us
for such services, the Operational Service Provider is considered our supplier of operational
support during the Track Record Period, while the relevant hospitals are considered our
customers as they are the ultimate users of our System.
We have conducted interviews with the Beijing Municipal Health Commission ( ̏ԯ̹ሊ
ึ) which indicate that the relevant arrangements among the hospital, the
Operational Service Provider and us are in compliance with applicable PRC laws and
regulations in all material respects. As advised by PRC Legal Advisor, the possibility that the
above regulatory assurance being challenged by the higher-level authority is relatively low as
of the Latest Practicable Date on the grounds that (i) Beijing Municipal Health Commission is
responsible for the supervision and management of the city’s healthcare industry, while the
National Health Commission aims to give guidance to local health authorities; (ii) in
accordance with the relevant constitutional and other statues in the PRC that govern the
relationships between different levels of government authorities, higher-level authorities shall
alter or annul decisions issued by lower-level authorities if such decisions are inappropriate.
Therefore, higher-level authorities generally do not challenge or interfere with the decisions
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issued by lower-level authorities if such decisions do not violate applicable laws and
regulations. As advised by our PRC Legal Advisor, the relevant arrangements among the
hospital, the Operational Service Provider and us are in compliance with applicable PRC laws
and regulations in all material respects.
Overview of Our Engagement of Third-Party Service Providers
For cognitive center collaboration with hospitals, we sometimes engage third-party
service providers, including the Operational Service Provider, to provide operational services
to ensure the smooth operation of the System. The following table sets forth an overview of our
historic and on-going engagements with third-party service providers.
Third-Party
Service Providers
Service Provider
Background
Reason for
Engagement
Revenue from
Associated Hospitals
(1)
Service Fees (2) as Percentage to
Total Cost of Sales
For the year ended
December 31,
For the six
months
ended
June 30,
For the year ended
December 31,
For the six
months
ended
June 30,
2021 2022 2023 2024 2021 2022 2023 2024
(RMB in thousands) %
Operational Service
Provider
A private
company engaged
in medical
research, clinical
testing services,
scientific research
services and
medical services.
To provide
operational
support for our
cognitive centers.
878 2,298 11,278 8,080 6.9 20.9 15.4 12.6
Provider B A private
company engaged
in market
research,
conferencing
services,
technology
promotion and
sale of medical
device.
To provide
operational
support for our
cognitive centers.
89 1,777 29,890 26,776 0.8 11.4 42.0 54.6
Notes:
(1) Associated Hospitals represent those hospitals where the third-party service provider is involved to provide
operational services.
(2) Service fees represent the total operational service fees paid or payable to the third-party service provider .
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We expect that the amount of revenue generated from customers involving the
Operational Service Provider will decrease in the future, and our reliance on the Operational
Service Provider to reach more hospital customers will continue to decline.
Collaborations with KOLs
We rely on KOLs, in particular, those who have used our products, to introduce and
recommend our products to physicians and hospitals through academic events. When selecting
KOLs for such events, we consider factors such as the participating physicians’ vocational
affiliation, the purpose and scale of the event, as well as the KOL candidate’s academic and
professional backgrounds, medical specialties and reputation in the industry. We also consider
whether they have participated in clinical studies or published academic articles related to our
products and technologies. All of our KOLs are Independent Third Parties. We provide these
KOLs with detailed information of our products and help them make independent comparisons
among competing products in the market.
KOLs have academic incentives in learning the latest diagnostic and treatment options
within their therapeutic areas, as well as introducing cutting-edge technologies and products
that they believe have clinical benefits to other physicians. Physicians, in the meanwhile, look
to peer experts and KOLs in the medical community for guidance in research, diagnosis and
treatment. We believe the resulting peer-to-peer interaction they generate, is instrumental in
raising the awareness of our technologies and driving adoption of our products.
Academic Conferences
We regularly organize and participate in various academic conferences which include
international and provincial conferences, regional conferences, as well as smaller events for
specific hospital departments, to continuously enhance our brand recognition. For example, we
have organized, attended, introduced our products, or shared our insights in the field of DTx
in various academic conferences, such as the first Cognitive Impairment Disease Specialty
Capability Building Conference (ணึᙄ). These conferences
allow us to enhance the medical professionals’ awareness of our products and communicate
with them regarding our clinical results. During the Track Record Period, we had incurred
aggregate of RMB10.1 million in conference fees to support these academic conferences and
seminars.
Promotion Efforts on Individual Patients
We have also ramped up our promotional efforts to individual patients who have
experienced our products in hospitals and may wish to continue purchasing our products for
use in their homes. Through patient marketing campaigns designed to reach consumers who are
either currently being treated or looking at medical options, we seek to empower these
consumers through patient engagement to enjoy more options for their treatment by giving
them direct access to information about relevant products or services.
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Compliance of the Promotion Efforts
Our PRC Legal Advisor is of the view that our collaboration with various hospitals,
including our funding of the renovation of the hospitals cognitive centers, does not violate any
applicable PRC laws and PRC regulations in all material aspects. In addition, our PRC Legal
Advisor is of the view that the risk that we and the Operational Service Provider are found
guilty of corruption or bribery in PRC due to building cognitive centers and various
promotional efforts (sponsoring conferences) is low, on the following basis:
(i) building and operating cognitive centers are legitimate business activities based
upon the willingness of both our Group and the hospitals, without illegitimate intent
of interest transfer, and each involved party has observed its internal decision-
making procedures when entering into the cooperation and has performed the
relevant contract obligations under the signed agreements;
(ii) during the Track Record Period and as of the Latest Practicable Date, we
participated in academic conferences primarily as attendees, and the purpose of
certain conferences was primarily academic communication;
(iii) as of the Latest Practicable Date, neither we nor the Operational Service Provider
had been subject to any fines or administrative penalties, mandatory rectifications,
sanctions, arbitrations, suits, legal actions or proceedings by any PRC competent
regulatory authorities in relation to corruption and bribery;
(iv) as of the Latest Practicable Date, neither we and the Operational Service Provider
had been involved in any corruption or bribery investigations initiated by PRC
competent authorities in connection with the above sales and marketing activities;
nor have we and the Operational Service Provider received any inquiries, notices,
warnings, or complaints in such respect;
(v) according to the confirmation letters issued by the local counterparts of the
Administration for Market Regulation ( ̹ఙ္ຖ၍ଣ҅) of where we had registered
entities in China, as well as public searches through National Enterprise Credit
Information Publicity System, Credit China, and China Judgment Document
Network, as of the Latest Practicable Date, there had not been any administrative
penalties or relevant litigation records related to us or the Operational Service
Provider on corruption or bribery;
(vi) according to public search through National Health Commission websites and the
websites of relevant provincial health commissions in China, as of the Latest
Practicable Date, neither we nor the Operational Service Provider had been listed in
the adverse records with respect to commercial bribery; and
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(vii) we have conducted interviews with Beijing Municipal Health Commission ( ̏ԯ̹
ึ), which is the competent authority regarding the supervision and
management of the medical and health industry in Beijing, as well as Beijing
Municipal Medical Insurance Enforcement Brigade (ᐼඟ),
which is the competent authority regarding medical insurance administrative law
enforcement in Beijing, both of which indicate that our collaboration with various
hospitals, including funding of the renovation of the hospitals cognitive centers is in
compliance with relevant PRC laws and regulations.
Based on the independent due diligence work conducted by the Joint Sponsors and as
advised by the legal advisers of the Joint Sponsors as to PRC laws, the Joint Sponsors concur
with the view of the Company’s PRC Legal Advisor as mentioned above.
Our PRC Legal Advisor is of the view that, based on the results of the following searches,
as of the Latest Practicable Date, no relevant criminal penalties or litigation records on
corruption or bribery against our top five hospital customers in terms of cognitive centers
revenue for each year during the Track Record Period had been identified:
(1) Our PRC Legal Advisor obtained the list of our top five hospital customers in terms
of cognitive centers revenue for each year during the Track Record Period; and
(2) Our PRC Legal Advisor conducted desktop searches on these hospital customers
through National Health Commission websites and the websites of relevant
provincial health commissions in China, Credit China, and China Judgment
Document Network.
Our Sales and Marketing Team
Our marketing efforts are implemented by our in-house sales and marketing team that is
aligned across various indication areas and geographic regions. As of the Latest Practicable
Date, we had established a strong in-house sales and marketing team of 13 members. Our sales
and marketing team is led by Mr. Lai Zhiyuan, a veteran in medical industry with more than
ten years related experiences. As of the Latest Practicable Date, a majority of our sales and
marketing personnel had served at global and domestic leading companies and accumulated
diverse experience in the medical and healthcare industry, covering various sectors, including
medical device, medicine, consumables, software and medical informatization.
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Pricing and Flow of Funds
For provision of the System integral software solutions in hospitals, patients first pay
hospitals for using the System, and hospitals then periodically settle payments for the System
to us based on the amount of use of the System by patients. The prices paid by patients to
hospitals are determined by the local health insurance reimbursement lists, and the prices
hospitals pay us for each time the System is offered to patients are determined based on
negotiation between the hospitals and us with reference to the applicable prices under local
health insurance reimbursement lists. We sometimes engage third-party service providers to
provide operational support in cognitive centers of these hospitals on our behalf. In such cases,
after receiving payments from patients, hospitals settle payments to the service providers
which then remit the amount from hospitals to us in full. See “Business—Sales and
Marketing—Our Marketing Model—Collaborations with Top Hospitals and Research
Institutions” for more details on the rationale, roles and arrangements with such service
providers. For patients who purchase our System integral software solutions out of hospitals,
we charge patients a subscription fee which enables them to access and train with our System
and receive related support services for a certain period of time from the comfort of their own
homes. For our research projects services, we charge our customers on a cost-plus basis, taking
into account the amount of staff resources and other costs of providing data analytics and
system development services, plus a margin determined on an individual basis depending on
characteristics of each project, such as (i) the degree to which our customers rely on our System
to conduct research projects; (ii) the level of labor intensity of a project; and (iii) case-by-case
negotiations with customers. As of the Latest Practicable Date, the price for cognitive training
in hospitals ranges from approximately RMB10.0 to RMB930.0 per session, depending on the
content and number of training sessions actually received by the patient. The prices for
out-of-hospital subscription range from approximately RMB480.0 to RMB5,600.0 with
subscription periods of one month to one year. Due to the tailored nature of research project
services, the price we charge for research project services can range from RMB50,000 to
RMB10.0 million. For our sale of integrated equipment and user accounts, the typical selling
price for each equipment alone was approximately RMB3,000, and the typical selling price for
each user account is approximately RMB1,000, which is primarily determined by costs plus a
reasonable margin acceptable to customers. For our training facilitation service, we charge
attendees approximately RMB2,000 to RMB3,000 service fee per attendee based on the type
of training attendees when they sign up for the training.
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OUR CUSTOMERS
Our customers primarily include (i) hospitals from which we generate revenue for
provision of the System integral software solutions in hospitals; (ii) individual patients from
whom we generate revenue for provision of the System integral software solutions out of
hospitals; (iii) hospitals, universities, and other research institutions from which we generate
research project revenue; and (iv) Customer H, a public institution dedicated to advancing the
knowledge and capabilities of physicians and other medical professionals in China, being the
organizer and the party who is ultimately responsible for designing, organizing and providing
guidance on these training sessions. Customer H is responsible for establishing the expert panel
for the trainings, setting training goals and standards, evaluating attendee performance,
awarding certificates to attendees, and supervising the overall operations of the training
sessions. Customer H engages us to provide certain organizational and logistical groundwork,
which facilitates Customer H in carrying out its overall goals. Per request from Customer H,
we charge service fees from attendees. Our ability to collect service fees from attendees
originates from our engagement by Customer H to provide organizational and logistical
groundwork. See “Financial Information—Description of Selected Components of Statements
of Profit or Loss—Revenue” for more details. As of the Latest Practicable Date, we had
generated sales revenue for the System from 186 hospitals in China. The total revenue
generated from our top five customers was RMB1.6 million, RMB8.3 million, RMB50.8
million, and RMB28.9 million in 2021, 2022, 2023, and the six months ended June 30, 2024,
respectively. Our five largest customers combined accounted for 70.1%, 73.1%, 75.6%, and
55.6%, respectively, of our total revenue, and our largest customer accounted for 35.5%,
39.1%, 39.9%, and 28.0%, respectively, of our total revenue, in 2021, 2022, 2023, and the six
months ended June 30, 2024. We became acquainted with our top five customers for each
period during the Track Record Period through various cooperation on clinical trials, cognitive
centers and brain science research projects, as well as academic conferences we organized and
attended.
The following tables set forth certain information about our five largest customers during
the Track Record Period in terms of revenue.
2021
Customers
Services Provided/
Products Sold Customer Background Revenue
Revenue
Contribution
(RMB in
millions)
%
Customer B Provision of the
System integral
software solutions
A public hospital founded in the early
1980s with approximately RMB300.0
million in registered capital that
engages in medical research and
provides medical services
0.8 35.5
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Customers
Services Provided/
Products Sold Customer Background Revenue
Revenue
Contribution
(RMB in
millions)
%
Customer H Sales of user accounts A private company founded in 2014 with
approximately RMB3.0 million in
registered capital that engages in
education, health and business
consulting and the sale of electronic
products
0.3 12.3
Customer I Sales of software and
hardware
A private company founded in 2018 with
approximately RMB5.0 million in
registered capital that engages in the
wholesale of computer software,
computer hardware, construction
material and medical devices
0.2 9.2
Customer C Research projects
services
A public university founded in the early
1930s with approximately RMB2,000.0
million in registered capital that
engages in R&D activities and provides
higher education
0.2 8.1
Customer J Sales of software and
hardware
A private company founded in 2015 with
approximately RMB3.0 million in
registered capital that engages in
software development and provides
information technology services
0.1 5.0
Total 1.6 70.1
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2022
Customers
Services Provided/
Products Sold Customer Background Revenue
Revenue
Contribution
(RMB in
millions)
%
Customer A Provision of system
integral software
solutions; and
research projects
service
A public hospital founded in the late
1910s with approximately RMB50.0
million in start-up capital that engages
in medical research and provides
medical services
4.4 39.1
Customer B Provision of system
integral software
solutions
A public hospital founded in the early
1980s with approximately RMB300.0
million in start-up capital that engages
in medical research and provides
medical services
2.2 19.8
Customer C Research projects
service
A public university founded in the early
1930s with approximately RMB2,000.0
million in start-up capital that engages
in R&D activities and provides higher
education
0.9 8.4
Customer D Provision of system
integral software
solutions
A private hospital founded in the mid
2000s with approximately RMB2.0
million in start-up capital that provides
medical services
0.4 3.2
Customer E Research projects
service
A public hospital founded in the mid
1880s with approximately RMB30.0
million in start-up capital that engages
in medical research and provides
medical services
0.3 2.6
Total 8.2 73.1
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2023
Customers
Services Provided/
Products Sold Customer Background Revenue
Revenue
Contribution
(RMB in
millions)
%
Customer A Provision of system
integral software
solutions; and
research projects
service
A public hospital founded in the late
1910s with approximately RMB50.0
million in start-up capital that engages
in medical research and provides
medical services
26.8 39.9
Customer B Provision of system
integral software
solutions
A public hospital founded in the early
1980s with approximately RMB300.0
million in start-up capital that engages
in medical research and provides
medical services
11.0 16.3
Customer F Provision of research
projects service
A public hospital founded in the early
1950s with approximately RMB340.0
million in start-up capital that engages
in medical research and provides
medical services
6.8 10.2
Customer K Training facilitation
service
A public institution founded in the early
2010s with approximately RMB0.1
million in start-up capital that is
dedicated to advancing the knowledge
and capabilities of physicians and other
medical professionals in China
5.1 7.6
Customer G Provision of the
System integral
software solutions;
and research projects
service
A public hospital founded in the late
1950s with approximately RMB230.0
million in start-up capital that engages
in medical research and provides
medical services
1.1 1.6
Total 50.8 75.6
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For the six months ended June 30, 2024
Customers
Services Provided/
Products Sold Customer Background Revenue
Revenue
Contribution
(RMB in
millions)
%
Customer A Provision of system
integral software
solutions; and
research projects
service
A public hospital founded in the late
1910s with approximately RMB50.0
million in start-up capital that engages
in medical research and provides
medical services
14.5 28.0
Customer F Provision of research
projects service
A public hospital founded in the early
1950s with approximately RMB340.0
million in start-up capital that engages
in medical research and provides
medical services
5.8 11.3
Customer B Provision of system
integral software
solutions
A public hospital founded in the early
1980s with approximately RMB300.0
million in start-up capital that engages
in medical research and provides
medical services
5.7 10.9
Customer L Provision of system
integral software
solutions
A public hospital founded in the late
1940s with approximately RMB250.0
million in start-up capital that engages
in medical research and provides
medical services
1.6 3.0
Customer G Provision of the
System integral
software solutions;
and research projects
service
A public hospital founded in the late
1950s with approximately RMB230.0
million in start-up capital that engages
in medical research and provides
medical services
1.3 2.4
Total 28.9 55.6
During the Track Record Period, all of our five largest customers in each year were
Independent Third Parties. None of our Directors, their respective associates, or Shareholders
who, to the knowledge of our Directors, own 5% or more of our issued share capital had any
interest in any of our five largest customers in each year during the Track Record Period. In
some cases, we collaborate with some of our customers on R&D of the System. See “—Core
Product: Brain Function Information Management Platform Software System—Core Product
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Development Timeline” and “—Research and Development” on details on such cooperations.
We also cooperate with certain hospital customers to conduct clinical trials for products other
than the System for different indications during the Track Record Period. See “—Other
Products and Product Candidates” for more details on certain of these cooperations.
Due to the nature of our business, two of our hospital customers, Customer B and
Customer F, were also our suppliers during the Track Record Period. These hospital customers
are primarily engaged in conducting medical research and providing medical services. We first
became acquainted with these hospitals through R&D cooperation in the development of the
System.
For Customer B, we provided the System integral software solutions in hospitals in 2021,
2022, 2023, and the six months ended June 30, 2024 and provided research projects service in
2023, and generated revenue of RMB0.8 million, RMB2.2 million, RMB11.0 million, and
RMB5.7 million, respectively. During the same periods, we procured clinical trial services
from Customer B in relation to the clinical trials of the System for certain VCI indications. We
incurred nil, RMB0.03 million, RMB3.6 million, and RMB0.2 million in purchases from
Customer B in 2021, 2022, 2023, and the six months ended June 30, 2024, respectively.
For Customer F, we provided research projects service in 2022, 2023 and the six months
ended June 30, 2024, and generated revenue of RMB0.3 million, RMB 6.8 million and RMB5.8
million, respectively. During the same periods, we procured clinical trial services from
Customer F in relation to the clinical trials of the System for certain NCI indications and
procured certain intellectual property primarily related to cognitive impairment assessment
methods and system (patent/patent application numbers: CN202210985424.2 and
202211512702.9). We incurred nil, RMB2.3 million and RMB17 thousand in purchases from
Customer F in 2022, 2023 and the six months ended June 30, 2024, respectively. For additional
details of the purchased intellectual property, see “—Intellectual Property.”
We selected this hospital customer as clinical trial service providers because we believe
it has the technical expertise and patient resources to facilitate the conduct of trials and that
given its demand for our products, it had a strong incentive to provide the clinical trial services
to the best of its ability to strengthen its business relationship with us.
Apart from the above, none of the above five largest customers in each year, to the
knowledge of our Directors, had any past or present relationship (business, employment,
financing, family, trust or otherwise) with our Company, our subsidiaries, their directors,
shareholders and senior management, and any of their respective associates.
To determine the appropriate credit periods and terms, we generally consider the credit
histories of our customers and typically grant them credit terms that range from 30 to 180 days.
We may extend our credit terms for our customers, based on various factors, including the
duration of our customer relationship and type of service provided.
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Customer Services
Cognitive impairment DTx is a new market area. We believe that thorough training and
ongoing customer support are important to develop a long-term relationship with hospitals and
other end users. We provide the following reliable, effective and satisfactory customer
services, which contribute to the improvement of user experience and product satisfaction.
We provide customer service to train end users and handle all kinds of customer queries
and complaints regarding our products and services. They are able to seek technical supports,
make queries and file complaints on the quality of our products and adverse events after use
via various channels, such as phone calls, online written instant messaging, and face-to-face
communications. Our return and exchange policy generally does not allow any return or
exchange, in line with industry norms. During the Track Record Period and up to the Latest
Practicable Date, we did not experience any material customer complaint or return from
customers.
We have a team dedicated to tracking and recording the occurrence of adverse events and
serious adverse events. The team will report when notices a suspicious event. If the team
determines that an incident involving our product constitutes an adverse event under applicable
laws and regulations, we will report the incident to corresponding regulatory authorities and
assess the cause for the adverse events. We also investigate and analyze the cause of issue
raised by users of our products and refer the quality issue to our management and relevant
responsible departments for resolution and correction. We will recall our products for quality
issues when necessary. During the Track Record Period and up to the Latest Practicable Date,
there were not any product recalls due to quality issues.
Product Liability
Pursuant to applicable PRC laws and regulations, medical institutions will be held liable
for any damage caused to a patient when receiving medical diagnosis and treatment, if the
medical institution or any practicing physician is at fault, or if the practicing physician fails to
perform diagnosis and treatment obligations corresponding to the prevailing medical standards
in diagnosis and treatment activities. However, if any injury to the patient is caused by the
defect of a medical device, the patient can claim against the manufacturer or the seller of the
medical device.
On such basis, and as advised by our PRC Legal Advisor, we are not legally liable for
physicians’ misuse of our DTx products unless any injury was resulting from the defect of our
DTx products. During the Track Record Period and as of the Latest Practicable Date, we were
not involved in any lawsuits, arbitrations and other legal proceedings in this regard, and we
were not subject to any administrative penalties due to quality issues of our products.
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OUR SUPPLIERS
Our major suppliers primarily provide us (i) certain research and development services
which we outsource to third-party vendors; (ii) operational support provided to cognitive
centers on our behalf, such as guidance and technical support on the after-sale utilization and
operations of our System and other services to ensure smooth operations of cognitive centers
in hospitals that adopt our System; (iii) suppliers of certain hardware on which our products
run; (iv) providers of professional services such as market development services, financial
advisory services, property renovation services, human resource services, and cloud services;
and (v) lessors of our leased properties. Our suppliers are primarily located in China. We have
established stable relationships with many of our key suppliers. For the top five suppliers in
each period during the Track Record Period as disclosed below, we became acquainted with
them through introduction by our employees or business partners who had prior working
relationship with these suppliers and through the regular supplier engagement process during
our ordinary course of business carried out by our personnel responsible for procurement.
The total purchases from our top five suppliers were RMB36.3 million, RMB13.8 million,
RMB39.2 million, and RMB30.2 million, respectively, in 2021, 2022, 2023, and the six months
ended June 30, 2024. Our five largest suppliers combined accounted for 80.3%, 46.4%, 43.9%,
and 55.5%, respectively, of our total purchases, and our largest supplier accounted for 33.2%,
12.7%, 18.7%, and 27.4%, respectively, of our total purchases, in 2021, 2022, 2023, and the
six months ended June 30, 2024.
The following tables set forth certain information about our five largest suppliers during
the Track Record Period in terms of procurement amount.
2021
Suppliers
Goods and/or
Services Procured Principal Business
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
(%)
Supplier I Financial advisory A private company founded in
2018 with approximately
RMB5.0 million in registered
capital that provides financial,
technical and management
consulting services
15.0 33.2
Beijing Dongsheng
Bozhan Science &
Technology
Development Co.,
Ltd.
Housing rental A private company founded in
2002 with approximately
RMB10.0 million in registered
capital that engages in property
management
8.7 19.3
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Suppliers
Goods and/or
Services Procured Principal Business
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
(%)
Supplier F Housing rental A private company founded in
1977 with approximately
RMB30.0 million in registered
capital that engages in the
leasing of office and commercial
spaces and the manufacturing
and sale of machinery and
equipment
5.8 12.8
Supplier K Housing rental A private company founded in
2018 with approximately
RMB10.0 million in registered
capital that engages in property
management, construction, real
estate management, technology
incubator, research and
consulting businesses
4.1 9.2
Supplier C Decoration Designs A private company founded in
2012 with approximately
RMB30.0 million in registered
capital that provides renovation,
professional design and
conference management services
2.6 5.8
Total 36.3 80.3
Note:
1. Supplier I provided financial advisory services in relation to our pre-IPO investment, which primarily
included reviewing our financial documents, recommending investment institutions and funds, and
facilitating financing transactions (which led to the issuance of the RMB300.0 million long-term bond.
See “Financial Information—Indebtedness—Long-term Bond” for details.) We became acquainted with
Supplier I through introduction by a business partner . Supplier I worked along with our management
and other personnel in providing the above services. We only purchased such services in 2021 in the
amount of RMB15.0 million, and the amount of services purchased from Supplier I in 2022, 2023 and
the six months ended June 30, 2024 was nil.
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2022
Suppliers
Goods and/or
Services Procured Principal Business
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
(%)
Supplier A Property renovation A private company founded in 2020 with
approximately RMB5.0 million in
registered capital that engages in
renovation, engineering design,
general contracting, leasing of
equipment and sale of appliances
3.8 12.7
Supplier B Operational support A private company founded in 2021 with
approximately RMB1.0 million in
registered capital that provides
technical services, consulting services,
project planning services and the sale
of machinery and equipment
2.8 9.3
Shenzhen Hochichuang
Technology Co., Ltd.
Equipment A private company founded in 2018 with
approximately RMB10.0 million in
registered capital that engages in
software development, computer
hardware development and big data
analysis
2.6 8.7
Supplier C Renovation design A private company founded in 2012 with
approximately RMB30.0 million in
registered capital that engages in
renovation, professional design and
conference management services
2.5 8.5
Supplier D Human resources
services
A private company founded in 2020 with
approximately RMB1.0 million in
registered capital that provides human
resources management and consulting
services
2.1 7.2
Total 13.8 46.4
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2023
Suppliers
Goods and/or
Services Procured Principal Business
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
(%)
Supplier E Operational support A private company founded in 2021 with
approximately RMB5.0 million in
registered capital that provides
corporate planning services, market
research services as well as
technology development services
16.7 18.7
Supplier F Housing rental A private company founded in 1977 with
approximately RMB30.0 million in
registered capital that engages in the
leasing of office and commercial
spaces and the manufacturing and sale
of machinery and equipment
8.4 9.4
Supplier G Operational support A private company founded in 2015 with
approximately RMB8.0 million in
registered capital that provides health
advisory services, medical research
and experimental development
5.4 6.1
Supplier B Operational support A private company founded in 2021 with
approximately RMB1.0 million in
registered capital that provides
technical services, consulting services,
project planning services and the sale
of machinery and equipment
4.4 4.9
Shenzhen Hochichuang
Technology Co., Ltd.
Equipment A private company founded in 2018 with
approximately RMB10.0 million in
registered capital that engages in
software development, computer
hardware development and big data
analysis
4.3 4.8
Total 39.2 43.9
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For the six months ended June 30, 2024
Suppliers
Goods and/or
Services Procured Principal Business
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
(%)
Supplier E Operational support A private company founded in 2021 with
approximately RMB5.0 million in
registered capital that provides
corporate planning services, market
research services as well as
technology development services
14.9 27.4
Supplier B Operational support A private company founded in 2021 with
approximately RMB1.0 million in
registered capital that provides
technical services, consulting services,
project planning services and the sale
of machinery and equipment
5.8 10.7
Supplier M Equipment A private company founded in 2003 with
approximately RMB110.0 million in
registered capital that focuses on IT
hardware or software product
marketing, system integration,
enterprise IT integrated services, and
enterprise purchasing services
3.5 6.3
Supplier G Operational support A private company founded in 2015 with
approximately RMB8.0 million in
registered capital that provides health
advisory services, medical research
and experimental development
3.4 6.3
Supplier L Advertising Services A private company founded in 2023 with
approximately RMB0.1 million in
registered capital that provides literary
and artistic creation, advertising
production and specialized design
services
2.6 4.8
Total 30.2 55.5
We select our suppliers based on a variety of factors, including their qualification,
reputation, pricing, and overall services. We perform thorough due diligence on our suppliers,
regularly monitor and review their performance.
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To the best of our knowledge, all of our five largest suppliers in each year during the
Track Record Period are Independent Third Parties. None of our Directors, their respective
associates, or Shareholders who own 5% or more of our issued share capital had any interest
in any of our five largest suppliers in each year during the Track Record Period. None of the
above five largest suppliers in each year, to the knowledge of our Directors, had any past or
present relationship (business, employment, financing, family, trust or otherwise) with our
Company, our subsidiaries, their directors, shareholders and senior management, and any of
their respective associates. During the Track Record Period, none of our major suppliers was
also our customer.
During the Track Record Period and up to the Latest Practicable Date, we did not have
any material disputes with our suppliers or experience any material breach of our supply
agreements. We had not experienced any material fluctuations in the pricing of our supplies
during the Track Record Period. To the best of our knowledge, as of the Latest Practicable
Date, there was no information or arrangement that would lead to termination of our
relationships with any of our major suppliers.
BUSINESS SUSTAINABILITY AND COMMERCIALIZATION STRATEGIES
We believe the long-term sustainability of our product commercialization can be
substantiated by the following strategies and trends:
Further Helping Hospitals Establish Cognitive Centers
We provide the System to hospitals which enables them to provide assessment and
intervention to their cognitive impairment patients utilizing the System. A substantial portion
of our revenue during the Track Record Period was generated from provision of the System
integral software solutions in hospitals, which accounted for 42.1%, 36.1%, 61.3%, 62.3% and
68.0% of our total revenue in 2021, 2022, 2023, and the six months ended June 30, 2023 and
2024, respectively. We establish relationships with hospitals through cognitive centers which
we help hospitals establish by providing the System, the hardware on which the System
operates, as well as the funding for renovating the cognitive center premises. As of the Latest
Practicable Date, we had helped more than 120 hospitals establish cognitive centers in China,
including several leading hospitals with “National Medical Center” (ᔼኪʕː)
certification for various medical specialties by the NHC.
Building on our early success with respect to cognitive centers, we became the first
organizer of a project initiated by the NHC, according to Frost & Sullivan, under which we are
tasked with helping to establish cognitive centers in over 2,100 public hospitals across China
and promoting the development of cognitive impairment DTx market in China over the next
five years. We intend to continue to help hospitals establish cognitive centers, and fully
capitalize on the commercialization potential of our System in new cognitive centers in these
hospitals, which we believe will provide us sustainable growth in our business and revenue
scale.
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Enhanced Brand and Product Awareness
We intend to recruit more talents with academic and professional experiences in the field
of cognitive impairment DTx to expand our commercialization team and enhance the team’s
academic and marketing capabilities. Leveraging our extensive clinical research experience,
academic achievements in publishing research papers on top academic journals and our
recognition among industry experts, we intend to further solidify our long-term relationships
with leading hospitals and physicians as well as regulatory authorities by sponsoring more
academic conferences, and actively participating in the establishment of industry standards. We
believe such relationships will further enhance market penetration of our DTx product. See
“—Sales and Marketing—Our Marketing Model” for more details on the various types of
methods we have and will continue to adopt to further commercialize our products and
services.
Product Innovation and Indication Expansion
We plan to accelerate the development, registration, and commercialization processes to
expand our System to more cognitive impairment indications by developing upgraded versions
of the System or developing new products. We believe this will enable us to provide
customized and effective medical solutions to more cognitive impairment patients. As of the
Latest Practicable Date, our System had several other indications under various stages of
preclinical and clinical development. We intend to apply for regulatory approval and market
these new indications, which we believe will be able to serve the needs of more hospitals and
patients. We also have four other products with regulatory approvals, and six additional
product candidates under different stages of preclinical and clinical development or
registration process. We intend to conduct further preclinical and clinical development
activities to obtain regulatory approvals for commercialization in various markets worldwide,
which we believe presents significant opportunity for future business and revenue growth.
Growing Industry Trend Demonstrating Strong Market Demand
Cognitive impairment DTx industry is still at an early stage of development. According
to Frost & Sullivan, the market size of the cognitive impairment DTx in China reached
RMB268.6 million in 2023 and is expected to increase to RMB1,046.7 million in 2025 and
RMB8,927.4 million in 2030, representing CAGRs of 97.4% and 53.5%, respectively. As a
seasoned player in China’s cognitive impairment DTx market, we believe we are well-
positioned to capture the rapid growth in the cognitive impairment DTx market in China, and
achieve sustainable business and revenue growth.
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MANUFACTURING
We have third-party vendors who manufacture the hardware on which our products run.
We do not own or operate any manufacturing facilities. We enter into purchase agreements
which fix the pricing of the hardware (typically tablet computers) within the agreement period,
and provide for payment terms and timetable, quality and warranty provisions, delivery and
confidentiality, among other standard terms. We then place individual purchase orders which
set forth the quantity of purchase, and pay purchase price pursuant to the purchase agreement
after vendors confirm the purchase order within 48 hours. We became acquainted with these
vendors through the regular procurement process and do not have any relationships other than
those described above.
QUALITY MANAGEMENT
We have a quality management department that devotes resources to the quality
management of our products. Our management team is actively involved in setting quality
policies and managing our internal and external quality performance.
Our entire quality control system is designed to meet the ISO 13485 international quality
management standards for quality management. This includes adherence to the basic
methodology, tools, quality planning, quality assurance, quality control and quality
improvement requirements outlined in the standards. We have achieved ISO 13485 certification
in this area, confirming our compliance with international quality management standards. To
ensure ongoing compliance, we conduct regular internal reviews and external audits on an
annual basis.
In addition, we review medical device management specifications to ensure compliance
with relevant standards. This includes reviewing the management of nodes, the basic
requirements for quality control and the methodology for the entire process in the above-
mentioned systems.
Overall, we have a comprehensive quality control system that includes various major
systems such as software engineering management, project management, risk management,
operation and maintenance management and knowledge management.
OUR PROPERTIES
As of the Latest Practicable Date, we had 19 leased properties in China, with a total
aggregate gross floor area of approximately 11,000 sq.m. We believe our current facilities are
sufficient to meet our near-term needs, and additional space can be obtained on commercially
reasonable terms to meet our future needs. We do not anticipate undue difficulty in renewing
our leases upon their expiration. As of the Latest Practicable Date, we did not have any
self-owned properties.
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The following table sets forth a summary of the material leased properties as of the Latest
Practicable Date:
Location Usage Address
Gross Floor
Area (sq.m)
Property
Leased Expiry Date
Shaoxing,
Zhejiang
Office 13F 1301/14F 1401/16F 1601,
Building 3, Shaoxing Shuimuwan
District Science Park, No. 2
Pingjiang Road, Y uecheng District
4,016 Leased July 25, 2026
Haidian District,
Beijing
Office Building A, No. 135 Qinghe Road 2,196 Leased September 9,
2027
Haidian District,
Beijing
Office Building G, No. 135 Qinghe Road 2,024 Leased August 31, 2025
We expect to renew and extend these leases before their respective expirations, or seek
other premises based on business needs. For our other leases, we expect to initiate renewal
discussions with the landlords and do not expect any material obstacles for successful
extension. If we were unable to renew such leases, our Directors believe we can find alternative
offices within a short time as there are plenty of comparable supplies in the market, and we will
incur immaterial moving expenses for our operations. For risks related to lessors and other
aspects of our leased properties, see “Risk Factors—Risks Relating to Our General
Operations—We do not own any real estate with respect to our current principal place of
operation and may be exposed to risks associated with leased properties. For example, we may
be subject to fines due to the lack of registration of our leases.”
According to Chapter 5 of the Listing Rules and section 6(2) of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong), we need to comply with the requirements of section
38(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to
paragraph 34(2) of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance which requires a valuation report with respect to all of our Group’s
interests in land or buildings, as we have property interest with a carrying amount of 15% or
more of our consolidated total assets. Accordingly, we have prepared the Property V aluation
Report with respect to our Group’s owned properties pursuant to Chapter 5 of the Listing
Rules.
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COMPETITION
While we believe that our technology, development experience, and scientific knowledge
provide us with competitive advantages, we face potential competition from many different
sources. To maintain our competitive edge, we pursue patent protection and establish
collaborative arrangements for the research, development, manufacturing and
commercialization of evidence-based therapeutics. Any products that we successfully develop
and commercialize will face competition from new therapies that may become available in the
future. See “Industry Overview—Cognitive Impairment DTx Market” for more information on
details of the competitive landscape we face.
INSURANCE
We believe we maintain insurance policies covering risks in line with industry standards.
We do not maintain any liability insurance or property insurance policies covering our
equipment and facilities for losses due to fire, earthquake or any other disaster. Consistent with
industry norm, we do not maintain key-man life insurance for any member of our senior
management, or business disruption insurance. While we believe that our insurance coverage
is adequate and in line with the industry norms, it may, however, be insufficient to cover all
claims for product liability, damage to our assets, facilities and equipment or employee
injuries. See “Risk Factors—Risks Relating to Our General Operations—Our insurance
coverage may not completely cover the risks related to our business and operations, which
could expose us to significant costs and business interruptions” for more information.
EMPLOYEES
The following table sets forth a breakdown of our employees by function as of the Latest
Practicable Date:
Function Number % of Total
Management and Administrative 24 15.3
R&D 120 76.4
Marketing 13 8.3
Total 157 100.0
As of the Latest Practicable Date, all our employees were based in Mainland China.
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Employment Agreements with Key Management and Research Staff
We generally enter into standard confidentiality and employment agreements with our key
management and research staff. The contracts with our key personnel typically include a
standard non-compete clause that prohibits the employee from competing with us, directly or
indirectly, during his or her employment and for up to two years after the termination of his
or her employment. The contracts also typically include undertakings regarding assignment of
inventions and discoveries made during the course of his or her employment. For further details
regarding the terms of confidentiality and employment agreements with our key management,
see “Directors and Senior Management.”
We believe that we maintain a good working relationship with our employees. We believe
we have not experienced any significant labor disputes or any significant difficulty in
recruiting staff for our operations.
Training and Development
We believe that our success depends in part on our ability to attract, recruit, train and
retain talented employees. We are committed to continuously enhancing our team’s technical
expertise, continuing education, project management capabilities and service quality with a
comprehensive training system, including periodic technical training and regular sharing of
industry insight to accelerate the learning progress and improve the knowledge and skill levels
of our workforce. We also conduct training for our employees to abide by our anti-bribery and
anti-corruption compliance requirements and applicable laws and regulations to eliminate
bribery and corruption risks.
Employee Benefits
Our employees’ remuneration consists of salaries, bonuses, employees’ provident fund
and social security contributions and other welfare payments. In accordance with applicable
Chinese laws, we have made contributions to social security insurance funds (including
pension plan, unemployment insurance, work-related injury insurance, medical insurance and
maternity insurance), supplemental medical insurance and housing funds for our employees. As
of the Latest Practicable Date, we had complied with statutory social security insurance fund
and housing fund obligations applicable to us under Chinese laws in all material aspects.
INTELLECTUAL PROPERTY
Intellectual property rights are important to our business. We develop and use a number
of patents, copy rights and other intellectual properties during our ordinary course of business.
As of the Latest Practicable Date, we had 183 registered trademarks, 63 granted patents,
78 registered software copyrights and filed 136 patent applications in China, as well as four
pending patent applications overseas.
BUSINESS
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The following table sets forth an overview of our material granted patents and pending
patent applications in connection with our System and other products as of the Latest
Practicable Date:
Number Product
Patent/
Application
Number
Patent
Type
Patent
Applicant/
Holder Title of Invention Jurisdiction
Date of
Application
Patent
Status
Patent
Expiration
1 All Products 201610302364.4 Invention Beijing
Zhijingling
An online cognitive
assessment method ( ɓ၇ίᇞ
ج)
China 2016-05-09 Granted 2036-05-09
2 All Products 201810111843.7 Invention Beijing
Zhijingling
A type of online cognitive
assessment system ( ɓ၇ίᇞႩ
൙Пӻ୕)
China 2016-05-09 Granted 2036-05-09
3 All Products 202110833758.3 Invention Beijing
Zhijingling
Personalized Cognitive
Training Task Recommendation
Algorithm and System Based
on User Ability (͜˒ঐɢ
ج
ʿӻ୕)
China 2021-07-23 Granted 2041-07-23
4 All Products 202110906058.2 Invention Beijing
Zhijingling
Computerized Social
Adaptation Training Method
and System (ึቇᏐ
ʿӻ୕)
China 2021-08-09 Granted 2041-08-09
5 The System,
Quantitative Cognitive
Assessment Software
for Depression,
Depression Treatment
Software
202110953462.5 Invention Beijing
Zhijingling
A type of human-computer
interface equipment for
emotional regulation (׵
ɛዚʹʝண௪)
China 2021-08-19 Granted 2041-08-19
6 All Products 202 111189595.6 Invention Beijing
Zhijingling
A type of human-computer
interface method and system
for cognitive correction
training (ᐞ͍৅
ʿӻ୕)
China 2021-10-12 Granted 2041-10-12
BUSINESS
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--- page 367 ---
Number Product
Patent/
Application
Number
Patent
Type
Patent
Applicant/
Holder Title of Invention Jurisdiction
Date of
Application
Patent
Status
Patent
Expiration
7 The System,
Quantitative Cognitive
Assessment Software
for Depression,
Depression Treatment
Software
202111296685.5 Invention Beijing
Zhijingling
Human-computer interface
method and system for
cognitive impairment based on
emotion monitoring (ઋၫ
ʿ
ӻ୕)
China 2021-11-03 Granted 2041-11-03
8 All Products 202111344162.3 Invention Beijing
Zhijingling
Multi-scale neural network
analysis method and system
based on modular dynamic
reconfiguration (ᅼ෯ʷਗ
ج
ʿӻ୕)
China 2021-11-12 Granted 2041-11-12
9 All Products 202111351103.9 Invention Beijing
Zhijingling
A multidimensional hierarchical
drift-diffusion model approach
to cognitive decision making
(εၪʱᄴ
ج)
China 2021-11-15 Granted 2041-11-15
10 All Products 202111365418.9 Invention Beijing
Zhijingling
Cognitive decision making
evaluation method and system
based on multidimensional
hierarchical drift diffusion
modeling (εၪʱᄴဎ୅ᓒ
ʿӻ
୕)
China 2021-11-17 Granted 2041-11-17
11 All Products 202111463438.X Invention Beijing
Zhijingling
Human-computer interaction
solution recommendation
method and system for
cognitive enhancement (౤
ج
ʿӻ୕)
China 2021-12-02 Granted 2041-12-02
12 All Products 202210148357.9 Invention Beijing
Zhijingling
A neuromodulation-based
cognitive enhancement training
method and system (׵
ʿ
ӻ୕)
China 2022-02-17 Granted 2042-02-17
BUSINESS
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--- page 368 ---
Number Product
Patent/
Application
Number
Patent
Type
Patent
Applicant/
Holder Title of Invention Jurisdiction
Date of
Application
Patent
Status
Patent
Expiration
13 All Products 202210745854.7 Invention Beijing
Zhijingling
Cognitive training task
recommendation method,
system and model construction
method based on FTRL
modeling (׵FTRLႩ
eӻ୕ʿ࿴
ج)
China 2022-06-28 Granted 2042-06-28
14 All Products 202210791199.9 Invention Beijing
Zhijingling
A neural network-based
cognitive enhancement method
and system (ग़຾ၣഖ
ʿӻ୕)
China 2022-07-06 Granted 2042-07-06
15 All Products 202210807025.7 Invention Beijing
Zhijingling
Cognitive assessment
enhancement method and
system based on personality
differences (Ⴉ
ʿӻ୕)
China 2022-07-08 Granted 2042-07-08
16 All Products 202210985424.2 Invention Beijing
Zhijingling
A human-computer interaction
method and system for
multidimensional assessment of
cognitive impairment (ٝ
ʿ
ӻ୕)
China 2022-08-17 Pending NA
17 All Products 202211219111.2 Invention Beijing
Zhijingling
A multimodal cognitive
enhancement method and
system (౤ʺ
ʿӻ୕)
China 2022-09-30 Granted 2042-09-30
18 All Products 202211219173.3 Invention Beijing
Zhijingling
Deep learning based cognitive
assessment method and
cognitive task recommendation
method (൙
ج)
China 2022-09-30 Granted 2042-09-30
BUSINESS
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--- page 369 ---
Number Product
Patent/
Application
Number
Patent
Type
Patent
Applicant/
Holder Title of Invention Jurisdiction
Date of
Application
Patent
Status
Patent
Expiration
19 All Products 202211387995.2 Invention Beijing
Zhijingling
Irregular training motivation
method and system based on
personality characteristics of
cognitively impaired patients
(ٙ
ʿӻ୕)
China 2022-11-07 Granted 2042-11-07
20 All Products 202211512702.9 Invention Beijing
Zhijingling
Modeling method for cognitive
task assessment and cognitive
task assessment method and
system (ܔٙ
ʿӻ
୕)
China 2022-11-25 Pending NA
21 The System 202211659784.X Invention Beijing
Zhijingling
Delusional disorder corrective
training system based on TMS
technology (׵TMSθ
ၚग़ღᖟ৅ᇖӻ୕)
China 2022-12-22 Granted 2042-12-22
22 All Products CN202311080653.0 Invention Beijing
Zhijingling
Multimodal mental health
assessment system and method
based on interface-style
emotional interaction (ࠦޢ׵
εᅼ࿒ːଣ਄ੰ൙
ج)
China 2023-8-25 Granted 2043-8-25
23 ADHD Software CN202311162949.7 Invention Beijing
Zhijingling
A method and system for
pushing ADHD training
programs based on brain
function training (໘
પ৔
ʿӻ୕)
China 2023-9-11 Granted 2043-9-11
24 All Products CN202311267670.5 Invention Beijing
Zhijingling
A method and system for
pushing cognitive training tasks
based on deep learning (ଉ
ج
ʿӻ୕)
China 2023-9-28 Granted 2043-9-28
BUSINESS
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As of the Latest Practicable Date, we had 30 granted patents and had filed 38 patent
applications in relation to the System in China. Our Directors believe that such patent and
patent applications have covered all the key characteristics of the System and the possibilities
of us failing to operate and commercialize the System in China due to any objection or claim
from other market players concerning similar technologies or features underlying their
registered patents or patent applications is remote. As of the Latest Practicable Date, to our best
knowledge, there was no pending opposition by any third party against, nor any other
circumstances which has any material adverse effect on, our patent applications filed in China.
The actual protection provided by a patent varies on a claim-by-claim and country-by-
country basis and depends upon many factors, including the type of patent, the scope of its
coverage, the availability of any patent term extensions or adjustments, the availability of legal
remedies in a particular country or region, and the validity and enforceability of the patent. We
cannot provide any assurance that patents will be issued with respect to any of our owned or
licensed pending patent applications or any such patent applications that may be filed in the
future, nor can we provide any assurance that any of our owned or licensed issued patents or
any such patents that may be issued in the future will be commercially useful in protecting our
product candidates and methods of manufacturing the same. We also have strict data separation
policies between production data and testing environment, among data from different projects,
and between corporate operations data and business data.
During the Track Record Period and up to the Latest Practicable Date, none of our
employees breached the confidentiality obligations under their employment contracts in a
material respect. Moreover, during the Track Record Period and up to the Latest Practicable
Date, we were not subject to, nor were we a party to, any intellectual property rights
infringement claims or litigations and were not aware of any material infringement of our
intellectual property rights that had or could have a material adverse effect on our business. We
had complied with all applicable intellectual property laws and regulations in all material
respects during the Track Record Period and up to the Latest Practicable Date. Furthermore, we
have engaged an intellectual property legal advisor to conduct an analysis with respect to the
Core Product in China pursuant to which no valid patents owned by a third-party have been
found that have a significant adverse effect on the freedom of operation of the Core Product
in China. The analysis includes search results for the issued invention patents, utility model
patents and design patents in China. See “Risk Factors—Risks Relating to Our Intellectual
Property Rights—If we and our current or future collaboration partners are unable to protect
our intellectual property rights throughout the world, or if the scope of such intellectual
property rights obtained is not sufficiently broad, third parties may compete directly against us
and our ability to successfully commercialize our products and product candidates may be
adversely affected.”
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DATA PRIV ACY AND PROTECTION
Our data privacy and protection measures are an integral part of our internal control
systems. We have established policies and procedures to ensure that personal information is
collected, stored and used securely and that risks to data privacy are identified and addressed.
Our Directors are of the view that, during the Track Record Period and up to the Latest
Practicable Date, we were in compliance with all applicable PRC laws and regulations with
respect to privacy and personal data protection in all material respects.
Our data privacy and protection measures include security requirements for collecting
personal information of users of our System and other products in a manner that is not
fraudulent, deceptive or misleading. We limit the amount of personal information collected to
what is necessary for our business functions and respect our users’ right to choose and obtain
their consent before collecting their personal information.
We retain personal information only for the duration of time necessary and take steps to
ensure the security of personal information during transmission and storage. We have an access
control policy to prevent unauthorized access to personal information, and users have the right
to access, correct, delete and withdraw consent for their personal information. We do not
disclose personal biometric information, race, ethnicity, political opinions, religious beliefs, or
other sensitive personal data analysis results.
We seek to preserve the security of our information technology infrastructure by
maintaining physical security of our premises and physical and electronic security of our
information technology systems by measures such as installing antivirus software, establishing
firewalls, backing up data on a stand-alone workstation with password protection and saving
physical copy of data when appropriate.
Engagement of Third Parties
From time to time we engage third-party service providers to process personal
information. We require these third parties to comply with our data security and privacy policy.
Our policy includes a risk management process to identify and assess potential risks and a
security management system to address those risks. We also have a system in place to evaluate
the credentials and track record of service providers to reduce non-compliance risks.
Personnel
We have implemented hiring protocols to ensure that only trustworthy individuals are
hired and assigned to handle personal information. Our policy outlines the security controls
associated with the hiring of personnel, including security responsibilities and standards of
conduct for regular employees, outsourced personnel and third-party personnel. All employees
are required to undergo appropriate pre-employment screening.
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Cybersecurity and AI Compliance
We engaged an independent data security consultant to conduct a review of our data
security practices, which found that (i) we have adopted multi-dimensional and multi-level data
compliance measures for our business and products operated in China in accordance with the
requirements of the laws on cybersecurity and data compliance in China and (ii) our principal
business is not based on the illegal collection, use or provision of data to the public, and there
is no fundamental defect that would be unsustainable or impossible to correct as a result of a
violation of laws and regulations relating to cybersecurity, data security and personal data.
In addition, as confirmed by our independent data security consultant, during the Track
Record Period and up to the Latest Practicable Date, we were in compliance, in all material
respects, with all applicable PRC laws and regulations relating to privacy and data protection.
However, the PRC privacy and data protection regulatory regime is relatively new, the
interpretation and application of relevant laws and regulations are evolving and new laws and
regulations in this area may be promulgated in the future that could affect us. Any inability to
adequately address patient privacy concerns or to comply with applicable laws and regulations
could result in additional costs and liabilities for us, damage our reputation and harm our
business.
For example, while we have implemented a variety of compliance measures to protect our
proprietary information and patient privacy, data breaches may occur due to human error,
employee misconduct or system failure. In addition, we work with third parties for our clinical
trials. Any breach or misuse of patient and customer data by our third party partners may be
perceived by patients and customers as a result of our failure. For more detail, see “Risk
Factors—Privacy and data protection laws and regulations could have an implication on our
reputation and customer preference.”
According to our data security consultant, the confirmation of compliance with data
privacy and protection laws and regulations have taken into account the technologies that are
in-licensed in addition to those developed in-house. In addition, the compliance confirmation
extends to all applicable local laws and regulations in the PRC, the sole jurisdiction where we
collect data.
Our Data Security Compliance Measures
We have implemented multi-dimensional and multi-stage data security protection
measures in accordance with the requirements of cybersecurity, data security and personal
information protection laws of the PRC for various businesses and products.
BUSINESS
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Organizational
We have established a Cybersecurity and Data Compliance Committee, which is
responsible for managing cybersecurity, data security and personal information protection
comprehensively. This includes the formulation of overall cybersecurity and data compliance
strategies, work plans and decision-making on major issues. The Cybersecurity and Data
Compliance Committee has working groups responsible for carrying out the daily tasks related
to cybersecurity, data security and personal information protection. This includes
implementing compliance requirements, supporting daily business processes of business
departments and conducting data compliance assessments. We have appointed a Cybersecurity
and Data Compliance Officer, who is also our Chief Security Officer.
Policy and Procedure
We have established a cybersecurity management system, a data protection system and a
personal information protection system. These include the Information Security Management
System, the Data Security Management System, the User Personal Information Security
Management System, the Account Management and Access Control System and the Employee
Information Security Training System, among others. We have also required our employees to
adhere to relevant systems and rules.
Technical
We have elected to utilize reliable cloud services and implemented data security measures
such as network isolation, classification, backup, encryption, identity authentication, access
control and log auditing. When processing sensitive personal information and important data,
we have put in place stricter security measures, such as encryption requirements and elevated
approval levels, to ensure protection against interference, disruption, unauthorized access, data
leakage, tampering and loss.
Personnel Management
We have required the establishment of personal information access permissions as
outlined in the User Personal Information Security Management System. We have also signed
confidentiality agreements with all employees and, additionally, signed Key Position Security
Responsibility Agreements with key personnel. In addition, regular data security training and
assessments are conducted for employees.
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Certification
The core business system that supports our business operations and products (including
our Core Product the System as well as our other products such as BCA T and SAS) has been
filed for Graded Cybersecurity Protection and been evaluated. We have also obtained
certifications such as ISO27001 for our Information Security Management System, ISO27701
for our Privacy Information Management System, and ISO20000 for our IT Service
Management System.
Assessment and Audit
We have conducted personal information protection impact assessment (“ PIA”) and
generated relevant reports. In accordance with the latest legal requirements, we have developed
templates for PIA, making clear that a PIA shall be conducted in circumstances such as
processing sensitive personal information, using personal information for automated decision-
making, entrusting personal information processing, providing personal information to other
personal information processors and publicly disclosing personal information. We have also
established a template for personal information protection compliance audits and plan to
conduct regular compliance audits of its processing of personal information once regulatory
authorities clarify the audit standards and procedures.
Transparency, Legal Basis and User Rights Protection
We are entrusted by processors such as medical and research institutions to process,
among others, the patients’ and medical professionals’ identity, education, healthcare, network
behavior and location information. We inform patient and medical professional users of the
rules for processing information through privacy policies, the terms of instant notification on
pages or otherwise and obtain users’ consent through the initial privacy pop-up window. As for
clinical trial scenarios, we have formulated the Key Points for Auditing Data Compliance of
Informed Consent Form for Clinical Trials (“ Key Points ”) and, based on the Key Points,
reviewed the informed consent form template provided by the research institution. We have
established a process to protect the rights of information owners in our personal information
processing activities, and we publish the contact information of the person responsible for
personal information protection in our Privacy Policy to enable us to respond promptly and
effectively to requests from individuals or to assist data processors, including medical and
research institutions, to respond promptly and effectively to such requests.
Our Compliance with Relevant Regulations on AI Algorithms
Our independent data security consultant conducted a comprehensive analysis of our
compliance with relevant regulations on AI algorithms, data input and output and risks of
wrongful use of the System to gather personal data.
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Our products use DNN algorithm to dynamically recommend training tasks. At the same
time, virtual human technology is used to provide users with evaluation and guidance services.
We have established an algorithm governance and supervision department and published a
description of our algorithms and their training task recommendation function to inform users
of the basic principles, purpose and main operating mechanism of our algorithms as well as the
available complaint and feedback channels. We have consulted with the algorithm filing
window of the Cyberspace Administration of China (“ CAC”) and determined that algorithm
filing is not required for our service because we provide our products to medical institutions
and, while patients can continue to use our products at home after initially using them in
hospitals as an extension of in-hospital services, our products are not openly available for
download or use by the general public on the internet. In addition, we have added an “AI
Generated” logo to the virtual human interaction interface to inform users of the active use of
deep synthesis technology. For details of the relevant regulations, see “Regulatory
Overview—PRC Regulatory Overview—Regulation Relating to Cybersecurity and Artificial
Intelligence.”
Our Compliance with Relevant Regulation on Data Input and Output
The collection and transfer of data is subject to various regulatory restrictions in the PRC.
At present, we do not harvest data from third parties or use tools such as web crawlers to obtain
data from the internet. In our data collection process, we do not engage in activities that
compromise network security, such as illegally intruding into other networks or stealing
network data. Our activities regarding the handling of personal information in various
businesses and products are in accordance with the basic principles set forth in the Personal
Information Protection Act (). We inform users of the rules for handling
personal information and the circumstances under which their personal information may be
shared with third parties through our privacy policy, on-screen notices, and terms and
conditions. We obtain user consent for data collection and handling through an initial privacy
pop-up. The pop-up notice provides the reasons for the need to share the information with third
parties. In addition, we provide the appropriate informed consent disclosures for our clinical
trial and review any informed consent templates provided by research institutions.
To ensure the security of personal information, we have an information security
verification mechanism for onboarding our suppliers. We have committed to verifying the
legitimacy and data security capabilities of third parties before entrusting them with the
processing of personal information and sign data entrustment agreements with them.
We engage in the co-processing of patients’ basic personal information and clinical trial
data with various research institutions in clinical trials where we are the sponsor. We also share
patients’ training and evaluation data with medical institutions in collaborative research and
development projects. We have implemented internal systems and procedures for
cybersecurity, data security and the protection of personal information. Our collaborators’ joint
processing of data is subject to the requirements of these internal systems. In addition, we enter
into cooperation agreements with co-processors to ensure alignment with our respective
requirements regarding privacy rights and obligations.
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We have implemented various security measures to protect our network and our users’
personal information, and to ensure the integrity and accuracy of the information we collect.
These measures include the establishment of internal security management systems and
operating procedures such as information security management, data security management,
personal information security management, and account management. We have also appointed
a person responsible for cybersecurity to oversee the protection of our cybersecurity and to
prevent security breaches through technical measures such as network segregation, identity
authentication, and security audits.
In addition, we have established procedures for responding to requests for personal
information and have disclosed users’ rights regarding personal information in our privacy
policy. Users have the right to access, copy, correct, supplement, delete and withdraw consent
for personal information. In order to respond to requests for personal information in a timely
and effective manner, we have published the contact information of the person responsible for
the personal information protection in our Privacy Policy. This ensures that users’ personal
information rights are protected and that their rights and interests are not adversely affected by
inaccurate or incomplete information. For details of the relevant regulations, see “Regulatory
Overview—PRC Regulatory Overview—Regulation Relating to Cybersecurity and Artificial
Intelligence.”
Prevention of Wrongful Use of the System to Gather Personal Data
We protect the personal data collected by us, including through the System, by
implementing various data security measures such as network segregation, classification and
rating, backup, encryption, identity authentication, access control and log auditing. We process
personal information only for the purposes and to the extent required by law or agreed upon
with the relevant data subject or the entrusting party, and we have a mechanism for responding
to user complaints and suggestions. We also assist our data processors in complying with
relevant PRC legal and regulatory obligations to protect personal information. For details of
the relevant regulations, see “Regulatory Overview—PRC Regulatory Overview—Regulation
Relating to Cybersecurity and Artificial Intelligence.”
PERMITS, LICENSES AND OTHER APPROV ALS
We are required to obtain and renew certain certificates, permits and licenses for
providing our services. See “Regulatory Overview” for more information about the material
certificates, permits and licenses required for our business operations in the PRC, United States
and other countries. During the Track Record Period and as of the Latest Practicable Date, we
obtained all requisite certificates, permits and licenses that are material for our operation, and
all of such certificates, permits and licenses are valid and up-to-date to the extent that they are
still needed. We did not experience any material difficulties in renewing such certificates,
permits and licenses during the Track Record Period and up to the Latest Practicable Date, and
do not expect to face any material difficulties in renewing them upon their expiry, if applicable.
BUSINESS
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We assess the risks of revocation of medical device registration certificate of the System
primarily by referring to the relevant provisions on suspension and revocation of such
certificates in the Rules on the Supervision and Administration of Medical Devices ( ᔼᐕኜ
૛္ຖ၍ଣૢԷ, the “ Rules ”). To address such risks, we have established a strict product
quality management system throughout the product lifecycle in accordance with the Rules and
relevant guidelines, such as the Good Manufacturing Practice for Medical Devices ( ᔼᐕኜ
૛͛ପሯඎ၍ଣ஝ᇍ), Good Quality Management Practice for Medical Device Operation
(ᔼᐕኜ૛຾ᐄሯඎ၍ଣ஝ᇍ), Appendix to Good Manufacturing Practices for Standalone
Software as Medical Devices (፽-ዹͭழ΁), as well as
relevant industry standards such as the ISO13485-2016. As part of our quality management
system, we have established good record keeping practices to ensure that the necessary records
are made and archived in accordance with the above rules, guidances and standards to ensure
full lifecycle quality management and traceability of our registered products. In addition, the
quality management of all our registered products is subject to annual internal audit and
management review. As of the Latest Practicable Date, we had not had any incidents of
non-compliance in this regard.
Based on the above review and analysis, our Directors are of the view that, as of the
Latest Practicable Date, the risk of revocation of the registration certificates of our System and
our other products is remote.
The following table sets forth a summary of the key licenses, permits and certificates that
we hold as of the Latest Practicable Date.
Holder Certificate Name
Issue
Authority
Certificate
Number Valid Period
Changsha Zhijingling Class II medical device
registration certificate on
Brain Function
Information Management
Platform Software
System
Hunan MPA 20182210142 2018 Certificate and
2020 Amended
Certificate:
September 2018
to September
2023;
2023 Renewed
Certificate:
September 2023
to September
2028
Changsha Zhijingling Class II medical device
registration certificate on
Cognitive Ability
Supplemental Screening
and Assessment
Software
Hunan MPA 20222212193 December 2022 to
December 2027
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Holder Certificate Name
Issue
Authority
Certificate
Number Valid Period
Changsha Zhijingling Class II medical device
registration certificate on
Basic Cognitive Ability
Testing Software
Hunan MPA 20222211862 October 2022 to
October 2027
Changsha Zhijingling Class II medical device
manufacturing license on
Data processing and in
vitro diagnostic software
Hunan MPA 20180031 July 2021 to
July 2026
Beijing Zhijingling Class II medical device
business record
certificate on Medical
Software and Medical
monitoring equipment
Beijing
Municipal
Administration
for Market
Regulation
20220263 NA
Changsha Zhijingling Class II medical device
registration certificate on
Dyslexia Supplemental
Screening and
Assessment Software
Hunan MPA 20232210892 September 2023 to
September 2028
During the Track Record Period and up to the Latest Practicable Date, we had not been
penalized by any government authorities for any non-compliance relating to our material
certificates, permits and licenses.
ENVIRONMENTAL, WORKPLACE SAFETY AND SOCIAL RESPONSIBILITY
MATTERS
Environmental, Social and Governance Matters
The current nature of our business does not expose us to a substantial risk of
environmental, health or work safety matters, including climate-related matters, and we do not
expect the potential risks of such matters will have a material adverse impact on our business,
strategy and financial performance.
Our Board believes our continued growth rests on integrating social values into our
business, and thus we will establish an ESG committee of the Board (“ ESG Committee ”) at
Listing that is responsible for evaluating and managing material ESG issues, such as waste
management and recycling efforts, energy consumption, pollutants/green house gas emissions
and reporting. Our ESG Committee of the Board is led by Dr. Wang, along with our
administrative department, to oversee the implementation of our policies relating to material
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ESG issues by taking into consideration any metrics and targets stipulated in applicable laws,
regulations and industry standards, including pollutants/greenhouse gas emissions, water and
electricity consumption, among others. We also plan to follow the principles below:
 We strictly comply with all applicable laws and regulations for ESG matters.
 We plan to hold periodically training sessions to improve employee awareness and
equip them with the sustainable and environmental friendly techniques and
knowledge.
ESG Governance and Risk Identification
Our Board (as represented by the ESG Committee to be established at Listing) is the
highest decision-making authority within our Company on ESG related matters, and is
responsible for setting the overall ESG goals and strategies. Our Board evaluates the ESG
related risks we face and create ESG risk management and internal monitoring mechanisms to
mitigate such risks. We have also established an ESG working group comprising heads of our
internal business departments, which shall be responsible for the on-the-ground execution of
the strategies set by the Board, and be subject to the supervision of the Board.
As a critical part of our ESG governance, we have identified key stakeholders of our
business, including investors, regulators, patients/users, employees, suppliers, the
environment, and the communities in which we operate. The Board and ESG working group
regularly convene to discuss key ESG related topics and identify whether we are subject to any
risks, challenges and opportunities in the following aspects.
Environment Society Corporate Governance
 Energy consumption;
 Use of renewable
energy;
 Product innovation;
 Product liabilities;
 Intellectual property
protection;
 Patient privacy
protection;
 Employee health and
safety;
 Compensation and labor
policies.
 Data security;
 Information disclosure;
 Anti-bribery and
anti-fraud management;
 Related party
transaction management;
 Internal audit;
 Insider trading;
 Risk and compliance
management.
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Our Board priorities the above risks based on their nature and severity, and timely adjust
our strategies in response.
Responses to the Identified Risks
To respond to the abovementioned risks, our Board has designed the following internal
monitoring and management policies.
Internal Control
We have established comprehensive financial management and internal audit policies and
procedures to make sure our financial records are reliable and accurate. We also created risk
management policies which provides the detailed procedures on how to prevent, control and
mitigate risk events before, during and after the fact, with emphasis on risk prevention. We
have also designated personnel to handle information disclosure to ensure our stakeholders can
timely receive accurate and reliable information about our Group.
We also have strict and comprehensive policies to prevent commercial bribery and fraud.
Our policies clearly set forth the code of professional conducts by which all of our employees
are required to strictly abide. Under our anti-bribery and anti-fraud policies, prohibited
activities include but are not limited to receiving kickbacks, paying brides or incurring
excessive business development expenses, and misappropriating properties and resources of
our Company. We have also opened an internal reporting and escalation mechanism to
encourage employees to report any suspicious activities and have put in place whistleblower
protection mechanism that forbids and prevents retaliation against those who made the reports.
Product Innovation
We have established comprehensive quality management system to govern each step of
the R&D of the System and other products to ensure compliance with GMP standards and other
applicable laws and regulations. See “Regulatory Overview—PRC Regulatory
Overview—Regulation Relating to Medical Devices” for details on the relevant laws and
regulations on medical device R&D. We have established an R&D service platform which
serves the whole R&D cycle covering product design, development, quality control, provides
training to relevant personnel, and records and revolves issues faced by R&D personnel. We
also organize routine trainings to our personnel on intellectual property protection to improve
their awareness of protecting our own intellectual properties and avoiding infringement on
others’ intellectual properties throughout our R&D process.
Product Quality
We have adopted four types of files and documents on product quality: quality standard
files, procedural files, quality Standard Operating Procedure (“ SOP”) files, and quality record
files. As of the Latest Practicable Date, we had instituted more than 140 files of the above
types, and routinely update them based on latest regulatory requirements.
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We have also created a comprehensive GMP management system covering personnel,
facilities, and documents. To ensure compliance during product design and development, we
have instituted design and development control system, configuration management control
system and risk management control system, and engaged professional third-party quality
assessment institutions to monitor our execution of these systems. We also have a control
mechanism to handle adverse quality related events so that our products can be timely recalled
when necessary. As of the Latest Practicable Date, no such adverse events had occurred. We
also instituted traceability control, software traceability analysis control and UDI (unique
device identification) systems to ensure traceability of our product throughout the product
lifecycle.
We also organize routine mandatory trainings on quality management for relevant
personnel in quality control, R&D, human resources, and sales and marketing departments,
among others.
Data Security and Protection
Data security is a fundamental issue for our business operations, including the security of
patient and user information, usage data, research data, business generated data, system
configuration data, and technical codes. The goal of our data privacy and protection mechanism
is to avoid attacks, losses, leakages or unauthorized alterations of information under our
custody. To that end, we have established the information security committee which generally
oversees all data privacy matters. Our information technology department is in charge of
carrying out the directives from the information security committee, and comprises personnel
with DPO, DSG, CISSP and ISO27001 professional credentials. We have put in place over 20
internal information security and protection policies, and have deployed various cloud server
security systems, terminal security system, web application firewalls, among other tools to
enhance our cybersecurity throughout the data collection, transmission, storage and usage
processes. Our security network has passed Level III certification in China, as well as
ISO27001, ISO27701 and ISO20000 certifications internationally. See “—Data Privacy and
Protection” on further details of our policies and procedures regarding data privacy and
security.
Employment Practice
We have created human resources policies that govern our practices on recruitment,
personnel management, compensation and benefits, and employee professional development.
Our policies strictly forbid discrimination based on gender, ethnicity, race, nationality, age,
religious belief, or familial status, as well as other unlawful employment practices such as use
of forced and/or underage labor. We offer competitive vacation and benefit packages to ensure
healthy and balanced development of our employees. We also provide employees trainings on
our corporate culture, professional capabilities and corporate strategies to improve employee
productivity and satisfy their need for professional development.
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Hazardous Waste Discharge and Resource Consumption
We have not historically discharged hazardous waste or has had material amounts of gas
emissions. While we do not consume a large amount and variety of natural resources due to the
nature of our business operations, we are mindful of and closely monitor the environmental
impact that may be caused by our business operations. In 2022 and 2023, we consumed 98 and
782 tons of water, respectively, and 161 and 169.4 megawatt-hour (MWh) of electricity,
respectively. We intend to continue to improve the efficiency of our energy use, reduce our
carbon footprint and achieve sustainability.
We have implemented several measures to reduce electricity consumption. First, we
prioritize the use of natural light whenever possible and have a “use as needed” policy for
lights during off-peak hours. We also encourage employees to turn off computer screens when
not in use and ensure that computers are turned off after meetings. In addition, we have strict
temperature controls for air conditioning, regularly clean air conditioning filters, and close
doors and windows when using air conditioning. In addition, we have established a
responsibility system whereby the last employee to leave the office is responsible for turning
off the lights and air conditioning. Failure to do so may result in fines.
To reduce water consumption, we have implemented a water conservation policy that
requires employees to use low flow rates for hand washing. We also prioritize the prompt
reporting of leaks or seepage from faucets and water pipes to allow for timely repairs.
We monitor our KPIs of monthly electricity and water consumption and will adjust our
conservation policies to most effectively manage and reduce our environmental impact while
ensuring operational efficiency and compliance.
Social Responsibility
We are highly committed to fulfilling our social responsibilities and giving back to the
communities in which we operate. In September 2022, we supported a public interest event on
Alzheimer’s disease where we offered free online and offline consultations, health screenings,
and livestreaming sessions on Alzheimer’s disease.
We also maintain a WeChat public account which routinely share scientific, health and
medical information on brain sciences and cognitive health.
Occupational Health and Safety
We have endeavored to provide a safe work environment by implementing company-wide
self-protection policies for employees to either work remotely or on-site with protective masks
and sanitization. To the best knowledge of our Directors and as Latest Practicable Date, we
have not had any workplace accidents. During the Track Record Period and as of the Latest
Practicable Date, we have not been imposed by regulatory authorities with any significant
penalties related to environmental and workplace safety.
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In setting targets for the ESG-related KPIs, we have taken into account our respective
historical consumption or discharge levels during the Track Record Period and have considered
our future business expansion in a thorough and prudent manner with a view of balancing
business growth and environmental protection to achieve sustainable development.
LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, we are not a party
to, and we are not aware of any threat of, any legal, arbitral or administrative proceeding,
which, in our opinion, is likely to have a material and adverse effect on our business, financial
conditions or results of operation. Our PRC Legal Advisor is of the opinion that, having
reviewed the relevant information and documents we provided, our business was in compliance
with the applicable laws and regulations of the PRC in all material aspects during the Track
Record Period and up to the Latest Practicable Date. However, we may from time to time be
subject to various legal or administrative claims and proceedings arising in the ordinary course
of business. We are committed to maintaining the highest standards of compliance with the
laws and regulations applicable to our business, and we intend to maintain this culture through
the strict implementation of our risk management and internal control policies. See “—Risk
Management and Internal Control.”
RISK MANAGEMENT AND INTERNAL CONTROL
Risk Management
We recognize that risk management is critical to the success of our business operation.
Key operational risks faced by us include changes in general market conditions and the
regulatory environment of the Chinese and global DTx markets, our ability to develop,
manufacture and commercialize our products, and our ability to compete with other DTx
products. See “Risk Factors” for a discussion of various risks and uncertainties we face. We
also face various market risks. In particular, we are exposed to credit, liquidity and currency
risks that arise in the normal course of our business. See Note 33 to the Accountants’ Report
included in Appendix I to this Prospectus for details regarding these risks. We have adopted a
series of risk management policies which set out a risk management framework to identify,
assess, evaluate and monitor key risks associated with our strategic objectives on an ongoing
basis. The following key principles outline our approach to risk management:
 The relevant departments in our Company, including but not limited to the finance
department and the human resources department, are responsible for implementing
our risk management policy and carrying out our day-to-day risk management
practice. Each department is responsible for identifying and evaluating risks
associated with its working scope. In order to standardize risk management across
our Group and set a common level of transparency and risk management
performance, the relevant departments will (i) identify the source of the risks and
potential impact, (ii) monitor the development of such risks, and (iii) prepare risk
management reports periodically for our management’s review.
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 Our internal control department will coordinate, oversee and manage the overall
risks associated with our business operations and quality control mainly including
(i) reviewing our corporate risk in light of our corporate risk tolerance, (ii)
maintaining a key risk list and leading corresponding risk management activities,
and (iii) organizing revision and update of the key risk list. Our management and
internal control department will be responsible for carrying out the risk prevention
and management activities with relevant department, internal audit department and
security department will conduct irregular reviews.
 Our management will be responsible for (i) reviewing the risk management
information collected by our internal control department every six months, (ii)
reviewing annual risk management report of our Company, and (iii) overseeing
internal control department and conducting annual risk evaluations.
Internal Control
Our Board of Directors is responsible for establishing and ensuring effective internal
controls to safeguard our Shareholder’s investment at all times. Our internal control policies
set out a framework to identify, assess, evaluate and monitor key risks associated with our
strategic objectives on an ongoing basis.
Below is a summary of the internal control policies, measures and procedures we have
implemented or plan to implement:
 We have adopted various measures and procedures regarding each aspect of our
business operation, such as related party transaction, risk management, protection of
intellectual property, environmental protection and occupational health and safety.
For more information, see “—Intellectual Property” and “—Environmental,
Workplace Safety and Social Responsibility Matters.” We plan to provide periodic
training about these measures and procedures to our employees as part of our
employee training program. Our internal audit department conducts audit field work
to monitor the implementation of our internal control policies, reports the weakness
identified to our management and audit committee and follows up on the
rectification actions.
 Our Directors (who are responsible for monitoring the corporate governance of our
Group) with help from our legal advisers, will also periodically review our
compliance status with all relevant laws and regulations after the Listing.
 We have established an audit committee which (i) makes recommendations to our
Directors on the appointment and removal of external auditors, and (ii) reviews the
financial statements and renders advice in respect of financial reporting as well as
oversees internal control procedures of our Group.
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 We have engaged SPDB International Capital Limited as our compliance adviser to
provide advice to our Directors and management team until the end of the first fiscal
year after the Listing regarding matters relating to the Listing Rules. Our
compliance adviser is expected to ensure our use of funding complies with the
section headed “Future Plans and Use of Proceeds” in this Prospectus after the
Listing, as well as to provide support and advice regarding requirements of relevant
regulatory authorities in a timely fashion.
 We plan to engage a PRC law firm to advise us on and keep us abreast with PRC
laws and regulations after the Listing. We will continue to arrange various trainings
to be provided by external legal advisers from time to time when necessary and/or
any appropriate accredited institution to update our Directors, senior management,
and relevant employees on the latest PRC laws and regulations.
 We plan to seek advice from law firms in the United States, the European Union and
other jurisdictions where we currently operate or may operate in the future to keep
us abreast of applicable local laws and regulations after the Listing. We will
continue to arrange various trainings to be provided by external legal advisors from
time to time when necessary and/or any appropriate accredited institution to update
our Directors, senior management, and relevant employees on the latest laws and
regulations in the jurisdictions in which we currently operate or may operate in the
future.
 We maintain strict confidentiality and privacy policies regarding the collection,
analysis, storage and transmission of the data of our subjects and clinical trial
results. Our project manager and data manager prepare and review study protocols
to ensure compliance with GCP requirements, including confidentiality and privacy
requirements. We will monitor project progress continuously against the guidelines
of ICH GCP and China GCP and make corrections as needed. Our IT team are
responsible for, from technical perspective, ensuring the usage, maintenance and
protection of preclinical and clinical data to comply with our internal policies and
applicable laws and regulations.
In addition the above policies, we have put in place the following measures for preventing
or detecting the occurrence of any illegal activities and ensuring the completeness and accuracy
of our books and records. The Directors are of the view, and the Joint Sponsors concur, that,
based on the review of the internal control consultant, these measures are adequate and
effective for achieving their intended goals.
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Company Level Measures
At the company level, we have formulated and issued management policies such as the
Anti-Corruption and Anti-Bribery Policy, the Anti-Fraud Policy, and the Anti-Money
Laundering Policy, which stipulate that we prohibit bribery, corruption, and other non-
compliant activities in the course of our production, operations, and management. The policies
also provide a mechanism for identifying and reporting suspicious transactions, clarify the
monitoring mechanism and accountability for anti-fraud efforts, and establish a mailbox for
filing related complaints or whistleblowing reports.
In addition, our employment contracts clearly state the various standards of professional
ethics and codes of conduct with which employees must comply. Our employee handbooks
require employees to strictly comply with the relevant sections of our Anti-Corruption and
Anti-Bribery Policy, Anti-Fraud Policy and Anti-Money Laundering Policy. Employees are
also required to attend annual ethics training.
Process Level Measures
At the business process level, we have formulated relevant management systems and
adopted internal control measures such as approval processes, privileges and system controls
as follows.
Procurement Management
We have formulated a Procurement Management Policy, which specifies the approval
process and approval privileges for our procurement process. The relevant approval process
and privilege allocation are carried out in Ding Talk, the enterprise intelligent mobile office
platform we have adopted.
Contract Management
The approval process for our prospective contracts is embedded within the Ding Talk
system, and the relevant employees submit the prospective contract for approval through this
system. Depending on factors such as contract type and contract amount, the prospective
contract is flagged for approval by the legal staff, finance manager, finance director or general
manager according to their respective approval privileges.
Expense Reimbursement
Our expense reimbursement system governs the reimbursement standard, pre-approval
request processes and reimbursement approval privileges. After we organize promotional
efforts and related conferences and activities, the relevant operational staff will request for
Company payment or expense reimbursement through internal automated system. Based on the
monetary amount, the request will be matched with the appropriate approval process. Once the
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request is approved and the payment is made, the amount is credited to sales expenses. Our
Expense Reimbursement Policy stipulates that the accounting staff are responsible for the
authenticity, legality, completeness and accuracy of the financial expense records.
Accounting
We have clarified our expense accounting rules. Our accounting staff collect the relevant
expense documentation and prepare accounting vouchers in our accounting system, which are
reviewed by our finance manager. The approved accounting information is recorded in
accordance with our accounting policies.
Risk Assessment Measures
With respect to risk assessment, our risk management and financial internal control
policies set forth the overarching requirements and allocation of responsibilities for internal
control, compliance and risk management. These policies also specify the relevant risk
management and financial internal control priorities and clarify the requirements for
monitoring, evaluation and continuing improvement. In addition, these policies incorporate the
results of the assessment of internal control, compliance and risk management into the annual
performance evaluation.
Hospital Sales and Marketing Arrangement Measures
We enter into the corresponding collaboration agreements when we help hospitals
establish cognitive centers. In some cases, the Operational Service Provider introduced the
System to hospitals under its pre-existing cooperation with the hospitals. See “—Sales and
Marketing—Our Marketing Model—Collaborations with Top Hospitals and Research
Institutions” for detailed terms of the cognitive center cooperations with hospitals as well as
the relevant rationale and arrangements with the Operational Service Provider.
We have established a Sales and Collections Management Policy that covers the selection
of new customers, the establishment of a customer credit rating mechanism, the sales pricing
process, sales plan management, sales data management, subscription management and account
reconciliation management.
Regarding sales and marketing arrangements with hospitals, the primary internal control
measures are as follows:
1. For the cognitive centers where the Operational Service Provider was involved, we
strengthened internal control and management primarily through the Sales and
Collection Management Policy and the relevant agreements with the Operational
Service Provider.
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2. For the cognitive center cooperation agreements signed directly between us and
hospitals without the involvement of the Operational Service Provider, we
strengthened internal control management primarily through the Sales and
Collection Management Policy and the cognitive center cooperation agreement with
the hospitals. The cognitive center cooperation agreement between us and the
hospital clearly specifies the rights and obligations of each party, the fees for service
items and the liability for breach of contract.
Continuous Monitoring Measures
In terms of continuous monitoring, we have full-time internal auditors to monitor our
compliance of the above policies and measures, and clarified the internal audit mechanism and
responsibilities. The staff in charge of internal audit reports to the Board of Directors. In
addition, we regularly conduct internal audit supervision.
Investment Risk Management
We engage in short-term investments with surplus cash on hand. Our investment portfolio
primarily consisted of time deposits and wealth management products. Our primary objective
of short-term investment is to preserve principal and increase liquidity without significantly
increasing risks. Under the supervision of our Chief Financial Officer, our finance department
is responsible for managing our short-term investment activities. Before making any
investment proposal, our finance department will assess our cash flow levels, operational needs
and capital expenditures. Our investment policy provides the guidelines and specific
instructions on the investment of our funds.
Our investment strategy aims to minimize risks by reasonably and conservatively
matching the maturities of the portfolio to anticipated operating cash needs. We make our
investment decisions on a case-by-case basis after thoroughly considering a number of factors,
including but not limited to macro-economic environment, general market conditions and the
expected profit or potential loss of the investment. Our portfolio to date has been required to
hold only instruments with an effective final maturity of 12 months or less, with effective final
maturity being defined as the obligation of the issuer to repay principal and interest.
We believe that our internal investment policies and the related risk management
mechanism are adequate. We may invest in wealth management products and time deposits in
consistent with our investment policy, after consultation with and approval by our Board on an
as-need basis where we believe it is prudent to do so after the Listing.
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A W ARDS AND RECOGNITIONS
The table below sets forth a summary of the major awards and recognition that our
Company had received as of the Latest Practicable Date.
Time Awards Awarding Organization/Authority
2011 Ministry of Education and Ministry of
Science and Technology “Chunhui Cup
Overseas Educated Personnel Innovation
and Entrepreneurship Competition Top
Prize” (Ҧ௅“؎”ࡰ
௴อ௴ุɽᒄᎴ௷ᆤ)
Department of International
Cooperation and Exchange, Ministry
of Education (ݴ
̡)
2012 Nanjing’s “Introduction Program for
Leading Scientific and Technological
Entrepreneurial Talents” (ԯ“߅ۨࠏ
ྌ”)
Nanjing Leading Science and
Technology Entrepreneurial Talents
Introduction Program Special Office
(ྌਖ਼
܃)
2014 Winner of Jiangsu Small and Medium-sized
Enterprises Innovation and
Entrepreneurship Competition ( Ϫᘽʕʃ
Άุ௴อ௴ุɽᒄᎴ௷ᆤ)
Jiangsu Province Economic and
Information Technology Commission
and Small and Medium Enterprises
Bureau of Jiangsu Province (޲
ʕʃΆ
ุ҅)
2015 Second-class prize of Jiangsu Medical
Science and Technology Award ( Ϫᘽᔼኪ
Ҧᆤɚഃᆤ)
Jiangsu Medical Association (ᔼ
ኪึ)
2015 Selected as “Specialized, Specialized and
New” Small and Medium-sized
Enterprises in Nanjing (ԯ̹“ਖ਼ၚतอ”
ධͦ)
Nanjing Economic and Information
Technology Commission (ԯ̹຾
ึ)
2016 Runner-up of BETAPITCH International
Entrepreneurship Challenge Nanjing
Station (BETAPITCH኷ᒄ
ࠏ)
TechCode and Betapitch Global
betahaus (TechCode ଡ଼։ึၾ
Betapitch Όଢଡ଼։ึ)
2017 Gold Award for the Rehabilitation Industry’s
Most Popular Enterprise (2017ථ
ᆤ)
ISPRMDC and IHF (ISPRMDC ଡ଼։ึ
ၾIHFዚ࿴)
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Time Awards Awarding Organization/Authority
2017 Third Prize of Chinese Medical Science and
Technology Award (Ҧᆤɧഃ
ᆤ)
Chinese Medical Association ( ʕശᔼኪ
ึ)
2022 Beijing Specialized and New SMEs ( ̏ԯ̹
“ਖ਼ၚतอ”ࣣ)
Beijing Municipal Bureau of Economy
and Information Technology ( ̏ԯ̹
ʷ҅)
2023 Award for Outstanding Achievements in
Scientific Research in Colleges and
Universities (Second Prize) (߅ࣧ
ᆤ(ኪҦஔ)ɚഃᆤ)
Ministry of Education ( ઺ԃ௅)
2023 Beijing Artificial Intelligence Industry
Enabling Typical Cases (2023) ( ̏ԯ̹ɛ
Է(2023))
Organizing Committee of the Artificial
Intelligence Summit at the 2023
Global Digital Economy Conference
(2023 Όଢᅰο຾᏶ɽึɛʈ౽ঐ৷
ሞእଡ଼։ึ)
2023 Chinese Medical Science and Technology
Award-First Place (Ҧᆤ
ɓഃᆤ)
Chinese Medical Association ( ʕശᔼኪ
ึ)
2023 2023 Typical Case of Artificial Intelligence
Integrated Development and Security
Application (ၾτΌᏐ
Է(2023))
National Industrial Information
Security Development Research
Center (Ӻ
ʕː)
2024 2024 Beijing Artificial Intelligence Industry
Enabling Typical Cases (2024 ̏ԯ̹ɛʈ
Է)
Organizing Committee of the Artificial
Intelligence Summit at the 2024
Global Digital Economy Conference
(2024 Όଢᅰο຾᏶ɽึɛʈ౽ঐ৷
ሞእଡ଼։ึ)
2024 Global Cognitive Impairment Digital
Therapeutics Innovation Award (ٝ
௴อᆤ)
Frost & Sullivan
2024 Digital Health New Quality Productivity
Innovation Cases at the World Digital
Therapeutics Conference 2024 (2024ޢ
ࣩ
Է)
VBDA TA.CN
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DIRECTORS
Upon Listing, our Board will consist of eight Directors, including two executive
Directors, three non-executive Directors and three independent non-executive Directors. The
following table provides certain information about our Directors:
Name (1) Age Position
Date of Joining
the Group
Date of
Appointment
as our Director Roles and Responsibilities
Mr. Tan Zheng
(ᗈ፾)
46 Chairman of the Board,
executive Director,
and chief strategy
officer
December 20, 2020 April 25, 2023 Responsible for overseeing our
overall strategic development and
investment strategy
Dr. Wang Xiaoyi
(׋)
46 Executive Director,
CEO and chief
research officer
September 21, 2012 April 25, 2023 Responsible for products and
technology research and
development, overall operation,
policies and business of the Group
Mr. Li Sirui
(ြ)
42 Non-executive Director April 11, 2023 April 25, 2023 Responsible for providing strategic
advice and recommendations on
the operations and management of
the Group
Ms. Li Mingqiu
(߇׼)
42 Non-executive Director July 30, 2023 July 30, 2023 Responsible for providing strategic
advice and recommendations on
the operations and management of
the Group
Mr. Deng Feng 61 Non-executive Director September 21,
2012
(2)
April 25, 2023 Responsible for providing strategic
advice and recommendations on
the operations and management of
the Group
Mr. Lam Yiu Por
(ت)
48 Independent
non-executive
Director
Listing Date Appointed on
December 19,
2024, with effect
from Listing Date
Responsible for supervising and
providing independent advice on
the operations and management of
the Group
Dr. Duan Tao
(ᏹ)
60 Independent
non-executive
Director
Listing Date Appointed on
December 19,
2024, with effect
from Listing Date
Responsible for supervising and
providing independent advice on
the operations and management of
the Group
Mr. Li Y uezhong
(ҽ˜ʕ)
54 Independent
non-executive
Director
Listing Date Appointed on
December 19,
2024, with effect
from Listing Date
Responsible for supervising and
providing independent advice on
the operations and management of
the Group
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Notes:
(1) Save as disclosed in “Relationship with Our Controlling Shareholders,” each of our Directors has no
relationship with other Directors and senior management members of our Company as at the Latest
Practicable Date.
(2) Due to corporate reorganization of NLVC Shareholders, Mr. Deng Feng’s directorship in our Group was
temporarily succeeded by another appointee of NLVC Shareholders between June 20, 2019 and April 21,
2022.
Executive Directors
Mr. Tan Zheng ( ᗈ፾), aged 46, was appointed as our Director in April 2023 and the chief
strategy officer of our Group in December 2020, and was re-designated as the chairman of the
Board and our executive Director in July 2023. Mr. Tan joined our Group in December 2020
and was appointed as a director of BrainAurora Zhejiang in the same time. Since then, Mr. Tan
has made significant contributions to the Group’s business development by leveraging on his
investment insights and business development capabilities, including (i) making judgment calls
to screen and seize promising market opportunities relating to the System; (ii) identifying
pathways for and overseeing the Group’s commercialization initiatives; and (iii) introducing
and securing new investments in the Group from certain other Pre-IPO Investors.
Mr. Tan has served managerial positions at our subsidiaries, including those as set out
below:
Name of Company Position Period of Service
Zhejiang Zhiling Ruidong Medical
Technology Co., Ltd. ( एϪ౽ᜳ
ʮ̡)
Chairman of the board Since June 2023
Zhejiang BrainAurora Medical
Technology Co., Ltd. ( एϪ໘ਗ
ʮ̡)
Chairman of the board Since December 2020
Through working with various pharmaceutical companies, Mr. Tan has over 20 years of
experience in health and medical field. From June 1998 to June 2004, he worked at Shaanxi
Buchang Pharmaceutical Co., Ltd. (ʮ̡), a company in China principally
engaged in the development and manufacturing of medical drugs, where his last position was
an office supervisor at their Tianjin office. From June 2004 to January 2013, Mr. Tan served
as an office supervisor at the Beijing office of Shaanxi Kanghui Pharmaceutical Co., Ltd.* ( ৯
ʮ̡), a company principally engaged in the research, development and
production of pharmaceuticals products. Between January 2013 and August 2015, Mr. Tan
worked at Wuhan Heer Medical Technology Development Co., Ltd. (Ϟ
ʮ̡), a company in China engaged in, among other things, the development and
manufacture of cancer screening and analysis systems, first as an office supervisor at the
Beijing office and subsequently as a deputy general manager, where he was responsible for
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sales, supervision and management of daily matters. Since September 2015 and March 2018,
Mr. Tan has been serving as a director and the chairman of the board of directors, respectively,
of Immunotech Applied Science Limited (ʮ̡), a wholly-owned
subsidiary of Immunotech Biopharm Ltd (ʮ̡)( “ Immunotech ”), a
company listed on the Stock Exchange (stock code: 06978.HK). Since August 2019, Mr. Tan
also has been serving as an executive director and the chairman of the board of directors in
Immunotech.
Mr. Tan is currently pursuing an executive master’s degree in business administration
from United Business Institutes China.
The Board has made appropriate enquiries with a view to understanding Mr. Tan’s work
commitment in our Group and has considered Mr. Tan’s concurrent service as an executive
Director of our Company and an executive director and chairman of the board of Immunotech
Biopharm Ltd and is satisfied that Mr. Tan is able to devote sufficient time to perform his duties
as an executive Director having regard to all relevant factors, including:
1. in the last three years since the listing of Immunotech Biopharm Ltd in July 2020,
Mr. Tan has acquired extensive management experience and developed substantial
knowledge on corporate governance through his directorship thereof, which are
expected to facilitate his proper discharge of fiduciary duties and responsibilities as
an executive director of a listed company;
2. when performing his roles of executive Director in our Company in formulating and
executing business and investment strategies, annual operational and financial plans,
Mr. Tan is assisted by his team of staff in dealing with the day-to-day matters in
various aspects;
3. Mr. Tan has attended all applicable board meetings of Immunotech Biopharm Ltd
since the listing of Immunotech Biopharm Ltd (as disclosed in its annual report for
2020, 2021 and 2022, respectively) and all applicable board meetings of the
Company since his appointment in December 2020, therefore, the concurrent
directorship did not hinder his time commitments in the Company in the past and it
is expected that the concurrent directorship will also not affect his time
commitments in the Company in the future; and
4. Mr. Tan has confirmed that: (a) Immunotech Biopharm Ltd has not questioned or
complained about his time devoted to his directorship therein; and (b) he will have
sufficient time to devote to his duties as an executive Director of our Company
notwithstanding such other concurrent directorships.
As of the Latest Practicable Date, Mr. Tan does not have any interest in business which
competes or is likely to compete, directly or indirectly, with our business and requires
disclosure under Rule 8.10 of the Listing Rules. For details, see “Relationship with Our
Controlling Shareholders — Competition.”
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Dr. Wang Xiaoyi (׋,)aged 46, was appointed as our Director in April 2023 and was
re-designated as our executive Director in July, 2023. Dr. Wang has been serving as our CEO
and chief research officer of our Group since June 2020.
Dr. Wang has served managerial positions at our subsidiaries, including those as set out
below:
Name of Company Position Period of Service
Zhejiang Zhiling Ruidong Medical
Technology Co., Ltd. ( एϪ౽ᜳ
ʮ̡)
Director, manager Since June 2023
Zhejiang BrainAurora Medical
Technology Co., Ltd. ( एϪ໘ਗ
ʮ̡)
General manager,
director
Since September 2012
Shenzhen BrainAurora Medical
Technology Co., Ltd. ( ଉέ໘ਗ
ʮ̡)
General manager,
executive director
Since October 2023
Dr. Wang has over 15-year of experience in medical and health field. Between August
2009 and September 2010, Dr. Wang worked as a contractor in the radiology department in
Xuanwu Hospital. From September 2010 to February 2013, Dr. Wang worked in Xuanwu
Hospital as an employee engineer. Dr. Wang also has been serving as a member of the standing
committee in China Society of Rehabilitation Medicine Special Committee on
Telerehabilitation ( ʕ਷ੰూᔼኪึჃ೻ੰూਖ਼։ึ) from December 2017 to December 2021,
China Rehabilitation Medical Association Special Committee on AD and Cognitive Disorders
Rehabilitation ( ʕ਷ੰూᔼኪึADღᖟੰూਖ਼։ึ) since July 2021 and China
Association of Gerontology and Geriatrics Nursing and Caregiving Branch ( ʕ਷ϼϋኪၾϼϋ
ᔼኪኪึᚐଣၾ๫ᚐʱึ) since October 2018.
Specifically on the development of DTx products, including the System, our Company
has been relying on Dr. Wang’s leadership and supervision leveraged on his wealth of relevant
experience and expertise as he has been dedicated to the fields of cognitive impairment
screening, assessment, training and management for over ten years. He has also been involved
in national level research and development projects organized under the 13th Five-Y ear Plan
for Economic and Social Development of the People’s Republic of China ( ʕശɛ͏΍ձ਷਷
ʞϋ஝ྌ), such as the 2017 Cerebrovascular Disease Exercise and
Cognitive Rehabilitation System Management Program and the 2019 Major Chronic Non-
Communicable Disease Prevention and Control Research Program. He also participated in the
Regional Science Foundation Projects (ධͦ), such as the 2019 Beijing
Brain Program Major Project on the Development of Mobilized Targeted Intervention
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Technology for Schizophrenia Based on Comprehensive Cognitive Function Assessment. Dr.
Wang’s involvement in these major projects and his long-term research in the treatment of
cognitive impairment provide him with the industry experience necessary to guide our
cognitive impairment DTx research and development.
Dr. Wang obtained a bachelor’s degree in biology from College of Life Sciences, Beijing
Normal University (ኪኪ৫) in China, in July 2000 and graduated from
the Institute of Psychology, Chinese Academy of Sciences (הi n
China where he majored in applied psychology, in July 2005. Dr. Wang also obtained a doctor’s
degree in basic psychology from State Key Laboratory of Cognitive Neuroscience and
Learning, Beijing Normal University (܃i n
China, in June 2009.
Non-executive Directors
Mr. Li Sirui (ြ), aged 42, was appointed as a Director in April 2023 and was
re-designated as our non-executive Director in July, 2023.
Mr. Li has approximately 15-year of experience in investment. He served as the vice
president and general manager of strategic planning in Huajing (Tianjin) Investment
Management Co., Ltd. (ږ(ݵ)ʮ̡) from May 2012 to January 2016. Mr. Li
has served as the analyst of Shenzhen Chongshi Private Equity Fund Management Co., Ltd. ( ଉ
ʮ̡) from September 2007 to May 2012. He has been
serving as the director of strategic investment department in Tasly Pharmaceutical Group Co.,
Ltd (ʮ̡), a company listed on the Shanghai Stock Exchange (Stock
code: 600535) since April 2024, and the general manager of strategy development center at
Tasly Bio-Medicine Industry Group Co., Ltd. (ʮ̡) (formerly
known as Tasly Holding Group Co., Ltd. (ʮ̡)) since July 2020. He also
served as the executive vice president and then the general manager of Juzhida Health
Technology Services Group Co., Ltd. (ʮ̡) since March 2020.
Mr. Li obtained a bachelor’s degree in pharmaceutical engineering from Tianjin
University (ɽኪ) in China, in June 2005. He obtained a master’s degree in business
administration from Nankai University in China, in December 2014. Mr. Li has been a member
of China Institute of Internal Audit (CIIA) since March 2011.
Ms. Li Mingqiu (߇׼,)aged 42, was appointed as our Director in July 2023 and was
re-designated as our non-executive Director in July 30, 2023.
Since January 2022, Ms. Li has been serving as the insurance business manager in Taiping
Life Insurance Company Limited Liaoning Branch (ʮ̡፱ྐྵʱʮ̡). She
also served as the executive director in Tianjin Tianjian Medical Technology Co. Ltd. (˂
ʮ̡).
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Ms. Li obtained bachelor’s degree in software engineering from University of Science and
Technology Anshan (Ҧɽኪ) (currently know as University of Science and Technology
Liaoning (Ҧɽኪ)) in China in July 2006.
Mr. Deng Feng , aged 61, has served as our director since April 2023 and was
re-designated as our non-executive Director on July 30, 2023.
Mr. Deng has over 22 years of experience in venture capital, computer science and
telecommunication industry. He founded Northern Light V enture Capital in January 2006 and
served as its founding managing partner, focusing on investment in technology, media and
telecom, clean technology, healthcare and consumer sectors. He obtained a bachelor’s and a
master’s degree in electronic engineering from Tsinghua University in China in July 1986 and
December 1988, respectively, a master’s degree in computer engineering from the University
of Southern California in U.S. in August 1993, and a master of business administration degree
from the Wharton Business School of the University of Pennsylvania in U.S. in May 2005. Mr.
Deng served as a director in New Hope Group (ʮ̡), a company listed on the
Shenzhen Stock Exchange (stock code: 000876.SZ), from September 2016 to May 2022. Mr.
Deng also served as a director in iRay Technology Company Limited (ٰ
ʮ̡) from July 2017 to March 2022. Mr. Deng has been serving as a director in Burning
Rock Biotech Ltd., a company listed on Nasdaq (stock ticker: BNR) since August 2016. He also
served as a director in Hillstone Network Communication Technology Co. (Ҧஔ
ʮ̡), a company listed on the Shanghai Stock Exchange (stock code: 688030.SH),
from December 2018 to January 2022. From August 2018 to June 2022, he served as a director
in Cytek Biosciences Inc., a company listed on Nasdaq (stock ticker: CTKB).
Independent Non-executive Directors
Mr. Lam Yiu Por (ت)aged 48, has been appointed as an independent non-executive
Director with effect from the Listing Date. He is primarily responsible for supervising and
providing independent advice on the operations and management of the Group.
Mr. Lam has been serving as an independent non-executive director in JNBY Design
Limited (ʮ̡), a company listed on the Stock Exchange (stock code: 03306.HK)
since October 13, 2016, and an independent non-executive director in Xiamen Y an Palace
Bird’s Nest Industry Co., Ltd. (ʮ̡), a company listed on the
Stock Exchange (stock code: 01497.HK), since November 20, 2023. Since January 2021, Mr.
Lam has been serving as the chief financial officer and joint company secretary of Dingdang
Health Technology Group Ltd. (ʮ̡), a company listed on the Stock
Exchange (stock code: 09886.HK). He served as the vice president and chief financial officer
of Greentech Technology International Limited (ʮ̡), a company listed on
the Stock Exchange (stock code: 00195.HK), from November 2013 to July 2020. He served as
an independent non-executive director of Tian Ge Interactive Holdings Limited (ٰ
ʮ̡), a company listed on the Stock Exchange (stock code: 01980.HK), from January
2021 to June 2022. From December 2014 to March 2016, Mr. Lam served as an independent
non-executive director of Y at Sing Holdings Limited (ʮ̡), a company listed on
DIRECTORS AND SENIOR MANAGEMENT
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the Stock Exchange (stock code: 03708.HK, currently known as China Supply Chain
Holdings Limited (ʮ̡)). From April 2015 to May 2017, Mr. Lam
served as a non-executive director of Zhong Ao Home Group Limited (ʮ
̡), a company listed on the Stock Exchange (stock code: 01538.HK). From October 2015 to
June 2020, Mr. Lam served as an independent non-executive director of Denox Environmental
& Technology Holdings Limited (ʮ̡), a company listed on the
Stock Exchange (stock code: 01452.HK). From November 2016 to November 2018, Mr. Lam
served as an independent non-executive director of China Tontine Wines Group Limited ( ʕ਷
ʮ̡), a company listed on the Stock Exchange (stock code: 00389.HK).
From June 2012 to February 2014, he was an independent non-executive director and chairman
of the audit committee of GR Properties Limited (ʮ̡), a company listed on the
Stock Exchange (stock code: 00108.HK, formerly known as Buildmore International Limited).
Mr. Lam also served as the chief financial officer and company secretary of Lijun International
Pharmaceutical (Holding) Co., Ltd. ( лё਷ყᔼᖹ(ٰ)ʮ̡) (currently known as SSY
Group Limited (ʮ̡)), a company listed on the Stock Exchange (stock code:
2005) from December 2005 to May 2008 and the chief financial officer and qualified
accountant of Zhongtian International Holdings Limited (ʮ̡) (currently
known as China Clean Energy Technology Group Limited (ʮ̡)),
a company listed on the Stock Exchange (stock code: 2379) from July 2004 to December 2005.
Mr. Lam received his bachelor’s degree of arts in accountancy from the Hong Kong
Polytechnic University (ಥଣʈɽኪ) in November 1997. Mr. Lam is a member of the Hong
Kong Institute of Certified Public Accountants, an associate of The Hong Kong Chartered
Governance Institute (formerly known as The Hong Kong Institute of Chartered Secretaries),
a chartered financial analyst of the CFA Institute, and a fellow of the Association of Chartered
Certified Accountants.
Dr. Duan Tao (ᏹ), aged 60, has been appointed as an independent non-executive
Director with effect from the Listing Date. He is primarily responsible for supervising and
providing independent advice on the operations and management of the Group.
Since August 2000, Dr. Duan has been serving as the vice president and then the president
Shanghai First Maternity and Infant Health Hospital of Tongji University (᙮ɪऎ
਄৫). Dr. Duan has served as the project leader of the National Key Research
and Development Program (பɛ) from July 2018 to December 2020
for “Research and Development of New Technologies for Intrauterine Diagnosis and Treatment
of Major Fetal Diseases (೯).” He has been awarded as
the Shanghai Excellent Discipline Leader ( ɪऎ̹ᎴӸኪஔ੭᎘ɛ) for the year of 2014 and
Shanghai Medical Leader (ɛʑ) for the year of 2015.
Dr. Duan graduated from Shandong Medical University (ɽኪ, currently known
as Shandong University Cheeloo College of Medicine (ɽኪᄁኁᔼኪ৫)) and majored in
medicine in China in July 1987. He obtained a doctor’s degree of medicine in Shanghai
Medical University (ɽኪ) (currently known as Shanghai Medical College of Fudan
University ( ూ͇ɽኪɪऎᔼኪ৫)) in China in July 1992.
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Mr. Li Yuezhong ( ҽ˜ʕ), aged 54, has been appointed as an independent non-executive
Director with effect from the Listing Date. He is primarily responsible for supervising and
providing independent advice on the operations and management of the Group.
From May 2000 to July 2005, Mr. Li was an executive director at UB China Business
Management Co. Ltd. (ʮ̡), a subsidiary of Industrial and
Commercial Bank of China (Asia) Limited (“ICBC (Asia)”), a company listed on the Stock
Exchange (stock code: 01398.HK), engaging in the management of the impaired loan portfolio
of ICBC (Asia) in the PRC. From July 2005 to May 2009, he was an assistant general manager
at China Merchants China Investment Management Limited (ʮ̡), a
fund management company incorporated in Hong Kong, where he was responsible for
supervising project investment and management. From June 2009 to February 2019, he was a
joint managing director at CCB International Asset Management Limited (ვ਷ყ༟ପ၍ଣ
ʮ̡), an asset management company established in Hong Kong. From February 2019 to
June 2021, he has been a joint general manager of Greater Bay Area Development Fund
Management Limited (ʮ̡), a Hong Kong company that provides
fund investment financing services to professional investors, where he is responsible (along
with other managers and responsible officers) for managing Greater Bay Area Development
Fund Management Limited’s role as the investment manager of Greater Bay Area Homeland
Development Fund LP . Mr. Li also served as a non-executive director of Immunotech
Biopharm Ltd (ʮ̡), a company listed on the Stock Exchange (stock code:
06978.HK) from August 2019 to August 2021. Since January 2022, Mr. Li has been serving as
a director in Beijing Boru Xincheng Investment Management Co., Ltd. (༐ҳ༟၍
ʮ̡). Since May 2022, he has been serving as an independent director in Guizhou
Guotai Intelligent Liquor Group Co., Ltd. (ʮ̡) (formerly
known as Guizhou Guotai Liquor Group Co., Ltd. (ʮ̡)).
In June 1993, Mr. Li obtained a bachelor’s degree in finance from Hunan University of
Finance and Economics (ৌ຾ኪ৫), (currently known as Hunan University (ɽኪ)) in
the PRC. In December 2005, he received a master’s degree in finance from University of Hong
Kong.
Other Disclosure Pursuant to Rule 13.51(2) of the Listing Rules
Save as disclosed above and in this Prospectus, each of our Directors confirms with
respect to himself or herself that he or she (i) did not hold other long positions or short
positions in the Shares, underlying Shares, debentures of our Company or any associated
corporation (within the meaning of Part XV of the SFO) as of the Latest Practicable Date; (ii)
had no other relationship with any Directors, senior management or substantial shareholders of
our Company as of the Latest Practicable Date; (iii) did not hold any other directorships in the
three years prior to the Latest Practicable Date in any public companies of which the securities
are listed on any securities market in Hong Kong and/or overseas; and (iv) there are no other
matters concerning his or her appointment that need to be brought to the attention of our
Shareholders and the Stock Exchange or shall be disclosed pursuant to Rules 13.51(2)(h) to (v)
of the Listing Rules.
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SENIOR MANAGEMENT
The following table sets out information regarding the members of senior management of
our Company:
Name Age Position
Date of Joining
the Group
Date of
Appointment
as our senior
management Roles and Responsibilities
Mr. Tan Zheng
(ᗈ፾)
46 Chairman of the Board,
executive Director,
and chief strategy
officer
December 20, 2020 December 20, 2020 Responsible for overseeing our
overall strategic development and
investment strategy
Dr. Wang Xiaoyi
(׋)
46 Executive Director,
CEO and chief
research officer
September 21, 2012 September 21, 2012 Responsible for products and
technology research and
development, overall operation,
policies and business of the Group
Mr. Cai Longjun
(ࠏ)
41 Chief technology officer
and chief operating
officer
January 17, 2022 January 17, 2022 Responsible for developing
technology strategies
Mr. Wang Junjie
(௫)
38 CFO September 6, 2021 September 6, 2021 Responsible for overseeing the
financial affairs of the Group
Mr. Lai Zhiyuan
(Ⴣ)
40 Vice president of market
and operation
October 8, 2021 October 8, 2021 Responsible for management of sales
and customer service, and daily
operation
Mr. Tan Zheng ( ᗈ፾) aged 46, is the chairman of the Board, executive Director and chief
strategy officer. For details of his biography, see subsection headed “— Directors — Executive
Directors” above.
Dr. Wang Xiaoyi (׋,)aged 46, is an executive Director, CEO and chief research
officer. For details of her biography, see subsection headed “— Directors — Executive
Directors” above.
Mr. Cai Longjun (ࠏ)aged 41, was appointed as our chief technology officer and
chief operating officer in January 2022. Mr. Cai is responsible for developing technology
strategies.
Mr. Cai has approximately 15-year of experience in computer science. Mr. Cai has served
as the software developer in International Commercial Machine (China) Investment Co., Ltd.
(਷ყਠุዚኜ(ʕ਷)ʮ̡), the subsidiary of International Business Machines
Corporation, a company listed on Nasdaq (stock ticker: IBM) from July 2008 to October 2012.
From September 2012 to October 2016, he served as a scientist in Beijing Qiyi Century
DIRECTORS AND SENIOR MANAGEMENT
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Technology Co., Ltd. (ʮ̡), the subsidiary of iQIYI, Inc., a company
listed on Nasdaq (stock ticker: IQ). From February 2017 to January 2022, he served as a senior
algorithm expert in the branch of Y ouku Network Technology (Beijing) Co., Ltd. ( ᎴბၣഖҦ
ஔ(̏ԯ)ʮ̡), the subsidiary of Alibaba Group Holding Limited, a company listed on the
Stock Exchange (stock code: 09988.HK) and the Nasdaq (stock ticker: BABA).
The above various managerial and technical roles which Mr. Cai has assumed in such
major international internet companies provide him the skills, experience and expertise in the
files of big data, algorithms, internet technologies, and project development. These are
transferable and necessary to him discharging the roles as our chief technology officer and
chief operating officer which, among others, require him to have acquired deep insights and
necessary technological know-hows in the DTx industry that heavily involves the above
mentioned technologies as well.
Mr. Cai obtained a bachelor’s degree in Beijing Jiaotong University ( ̏ԯʹஷɽኪ)i n
China in July 2006 and also a master’s degree in Beijing Jiaotong University in June 2008.
Mr. Wang Junjie (௫), aged 38, was appointed as our financial director in September
2021. Mr. Wang is responsible for overseeing the financial affairs of the Group.
Mr. Wang has over 10-year of experience in finance and investment. He served as an
auditor and senior auditor from October 2009 to May 2012 and an audit manager, from
February 2014 to February 2017 in Beijing branch of Deloitte Touche Tohmatsu. From
November 2012 to February 2014, he served as an investment manager in Beijing
Xingliancheng Investment Management Co. Ltd. (ʮ̡). Mr. Wang
also served as the financial director in Beijing YingY an Network Technology Co. Ltd. (ޮ
ʮ̡), from March 2017 to August 2018. From November 2019 to March 2020,
Mr. Wang served as the head of internal audit in China Submarine Co., Ltd. (ʮ
̡), a company listed on the Shenzhen Stock Exchange (stock code: 300526.SZ) previously and
delisted in July 2023. He also served as the financial director in Beijing Jing Shi Hongru
Education Technology Co., Ltd. (ʮ̡), from May 2020 to August
2021.
Mr. Wang obtained a bachelor’s degree in management from Peking University ( ̏ԯɽ
ኪ) in China, in July 2009. He is also a member of non-practicing certified public accountants
in China (ࢪࠇ.)
Mr. Lai Zhiyuan (Ⴣ), aged 40, was appointed as our vice president of market and
operation in October 2021. He is responsible for management of sales and customer service,
and daily operation.
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Mr. Lai served as the general manager of business affairs department in Beijing Chunyu
Tianxia Software Co., Ltd. (ʮ̡), from February 2014 to June 2017.
He also served as senior vice president in Dingdang Fast Medicine Technology Group Co., Ltd.
(ʮ̡), from May 2017 to May 2018. From June 2018 to June 2019, he
served as general manager of health management center in Ransheng Health Industry
Investment Co. Ltd. (ʮ̡). Mr. Lai also served as the joint founder and
general manager in Jiangsu Xijie Biotechnology Co., Ltd. (ʮ̡), from
August 2019 to September 2021.
Mr. Lai obtained a bachelor’s degree in acupuncture in Chinese medicine from Fujian
College of Traditional Chinese Medicine (ʕᔼኪ৫) (currently know as Fujian University
of Traditional Chinese Medicine (ʕᔼᖹɽኪ)) in China, in July 2007.
JOINT COMPANY SECRETARIES
Mr. Wang Junjie (௫) was appointed as a joint company secretary of our Company
on July 30, 2023. For details of his biography, see subsection headed “Senior Management”
above.
Ms. Sham Ying Man ( Ҋᅂ˖) was appointed as a joint company secretary of our
Company on July 30, 2023. Ms. Sham is a manager of Company Secretarial Services of Tricor
Services Limited, a global professional services provider specializing in integrated business,
corporate and investor services. She has over 25 years of experience in the corporate secretarial
field.
Ms. Sham currently holds company secretary positions in certain Hong Kong listed
companies, including Hilong Holding Limited (ʮ̡) (stock code: 1623), Honma
Golf Limited (ʮ̡) (stock code: 6858) and WuXi Biologics (Cayman) Inc. ( ᖹ
ʮ̡) (stock code: 2269).
Ms. Sham obtained a bachelor degree of business administration from Lingnan College
(now known as Lingnan University). She is a Chartered Secretary, a Chartered Governance
Professional and an associate of both The Hong Kong Chartered Governance Institute and The
Chartered Governance Institute in the United Kingdom, respectively.
Our Company was granted a waiver from strict compliance with the requirements under
Rules 3.28 and 8.17 of the Listing Rules such that Mr. Wang Junjie and Ms. Sham may be
appointed as joint company secretaries of our Company, on the condition that the waiver can
be revoked if there are material breaches of the Listing Rules by our Company. For details,
please refer to the section headed “Waivers — Waiver in respect of Joint Company
Secretaries.”
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CORPORATE GOVERNANCE
Audit Committee
We have established an audit committee with written terms of reference in compliance
with Rule 3.21 of the Listing Rules and the Corporate Governance Code set out in Appendix C1
to the Listing Rules. The audit committee of the Company comprises three members, namely
Mr. Lam Yiu Por, Mr. Li Y uezhong and Dr. Duan Tao, with Mr. Lam Yiu Por (being our
independent non-executive Director with the appropriate professional qualifications or
accounting or related financial management expertise as required under Rules 3.10(2) and 3.21
of the Listing Rules) as chairman of the audit committee. The primary duties of the Company’s
audit committee are, among other things, to review and supervise the financial reporting
process and internal controls system of our Group, review and approve connected transactions
and provide advice and comments to the Board.
Remuneration Committee
We have established a remuneration committee with written terms of reference in
compliance with Rule 3.25 of the Listing Rules and the Corporate Governance Code set out in
Appendix C1 to the Listing Rules. The remuneration committee of the Company comprises
three members, namely Mr. Li Y uezhong, Mr. Lam Yiu Por and Dr. Duan Tao, with Mr. Li
Y uezhong as chairman of the remuneration committee. The primary duties of the Company’s
remuneration committee are to review and make recommendations to the Board on the terms
of remuneration packages, bonuses and other compensation payable to our Directors and other
senior management.
Nomination Committee
We have established a nomination committee with written terms of reference in
compliance with Rule 3.27A of the Listing Rules and the Corporate Governance Code set out
in Appendix C1 to the Listing Rules. The nomination committee of the Company comprises
three members, namely Mr. Tan Zheng, Mr. Li Y uezhong and Dr. Duan Tao, with Mr. Tan
Zheng as chairman of the nomination committee. The primary duties of the nomination
committee are to make recommendations to our Board on the appointment of Directors and
management of Board succession.
Board Diversity Policy
We are committed to promoting the culture of diversity in the Company. We have strived
to promote diversity to the extent practicable by taking into consideration a number of factors
in our corporate governance structure.
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Our Company has adopted a board diversity policy which sets out the objective and
approach to achieve and maintain diversity of the Board in order to enhance the effectiveness
of our Board. Pursuant to the board diversity policy, we seek to achieve Board diversity
through the consideration of a number of factors, including but not limited to gender, age,
educational background, industry experience and professional experience. Our Directors have
a balanced mix of gender, knowledge, skills and experiences, including management, strategic
planning, finance, investment, healthcare and technology industries. They obtained degrees in
various areas such as biology, medical, business administration, communication and electronic
system and computer engineering. We have also taken, and will continue to take steps to
promote gender diversity at the Board level of our Company. Upon Listing, our Board
comprises seven male members and one female members, and we expect to maintain/improve
such gender ratio at the Board level going forward. After Listing, the nomination committee
will revisit the board diversity policy and monitor its implementation from time to time. Our
nomination committee will also use their best efforts to identify and recommend suitable
female candidates for the Board’s consideration in the future to ensure that gender diversity can
be maintained. With reference to our board diversity policy, we will also ensure that there is
gender diversity when recruiting staff at mid to senior level so that we will have a pipeline of
female senior management and potential successors to our Board in due time to ensure gender
diversity of the Board. Our Group will continue to emphasize training of female talent and
providing long-term development opportunities for our female staff.
Anti-Corruption and Whistle Blowing Policies
We are committed to acting with integrity, honesty, fairness, impartiality, and ethical
business practices. We have adopted an anti-corruption policy to promote an ethical culture
within our Group and have zero-tolerance for bribery and any kind of corrupt activities. Our
Board and senior management also strive to promote an ethical culture within our Group. We
also adopted a whistle blowing policy that serves the purpose of establishing whistleblowing
procedures for employees and other relevant external parties of our Group, in order to report
and escalate any suspicious misconducts. In accordance with the policy, we protect all
whistleblowers from any kind of retaliation. All the information provided by the
whistleblowers will be strictly confidential.
Corporate Governance Code
We aim to achieve high standard of corporate governance which are crucial to our
development and safeguard the interests of our Shareholders. In order to accomplish this, we
expect to comply with the Corporate Governance Code set out in Appendix C1 to the Listing
Rules.
DIRECTORS AND SENIOR MANAGEMENT
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KEY TERMS OF EMPLOYMENT CONTRACTS
We normally enter into an employment contract with non-competition clauses with our
key management members and technical personnel. We normally enter into an employment
contract with our key management members and technical personnel with a term of three years.
Below sets forth the key terms of these contracts we enter into with our key management
members and technical personnel.
Confidentiality
Scope of confidential information : Information the employee shall keep confidential
includes but is not limited to: technical information and business information that is not known
to the public, can bring economic benefits to the enterprise, is practical and has been kept
confidential by the Company.
Confidential obligation : The employee (i) shall keep the Company’s trade secrets known
to him or her by virtue of his or her status, position, occupation or technical relationship, and
shall guarantee that they will not be disclosed or used, including by accident or negligence.
This is so even though the information may have been conceived or acquired in its entirety by
the person subject to confidentiality as a result of his or her work; (ii) during the period of labor
relationship, shall not (a) disclose or use the trade secrets without authorization for the purpose
of competition, or for personal interest, or for the benefit of a third party, or for the purpose
of intentionally inflicting harm on the Company, (b) spy on the trade secrets which are not
related to his/her own work or his/her own business; shall not divulge them, directly or
indirectly, to unrelated persons inside or outside the Company, (c) disclose the trade secrets of
the Company to any third party who does not bear the obligation of confidentiality, and (d)
copy or publicize the documents or copies of documents containing the Company’s trade
secrets; and (iii) shall treat the documents related to the Company, the Company’s customers
and the Company’s partners that are kept and touched by the work properly, and shall not use
them beyond the scope of work without permission.
Confidential period : The confidentiality obligation shall continue to be in effect during
the course of employment and after the departure of the employee.
Ownership of intellectual work products
The right of use, license, ownership and related intellectual property rights of any
technology, software and other results developed by the employee using the Company’s
information, materials, substances, equipment and tools shall belong to the Company, and the
employee shall not use or license others to use them without authorization or take them for
himself/herself. If, without the Company’s consent, the employee applies for a patent or
copyright registration in the name of the employee and/or a third party, the employee agrees
to exclusively transfer the above technology, software, copyright, patent right, patent
DIRECTORS AND SENIOR MANAGEMENT
– 395 –


--- page 405 ---
application right and any related rights to the Company at a transfer fee of RMB1 per piece.
Staff undertakes not to use any of the above technical results, works, software, patents, etc. for
commercial purposes or to license others to use them for commercial purposes without the
written consent of the Company.
Non-competition
Term and Scope : The non-competition obligation is effective during the course of
employment. The employee shall bear the non-competition obligation him or herself, and cause
and procure his or her affiliates (including but not limited to, his or her spouse, children,
brothers and sisters, parents, relatives by law, grandparents, grandchildren, uncles, aunts and
cousins) to also keep non-competition obligation.
Non-competition obligation : The employee shall not, and shall cause and procure that
his/her affiliates shall not, without the prior written consent of the Company, directly or
indirectly, carry on or be in any way interested in any and all business worldwide, which
competes or proposes to compete with the Group’s business, whether (i) in the capacity of sole
proprietorship, shareholding, investing, partnership, licensors or in any other way; (ii) by
acting as a consultant (or provide consultancy service or similar service), employee or officer
in any capacity in such business or providing technical, commercial or professional advice to
such business; (iii) by supplying any product or service of the same type as or similar to or
competitive with any product or service supplied by the Group to any person who is a customer
of the Group; or (iv) by manufacturing, marketing, selling and distributing products worldwide
that are identical to or compete with any products of such business, or in any way compete with
the Group.
COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
Our Directors receive compensation in the form of salaries, other allowances, retirement
benefits, and equity settled share-based payments. Our Directors’ remuneration is determined
with reference to the relevant Director’s experience and qualifications, level of responsibility,
performance and the time devoted to our business, and the prevailing market conditions. For
the terms of service contracts and appointment letters with our Directors, please refer to the
section headed “Appendix IV — Statutory and General Information.”
The aggregate amount of remuneration to our Directors for the three years ended
December 31, 2023, and the six months ended June 30, 2024 were approximately RMB15.1
million, RMB4.8 million, RMB37.0 million and RMB24.2 million, respectively. It is estimated
that remuneration and benefits in kind (excluding any possible payment of discretionary bonus)
equivalent to approximately RMB45.9 million in aggregate will be paid and granted to our
Directors by us in respect of the financial year ending December 31, 2024 under arrangements
in force at the date of this Prospectus.
DIRECTORS AND SENIOR MANAGEMENT
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--- page 406 ---
The aggregate amount of remuneration to our five highest paid individuals who are
neither Director nor chief executive of our Company for the three years ended December 31,
2023 and the six months ended June 30, 2024 were approximately RMB6.5 million, RMB4.4
million, RMB10.7 million and RMB8.7 million, respectively.
PRE-IPO SHARE A W ARD SCHEME
We have approved and adopted the Pre-IPO Share Award Scheme, the principal terms of
which are summarized in ‘‘Appendix IV – Statutory and General Information – Pre-IPO Share
Award Scheme.’’
During the Track Record Period, (i) no remuneration was paid to our Directors or the five
highest paid individuals as an inducement to join, or upon joining our Group; (ii) no
compensation was paid to, or receivable by, our Directors, past Directors or the five highest
paid individuals for the loss of office as director of any member of our Group or of any other
office in connection with the management of the affairs of any member of our Group; and (iii)
none of our Directors waived any emoluments.
For additional information on remuneration of our Directors and the highest paid
individuals, see Notes 12 and 13 to the Accountants’ Report.
COMPLIANCE ADVISER
Our Company has appointed SPDB International Capital Limited as our Compliance
Adviser pursuant to Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing
Rules, our Compliance Adviser will advise our Company in the following circumstances:
 before the publication of any regulatory announcement, circular or financial report;
 where a transaction, which might be a notifiable or connected transaction, is
contemplated, including shares issues, sales or transfers of treasury shares and share
repurchases;
 where our Company proposes to use the proceeds of the Global Offering in a manner
different from that detailed in this Prospectus or where our business activities,
developments or results deviate from any forecast, estimate or other information in
this Prospectus; and
 where the Stock Exchange makes an inquiry of our Company under Rule 13.10 of
the Listing Rules.
The term of the appointment of our Compliance Adviser shall commence on the Listing
Date and end on the date on which our Company distribute our annual report in respect of our
financial results for the first full financial year commencing after the Listing Date.
DIRECTORS AND SENIOR MANAGEMENT
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--- page 407 ---
CONFIRMATION FROM OUR DIRECTORS
Rule 8.10 of the Listing Rules
Each of our Directors confirms that as of the Latest Practicable Date, he or she did not
have any interest in a business which competes or is likely to compete, directly or indirectly,
with our business and requires disclosure under Rule 8.10 of the Listing Rules.
From time to time our non-executive Directors may serve on the boards of both private
and public companies within the broader healthcare and biopharmaceutical industries.
However, as these non-executive Directors are not members of our executive management
team, we do not believe that their interests in such companies as directors would render us
incapable of carrying on our business independently from the other companies in which these
non-executive Directors may hold directorships from time to time.
Rule 3.09D of the Listing Rules
Each of our Directors confirms that he/she (i) has obtained the legal advice referred to
under Rule 3.09D of the Listing Rules on July 30, 2023, and (ii) understands his or her
obligations as a director of a listed issuer under the Listing Rules.
Rule 3.13 of the Listing Rules
Each of the independent non-executive Directors has confirmed (i) his independence as
regards each of the factors referred to in Rules 3.13(1) to (8) of the Listing Rules, (ii) that he
has no past or present financial or other interest in the business of the Company or its
subsidiaries or any connection with any core connected person of the Company under the
Listing Rules as of the Latest Practicable Date, and (iii) that there are no other factors that may
affect his independence at the time of his appointments.
DIRECTORS AND SENIOR MANAGEMENT
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--- page 408 ---
THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone
Investment Agreement ”, and together the “ Cornerstone Investment Agreements ”) with the
cornerstone investors set out below (the “ Cornerstone Investors ”), pursuant to which the
Cornerstone Investors have agreed to subscribe for certain number of our Offer Shares at the
Offer Price (the “ Cornerstone Placing ”).
Assuming an Offer Price of HK$3.22, the total number of Offer Shares to be subscribed
by the Cornerstone Investors would be approximately 116,406,000 Offer Shares, representing
approximately 64.27% of the Offer Shares pursuant to the Global Offering and 9.19% of our
Shares in issue upon completion of the Share Subdivision and the Global Offering (assuming
that the Over-allotment Option is not exercised).
Our Company is of the view that the Cornerstone Placing will help to raise our profile and
signify that such investors have confidence in the business and prospect of our Group.
To the best knowledge of our Company and as confirmed by the Cornerstone Investors,
other than Tasly (Hong Kong) (as defined below), the holding company of which, namely Tasly
Pharmaceuticals (as defined below), is a company listed on the Shanghai Stock Exchange
(Stock code: 600535), none of the other Cornerstone Investors or their shareholders are listed
on any stock exchange. Subject to the “Closing Conditions” as set out below, the Cornerstone
Investors have confirmed that all necessary approvals have been obtained with respect to the
Cornerstone Placing and there is no need for Tasly Pharmaceuticals to obtain approval from the
relevant stock exchange and its shareholders with respect to its investment in the Offer Shares
through Tasly (Hong Kong), its indirectly wholly-owned subsidiary, as a Cornerstone Investor.
To the best knowledge of our Company, (i) the Cornerstone Investors are Independent
Third Parties of the Company and are independent of our connected persons and their
respective close associates; (ii) the Cornerstone Investors are not accustomed to take
instructions and have not taken instructions from our Company, the Directors, chief executive,
our substantial shareholders (including the Controlling Shareholders), existing Shareholders or
any of their subsidiaries or their respective close associates in relation to the acquisition,
disposal, voting or other disposition of the Offer Shares; (iii) the subscription of the relevant
Offer Shares by the Cornerstone Investors are not financed by our Company, the Directors,
chief executive, our substantial Shareholders (including the Controlling Shareholders), existing
Shareholders (except for Mr. Huang Guangwei who is an existing Shareholder himself) or any
of their subsidiaries or their respective close associates; and (iv) each Cornerstone Investor will
be utilizing its own internal resources as its/his source of funding for the subscription of the
Offer Shares.
The Cornerstone Placing will form part of the International Offering and the Cornerstone
Investors will not subscribe for any Offer Shares under the Global Offering other than pursuant
to the Cornerstone Investment Agreements. The Offer Shares to be subscribed for by the
Cornerstone Investors will rank pari passu in all respects with the other fully paid Shares in
CORNERSTONE INVESTORS
– 399 –


--- page 409 ---
issue following the completion of the Global Offering, and will be counted towards the public
float of our Company under Rule 8.08 of the Listing Rules. Such Offer Shares will not be
counted towards the public float of our Company for the purpose of Rule 18A.07 of the Listing
Rules. Immediately following the completion of the Share Subdivision and the Global
Offering, no Cornerstone Investor will become a Substantial Shareholder of our Company, and
the Cornerstone Investors will not have any Board representation in our Company. Other than
a guaranteed allocation of the relevant Offer Shares at the Offer Price, the Cornerstone
Investors do not have any preferential rights in the Cornerstone Investment Agreements
compared with other public Shareholders. There are no side agreements/arrangements between
our Company and the Cornerstone Investors or any benefit, direct or indirect, conferred on the
Cornerstone Investors by virtue of or in relation to the Cornerstone Placing, other than a
guaranteed allocation of the relevant Offer Shares at the Offer Price.
The total number of Offer Shares to be subscribed by the Cornerstone Investors may be
affected by reallocation of the Offer Shares between the International Offering and the Hong
Kong Public Offering in the event of over-subscription under the Hong Kong Public Offering
as described in the paragraph headed “Structure of the Global Offering—The Hong Kong
Public Offering—Reallocation” in this prospectus. Details of the actual number of the Offer
Shares to be allocated to the Cornerstone Investors will be disclosed in the allotment results
announcement of our Company to be issued by our Company on or around Tuesday, January
7, 2025.
All of the Cornerstone Investors will pay and settle in full for the relevant Offer Shares
that they have subscribed before dealings in the Offer Shares commence on the Stock
Exchange. As such, there will be no deferred payment for the Offer Shares to be subscribed by
the Cornerstone Investors. If there is over-allocation in the International Offering, the
settlement of such over-allocation may be effected through delayed delivery of the Offer
Shares to be subscribed by the Cornerstone Investors. Where delayed delivery takes place, each
Cornerstone Investor that may be affected by such delayed delivery has agreed that it shall
nevertheless pay for the relevant Offer Shares at or before 8 a.m. on the Listing Date.
CORNERSTONE INVESTORS
– 400 –


--- page 410 ---
Set forth below is the aggregate number of Offer Shares, and the corresponding
percentage to the Company’s total issued Shares under the Cornerstone Placing:
Cornerstone
Investor
Investment
amount (unless
otherwise
specified,
excluding
brokerage, SFC
transaction levy,
AFRC
transaction levy
and the Hong
Kong Stock
Exchange
trading fee
payable Offer Price
Number of Offer
Shares to be
subscribed for
(rounded down
to the nearest
whole board lot)
Approximate
percentage of
the Offer Shares
(assuming that
Over-allotment
Option is not
exercised)
Approximate
percentage of
the Offer Shares
(assuming that
Over-allotment
Option is
exercised in full)
Approximate
percentages of
the Shares in
issue
immediately
following the
completion of
the Share
Subdivision and
the Global
Offering
(assuming that
Over-allotment
Option is not
exercised)
Approximate
percentages of
the Shares in
issue
immediately
following the
completion of
the Share
Subdivision and
the Global
Offering
(assuming that
Over-allotment
Option is
exercised in full)
Tasly
(Hong Kong)
US$5,000,000 HK$3.22 12,074,000 6.67% 5.80% 0.95% 0.93%
Tasly
International
US$10,000,000 HK$3.22 24,148,000 13.33% 11.59% 1.91% 1.87%
Huang Guangwei US$4,000,000 HK$3.22 9,659,000 5.33% 4.64% 0.76% 0.75%
Suzhou Ceyuan US$29,500,000
(including
brokerage, SFC
transaction
levy, AFRC
transaction levy
and the Hong
Kong Stock
Exchange
trading fee
payable)
HK$3.22 70,525,000 38.94% 33.86% 5.57% 5.45%
Total US$48,500,000 116,406,000 64.27% 55.89% 9.19% 9.00%
CORNERSTONE INVESTORS
– 401 –


--- page 411 ---
OUR CORNERSTONE INVESTORS
The following information about the Cornerstone Investors was provided to our Company
by the Cornerstone Investors in relation to the Cornerstone Placing as of the Latest Practicable
Date.
Tasly Entities
Tasly (Hong Kong)
Tasly (Hong Kong) Pharmaceutical Investment Limited ( ˂ɻɢ(ಥ)ʮ̡)
(“Tasly (Hong Kong) ”) has agreed to subscribe for such number of the Offer Shares (rounded
down to the nearest whole board lot) which may be purchased with an aggregate amount of
US$5,000,000 at the Offer Price (exclusive of brokerage, SFC transaction levy, AFRC
transaction levy and the Hong Kong Stock Exchange trading fee payable).
Tasly (Hong Kong) is an investment holding company with limited liability incorporated
under the laws of the Hong Kong which is indirectly wholly owned by Tasly Pharmaceutical
Group Co., Ltd. (ʮ̡)( “Tasly Pharmaceuticals ”), a company listed
on the Shanghai Stock Exchange (Stock code: 600535). Tasly Pharmaceuticals was controlled
by Tasly Bio-Medicine Industry Group Co., Ltd. (ʮ̡)( “ Tasly
Group ”). Tasly Group is a limited liability company established in the PRC principally
engaged in biomedical healthcare in the “great-health” industry and ultimately beneficially
controlled by Y an Kaijing ( ₢௱ྤ) as of the Latest Practicable Date. On August 5, 2024 and
August 6, 2024, Tasly Pharmaceuticals announced that Tasly Group, together with certain other
shareholders of Tasly Pharmaceuticals, have agreed to transfer an aggregate of 28% equity
interests in Tasly Pharmaceuticals, to China Resources Sanjiu Medical & Pharmaceutical Co.,
Ltd. (ʮ̡)( “ CR Sanjiu ”), a company established in the PRC with
limited liability and the shares of which are listed on the Shenzhen Stock Exchange (stock
code: 000999), and a non-wholly owned subsidiary of China Resources Pharmaceutical Group
Limited, a company listed on the Stock Exchange (stock code: 3320). Such share transfer is
subject to certain conditions and had not been completed as of the Latest Practicable Date.
Upon the completion of such share transfer, Tasly Pharmaceuticals will be accounted for as a
non-wholly-owned subsidiary of China Resources Pharmaceutical Group Limited (the
“Potential Change in Control ”). For further details of the Potential Change in Control, please
refer to the announcement of China Resources Pharmaceutical Group Limited dated August 4,
2024 as published on the website of the Stock Exchange, and the announcements of Tasly
Pharmaceuticals dated August 5 and August 6, 2024, respectively, as published on the website
of the Shanghai Stock Exchange.
Tasly (Hong Kong) became aware of the cornerstone investment opportunities through
commercial cooperation with the Company.
CORNERSTONE INVESTORS
– 402 –


--- page 412 ---
Tasly Pharmaceuticals is principally engaged in the research and development,
manufacturing and distribution of Chinese and chemical medicinal products and is one of the
leading companies in modernized traditional Chinese medicine development. Through its
subsidiaries, Tasly Pharmaceuticals is also engaged in biopharmaceutical business in the PRC
with a bench-to-bedside biologics commercialization platform which vertically integrates the
research and development, manufacturing, and sales and marketing of proprietary biologic
products.
Tasly International
Tasly (International) Healthcare Investment&Development Company Limited (“ Tasly
International ”) ( ˂ɻɢ(਷ყ)ʮ̡) has agreed to subscribe for such
number of the Offer Shares (rounded down to the nearest whole board lot) which may be
purchased with an aggregate amount of US$10,000,000 at the Offer Price (exclusive of
brokerage, SFC transaction levy, AFRC transaction levy and the Hong Kong Stock Exchange
trading fee payable).
Tasly International is a company incorporated in the British Virgin Islands and is
indirectly wholly-owned by Tasly Bio-Medicine Industry Group Co., Ltd. (ᔼᖹପ
ʮ̡) through its wholly-owned subsidiary, TianJin Tasly Healthcare Capital Co.,
Ltd. (ʮ̡). Tasly International is therefore ultimately
beneficially controlled by Y an Kaijing ( ₢௱ྤ). Tasly International is principally engaged in
overseas medical investment & holding and medical management services.
Tasly International became aware of the cornerstone investment opportunities through
introduction of previous investors of the Company.
Mr. Huang Guangwei
Mr. Huang Guangwei ( රΈਃ) has agreed to subscribe for such number of the Offer
Shares (rounded down to the nearest whole board lot) which may be purchased with an
aggregate amount of US$4,000,000 at the Offer Price (exclusive of brokerage, SFC transaction
levy, AFRC transaction levy and the Hong Kong Stock Exchange trading fee payable).
We have applied to the Stock Exchange, and the Stock Exchange has granted, a waiver
from strict compliance with Rule 10.04 of the Listing Rules in relation to the cornerstone
investment by Mr. Huang, who is an existing Shareholder of our Company, pursuant to
paragraph 18 of Chapter 2.3 of the Guide for New Listing Applicants. Details of such waiver
are set out in the section headed “Waivers”. For the background of Mr. Huang including how
he became acquainted with the Company and thus the cornerstone investment opportunities,
please refer to the section headed “History, Reorganization and Corporate Structure—Pre-IPO
Investments— Information about Our Pre-IPO Investors—Mr. Huang Guangwei”.
CORNERSTONE INVESTORS
– 403 –


--- page 413 ---
Suzhou Ceyuan
Suzhou Ceyuan Fuhai Enterprise Management Partnership (Limited Partnership)* ( ᘽψ
ഄ๕ҧऎΆุ၍ଣΥྫΆุ(Υྫ)) (“ Suzhou Ceyuan ”) has agreed to subscribe for such
number of the Offer Shares (rounded down to the nearest whole board lot) which may be
purchased with an aggregate amount of US$29,500,000 at the Offer Price (inclusive of
brokerage, SFC transaction levy, AFRC transaction levy and the Hong Kong Stock Exchange
trading fee payable).
Suzhou Ceyuan is a limited partnership established by Chengdu High-tech Orinno
Y ouchan Equity Investment Fund Partnership (Limited Partnership)* (“ Orinno Investment ”)
(ΥྫΆุ(Υྫ)) and other entities in the PRC in
November 2024 for the purpose of participating in the Cornerstone Placing. Its general partner
is Suzhou Industrial Park Fuhai V enture Investment Co., Ltd* (“ Fuhai Venture ”) ( ᘽψʈุ෤
ʮ̡), which is responsible for providing support to its operation, and its
sole limited partner that has control over Suzhou Ceyuan is Orinno Investment, which owns
99.99995% of the equity interest in Suzhou Ceyuan. Orinno Investment is principally engaged
in enterprise management and equity investment. Fuhai V enture is wholly owned by Beijing
Y uanhe Origin Entrepreneurship Investment Management Co., Ltd* (ᓃ௴ุҳ༟၍
ʮ̡), which is in turn wholly owned by SIP Oriza Seed Fund Management CO., LTD
(ʮ̡). SIP Oriza Seed Fund Management CO., LTD
is owned by (i) Suzhou Industrial Park Zhengze Jiming Equity Investment Management Co.,
Ltd. (“ Zhengze Jiming ”) (ʮ̡) as to 51%, which is
in turn owned by five individuals where Mr. Fei Jianjiang (Ϫ), who owns 48.55% therein,
is the only shareholder owning more than 30% therein; and (ii) Suzhou Oriza Holdings
Corporation (ʮ̡) as to 49%, which is in turn owned as to 59.98% by
Suzhou Industrial Park Economic Development Ltd. (ʮ̡), which
is in turn owned as to 90% by Suzhou Industrial Park Administration Committee ᘽψʈุ෤
ึ
 a PRC-state owned entity. Orinno Investment is a PRC state-owned entity as
it is owned as to (i) 50% by Chengdu High-tech Jicui Technology Co., Limited* ( ϓே৷อණ
ʮ̡) as a limited partner, a wholly-owned subsidiary of Chengdu High-tech
Industrial Development Zone Finance Bureau* (ፄ҅), and (ii)
44% by Chengdu High-tech Investment Group Co., Ltd.* (ʮ̡)a sa
limited partner, which is owned as to 90% by Chengdu High-tech Industrial Development Zone
Finance Bureau* (ፄ҅) and 10% by the Sichuan Provincial
Finance Department* (ᝂ).
Suzhou Ceyuan became aware of the cornerstone investment opportunities through the
introduction of the relevant government authority in Chengdu city, Sichuan Province, the PRC.
CORNERSTONE INVESTORS
– 404 –


--- page 414 ---
CLOSING CONDITIONS
The obligation of the Cornerstone Investors to subscribe for the Offer Shares under the
Cornerstone Investment Agreements is subject to, among other things, the following closing
conditions:
(i) the Underwriting Agreements being entered into and having become effective and
unconditional (in accordance with their respective original terms or as subsequently
waived or varied by agreement of the parties thereto) by no later than the time and
date as specified in the Underwriting Agreements, and neither of the Underwriting
Agreements having been terminated;
(ii) the Offer Price having been agreed upon between the Company and the Overall
Coordinators (for themselves and on behalf of the Underwriters of the Global
Offering);
(iii) the Listing Committee having granted the listing of, and permission to deal in, the
Shares (including the Shares under the Cornerstone Placing) as well as other
applicable waivers and approvals and such approval, permission or waiver having
not been revoked prior to the commencement of dealings in the Shares on the Stock
Exchange;
(iv) no laws shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the transactions contemplated in the Global
Offering or the Cornerstone Investment Agreements and there shall be no orders or
injunctions from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions;
(v) the representations, warranties, undertakings, acknowledgements and confirmations
of the Cornerstone Investors under the Cornerstone Investment Agreements are
accurate, true and complete in all respects and not misleading or deceptive and that
there is no material breach of the Cornerstone Investment Agreements on the part of
the Cornerstone Investors; and
(vi) the relevant Cornerstone Investors have completed the Overseas Direct Investment
procedures required solely in relation to the transactions contemplated under the
Cornerstone Investment Agreements.
CORNERSTONE INVESTORS
– 405 –


--- page 415 ---
RESTRICTIONS ON THE CORNERSTONE INVESTORS
The Cornerstone Investors have agreed that they will not, whether directly or indirectly,
at any time during the period of 6 months from and including the Listing Date (the “ Lock-up
Period ”), (i) dispose of any of the Offer Shares they have purchased pursuant to the
Cornerstone Investment Agreements or (ii) undergo a change of control (the “ Lock-up
Undertaking ”), save for certain limited circumstances, such as (a) transfers to any of their
wholly-owned subsidiaries and/or (b) solely for Tasly (Hong Kong), undergoing the Potential
Change in Control, provided that the Potential Change in Control would not affect the
obligations of Tasly (Hong Kong) to comply with the disposal restrictions during the Lock-up
Period; and after the consummation of the Potential Change in Control (if occurs within the
Lock-up Period), Tasly (Hong Kong) will continue to be bound by its obligations under the
Lock-up Undertaking.
CORNERSTONE INVESTORS
– 406 –


--- page 416 ---
OUR CONTROLLING SHAREHOLDERS
Immediately following the completion of the Share Subdivision and the Global Offering
(on the basis that all the Preferred Shares are converted into Shares on a one-to-one basis and
assuming that the Over-allotment Option is not exercised), Mr. Tan and Dr. Wang, acting in
concert pursuant to the Offshore AIC Agreement, will together control the voting rights of
approximately 44.11% of the total issued share capital of our Company, including:
(i) the voting rights of such Shares, representing approximately 21.75% of the total
issued share capital of our Company, held by ZTan Limited, a BVI company
wholly-owned by Mr. Tan;
(ii) the voting rights of such Shares, representing approximately 8.61% of the total
issued share capital of our Company, held by Wispirits Limited, a BVI company
wholly-owned by Dr. Wang;
(iii) the voting rights of such Shares, representing approximately 3.51% of the total
issued share capital of our Company, held by Wiseforward Limited, a BVI company
and a close associate of Dr. Wang, in which Dr. Wang controls all voting rights
through (a) direct shareholding as to 17.61% in Wiseforward Limited, and (b) proxy
of the voting rights of all remaining shares of Wiseforward Limited granted by the
relevant shareholders thereof to Dr. Wang since Wiseforward Limited first became
a Shareholder;
(iv) the voting rights of such Shares, representing approximately 2.40% of the total
issued share capital of our Company, held by Neurobright Limited, a BVI company
and a close associate of Dr. Wang, in which Dr. Wang controls all voting rights
through (a) direct shareholding as to 32.82% in Neurobright Limited, and (b) proxy
of the voting rights of all remaining shares of Neurobright Limited granted by the
relevant shareholders thereof to Dr. Wang since the date when Neurobright Limited
first became a Shareholder; and
(v) pursuant to the V oting Proxy Agreement (as summarized below), the voting rights of
such Shares, representing approximately 7.83% in aggregate of the total issued share
capital of our Company, held by the Proxy Grantor, being Healthblooming Limited.
For details of the Proxy Grantor, see “History — Pre-IPO Investments —
Information about our Pre-IPO Investors — Healthblooming Limited”.
Accordingly, Mr. Tan and Dr. Wang, together with their respective close associates,
namely ZTan Limited, Wispirits Limited, Wiseforward Limited and Neurobright Limited, are
the Controlling Shareholders of our Company.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 407 –


--- page 417 ---
For the background of our Controlling Shareholders, see the sections headed “Directors
and Senior Management” and “History, Reorganization and Corporate Structure.”
Offshore AIC Agreement
Pursuant to the Offshore AIC Agreement, and not taking into account the voting rights of
the Proxy Grantors entrusted through the V oting Proxy Agreements, Mr. Tan and Dr. Wang will
together control the voting rights of approximately 36.28% of the total issued share capital of
our Company immediately after the completion of the Share Subdivision and the Global
Offering (on the basis that all the Preferred Shares are converted into Shares on a one-to-one
basis and assuming the Over-allotment Option is not exercised), being the aggregate voting
rights controlled by the Offshore AIC Parties.
Dr. Wang has also undertaken in the Offshore AIC Agreement that, since the date thereof,
he will not dispose of any Shares he holds in our Company without first acquiring written
consent of Mr. Tan.
For the details of the Offshore AIC Agreement, see the section headed “History,
Reorganization and Corporate Structure — Acting in Concert Arrangements — Offshore AIC
Agreement.”
Voting Proxy Agreement
Following the initial investments in our Group by the onshore affiliate of the Proxy
Grantor prior to the Reorganization, and taking into account the increase in the value of its
investment thereafter attributable to the sustained business development of the Group, the
Proxy Grantor, being Healthblooming Limited, has developed confidence in the management
of the Group under the supervision of Mr. Tan. Accordingly, to (i) further affirm the Proxy
Grantor’s support and faith in the commercial direction and guidance of Mr. Tan to act in a
manner that is aligned with the interests of our Group (including attaining our long-term
business prospects and strategic objectives) and our Shareholders as a whole; (ii) reflect the
importance of Mr. Tan’s vision and leadership in our Group’s continued growth; and (iii)
enable Mr. Tan to further consolidate his control in our Group and continue to drive the
Group’s development, the Proxy Grantor entered into the V oting Proxy Agreement dated
August 6, 2023 with Mr. Tan. Pursuant to the V oting Proxy Agreement, Mr. Tan is entitled to
exercise, in his sole discretion, all rights as the Shareholder of our Company on behalf of the
Proxy Grantor, in relation to the Shares representing approximately 7.83% of the total issued
share capital of our Company held by the Proxy Grantor immediately after the completion of
the Share Subdivision and the Global Offering (on the basis that all the Preferred Shares are
converted into Shares on a one-to-one basis and assuming the Over-allotment Option is not
exercised), according to the applicable laws and rules with respect to corporate governance,
including but not limited to the voting rights of Shareholders at shareholder meetings.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 408 –


--- page 418 ---
The V oting Proxy Agreement took immediate effect upon the date thereof and shall
continue in force so long as the Proxy Grantor holds any Share in our Company subject to the
V oting Proxy Agreement.
As a result of the arrangements set out above, Mr. Tan and Dr. Wang are entitled to control
approximately 7.83% in aggregate of the voting rights of our Company, being the aggregate
voting rights held by the Proxy Grantor, immediately after the completion of the Share
Subdivision and the Global Offering (on the basis that all the Preferred Shares are converted
into Shares on a one-to-one basis and assuming the Over-allotment Option is not exercised).
The Proxy Grantor has also entered into a deed of undertaking dated August 6, 2023 with
Mr. Tan pursuant to which it has been agreed that, since the date thereof and for so long as the
Proxy Grantor holds any Share in our Company, the Proxy Grantor will not dispose of any such
Share subject to the relevant deed of undertaking it holds in our Company without first
acquiring written consent of Mr. Tan.
COMPETITION
Business of our Group
Our Company is primarily engaged in research, development commercialization of
medical-grade digital therapeutics (DTx) product for cognitive impairment. For details, please
refer to the section headed “Business.”
Business Delineation
As of the Latest Practicable Date, Mr. Tan, our executive Director, chairman of the Board
and one of our Controlling Shareholders, is interested in approximately 36.04% equity interests
in Immunotech Biopharm Ltd (ʮ̡)( “ Immunotech ”), whose shares are
listed on the Stock Exchange (stock code: 6978), where Mr. Tan serves as an executive director
and the chairman of the board of directors thereof.
Immunotech is a leading cellular immunotherapy biopharmaceutical company in China
focusing on the research, development, and commercialisation of T cell immunotherapy. As our
Group primarily engages in research, development commercialization of medical-grade DTx
product for cognitive impairment, our Directors are of the view that there is a clear and
definitive delineation between the respective businesses of our Group and Immunotech,
including the underlying research and development process of the respective products of
Immunotech and those of our Group, and that there is no overlap with regard to the respective
suppliers and/ or customers of Immunotech and those of our Group. For further details of the
business of our Group, see “Business.”
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 409 –


--- page 419 ---
Based on the above reasons, the Directors are of the view that, as of the Latest Practicable
Date, neither Mr. Tan, nor any of our Directors or any Controlling Shareholder is interested in
any business, other than our Group, which competes or is likely to compete, either directly or
indirectly, with our Group’s business and which requires disclosure pursuant to Rule 8.10 of
the Listing Rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are able of
carrying out our business independently from our Controlling Shareholders and their respective
close associates after the Listing.
Management Independence
Our business is managed and conducted by our Board and senior management. Our Board
comprises two executive Directors, three non-executive Directors and three independent
non-executive Directors. For more details, see “Directors and Senior Management.”
Despite that Mr. Tan and Dr. Wang, our executive Directors, are our Controlling
Shareholders, our Directors are of the view that our Board and senior management team are
able to manage our business independently from the Controlling Shareholders and their
respective close associates for the following reasons:
 each of our Directors is aware of his or her fiduciary duties as a Director which
require, among others, that he or she must act for the benefit of and in the best
interests of our Company and not allow any conflict between his or her duties as a
Director and his or her personal interests;
 our daily management and operations are carried out by a senior management team,
all of whom have substantial experience in the industry in which our Company is
engaged, and will therefore be able to make business decisions that are in the best
interests of our Group. For details of the industry experience of our senior
management team, see “Directors and Senior Management”;
 we have three independent non-executive Directors which (i) account for more than
one-third of the Board, (ii) do not and will not hold any directorships or management
positions in our Controlling Shareholders, and (iii) possess requisite industry
knowledge and experience and are qualified to provide independent, sound and
professional advice to our Company;
 in the event that there is a potential conflict of interest arising out of any transaction
to be entered into between our Group and our Directors or their respective
associates, the interested Director(s) is required to declare the nature of such interest
before voting at the relevant Board meetings of our Company in respect of such
transactions. In addition, the interested Director shall not vote (nor be counted in the
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 410 –


--- page 420 ---
quorum) on any resolution of the Board approving any contract or arrangement or
proposal in which he or she or any of his or her close associates (as defined in the
Articles) has/have a material interest except for certain circumstances as set out in
the Articles; and
 we have adopted a series of corporate governance measures to manage conflicts of
interest, if any, between our Group and our Controlling Shareholders and their close
associates which would support our independent management. For more details, see
“Corporate Governance Measures” below.
Based on the above, our Directors are satisfied that our Board as a whole together with
our senior management team is able to perform the managerial role in our Group
independently.
Financial Independence
Our Group has an independent financial system. We make financial decisions according
to our own business needs and neither the Controlling Shareholders nor their close associates
intervene with our use of funds. In addition, we have also established an independent finance
department as well as implemented sound and independent audit, accounting and financial
management systems.
As of the date of this Prospectus, there were no outstanding loans or guarantees provided
by, or granted to, our Controlling Shareholders or their respective close associates.
Our Directors believe that, upon Listing, our Company will be able to obtain further
financing, if necessary, upon market terms and conditions without relying on financial
assistance or credit support from our Controlling Shareholders or their close associates.
Based on the above, our Company considers there is no financial dependence on our
Controlling Shareholders or their close associates.
Operational Independence
We have full rights to make all decisions on, and to carry out, our own business operations
independently. Our Company, through our subsidiaries, holds the licenses and qualifications
necessary to carry on our current business, and has sufficient capital, facilities, technology and
employees to operate the business independently from our Controlling Shareholders. We have
access to third parties independently from and not connected to our Controlling Shareholders
for sources of suppliers and customers. Based on the above, our Directors are of the view that
we are able to operate independently from our Controlling Shareholders and their close
associates.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
–4 1 1–


--- page 421 ---
CORPORATE GOVERNANCE MEASURES
Our Directors recognize the importance of good corporate governance in protecting our
Shareholders’ interests. We have adopted the following measures to safeguard good corporate
governance standards and to avoid potential conflict of interests between our Group and our
Controlling Shareholders:
 under the Articles of Association, where a Shareholders’ meeting is to be held for
considering proposed transactions in which any of our Controlling Shareholders or
any of their associates has a material interest, the Controlling Shareholders or their
associates will not vote on the relevant resolutions;
 our Company has established internal control mechanisms to identify connected
transactions. If our Company enters into connected transactions with our Controlling
Shareholders or any of their associates upon Listing, our Company will comply with
the applicable Listing Rules;
 the independent non-executive Directors will review, on an annual basis, whether
there are any conflicts of interests between our Group and our Controlling
Shareholders (the “ Annual Review ”) and provide impartial and professional advice
to protect the interests of our minority Shareholders;
 our Controlling Shareholders will undertake to provide all information necessary,
including all relevant financial, operational and market information and any other
necessary information as required by the independent non-executive Directors for
the Annual Review;
 our Company will disclose decisions on matters reviewed by the independent
non-executive Directors either in its annual reports or by way of announcements as
required by the Listing Rules;
 where our Directors reasonably request the advice of independent professionals,
such as financial advisers, the appointment of such independent professionals will
be made at our Company’s expenses; and
 we have appointed SPDB International Capital Limited as our Compliance Adviser
to provide advice and guidance to us in respect of compliance with the applicable
laws and regulations, as well as the Listing Rules, including various requirements
relating to corporate governance.
Based on the above, our Directors are satisfied that sufficient corporate governance
measures have been put in place to manage conflicts of interest that may arise between our
Group and our Controlling Shareholders, and to protect our minority Shareholders’ interests
after Listing.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 412 –


--- page 422 ---
SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following completion of the Share
Subdivision and the Global Offering, assuming the Over-allotment Option is not exercised, the
following persons will have interests and/or short positions in the Shares or underlying shares
of our Company which would fall to be disclosed to us pursuant to the provisions of Divisions
2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of
the nominal value of any class of share capital carrying rights to vote in all circumstances at
general meetings of our Company. Our Directors are not aware of any arrangement which may
at a subsequent date result in a change of control of our Company:
Substantial
Shareholder
Capacity/Nature of
interest
Total number of
Shares held as of
the date of this
Prospectus
(1)
Approximate
percentage of
interest in our
Company as of
the date of this
Prospectus
Number of
Shares upon
completion of the
Share Subdivision
and the Global
Offering (2)
Approximate
percentage of
interest in our
Company upon
completion of and
the Share
Subdivision and
the Global
Offering (2)
(%) (%)
ZTan Limited (3) Beneficial owner (3) 275,468(L) 25.38 275,468,000(L) 21.75
Mr. Tan (3)(4)(5) Interest in controlled
corporation (3)
275,468(L) 25.38 275,468,000(L) 21.75
Interest held through
voting powers
entrusted by other
persons
(4)
99,104(L) 9.13 99,104,000(L) 7.83
Beneficial owner (5) 27,129(L) 2.50 27,129,000(L) 2.14
Wispirits Limited (6) Beneficial owner (6) 109,052(L) 10.05 109,052,000(L) 8.61
Dr. Wang (6)(7) Interest in controlled
corporation (6)
183,955(L) 16.95 183,955,000(L) 14.53
Beneficial owner (7) 26,946(L) 2.48 26,946,000(L) 2.13
Northern Light
V enture Fund IV
L.P . (“NLVF”)
(8)
Beneficial owner (8) 115,729(L) 10.66 115,729,000(L) 9.14
Northern Light
Partners IV L.P .
(“NL Partners ”)
(8)
Interest in controlled
corporation (8)
126,854(L) 11.69 126,854,000(L) 10.02
Northern Light
V enture Capital IV ,
Ltd.
(8)
Interest in controlled
corporation (8)
126,854(L) 11.69 126,854,000(L) 10.02
SUBSTANTIAL SHAREHOLDERS
– 413 –


--- page 423 ---
Substantial
Shareholder
Capacity/Nature of
interest
Total number of
Shares held as of
the date of this
Prospectus (1)
Approximate
percentage of
interest in our
Company as of
the date of this
Prospectus
Number of
Shares upon
completion of the
Share Subdivision
and the Global
Offering (2)
Approximate
percentage of
interest in our
Company upon
completion of and
the Share
Subdivision and
the Global
Offering (2)
(%) (%)
Mr. Deng Feng (8) Interest in controlled
corporation (8)
126,854(L) 11.69 126,854,000(L) 10.02
Crusky Limited (9) Beneficial owner (9) 123,527(L) 11.38 123,527,000(L) 9.76
Ms. Li Mingqiu
(߇׼9)
Interest in controlled
corporation (9)
123,527(L) 11.38 123,527,000(L) 9.76
Healthblooming
Limited (10)
Beneficial owner (10) 99,104(L) 9.13 99,104,000(L) 7.83
Mr. Zhao Y ujie ( Ⴛρ
௫)( “ Mr. Zhao ”)(10)
Interest in controlled (10)
corporation
99,104(L) 9.13 99,104,000(L) 7.83
Wisdomspirit Holding
Limited (11)
Beneficial owner (11) 85,166(L) 7.85 85,166,000(L) 6.73
Trident Trust Company
(HK) Limited
(“Trident ”)
(11)
Interest in controlled
corporation (11)
85,166(L) 7.85 85,166,000(L) 6.73
Suzhou Ceyuan Fuhai
Enterprise
Management
Partnership (Limited
Partnership)* ( ᘽψ
ഄ๕ҧऎΆุ၍ଣΥ
ྫΆุ(Υྫ))
(“Suzhou
Ceyuan ”)
(12)
Beneficial owner (12) – – 70,525,000(L) 5.57
Y ouchan Equity
Investment Fund
Partnership (Limited
Partnership)* ( ϓே
ᛆҳ
ΥྫΆุ(Ϟ
Υྫ)) (“ Orinno
Investment ”
(12)
Interest in controlled
corporation (12)
– – 70,525,000(L) 5.57
SUBSTANTIAL SHAREHOLDERS
– 414 –


--- page 424 ---
Substantial
Shareholder
Capacity/Nature of
interest
Total number of
Shares held as of
the date of this
Prospectus (1)
Approximate
percentage of
interest in our
Company as of
the date of this
Prospectus
Number of
Shares upon
completion of the
Share Subdivision
and the Global
Offering (2)
Approximate
percentage of
interest in our
Company upon
completion of and
the Share
Subdivision and
the Global
Offering (2)
(%) (%)
Chengdu High-tech
Jicui Technology
Co., Limited* ( ϓே
ʮ
̡)( “ Chengdu
High-tech
Jicui ”)
(12)
Interest in controlled
corporation (12)
– – 70,525,000(L) 5.57
Chengdu High-tech
Investment Group
Co., Ltd.* ( ϓே৷
ʮ
̡)( “ Chengdu
High-tech
Investment ”)
(12)
Interest in controlled
corporation (12)
– – 70,525,000(L) 5.57
Chengdu High-tech
Industrial
Development Zone
Finance Bureau* ( ϓ
ே৷อҦஔପุක೯
ፄ҅)
(“Chengdu High-
tech Industrial ”)
(12)
Interest in controlled
corporation (12)
– – 70,525,000(L) 5.57
CFCH (13) Beneficial owner (13) 70,143(L) 6.46 70,143,000(L) 5.54
Mr. Lv Y ajun ( ѐԭ
ࠏ13) (“Mr. Lv ”)
Interest in controlled
corporation (13)
70,143(L) 6.46 70,143,000(L) 5.54
Notes:
1. The number of Shares held assuming that all of the Preferred Shares have been converted into the Shares on
a one-to-one basis, and the letter “L” denotes the person’s long position in the Shares.
2. The table above assumes (i) completion of the Share Subdivision and the Global Offering; and (ii) the
Over-allotment Option is not exercised, and the letter “L” denotes the person’s long position in the Shares.
3. As of the date of this Prospectus, ZTan Limited was wholly-owned by Mr. Tan. Therefore, Mr. Tan is deemed
to be interested in the Shares held by ZTan Limited under the SFO.
4. Pursuant to the V oting Proxy Agreement, Mr. Tan is entitled to exercise the voting rights of the Shares held
by Healthblooming Limited. See the section headed “Relationship With Our Controlling Shareholders — Our
Controlling Shareholders — V oting Proxy Agreement” for details. Therefore, Mr. Tan is deemed to be
interested in the Shares held by Healthblooming Limited under the SFO.
SUBSTANTIAL SHAREHOLDERS
– 415 –


--- page 425 ---
5. As of the date of this Prospectus, Mr. Tan was granted Awards to acquire 27,129 Shares (to be adjusted to
27,129,000 Shares pursuant to the Share Subdivision) under the Pre-IPO Share Award Scheme. See “Appendix
IV — Statutory and General Information — Pre-IPO Share Award Scheme” for details.
6. As of the date of this Prospectus, Wispirits Limited was wholly-owned by Dr. Wang. Therefore, Dr. Wang is
deemed to be interested in the Shares held by Wispirits Limited under the SFO.
As of the date of this Prospectus, each of the shareholders of Wiseforward Limited entered into proxy
arrangement with Dr. Wang respectively, to allow Dr. Wang to have control over the entire voting power
thereof, and as such Wiseforward Limited is a controlled corporation of Dr. Wang. Therefore, Dr. Wang is
deemed to be interested in all the interests of Wiseforward Limited in our Company under the SFO.
As of the date of this Prospectus, Neurobright Limited was owned as to approximately by 32.82% by Dr. Wang,
and each of the shareholders of Neurobright Limited entered into proxy arrangement with Dr. Wang
respectively, to allow Dr. Wang to have control over the entire voting power thereof, and as such Neurobright
Limited is a controlled corporation of Dr. Wang. Therefore, Dr. Wang is deemed to be interested in all the
interests of Neurobright Limited in our Company under the SFO.
7. As of the date of this Prospectus, Dr. Wang was granted Awards to acquire 26,946 Shares (to be adjusted to
26,946,000 Shares pursuant to the Share Subdivision) under the Pre-IPO Share Award Scheme. For details,
please refer to “Appendix IV — Statutory and General Information — Pre-IPO Share Award Scheme.”
8. As of the date of this Prospectus, each of Northern Light Strategic Fund IV L.P . (“ NLSF ”), NLVF and Northern
Light Partners Fund IV L.P . (“ NLPF ”) is an exempted limited partnership established in the Cayman Islands,
whose general partner is NL Partners. NL Partners is an exempted limited partnership established in the
Cayman Islands, whose general partner is Northern Light V enture Capital IV , Ltd., a company controlled by
Mr. Deng Feng, our non-executive Director. Therefore, each of NL Partners, Northern Light V enture Capital
IV , Ltd. and Mr. Deng Feng is deemed to be interested in the Shares held by NLSF, NLVF and NLPF.
9. As of the date of this Prospectus, Crusky Limited was wholly-owned by Ms. Li Mingqiu. Therefore, Ms. Li
Mingqiu is deemed to be interested in the Shares held by Crusky Limited under the SFO.
10. As of the date of this Prospectus, Healthblooming Limited was owned as to approximately by 39.96% by Mr.
Zhao. No other shareholder of Healthblooming Limited held one-third or more of the voting power therein.
Therefore, Mr. Zhao is deemed to be interested in the Shares held by Healthblooming Limited under the SFO.
11. As of the date of this Prospectus, Wisdomspirit Holding Limited is a company wholly owned by Trident, the
trustee of the trust set up by the Company to facilitate the administration of the Pre-IPO Share Award Scheme,
of which the Company is the settlor. Therefore, Trident is deemed to be interested in the Shares held by
Wisdomspirit Holding Limited under the SFO.
12. Upon completion of the Share Subdivision and the Global Offering, Suzhou Ceyuan will hold 5.57% in the
Company. For details of Suzhou Ceyuan’s investment as a cornerstone investor, see “Cornerstone Investors”.
Orinno Investment is the sole limited partner which controls Suzhou Ceyuan, owning 99.99995% therein.
Orinno Investment is in turn owned as to (i) 50% by Chengdu High-tech Jicui as a limited partner, a
wholly-owned subsidiary of Chengdu High-tech Industrial, and (ii) 44% by Chengdu High-tech Investment as
a limited partner, which is in turn owned as to 90% by Chengdu High-tech Industrial. Therefore, each of
Orinno Investment, Chengdu High-tech Jicui, Chengdu High-tech Industrial and Chengdu High-tech
Investment is deemed to be interested in the Shares held by Suzhou Ceyuan.
13. As of the date of this Prospectus, CFCH was wholly-owned by Mr. Lv. Therefore, Mr. Lv is deemed to be
interested in the Shares held by CFCH under the SFO.
Save as disclosed above and in section headed “Appendix IV — Statutory and General
Information — Further Information about our Directors, Chief Executives and Substantial
Shareholders”, our Directors are not aware of any other person who will or any other entity
which will, immediately following the completion of the Share Subdivision and the Global
Offering (assuming the Over-allotment Option is not exercised), have any interests and/or short
positions in the Shares or underlying shares of our Company which would fall to be disclosed
to us and the Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of
the SFO, or be directly or indirectly interested in 10% or more of the nominal value of any class
of our share capital carrying rights to vote in all circumstances at general meetings of our
Company or any other member of our Group. Our Directors are not aware of any arrangement
which may at a subsequent date result in a change of control of our Company.
SUBSTANTIAL SHAREHOLDERS
– 416 –


--- page 426 ---
AUTHORISED AND ISSUED SHARE CAPITAL
The following is a description of the authorised and issued share capital of our Company
in issue and to be issued as fully paid or credited as fully paid immediately following
completion of the Share Subdivision and the Global Offering.
As of the date of this Prospectus, our authorised share capital was US$50,000 divided into
500,000,000 Shares of US$0.0001 par value each, comprising 499,873,146 ordinary Shares,
95,878 Series A-1 Preferred and 30,976 Series A-2 Preferred Shares.
As of the date of this Prospectus, our issued share capital consisted of 958,312 ordinary
Shares, 95,878 Series A-1 Preferred and 30,976 Series A-2 Preferred Shares.
Upon the Global Offering becoming unconditional, each share in our then issued and
unissued share capital will be split into 1,000 shares of the corresponding class with nominal
value of US$0.0000001, and each of the issued and unissued Series A Preferred Shares will be
automatically converted into ordinary Shares on a one-to-one basis by way of re-designation
and re-classification. As a consequence of the Share Subdivision and re-designation,
immediately prior to the completion of the Global Offering, the authorized share capital of our
Company will be US$50,000 divided into 500,000,000,000 Shares of a nominal or par value
of US$0.0000001.
Assuming the Over-allotment Option is not exercised, the share capital of our Company
immediately after the Share Subdivision and the Global Offering will be as follows:
Description of Shares
Number of
Shares
Aggregate
nominal value
of Shares
(US$)
Shares in issue (including the Shares converted
on a one-to-one basis by way of re-designation
and re-classification of the Series A
Preferred Shares) 1,085,166,000 108.5166
Shares to be issued under the Global Offering 181,112,000 18.1112
Total 1,266,278,000 126.6278
SHARE CAPITAL
– 417 –


--- page 427 ---
Assuming the Over-allotment Option is exercised in full, the share capital of our
Company upon completion of the Share Subdivision and the Global Offering will be as follows:
Description of Shares
Number of
Shares
Aggregate
nominal value
of Shares
(US$)
Shares in issue (including the Shares converted
on a one-to-one basis by way of re-designation
and re-classification of the Series A
Preferred Shares) 1,085,166,000 108.5166
Shares to be issued under the Global Offering 181,112,000 18.1112
Shares to be issued pursuant to the Over-
allotment Option 27,166,000 2.7166
Total 1,293,444,000 129.3444
ASSUMPTIONS
The above tables assume that the Share Subdivision is completed, the Global Offering
becomes unconditional, all Series A Preferred Shares are converted into ordinary Shares, and
that the issue of Shares pursuant to the Global Offering (including the exercise of the
Over-allotment Option) are made as described herein. It takes no account of any Shares which
may be issued or bought back by us pursuant to the general mandates granted to our Directors
to issue or buy back Shares as described below.
RANKING
The Offer Shares are shares in the share capital of our Company and rank equally with
all Shares currently in issue or to be issued (including all Preferred Shares re-designated into
Shares upon completion of the Share Subdivision and the Global Offering) and, in particular,
will rank in full for all dividends or other distributions declared, made or paid on the Shares
in respect of a record date which falls after the date of this Prospectus.
SHARE CAPITAL
– 418 –


--- page 428 ---
POTENTIAL CHANGES TO SHARE CAPITAL
Circumstances Under which General Meetings are Required
Pursuant to the Cayman Companies Act and the terms of the Memorandum and Articles
of Association, our Company may from time to time by ordinary resolution of Shareholders (i)
increase its share capital; (ii) consolidate and divide its share capital into Shares of larger
amount; (iii) subdivide its Shares into shares of smaller amount; and (iv) cancel any shares
which have not been taken. In addition, our Company may subject to the provisions of the
Cayman Companies Act reduce its share capital or capital redemption reserve by its
shareholders passing a special resolution. See the section headed “Appendix III — Summary
of the Constitution of our Company and Cayman Companies Act — 2 Articles of Association
— 2.1 Shares — (c) Alteration of Capital” for further details.
General Mandate to Issue Shares, Sell and/or Transfer Treasury Shares and Repurchase
Shares
Subject to the Global Offering becoming unconditional, pursuant to the Shareholders
resolutions of the Company, our Directors have been granted general unconditional mandates
to issue our Shares and sell and/or transfer our Shares out of treasury that are held as treasury
shares and repurchase our Shares.
See “Appendix IV — Statutory and General Information — Further Information About
Our Company — Resolutions of our Shareholders” for further details on the general mandates
to issue and repurchase Shares.
EMPLOYEE INCENTIVE PLAN
We adopted the Pre-IPO Share Award Scheme.
For details, see the section headed “Appendix IV — Statutory and General Information
— Pre-IPO Share Award Scheme”.
SHARE CAPITAL
– 419 –


--- page 429 ---
You should read the following discussion and analysis with our audited consolidated
financial information, including the notes thereto, included in the Accountants’ Report in
Appendix I to this Prospectus. Our consolidated financial information has been prepared
in accordance with IFRS, which may differ in material aspects from generally accepted
accounting principles in other jurisdictions, including the United States.
The following discussion and analysis contain forward-looking statements that
reflect our current views with respect to future events and financial performance. These
statements are based on our assumptions and analysis in light of our experience and
perception of historical trends, current conditions and expected future developments, as
well as other factors we believe are appropriate under the circumstances. However ,
whether actual outcomes and developments will meet our expectations and predictions
depends on a number of risks and uncertainties. In evaluating our business, you should
carefully consider the information provided in the section headed “Risk Factors” in this
Prospectus.
For the purpose of this section, unless the context otherwise requires, references to
2021, 2022 and 2023 refer to our financial year ended December 31 of such year . Unless
the context otherwise requires, financial information described in this section is
described on a consolidated basis.
OVERVIEW
We are a seasoned player in China’s cognitive impairment DTx market. We are the first
company in China that has developed a medical-grade DTx product for cognitive impairment,
combining brain science with advanced artificial intelligence (the “ AI”) technologies,
according to Frost & Sullivan. Our product pipeline covers both the assessment and
intervention of a broad range of cognitive impairments induced by vascular diseases,
neurodegenerative diseases, psychiatric disorders, and child development deficiencies, among
others. Our Core Product is the first cognitive impairment DTx product that has obtained
regulatory approval in China, according to Frost & Sullivan.
During the Track Record Period, our revenue was primarily generated from provision of
the System integral software solutions in hospitals and out of hospitals, research projects, and
training facilitation service. We have not been profitable and have incurred net losses during
the Track Record Period.
We are a commercial stage company. As of the Latest Practicable Date, the System had
been included in the provincial health insurance reimbursement lists of 30 provinces in China.
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BASIS OF PREPARATION
The historical financial information has been prepared in accordance with accounting
policies which conform with IFRSs issued by the IASB. For the purpose of preparation of the
historical financial information, information is considered material if such information is
reasonably expected to influence decisions made by primary users. In addition, the historical
financial information includes applicable disclosures required by the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited and by the Hong Kong
Companies Ordinance.
The Historical Financial Information has been prepared on the historical cost basis except
for certain financial instruments that are measured at fair values at the end of each reporting
period. Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services.
MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS
We operate in China’s DTx industry, and our results of operations have been, and are
expected to continue to be, affected by the following factors that affect this industry in general.
Many of these factors may be beyond our control, and unfavorable development of these
factors could materially and adversely affect demand for our services and products and our
results of operations.
Growth and Competitive Landscape of the Cognitive Impairment DTx Market Globally
and in China
The cognitive impairment DTx market is relatively new. We believe that our financial
performance and future growth are dependent on the overall growth of Cognitive Impairment
DTx market globally and in China. According to Frost & Sullivan, the global cognitive
impairment DTx market has a size of approximately US$2,529.4 million as measured by sales
revenue in 2023, and is expected to grow to approximately US$4,119.6 million in 2025 and
US$6,737.0 million in 2030, representing CAGRs of 27.6% and 10.3% from 2023 to 2025 and
from 2025 to 2030, respectively. The cognitive impairment DTx market in China has a size of
approximately RMB268.6 million as measured by sales revenue in 2023, and is expected to
grow to approximately RMB1,046.7 million and RMB8,927.4 million in 2025 and 2030,
respectively, representing CAGRs of 97.4% and 53.5% from 2023 to 2025 and from 2025 to
2030, respectively.
The market for cognitive impairment DTx is characterized by technological changes and
evolving industry standards. Our ability to keep pace with new technologies in AI and artificial
humans, develop and market more advanced products, and maintain our competitive position
will significantly affect our results of operations. We believe that leveraging the broad
indication coverage by our System and other products, we have developed integrated
end-to-end capabilities ranging from R&D to commercialization, and are well positioned to
capture the significant growth opportunity in the cognitive impairment DTx market.
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Government Policies and Medical Insurance Coverage with Regard to Our Product
The regulatory framework for DTx products is constantly evolving. Increasingly stringent
regulatory requirements could create barriers to our development and introduction of new
products. Conversely, in the event that regulatory requirements are lowered, competitors could
potentially enter the prescription DTx market and compete against us more easily.
Our DTx products are novel and represent a new category of therapeutics for which the
regulatory framework continues to evolve. Our ability to develop and introduce new products
will depend, in part, on our ability to comply with these complex requirements, which include
regulations related to product design and development; clinical trials, pre-market clearance,
authorization, and approval; establishment registration; and marketing, sales and distribution.
If, however, the regulatory framework for DTx products simplifies and the requirements that
we and others are required to comply with are lowered, we may face increased competition and
the introduction by competitors of products that are or claim to be superior to our products. For
example, if the DTx regulation in China no longer requires Class II or Class III medical device
registration for DTx products before commercialization, and the accompanying clinical
validation of DTx safety and efficacy is no longer required, our competitive advantages may
be significantly lowered.
Moreover, the inclusion of our products and product candidates (upon commercialization)
in the governmental insurance coverage would significantly increase the demand for such
products, and would therefore have a positive impact on the sales volume of our products and
our financial performance. As of the Latest Practicable Date, our System had been included in
the provincial health insurance reimbursement lists of 30 provinces in China. However, we may
face downward pricing pressure if our products are included in the government insurance
coverage, even if such inclusions are expected to increase the sales volume of our products.
In addition to these general factors affecting the industry in which we operate, we believe
our results of operations are also affected by the following company specific factors.
Ability to Increase Sales and Market Penetration of Our Products
As of the Latest Practicable Date, we had commercialized our System for eight
indications for which we had received the Class II medical device registration certificate from
the Hunan MPA. During the Track Record Period, a substantial amount of our revenue was
derived from the System. Our revenue growth will depend on our ability to increase sales and
market penetration of our products. With respect to the System, our commercialization efforts
primarily focus on expanding indication coverage, which we believe will expand the
addressable market for our System, as well as establishing collaborations with more hospitals
in order to reach more patients and generate more sales as hospitals are expected to remain our
primary customers. Particularly, we plan to deepen our market penetration to small- and
medium-sized hospitals through our in-house selling and distribution team as well as
third-party marketing service providers. The sales volume of our products have been, and will
continue to have a significant influence on our results of operations.
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Commercialization of Our Product Candidates
Our results of operations also depend on our ability to successfully promote our product
candidates upon regulatory approval by the relevant authorities. The commercial success of our
products depends upon the degree of market acceptance each of such products achieves,
particularly among hospitals, physicians and patients. Such acceptance is in turn determined
by, among other factors, our ability to demonstrate the distinctive characteristics and
advantages in product safety, efficacy and cost effectiveness compared to our competitors’
products and even other therapies. Effect marketing strategies by our in-house team and
third-party service providers are also critical in attracting new customers and retaining existing
ones.
Ability to Manage Research and Development of Our Products and Product Candidates
We devote significant resources on R&D activities, including conducting preclinical
studies, clinical trials and activities related to seeking regulatory approvals, in order to
commercialize our System for more indications, bring pipeline products to market, and develop
new pipeline products and indication expansion for existing products and product candidates.
As of the Latest Practicable Date, we had commercialized our System for eight indications, and
are under various stages of development for several other cognitive impairment indications. We
also have four other products with regulatory approvals, as well as six additional product
candidates targeting the assessment and/or intervention of other types of cognitive impairment
and diseases under different stages of preclinical and clinical development or registration
process. The success of such R&D activities significantly affects our ability to expand sales,
business scale, and in turn results of operation and financial condition.
While we expect to continue to incur significant research and development expenses in
the foreseeable future, we need to control the amount of such expenses at a reasonable level
in light of the R&D achievements we make. In 2021, 2022, 2023, and the six months ended
June 30, 2023 and 2024, our research and development expenses amounted to RMB32.8
million, RMB67.6 million, RMB90.7 million, RMB34.4 million and RMB64.2 million,
respectively. Our ability to balance the need to invest in R&D activities and control our
operating expenses is key to our ability to reach profitability and sustainable growth.
Ability to Manage Costs and Improve Operating Efficiency
Our effective control of cost of sales and our ability to improve operating efficiency have
significant impacts on our results of operations. In 2021, 2022, 2023, and the six months ended
June 30, 2023 and 2024, our cost of sales was RMB1.0 million, RMB8.0 million, RMB35.1
million, RMB12.3 million and RMB27.4 million, respectively, accounting for 43.3%, 70.8%,
52.3%, 50.4% and 52.7% of our total revenue for the respective periods. Similarly, our ability
to efficiently control our operating expenses also impacts our profitability. In 2021, 2022,
2023, and the six months ended June 30, 2023 and 2024, our selling and distribution
expenses amounted to RMB10.8 million, RMB11.9 million, RMB38.4 million, RMB17.0
million and RMB25.4 million, respectively, and our administrative expenses amounted
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to RMB26.8 million, RMB27.8 million, RMB54.4 million, RMB15.0 million and RMB28.1
million, respectively. We expect our selling and distribution expenses and our administrative
expenses to increase in future periods, as we continue to support the expanded
commercialization, promotion and marketing of our products and product candidates, and to
manage the growth in our overall business scale. Our ability to control our various operating
expenses at a reasonable level in light of the achievements we make has a significant impact
on our results of operations and financial condition.
Ability to Obtain Funding for Our Operation
During the Track Record Period, we funded our operations primarily through capital
injection from shareholders and issuance of redeemable preference shares and long-term bonds.
Going forward, as we commercialize the System to cover more indications, commercialize
more product candidates, and expand the sales of existing products, we expect to fund our
operations in part with cash generated from operating activities. However, with the continuing
expansion of our business and development of product candidates, we may require further
funding through public or private equity offerings, debt financing and other sources. Any
changes in our ability to fund our operations may affect our cash flow and liquidity position,
limit our ability to carry out expansion strategies as planned, and otherwise affect our business
operations, results of operation, and financial position.
MATERIAL ACCOUNTING POLICY INFORMATION AND CRITICAL JUDGMENT
IN APPLYING ACCOUNTING POLICIES
We set forth below those material accounting policy information that we believe are of
critical importance to us or involve the most significant estimates and judgments used in the
preparation of our consolidated financial statements. Our material accounting policy
information, which is important for an understanding of our financial condition and results of
operations, are set forth in detail in Note 4 to the Accountants’ Report in Appendix I to this
Prospectus.
Material Accounting Policy Information
Revenue Recognition
Revenue from contracts with customers
We recognize revenue when (or as) a performance obligation is satisfied, i.e. when
“control” of the goods or services underlying the particular performance obligation is
transferred to the customer.
A performance obligation represents a good or service (or a bundle of goods or services)
that is distinct or a series of distinct goods or services that are substantially the same.
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Control is transferred over time and revenue is recognized over time by reference to the
progress towards complete satisfaction of the relevant performance obligation if one of the
following criteria is met:
 the customer simultaneously receives and consumes the benefits provided by our
performance as we performs;
 our performance creates or enhances an asset that the customer controls as we
perform; or
 our performance does not create an asset with an alternative use to us and we have
an enforceable right to payment for performance completed to date.
Otherwise, revenue is recognized at a point in time when the customer obtains control of
the distinct good or service.
A contract liability represents our obligation to transfer goods or services to a customer
for which we have received consideration (or an amount of consideration is due) from the
customer.
Over time revenue recognition: measurement of progress towards complete satisfaction of a
performance obligation
Input Method
The progress towards complete satisfaction of a performance obligation is measured
based on input method, which is to recognize revenue on the basis of our efforts or inputs to
the satisfaction of a performance obligation relative to the total expected inputs to the
satisfaction of that performance obligation, that best depict our performance in transferring
control of goods or services.
Financial Assets
Amortized Cost and Interest Income
Interest income is recognized using the effective interest method for financial assets
measured subsequently at amortized cost. Interest income is calculated by applying the
effective interest rate to the gross carrying amount of a financial asset, except for financial
assets that have subsequently become credit-impaired. For financial assets that have
subsequently become credit-impaired, interest income is recognized by applying the effective
interest rate to the amortized cost of the financial asset from the next reporting period. If the
credit risk on the credit-impaired financial instrument improves so that the financial asset is no
longer credit-impaired, interest income is recognized by applying the effective interest rate to
the gross carrying amount of the financial asset from the beginning of the reporting period
following the determination that the asset is no longer credit-impaired.
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Fair V alue Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date, regardless of
whether that price is directly observable or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, we take into account the characteristics of
the asset or liability if market participants would take those characteristics into account when
pricing the asset or liability at the measurement date. Fair value for measurement and/or
disclosure purposes in the Historical Financial Information is determined on such a basis,
except for share-based payment transactions that are within the scope of IFRS 2 Share-based
Payment, leasing transactions that are accounted for in accordance with IFRS 16 Leases, and
measurements that have some similarities to fair value but are not fair value, such as net
realizable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets .
For financial instruments which are transacted at fair value and a valuation technique that
unobservable inputs are to be used to measure fair value in subsequent periods, the valuation
technique is calibrated so that at initial recognition the results of the valuation technique equals
the transaction price.
In addition, for financial reporting purposes, fair value measurements are categorized into
Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in its entirety,
which are described as follows:
 Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity can access at the measurement date;
 Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and
 Level 3 inputs are unobservable inputs for the asset or liability.
Research and Development Expenditure
Expenditure on research activities is recognized as an expense in the period in which it
is incurred. An internally-generated intangible asset arising from development activities (or
from the development phase of an internal project) is recognized if, and only if, all of the
following have been demonstrated:
 the technical feasibility of completing the intangible asset so that it will be available
for use or sale;
 the intention to complete the intangible asset and use or sell it;
 the ability to use or sell the intangible asset;
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 how the intangible asset will generate probable future economic benefits;
 the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
 the ability to measure reliably the expenditure attributable to the intangible asset
during its development.
The amount initially recognized for internally-generated intangible asset is the sum of the
expenditure incurred from the date when the intangible asset first meets the recognition criteria
listed above. Where no internally generated intangible asset can be recognized, development
expenditure is recognized in profit or loss in the period in which it is incurred.
Property, Plant and Equipment
Property, plant and equipment are tangible assets that are held for use in the production
or supply of goods or services, or for administrative purposes. Property, plant and equipment
(other than construction in progress), are stated in the consolidated statements of financial
position at cost, less subsequent accumulated depreciation and subsequent accumulated
impairment losses, if any.
Property, plant and equipment in the course of construction for production, supply or
administrative purposes are carried at cost, less any recognized impairment loss. Costs include
any costs directly attributable to bringing the asset to the location and condition necessary for
it to be capable of operating in the manner intended by management and, for qualifying assets,
borrowing costs capitalized, in accordance with our accounting policy. Depreciation of these
assets, on the same basis as other property, plant and equipment, commences when the assets
are ready for their intended use.
Depreciation is recognized so as to write off the cost of property, plant and equipment,
other than construction in progress less their residual values over their estimated useful lives,
using the straight-line method. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of property, plant and equipment is determined
as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in profit or loss.
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Share-Based Payments
Equity-settled share-based payments to employees are measured at the fair value of the
equity instruments at the grant date.
The fair value of the equity-settled share-based payments determined at the grant date
without taking into consideration all non-market vesting conditions is expensed on a
straight-line basis over the vesting period, based on our estimate of equity instruments that will
eventually vest, with a corresponding increase in equity (share-based payments reserve). At the
end of each reporting period, we revise its estimate of the number of equity instruments
expected to vest based on assessment of all relevant non-market vesting conditions. The impact
of the revision of the original estimates, if any, is recognized in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to the
share-based payments reserve. For shares/share options that vest immediately at the date of
grant, the fair value of the shares/share options granted is expensed immediately to profit or
loss.
When shares granted are vested, the amount previously recognized in share-based
payments reserve will be transferred to other reserve.
Critical Judgment in Applying Accounting Policies
The following is the critical judgment, apart from those involving estimations (see
below), that the Directors have made in the process of applying the Group’s accounting policies
and that have the most significant effect on the amounts recognized in the Historical Financial
Information.
Research and Development Expenditures
Development costs incurred on our cognitive impairment DTx are capitalized and
deferred only when we can demonstrate the technical feasibility of completing the intangible
asset so that it will be available for use or sale, our intention to complete and use or sell the
asset, how the asset will generate probable future economic benefits, the availability of
adequate technical, financial and other resources to complete the pipeline, our ability to use or
sell the asset and the ability to measure reliably the expenditure during the development.
Development costs which do not meet these criteria are expensed when incurred.
The Directors assess the progress of each of the research and development projects and
determine whether the criteria are met for capitalization. During the Track Record Period, all
development costs were expensed when incurred.
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Key Sources of Estimation Uncertainty
The followings are the key assumptions concerning the future, and other key sources of
estimation uncertainty at the end of the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the
coming twelve months.
Fair V alue Measurement of Financial Liabilities at FVTPL
No quoted prices in an active market are available for our financial liabilities at FVTPL.
These financial liabilities were valued by the Directors with the assistance of an independent
qualified professional valuer not connected to us, which has appropriate qualifications and
experience in valuation of similar financial instruments. The fair value of these financial
liabilities is established by using valuation techniques as disclosed in Notes 27 and 34 of the
Accountants’ Report included in Appendix I to this Prospectus. V aluation techniques are
certified by the valuer before being implemented for valuation and are calibrated to ensure that
outputs reflect market conditions. V aluation models established by the valuer make the
maximum use of market inputs and rely as little as possible on our specific data. However, it
should be noted that some inputs, such as possibilities under different scenarios such as IPO,
liquidation and redemption, require management estimates. The estimates and assumptions are
reviewed periodically by the Directors and adjusted if necessary. Should any of the estimates
and assumptions changed, it may lead to a change in the fair value of financial liabilities at
FVTPL.
In relation to the valuation of our financial liabilities at FVTPL, our Directors, based on
the professional advice received, adopted the following procedures: (i) reviewed the terms of
Preferred Shares agreements; (ii) engaged independent business valuer, provided necessary
financial and non-financial information so as to enable the valuer to perform valuation
procedures and discussed with the valuer on relevant assumptions; (iii) carefully considered all
information especially those non-market related information input, such as fair value of the
ordinary shares of our Company, possibilities under different scenarios, time to liquidation and
discount for lack of marketability, which require management assessments and estimates; and
(iv) reviewed the valuation working papers and results prepared by the valuer. Based on the
above procedures, our Directors are of the view that the valuation analysis performed by the
valuer is fair and reasonable, and the financial statements of our Group are properly prepared.
Details of the fair value measurement of financial liabilities at FVTPL, the valuation
techniques and key inputs, including significant unobservable inputs, the relationship of
unobservable inputs to fair value and reconciliation of level 3 measurements are disclosed in
Notes 27 and 34 of the Accountants’ Report included in Appendix I to this Prospectus issued
by the Reporting Accountants. The reporting accountants’ opinion on the Historical Financial
Information of our Group for the Track Record Period as a whole is set out on I-2 of Appendix
I to the Prospectus.
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In relation to the fair value assessment of our Group’s financial liabilities at FVTPL, the
Joint Sponsors have conducted relevant due diligence work, including but not limited to, (i)
obtaining and reviewing the terms of the relevant investment agreements regarding the
financial liabilities; (ii) obtaining and reviewing the valuation working papers and valuation
report prepared by the external valuer we engaged; (iii) discussing with our management to
understand the methodology, assumptions and information relied upon in respect of such
valuation; (iv) obtaining and reviewing the professional qualification and credentials of the
external valuer we engaged in connection with the valuation; (v) discussing with the external
valuer we engaged to understand the methodology, assumptions and information relied upon
and the work they have performed in respect of such valuation; (vi) discussing with the
Reporting Accountants to understand the work they have performed in this regard; and (vii)
reviewing the relevant note in the Accountants’ Report as contained in Appendix I to this
Prospectus and the Reporting Accountants’ opinion on the historical financial information for
the Track Record Period as a whole. Based upon the due diligence work conducted by the Joint
Sponsors as stated above, and having considered the views of the Directors and the Reporting
Accountant, nothing material has come to the Joint Sponsors’ attention that would cause them
to question the valuation of our Group’s financial liabilities at FVTPL.
DESCRIPTION OF SELECTED COMPONENTS OF STATEMENTS OF PROFIT OR
LOSS
The following table sets forth our consolidated statements of profit or loss and other
comprehensive income with line items in absolute amounts and as percentages of our revenue
for the periods indicated, which are derived from our consolidated statements of profit or loss
and other comprehensive income set out in the Accountants’ Report included in Appendix I to
this Prospectus.
For the year ended
December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 2,299 11,291 67,200 24,412 51,887
Cost of sales (995) (7,994) (35,136) (12,309) (27,367)
Gross profit 1,304 3,297 32,064 12,103 24,520
Other income 1,478 3,915 2,079 1,692 582
Other gains and losses, net (3) 3,098 2,318 2,139 2,135
Fair value loss of financial
liabilities at fair value through
profit or loss (“FVTPL”) (623,764) (385,886) (165,216) (163,543) (243)
Impairment loss under expected
credit loss (“ECL”) model, net
of reversal (13) (50) (848) (248) (4,142)
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For the year ended
December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Selling and distribution expenses (10,813) (11,928) (38,399) (17,024) (25,376)
Administrative expenses (26,782) (27,762) (54,398) (15,047) (28,138)
Research and development
expenses (32,760) (67,627) (90,733) (34,371) (64,231)
Finance costs (6,391) (19,223) (20,216) (9,962) (10,904)
Listing expenses – – (25,767) (10,309) (8,592)
Other expenses (94) (295) – – –
Loss before tax (697,838) (502,461) (359,116) (234,570) (114,389)
Income tax expense –––––
Loss and total comprehensive
expense for the year/period (697,838) (502,461) (359,116) (234,570) (114,389)
(Loss) profit for the year/period
attributable to:
Owners of the Company (697,837) (502,452) (359,083) (234,597) (114,328)
Non-controlling interests (1) (9) (33) 27 (61)
Non-IFRS Measures
To supplement our consolidated statements of profit or loss and other comprehensive
income, which are presented in accordance with IFRS, we also use adjusted net loss (non-IFRS
measure) as an additional financial measure, which is not required by, or presented in
accordance with, IFRS. We believe this non-IFRS measure facilitates comparisons of operating
performance from period to period and company to company by eliminating potential impacts
of certain items. We believe this measure provides useful information to investors and others
in understanding and evaluating our consolidated results of operations in the same manner as
they help our management in assessing our results of operations. The fair value loss of
financial liabilities at FVTPL is adjusted because it will cease upon the completion of this
Global Offering; share-based payments are adjusted because they are non-cash in nature.
However, our non-IFRS measure does not have a standardized meaning prescribed by IFRS,
and our adjusted net loss (non-IFRS measure) may not be comparable to similarly titled
measures presented by other companies. The use of this non-IFRS measure has limitations as
an analytical tool, and you should not consider it in isolation from, or as a substitute for an
analysis of, our results of operations or financial condition as reported under IFRS.
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We define adjusted net loss (non-IFRS measure) as loss and total comprehensive expense
for the year adjusted by adding back fair value loss of financial liabilities at FVTPL and
share-based payments, both being non-cash in nature.
The following table reconciles adjusted net loss (non-IFRS measure) for the years/periods
indicated to the nearest financial measure calculated and presented in accordance with IFRS,
which is loss and total comprehensive expense for the year:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Reconciliation of loss and total
comprehensive expense for
the year to adjusted net loss
(non-IFRS measure)
Loss and total comprehensive
expense for the year/period (697,838) (502,461) (359,116) (234,570) (114,389)
Add:
Fair value loss of financial
liabilities at FVTPL 623,764 385,886 165,216 163,543 243
Share-based payments 19,370 – 44,873 – 35,304
Adjusted net loss (non-IFRS
measure) (54,704) (116,575) (149,027) (71,027) (78,842)
Revenue
We generate revenue from (i) provision of the System integral software solutions in
hospitals which enable hospitals to offer assessment and intervention to their cognitive
impairment patients; (ii) provision of the System integral software solutions out of hospitals to
individual patients; (iii) research projects services we provide to research institutions; (iv)
training facilitation service where we assist our customer, the organizer of the training
sessions, in performing the organizational and logistical groundwork of training sessions for
medical specialists in the cognitive impairment specialty. We ceased offering training
facilitation service in January 2024, and entered into a termination agreement with the
customer in April 2024; and (v) others, such as sales of hardware embedded with the System
and the related user accounts. The following table sets forth a breakdown of our revenue by
types of solutions and service during the periods indicated, both in absolute amount and as
percentages of total revenue.
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For the year ended December 31, For the six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Provision of the
System integral
software solutions
In hospitals 967 42.1 4,075 36.1 41,224 61.3 15,216 62.3 35,282 68.0
Out of hospitals 240 10.4 1,095 9.7 5,723 8.5 1,901 7.8 10,544 20.3
Subtotal 1,207 52.5 5,170 45.8 46,947 69.8 17,117 70.1 45,826 88.3
Research projects 413 18.0 5,993 53.1 14,290 21.3 5,119 21.0 5,914 11.4
Training facilitation
service –––– 5,085 7.6 1,324 5.4 – –
Others 679 29.5 128 1.1 878 1.3 852 3.5 147 0.3
Total 2,299 100.0 11,291 100.0 67,200 100.0 24,412 100.0 51,887 100.0
Provision of the System Integral Software Solutions in Hospitals
We provide the System integral software solutions to hospitals which enable them to offer
cognitive assessment and intervention to their cognitive impairment patients. The System runs
on the hardware provided by us at the cognitive centers of these hospitals. We do not generate
revenue in relation to such hardware. We generate revenue from hospitals which pay us based
on the amount of in-hospital use by patients and the pricing determined based on negotiation
with the hospitals with reference to the applicable prices under the local health insurance
reimbursement lists. We generated revenue of RMB1.0 million, RMB4.1 million, RMB41.2
million, RMB15.2 million and RMB35.3 million from provision of the System integral
software solutions in hospitals in 2021, 2022, 2023, and the six months ended June 30, 2023
and 2024, respectively, and recorded gross profits of RMB0.5 million, RMB0.7 million,
RMB20.4 million, RMB7.2 million and RMB16.5 million for the same periods, respectively.
We sometimes engage third-party service providers to provide operational support in cognitive
centers of these hospitals on our behalf. See “Business—Sales and Marketing—Our Marketing
Model—Collaborations with Top Hospitals and Research Institutions” for more details on the
roles and arrangements with such service providers. We charge hospitals periodically based on
the number of times our products are used by these hospitals to assess and treat patients during
the period.
FINANCIAL INFORMATION
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Provision of the System Integral Software Solutions out of Hospitals
Our revenue from provision of the System integral software solutions out of hospitals
primarily arises from sales to individual patients who first experience the System in hospitals
and then decide to continue to use the System for cognitive training at their own homes.
Patients pay us periodic subscription fees in exchange for access to the System software as well
as hardware (such as computers or tablets) which we provide during the period of subscription.
Research Projects
We provide the System as well as technical and operational support services to facilitate
our customers’ cognitive impairment research projects. Customers of our research projects
primarily include universities, hospitals and research institutions. We believe that by
facilitating our customers’ research projects and working closely with medical professionals of
our customers, we strengthen our reputation among the medical community, educate
professionals on the benefits of adopting our System for assessment and intervention of various
types of cognitive impairment, and generally promote the acceptance of our System among
hospitals and medical professionals nationwide. Our revenue from research projects primarily
arises from data analytics and system development services we offer to universities, hospitals,
and research institutions. We charge customers on a cost-plus basis, taking into account the
labor costs and the amount of time we devote to each customer, as well as a percentage of
markup.
Training Facilitation Service
We offer training facilitation service where we assist our customer and the organizer in
performing the organizational and logistical groundwork of training sessions for medical
specialists in the cognitive impairment specialty. The customer and organizer is a public
institution dedicated to advancing the knowledge and capabilities of physicians and other
medical professionals in China. In particular, we are responsible for (i) co-designing the
training curriculum, standards, and attendance certificates with the customer; (ii) contacting
training session lecturers; (iii) promoting the training sessions among potential attendees; (iv)
handling the logistics of setting up the training sessions; (v) providing attendee after-sale
services; and (vi) maintaining the necessary website and online portals in relation to the
training sessions. Per request from the customer, we charge service fees from attendees. The
service fee from each training is based on the type and number of training attendees when they
sign up for the training. We record training facilitation service revenue at the completion of
each training. We ceased offering training facilitation service in January 2024, and entered into
a termination agreement with the customer in April 2024.
Others
Our other revenue primarily relates to the sales of hardware equipment with our System
pre-installed and user accounts. The typical selling price for such hardware equipment was
approximately RMB3,000, and the typical selling price for each user account is approximately
RMB1,000. Customers purchase such integrated equipment with software or user accounts
FINANCIAL INFORMATION
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(which enable them to access a web page through their own computers) to utilize the
assessment and intervention functions of the System. Sales of user accounts and hardware
equipment with the System pre-installed are typically one-off transactions that enable the
customers to access the System without limits on usage duration and amount, while in a very
limited number of cases we charge a periodic fees during customers’ use of the user account.
In contrast, under the sales of our System as a software, we charge hospitals based on the
number of times the System was used. Sales of hardware equipment with our System
pre-installed and user accounts are no longer our prevailing business model as we began the
“cognitive center” approach. See “Business—Sales and Marketing—Our Marketing
Model—Collaborations with Top Hospitals and Research Institutions” for details, and is only
made upon existing customers’ requests. This is because we now primarily sell the System as
an integral software solution to hospitals and patients under “provision of the System integral
software solutions in hospitals” and “provision of the System integral software solutions out
of hospitals” business lines above.
Cost of Sales
Cost of sales for provision of the System integral software solutions in hospitals primarily
includes (i) operational costs, which arise from third-party service providers we engage to
provide hospitals with operational support, such as guidance and technical support on the
after-sale utilization and operations of our System, and other services to ensure smooth
operations of cognitive centers in hospitals that adopt our System. In 2021, 2022, 2023, and the
six months ended June 30, 2023 and 2024, the amount of such operational costs were RMB0.14
million, RMB2.6 million, RMB20.2 million, RMB7.3 million and RMB18.4 million,
respectively; and (ii) depreciation of construction costs in relation to renovation of cognitive
centers of our customers and the hardware on which the System runs. As advised by Frost &
Sullivan, it is not uncommon in the industry to engage service providers to provide such
services.
Cost of sales for provision of the System integral software solutions out of hospitals
primarily includes (i) operational costs which arise from third-party service providers we
engage to provide abovementioned operational support. Because individual patients purchase
our System only after they initially use it in hospitals, we are therefore obligated to pay
operational service fees in relation to out-of-hospital sales under our agreements with the
operational service providers; and (ii) depreciation costs in relation to hardware we rent to
patients on which the System runs.
Cost of sales for our research projects service primarily includes staff costs in relation to
providing technical and operational support services to customers to facilitate their cognitive
impairment research projects. Cost of sales for our training facilitation service include (i)
compensation for training session lecturers; and (ii) costs incurred to set up and arrange the
logistics for training sessions, such as labor and venue costs. The following table sets forth a
breakdown of our cost of sales by types of service during the periods indicated, both in absolute
amount and as percentages of total cost of sales.
FINANCIAL INFORMATION
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For the year ended December 31, For the six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Provision of the System integral software solutions
In hospitals 439 44.1 3,389 42.4 20,825 59.3 8,018 65.1 18,787 68.7
Out of hospitals 130 13.1 625 7.8 2,390 6.8 768 6.2 3,833 14.0
Subtotal 569 57.2 4,014 50.2 23,215 66.1 8,786 71.3 22,620 82.7
Research projects 376 37.8 3,958 49.5 9,506 27.1 2,556 20.8 4,747 17.3
Training facilitation
service –––– 2,194 6.2 746 6.1 – –
Others 50 5.0 22 0.3 221 0.6 221 1.8 – –
Total cost of sales 995 100.0 7,994 100.0 35,136 100.0 12,309 100.0 27,367 100.0
Gross Profit and Gross Profit Margin
Our gross profit represents our revenue less our cost of sales. The following table sets
forth a breakdown of our gross profit and gross profit margin by business segment for the
periods indicated.
For the year ended December 31, For the six months ended June 30,
2021 2022 2023 2023 2024
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
Gross
Profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Provision of the System integral software solutions
In hospitals 528 54.6 686 16.8 20,399 49.5 7,198 47.3 16,495 46.8
Out of hospitals 110 45.8 470 42.9 3,333 58.2 1,133 59.6 6,711 63.6
Subtotal/overall 638 52.9 1,156 22.4 23,732 50.6 8,331 48.7 23,206 50.6
Research projects 37 9.0 2,035 34.0 4,784 33.5 2,563 50.1 1,167 19.7
Training facilitation
service –––– 2,891 56.9 578 43.7 – –
Others 629 92.6 106 82.8 657 74.8 631 74.1 147 100.0
Total/overall 1,304 56.7 3,297 29.2 32,064 47.7 12,103 49.6 24,520 47.3
FINANCIAL INFORMATION
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Other Income
Our other income primarily consists of (i) interest income on bank balances, term deposits
and restricted bank deposit; (ii) interest income from rental deposits; (iii) government grants
related to research and development activities; and (iv) others. The following table sets forth
a breakdown of our other income, both in absolute amount and as percentages of our total other
income for the periods indicated.
For the year ended December 31,
For the six months ended
June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 RMB’000
(Unaudited)
Interest income on bank
balances, term deposits and
restricted bank deposit 1,308 88.5 3,812 97.4 1,973 94.9 1,642 378
Interest income from rental
deposits 18 1.2 91 2.3 106 5.1 50 54
Government grants related to
research and development
activities – – – – – – – 150
Others 152 10.3 12 0.3 – – – –
Total 1,478 100.0 3,915 100.0 2,079 100.0 1,692 582
Other Gains and Losses, Net
Our other gains and losses, net primarily relates to fair value gains on financial assets at
FVTPL. We recorded other losses of RMB3 thousand and other gains of RMB3.1 million,
RMB2.3 million, RMB2.1 million and RMB2.1 million in 2021, 2022, 2023, and the six
months ended June 30, 2023 and 2024, respectively. We had fair value gains on financial assets
at FVTPL of nil, RMB3.2 million, RMB2.7 million, RMB2.7 million and nil in 2021, 2022,
2023, and the six months ended June 30, 2023 and 2024, respectively, which arise from fair
value changes of the related financial assets.
Fair Value Changes of Financial Liabilities at FVTPL
Our fair value changes of financial liabilities at FVTPL primarily relates to fair value
changes of our redeemable preference shares. Our fair value changes of financial liabilities
were RMB623.8 million, RMB385.9 million, RMB165.2 million, RMB163.5 million and
RMB0.2 million in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024,
respectively.
FINANCIAL INFORMATION
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Selling and Distribution Expenses
Our selling and distribution expenses primarily consist of (i) market development and
service expenses to third-party service providers with connections to local hospitals which help
us establish connections with hospitals in more areas in China, and to enhance awareness of
DTx as a viable therapy for potential patients. In particular, we incurred RMB0.2 million,
RMB0.07 million, RMB7.0 million, RMB6.2 million and RMB2.9 million in conference
fees in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024,
respectively; (ii) employee benefits expenses for our selling and distribution staff; (iii)
depreciation and amortization expenses in relation to property, plant and equipment used by the
selling and distribution department; (iv) share-based payments; and (v) others. The following
table sets forth a breakdown of our selling and distribution expenses, both in absolute amount
and as percentages of our total selling and distribution expenses for the periods indicated.
For the year ended December 31, For the six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Market development
and service
expenses 1,185 11.0 5,834 48.9 22,430 58.4 13,679 80.4 14,210 56.0
Employee benefits
expenses 2,175 20.1 5,011 42.0 4,313 11.2 1,894 11.1 2,714 10.8
Depreciation and
amortization 24 0.2 731 6.1 2,599 6.8 975 5.7 1,708 6.7
Share-based
payments 7,186 66.5 – – 8,127 21.2 – – 6,404 25.2
Others 243 2.2 352 3.0 930 2.4 476 2.8 340 1.3
Total 10,813 100.0 11,928 100.0 38,399 100.0 17,024 100.0 25,376 100.0
Administrative Expenses
Our administrative expenses primarily consist of (i) employee benefit expenses for our
administrative staff; (ii) restructuring related expenses in relation to tax liabilities that arose
from restructuring activities prior to Listing; (iii) depreciation and amortization expenses in
relation to property, plant and equipment used by the administrative department; (iv)
professional service expenses for certain consulting services and information services to
support our business operations; (v) utilities and office expenses in relation to our corporate
offices; (vi) share-based payments; and (vii) others. The following table sets forth a breakdown
of our administrative expenses, both in absolute amount and as percentage of our total
administrative expenses for the periods indicated.
FINANCIAL INFORMATION
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For the year ended December 31, For the six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Employee benefit
expenses 8,042 30.0 12,053 43.4 13,764 25.3 6,656 44.2 6,688 23.8
Restructuring related
expenses –––– 5,533 10. 2––––
Depreciation and
amortization
expenses 1,535 5.7 6,065 21.8 6,510 12.0 3,020 20.1 4,018 14.3
Professional service
expenses 6,320 23.6 5,311 19.1 6,285 11.5 2,676 17.8 1,569 5.6
Utilities and office
expenses 3,635 13.6 3,895 14.0 3,574 6.6 1,331 8.8 1,675 6.0
Share-based
payments 7,186 26.8 – – 17,921 32.9 – – 14,106 50.1
Others 64 0.3 438 1.7 811 1.5 1,364 9.1 82 0.2
Total 26,782 100.0 27,762 100.0 54,398 100.0 15,047 100.0 28,138 100.0
Research and Development Expenses
Our research and development expenses primarily consist of (i) employee benefit
expenses for our research and development staff; (ii) depreciation and amortization expenses
in relation to property, plant and equipment used by the research and development department;
(iii) collaboration expenses incurred with hospitals and CROs with which we collaborate on
our R&D projects; (iv) service expenses in relation to purchases of cloud services from
third-party vendors for data storage, as well as technical research, management and consulting
services; (v) procurement expenses in relation to procurement of miscellaneous testing
services, office expenses, patent fees, among others; and (vi) share-based payments. The
following table sets forth a breakdown of our research and development expenses, both in
absolute amount and as percentage of our total research and development expenses for the
periods indicated.
FINANCIAL INFORMATION
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For the year ended December 31, For the six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Employee benefit
expenses 25,927 79.1 57,626 85.2 42,011 46.3 21,719 63.2 28,407 44.2
Depreciation and
amortization
expenses 4 – 4,886 7.2 9,353 10.2 4,524 13.2 5,449 8.5
Collaboration
expense
(1) – – 264 0.4 7,049 7.8 2,311 6.7 1,300 2.0
Service expenses 614 1.9 2,640 3.9 3,654 4.0 1,740 5.1 4,555 7.1
Procurement
expenses 1,217 3.8 2,211 3.3 9,841 10.9 4,077 11.8 9,726 15.2
Share-based
payments 4,998 15.2 – – 18,825 20.8 – – 14,794 23.0
Total 32,760 100.0 67,627 100.0 90,733 100.0 34,371 100.0 64,231 100.0
Note:
(1) Collaboration expenses represent sub-contracting costs in relation to clinical trials included in research and
development expenses.
Finance Costs
Our finance costs primarily consist of (i) interest expense on long-term bond of RMB6.2
million, RMB18.7 million, RMB19.6 million, RMB9.8 million and RMB10.4 million in 2021,
2022, 2023, and the six months ended June 30, 2023 and 2024, respectively; and (ii) interest
on lease liabilities of RMB0.2 million, RMB0.6 million, RMB0.4 million, RMB0.2 million and
RMB0.2 million during the same periods, respectively.
Listing Expenses
Our listing expenses primarily related to expenses incurred in relation to this Global
Offering. In 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024, we incurred
nil, nil, RMB25.8 million, RMB10.3 million and RMB8.6 million in listing expenses,
respectively.
FINANCIAL INFORMATION
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PERIOD-TO-PERIOD COMPARISON
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2024
Revenue
Our revenue increased significantly from RMB24.4 million in the six months ended June
30, 2023 to RMB51.9 million in the six months ended June 30, 2024, primarily due to the
following changes in our various types of service:
 Our revenue from provision of the System integral software solutions in hospitals
increased significantly from RMB15.2 million in the six months ended June 30,
2023 to RMB35.3 million in the six months ended June 30, 2024, primarily due to
(i) an increase in the number of hospitals that purchased the System from 43 in the
six months ended June 30, 2023 to more than 100 in the six months ended June 30,
2024, with a customer retention rate (being the percentage of hospitals that
purchased our System in 2023 who also purchased our System in the six months
ended June 30, 2024) of 97.4%; (ii) an increase in the number of times patients used
our System from over 218,600 times in the six months ended June 30, 2023 to
approximately 432,500 times in the six months ended June 30, 2024; and (iii) an
increase in the amount of assessment prescription by physicians to facilitate their
medical diagnosis using the System.
 Our revenue from provision of the System integral software solutions out of
hospitals increased significantly from RMB1.9 million in the six months ended June
30, 2023 to RMB10.5 million in the six months ended June 30, 2024, primarily due
to (i) a significant increase in the number of patients from approximately 3,300 to
over 10,200 over the same periods who selected our System for use in their own
homes after initially using the System in hospitals; and (ii) an increase in
subscription period for the System by users out of hospitals.
 Our revenue from research projects increased from RMB5.1 million in the six
months ended June 30, 2023 to RMB5.9 million in the six months ended June 30,
2024, primarily due to an increase in the average project scale.
Cost of Sales
Our cost of sales increased significantly from RMB12.3 million in the six months ended
June 30, 2023 to RMB27.4 million in the six months ended June 30, 2024, primarily due to the
following changes in cost of sales in our various types of service:
 Our cost of sales for provision of the System integral software solutions in hospitals
increased significantly from RMB8.0 million in the six months ended June 30, 2023
to RMB18.8 million in the six months ended June 30, 2024, primarily due to an
RMB10.8 million increase in operational costs, incurred by ourselves and with
third-party service providers that provide operational support in cognitive centers on
our behalf primarily because of an increase in the number of cognitive centers from
which we incurred construction costs from 43 in the six months ended June 30, 2023
to more than 100 in the six months ended June 30, 2024, which led to an increase
in construction and depreciation costs.
FINANCIAL INFORMATION
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 Our cost of sales for provision of the System integral software solutions out of
hospitals increased significantly from RMB0.8 million in the six months ended June
30, 2023 to RMB3.8 million in the six months ended June 30, 2024, primarily due
to an increase in the operational costs incurred with third-party service providers
that provided operational support.
 Our cost of sales for research projects increased significantly from RMB2.6 million
in the six months ended June 30, 2023 to RMB4.7 million in the six months ended
June 30, 2024, primarily due to an increase in costs for staff who provided data
analytics and system development services to our customers driven by the sizes of
and demands by the projects.
Gross Profit and Gross Profit Margin
As a result of the changes in our revenue and cost of sales described above, our gross
profit increased significantly from RMB12.1 million in the six months ended June 30, 2023 to
RMB24.5 million in the six months ended June 30, 2024.
Our gross profit margin decreased from 49.6% in the six months ended June 30, 2023 to
47.3% in the six months ended June 30, 2024. Such decrease was primarily due to a decrease
in gross profit margin of our research projects services from 50.1% in the six months ended
June 30, 2023 to 19.7% in the six months ended June 30, 2024.
The gross profit margin from research projects fluctuates from period to period, primarily
due to the characteristics of each project, such as (i) the degree to which our customers rely
on our System to conduct research projects; (ii) the level of labor intensity of a project; and
(iii) case-by-case negotiations with customers. Our gross profit margin tends to be higher for
research projects that are more reliant on our System during the research process, and/or that
are less labor intensive. The projects we undertook in the six months ended June 30, 2024 were
relatively labor intensive due to their nature. In the six months ended June 30, 2024, the salary
level of our staff offering research projects services also increased. These factors drove down
our gross profit margin for research projects services from the six months ended June 30, 2023
to the six months ended June 30, 2024.
Our gross profit margin for others was 100.0%, because the revenue was related to
subscription fees for user accounts for which we did not incur any costs in the six months ended
June 30, 2024.
Other Income
Our other income decreased from RMB1.7 million in the six months ended June 30, 2023
to RMB0.6 million in the six months ended June 30, 2024, which is consistent with our overall
business plans.
FINANCIAL INFORMATION
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Other Gains and Losses, Net
Our other gains and losses, net remained stable at RMB2.1 million and RMB2.1 million
in the six months ended June 30, 2023 and 2024, respectively.
Fair V alue Loss of Financial Liabilities at FVTPL
The fair value loss of financial liabilities at FVTPL decreased from RMB163.5 million in
the six months ended June 30, 2023 to RMB0.2 million in the six months ended June 30, 2024,
primarily due to change in the fair value of redeemable preference shares.
Selling and Distribution Expenses
Our selling and distribution expenses increased significantly from RMB17.0 million in
the six months ended June 30, 2023 to RMB25.4 million in the six months ended June 30, 2024,
primarily due to (i) an RMB0.5 million increase in market development and service expenses
for (a) the engagement of more marketing and promotional services to support our growing
business scale; and (b) organization of industry conferences to promote the sales of the System;
and (ii) an RMB6.4 million increase in share-based payment expenses driven by the adoption
of the Pre-IPO Share Award Scheme in July 2023.
Administrative Expenses
Our administrative expenses increased by 87.0% from RMB15.0 million in the six months
ended June 30, 2023 to RMB28.1 million in the six months ended June 30, 2024, primarily due
to an RMB14.1 million increase in share-based payments driven by the adoption of the Pre-IPO
Share Award Scheme in July 2023.
Research and Development Expenses
Our research and development expenses increased by 86.9% from RMB34.4 million in the
six months ended June 30, 2023 to RMB64.2 million in the six months ended June 30, 2024,
primarily due to (i) an RMB14.8 million increase in share-based payments driven by the
adoption of the Pre-IPO Share Award Scheme in July 2023; and (ii) an RMB2.8 million
increase in service expenses and an RMB5.6 million increase in procurement expenses, driven
by an increase in R&D activities we conducted.
Finance Costs
Our finance costs remained relatively stable at RMB10.0 million and RMB10.9 million
in the six months ended June 30, 2023 and 2024, respectively.
FINANCIAL INFORMATION
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Listing Expenses
Our listing expenses decreased from RMB10.3 million in the six months ended June 30,
2023 to RMB8.6 million in the six months ended June 30, 2024, primarily due to changes in
the progress of this Listing process.
Loss and Total Comprehensive Expense for the Period
As a result of the above, we incurred loss of RMB234.6 million and RMB114.4 million
in the six months ended June 30, 2023 and 2024, respectively.
The Y ear Ended December 31, 2022 Compared to The Y ear Ended December 31, 2023
Revenue
Our revenue increased significantly from RMB11.3 million in 2022 to RMB67.2 million
in 2023, primarily due to the following changes:
 Our revenue from provision of the System integral software solutions in hospitals
increased significantly from RMB4.1 million in 2022 to RMB41.2 million in 2023,
primarily due to (i) an increase in the number of hospitals that purchased the System
from 17 in 2022 to 75 in 2023, with a customer retention rate (being the percentage
of hospitals that purchased our System in 2022 who also purchased our System in
2023) of 100.0%; and (ii) an increase in the number of times patients used our
System from approximately 113,500 times in 2022 to over 850,000 times in 2023.
 Our revenue from provision of the System integral software solutions out of
hospitals increased significantly from RMB1.1 million in 2022 to RMB5.7 million
in 2023, primarily due to a significant increase in the number of patients from
approximately 1,800 to approximately 4,900 over the same periods who selected our
System for use in their own homes after initially using the System in hospitals, as
well as an increase in selling price of our out-of-hospital product.
 Our revenue from research projects increased from RMB6.0 million in 2022 to
RMB14.3 million in 2023, primarily due to an increase in the average project scale.
 Our revenue from training facilitation service increased from nil in 2022 to RMB5.1
million in 2023, primarily because we began offering training facilitation service in
2023. In 2023, we facilitated 29 training sessions to over 3,100 attendees.
FINANCIAL INFORMATION
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Cost of Sales
Our cost of sales increased significantly from RMB8.0 million in 2022 to RMB35.1
million in 2023, primarily due to the following changes in cost of sales in our various types
of service:
 Our cost of sales for provision of the System integral software solutions in hospitals
increased significantly from RMB3.4 million in 2022 to RMB20.8 million in 2023,
primarily due to (i) an RMB16.1 million increase in operational costs, incurred by
ourselves and with third-party service providers that provide operational support in
cognitive centers on our behalf; and (ii) an increase in the number of cognitive
centers from which we incurred construction costs from 14 in 2022 to 48 in 2023,
which led to an increase in construction and depreciation costs.
 Our cost of sales for provision of the System integral software solutions out of
hospitals increased significantly from RMB0.6 million in 2022 to RMB2.4 million
in 2023, primarily due to an increase in the operational costs incurred with
third-party service providers that provided operational support.
 Our cost of sales for research projects increased significantly from RMB4.0 million
in 2022 to RMB9.5 million in 2023, primarily due to an increase in costs for staff
who provided data analytics and system development services to our customers
driven by the sizes of and demands by the projects.
 Our cost of sales for training facilitation service was nil and RMB2.2 million in
2022 and 2023, respectively. In 2023, we facilitated 29 training sessions and
incurred relevant costs in lecturer compensation, venue and labor.
Gross Profit and Gross Profit Margin
As a result of the changes in our revenue and cost of sales described above, our gross
profit increased significantly from RMB3.3 million in 2022 to RMB32.1 million in 2023,
primarily due to the significant increase in sales volume of the System and the increase in the
number of hospitals and patients that used our System.
Our gross profit margin increased from 29.2% in 2022 to 47.7% in 2023. In particular, our
gross profit margin for provision of the System integral software solutions in hospitals
increased from 16.8% in 2022 to 49.5% in 2023, and gross profit margin for provision of the
System integral software solutions out of hospitals increased from 42.9% in 2022 to 58.2% in
2023, primarily due to a hike in the fee rate of operational costs in 2022 incurred with a
third-party service provider which provided guidance and technical support on the after-sale
utilization and operations of our System and other services to ensure smooth operations of
cognitive centers in hospitals that adopt our System. Under the relevant service agreement, the
fee rate is calculated as a percentage of sales of the System integral software solutions made
by hospitals to patients in hospitals, and the service provider offered operational support in the
hospitals. For sales of the System integral software solutions out of hospitals, the fee rate is
FINANCIAL INFORMATION
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calculated as the same percentage of sales made by us to patients who typically use the System
first in hospitals and then decide to continue using it for cognitive training at their own homes.
Such percentage of one of the service providers was retrospectively revised in September 2022
from floating rates (based on sales volume) to a fixed rate at the high end of the previously
floating rate range. The gross profit margins for provision of the System integral software
solutions in hospitals and out of hospitals were relatively lower in 2022, primarily because the
abovementioned retrospective revision for periods prior to 2022 was all recorded in 2022.
Such adjustment was primarily in relation to changes in the amount of work provided by
this service provider in the cognitive centers. In 2021, our cognitive center approach was at an
early development and ramp-up stage. Later in 2022, as the cognitive center approach became
more well developed and as the operations of existing cognitive centers more ramped up, the
number of staff and the amount of work provided by this service provider grew and exceeded
the original plan. To ensure sustainable business cooperation, we and this service provider
mutually agreed to revise the abovementioned fee rate percentage. In 2022 and 2023, the
amount of service fees under the relevant service agreement incurred with such service
provider accounted for approximately 5.6% and 6.1% of our total procurement amount,
respectively.
Our gross profit margin for research projects remained relatively stable at 34.0% and
33.5% in 2022 and 2023, respectively. The gross profit margin from research projects
fluctuates from period to period, primarily due to the characteristics of each project, such as
(i) the degree to which our customers rely on our System to conduct research projects; (ii) the
level of labor intensity of a project; and (iii) case-by-case negotiations with customers. Our
gross profit margin tends to be higher for research projects that are more reliant on our System
during the research process, and/or that are less labor intensive.
Other Income
Our other income decreased from RMB3.9 million in 2022 to RMB2.1 million in 2023,
primarily due to an RMB1.8 million decrease in interest income on bank balances, term
deposits and restricted bank deposit, driven by changes in their average balances in 2022
compared to 2023.
Other Gains and Losses, Net
Our other gains and losses, net decreased from a gain of RMB3.1 million in 2022 to a gain
of RMB2.3 million in 2023, primarily due to fair value changes of relevant financial assets at
FVTPL.
Fair V alue Loss of Financial Liabilities at FVTPL
Our fair value changes of financial liabilities at FVTPL decreased significantly from
RMB385.9 million in 2022 to RMB165.2 million in 2023, primarily due to fair value changes
of redeemable preference shares.
FINANCIAL INFORMATION
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Selling and Distribution Expenses
Our selling and distribution expenses increased significantly from RMB11.9 million in
2022 to RMB38.4 million in 2023, primarily due to an increase in market development and
service expenses driven by the increasing efforts to explore business cooperation opportunities
in order to reach more hospitals and other customers and to enhance industry recognition and
awareness of our products. The number of hospitals that purchased the System increased from
17 in 2022 to 75 in 2023. The increase is also due to an increase in the number of events and
conferences we organized or attended. For example, in April 2023, we co-organized the First
Cognitive Impairment Disease Specialty Capability Building Conference in Shaoxing,
Zhejiang, during which experts in the fields of brain sciences and DTx gathered to discuss new
technology applications in the diagnosis and treatment of cognitive impairment diseases as
well as the use of DTx in preventing and treating Alzheimer’s disease; partially offset by a
decrease in employee benefits expenses driven by reduction in selling and distribution
personnel as we shifted some of their responsibilities to the third-party service providers. We
also incurred an RMB8.1 million employee share-based payments included in selling and
distribution expenses in 2023.
Administrative Expenses
Our administrative expenses increased significantly, from RMB27.8 million in 2022 to
RMB54.4 million in 2023, primarily due to (i) the RMB17.9 million share-based compensation
in 2023 as a result of the Pre-IPO Share Award Scheme; (ii) an RMB1.7 million increase in
employee benefits expenses, driven by an increase in the average salary of our administrative
staff, social and housing provident fund benefits, severance pays for reduced headcount, and
benefits paid to key management personnel; and (iii) an RMB1.0 million increase in
professional service expenses, driven by an increase in the amount of certain consulting,
information and other miscellaneous types of professional services to support our business
operations.
Research and Development Expenses
Our research and development expenses increased by 34.2%, from RMB67.6 million in
2022 and RMB90.7 million in 2023, primarily due to (i) the RMB18.8 million share-based
payments in 2023 as a result of the Pre-IPO Share Award Scheme; (ii) an RMB7.5 million
increase in procurement expenses in relation to other miscellaneous purchases for the R&D
department; (iii) an RMB6.9 million increase in collaboration expenses, driven by the progress
of collaborative R&D projects with CROs; and (iv) an RMB4.5 million increase in depreciation
and amortization expenses, driven by the depreciation of right-of-use assets related to our
office spaces and the renovation of our R&D facility and purchases of equipment for the R&D
department; partially offset by an RMB15.6 million decrease in employee benefit expenses,
driven by a decrease in research and development department headcount as certain research
projects we undertook had been suspended. These projects were focused on a variety of
subjects that were unrelated to the System or cognitive impairment assessment and
FINANCIAL INFORMATION
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intervention, such as sleep quality and cognitive health monitoring. We initiated these projects
as an attempt to develop a variety of products besides the System that revolve around cognitive
functions, and suspended these projects in late 2022 to become more focused on the research
and development of the System.
Finance Costs
Our finance costs remained relatively stable at RMB19.2 million and RMB20.2 million
in 2022 and 2023, respectively.
Listing Expenses
Our listing expenses increased from nil in 2022 to RMB25.8 million in 2023, primarily
due to expenses incurred in relation to this Global Offering.
Loss and Total Comprehensive Expense for the Y ear
As a result of the above, we incurred loss of RMB502.5 million and RMB359.1 million
in 2022 and 2023, respectively. We remained at a net loss position in 2023 primarily because
(i) our commercialization progress is still at an early stage and we incurred significant
operating expenses to operate our business, complete this Global Offering and develop new
markets, technologies and products; and (ii) we continue to be influenced by changes in fair
value of financial liabilities at FVTPL until the Listing. We expect to remain at a net loss
position in 2024, primarily due to expected significant spending on operating expenses in order
to carry out research and development of our products for more indications, to establish sales
relationship with more hospitals and expand sales volume, to manage our growth, and to
complete this Global Offering.
Y ear Ended December 31, 2021 Compared to Y ear Ended December 31, 2022
Revenue
Our revenue increased significantly from RMB2.3 million in 2021 to RMB11.3 million in
2022, primarily due to the following changes in our various types of service:
 Our revenue from provision of the System integral software solutions in hospitals
increased significantly from RMB1.0 million in 2021 to RMB4.1 million in 2022,
primarily due to (i) an increase in the number of hospitals that purchased our System
from six in 2021 to 17 in 2022, with customer retention rate (being the percentage
of hospitals that purchased our System in 2021 who also purchased our System in
2022) of 100%; and (ii) the number of times patients use the System increased
significantly from approximately 31,500 times in 2021 to approximately 113,500
times in 2022.
FINANCIAL INFORMATION
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 Our revenue from provision of the System integral software solutions out of
hospitals increased significantly from RMB0.2 million in 2021 to RMB1.1 million
in 2022, primarily due to an increase in the number of patients from approximately
690 to approximately 1,800 over the same year who selected our System for use in
their own homes after initially using the System in hospitals.
 Our revenue from research projects increased significantly from RMB0.4 million in
2021 to RMB6.0 million in 2022, primarily due to (i) an increase in the number of
completed projects from two in 2021 to 12 in 2022; and (ii) an increase in the
average project size.
 Our revenue from other services decreased from RMB0.7 million in 2021 to
RMB0.1 million in 2022, primarily because we sold approximately 300 user
accounts in 2021, which we ceased to sell since 2022. We also gradually ceased the
promotion and sales of integrated equipment in 2022, and only made sales upon
existing customers’ requests.
Cost of Sales
Our cost of sales increased significantly from RMB1.0 million in 2021 to RMB8.0 million
in 2022, primarily due to the following changes in our various types of service:
 Our cost of sales for provision of the System integral software solutions in hospitals
increased significantly from RMB0.4 million in 2021 to RMB3.4 million in 2022,
primarily due to an increase of RMB2.4 million in operational costs, incurred by
ourselves and with third-party service providers that provide operational support in
cognitive centers on our behalf.
 Our cost of sales for provision of the System integral software solutions out of
hospitals increased significantly from RMB0.1 million in 2021 to RMB0.6 million
in 2022, primarily due to an RMB0.4 million increase in the operational costs
incurred with third-party service providers that provided operational support.
 Our cost of sales for research projects increased significantly from RMB0.4 million
in 2021 to RMB4.0 million in 2022, primarily due to an increase in costs for staff
who provided data analytics and system development services to our customers.
Gross Profit and Gross Profit Margin
As a result of the changes in our revenue and cost of sales described above, our gross
profit increased significantly from RMB1.3 million in 2021 to RMB3.3 million in 2022,
primarily due to an increase in sales volume of the System and the increase in the number of
hospitals and patients that used our System.
FINANCIAL INFORMATION
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Our gross profit margin decreased from 56.7% in 2021 to 29.2% in 2022. In particular,
our gross profit margin for provision of the System integral software solutions in hospitals
decreased from 54.6% in 2021 to 16.8% in 2022, and our gross profit margin for provision of
the System integral software solutions out of hospitals decreased from 45.8% in 2021 to 42.9%
in 2022, primarily due to an increase in the rate of operational costs incurred with third-party
service providers. Under the relevant service agreement, the fee rate is calculated as a
percentage of sales made by hospitals to patients, and the service provider offered operational
support in the hospitals. Such percentage of one of the service providers was retrospectively
revised in September 2022 from floating rates (based on sales volume) to a fixed rate at the
high end of the previously floating rate range, which contributed to the higher fee rate and the
resulting lower gross profit margin in 2022. The result of such increase in fee rate was
retrospectively applied to the sales in 2021, and the resulting fees were recorded in 2022 at the
time of this increase in fee rate. In 2021 and 2022, the amount of service fees under the relevant
service agreement incurred with such service provider accounted for 0.2% and 5.6% of our
total procurement amount, respectively. See “—The Y ear Ended December 31, 2022 Compared
to The Y ear Ended December 31, 2023—Gross Profit and Gross Profit Margin” for details on
the circumstances leading to the above change in fee rate percentage.
Our gross profit margin for research projects increased significantly from 9.0% in 2021
to 34.0% in 2022. The gross profit margin fluctuates from period to period, primarily
dependent on the characteristics of each project, such as (i) the degree to which our customers
rely on our System to conduct research projects; (ii) the amount of staff resources we devote
to the project; and (iii) case-by-case negotiations with customers. Our gross profit margin tends
to be higher for research projects that are more reliant on our System during the research
process, and/or that require fewer human resources.
Other Gains and Losses, Net
Our other losses, net was RMB3 thousand in 2021, and our other gains was RMB3.1
million in 2022. Change was primarily due to changes in fair value of financial assets at
FVTPL.
Other Income
Our other income increased significantly from RMB1.5 million in 2021 to RMB3.9
million 2022, primarily due to an increase in interest income on bank balances and term
deposits driven by proceeds received from capital injection and proceeds from issuance of
long-term bonds and financial liabilities at FVTPL.
Fair V alue Changes of Financial Liabilities at FVTPL
Our fair value changes of financial liabilities at FVTPL decreased significantly from
RMB623.8 million in 2021 to RMB385.9 million in 2022, primarily due to fair value changes.
FINANCIAL INFORMATION
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Selling and Distribution Expenses
Our selling and distribution expenses increased by 10.3% from RMB10.8 million in 2021
to RMB11.9 million in 2022, primarily due to (i) an RMB2.8 million increase in employee
benefits expenses, driven by an increase in selling and distribution department headcount; and
(ii) an RMB4.6 million increase in market development and service expenses to recruit
third-party service providers to help us establish connection with local physicians and hospitals
in order to expand the sales of the System. The number of hospitals that purchased our System
increased from six in 2021 to 17 in 2022, which we believe was largely driven by our spending
on market development and services which helped promote our brand and products among the
medical community and establish connection with more hospitals; partially offset by the
RMB7.2 million share-based payments in 2021 which did not recur in 2022 because all
outstanding shares had been completely vested in 2021.
Administrative Expenses
Our administrative expenses remained relatively stable at RMB26.8 million and
RMB27.8 million in 2021 and 2022, respectively. In 2021, we had RMB7.2 million share-based
payments which did not recur in 2022 because all outstanding shares had been completely
vested in 2021. This was largely offset by (i) an increase in depreciation and amortization
expenses as we completed the renovations of certain of our office spaces and as we entered into
new leases; and (ii) an increase in employee benefit expenses.
Research and Development Expenses
Our research and development expenses increased significantly from RMB32.8 million in
2021 to RMB67.6 million in 2022, primarily due to (i) an RMB31.7 million increase in
employee benefits expenses, driven by an increase in research and development department
headcount to support our various R&D projects; (ii) an RMB4.9 million increase in
depreciation and amortization expenses, driven by the newly completed office renovations and
purchases of R&D equipment; and (iii) an RMB2.0 million increase in service expenses, driven
by an increase in purchase of data storage and technical consulting services to support our
R&D projects; partially offset by the RMB5.0 million share-based payments, which did not
recur in 2022 because all outstanding shares had been completely vested in 2021.
Finance Costs
Our finance costs increased significantly from RMB6.4 million in 2021 to RMB19.2
million in 2022, primarily due to the long-term bond subscription agreement we entered into
in July 2021, which led to significantly more accrued interest expense in 2022 compared to
2021.
FINANCIAL INFORMATION
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Loss and Total Comprehensive Expense for the Y ear
As a result of the above, we incurred loss and total comprehensive expense for the year
of RMB697.8 million and RMB502.5 million in 2021 and 2022, respectively.
DISCUSSION OF CERTAIN SELECTED ITEMS FROM THE CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
The following table sets forth selected information from our consolidated statements of
financial position as of the dates indicated, which have been extracted from the Accountants’
Report set out in Appendix I to this Prospectus.
As of December 31,
As of
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Total non-current assets 30,598 110,914 92,130 39,072
Total current assets 340,700 307,174 302,724 279,855
Total assets 371,298 418,088 394,854 318,927
Total current liabilities 176,939 35,621 392,844 391,120
Net current assets
(liabilities) 163,761 271,553 (90,120) (111,265)
Total non-current liabilities 875,641 1,476,710 334,191 339,073
Total liabilities 1,052,580 1,512,331 727,035 730,193
Net liabilities (681,282) (1,094,243) (332,181) (411,266)
Total deficits (681,282) (1,094,243) (332,181) (411,266)
Non-controlling interest (1) (10) (43) (104)
FINANCIAL INFORMATION
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NET CURRENT ASSETS/(LIABILITIES)
The following table sets forth our current assets and current liabilities as of the dates
indicated:
As of December 31,
As of
June 30,
2024
As of
October 31,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current assets
Contract costs 457 251 4,094 884 1,148
Trade and other
receivables and
prepayments 16,474 19,674 76,053 103,644 124,259
Amounts due from related
parties 29 29 – – –
Financial assets at FVTPL – 228,789 – – –
Restricted bank deposit – – 165,000 119,421 69,471
Term deposits – 30,180 – – –
Bank balances and cash 323,740 28,251 57,577 55,906 36,172
Total current assets 340,700 307,174 302,724 279,855 231,050
Current liabilities
Trade and other payables 13,974 17,746 43,261 46,842 47,404
Contract liabilities 450 1,023 3,804 5,837 8,118
Amounts due to related
parties 2,364 2,364 – – –
Lease liabilities 6,686 7,523 7,927 5,534 9,675
Bank and other borrowings – 6,965 22,083 16,127 7,125
Deferred income – – 225 993 1,563
Financial liabilities at
FVTPL 153,465 – 315,544 315,787 275,906
Total current liabilities 176,939 35,621 392,844 391,120 349,791
Net current
assets/(liabilities) 163,761 271,553 (90,120) (111,265) (118,741)
FINANCIAL INFORMATION
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Our net current assets increased from RMB163.8 million as of December 31, 2021 to
RMB271.6 million as of December 31, 2022, primarily due to (i) an RMB228.8 million
increase in financial assets at FVTPL; (ii) an RMB153.5 million decrease of financial liabilities
at FVTPL; and (iii) an RMB30.2 million increase in term deposits; partially offset by (i) an
RMB295.5 million decrease in bank balances and cash; and (ii) an RMB7.0 million increase
in other borrowing.
Our net current assets of RMB271.6 million as of December 31, 2022 changed to net
current liabilities of RMB90.1 million as of December 31, 2023. The change was primarily due
to (i) an RMB315.5 million increase in current portion of financial liabilities at FVTPL in
relation to the issuance of Series A-1 Preferred Shares in July 2023 in exchange for termination
of preferential rights of certain investor; and (ii) an RMB228.8 million decrease in financial
assets at FVTPL resulting from our redemption of financial products; partially offset by an
RMB165.0 million increase in restricted bank deposits.
Our net current liabilities increased to RMB111.3 million as of June 30, 2024 and further
increased to RMB118.7 million as of October 31, 2024. The change was primarily due to
decreases in our restricted bank deposit and bank balances and cash, partially offset by an
increase in trade and other receivables and prepayments. We expect that the automatic
conversion of financial liabilities into ordinary shares at Listing and the proceeds from this
Global Offering are expected to turn our net current liabilities position into net current asset
position.
Bank Balances and Cash
We had current bank balances and cash of RMB323.7 million, RMB28.3 million,
RMB57.6 million and RMB55.9 million as of December 31, 2021, 2022, 2023, and June 30,
2024, respectively. The decrease in current bank balances and cash from December 31, 2021
to December 31, 2022 was primarily due to (i) purchases of financial assets at FVTPL
(including wealth management products and structured deposits), plant, property and
equipment, and long-term bank balances; and (ii) net operating cash outflow during our
ordinary course of business for payments to suppliers and employees. Our current bank
balances and cash increased from RMB28.3 million as of December 31, 2022 to RMB57.6
million as of December 31, 2023 primarily due to receipt of proceeds from shareholders’
capital injection, disposal of financial assets at FVTPL, partially offset by payments in the
ordinary course of business. Our current bank balances and cash decreased from RMB57.6
million as of December 31, 2023 to RMB55.9 million as of June 30, 2024. See “—Liquidity
and Capital Resources—Cash Flows” for more details.
We have implemented internal policies on the management of bank balances and cash to
ensure capital preservation and to match portfolio maturities and duration to approximately
mirror anticipated liquidity requirements and working capital needs. We manage the portfolio
and evaluate the risk profiles of the types of investments to reduce risk and generate an
acceptable risk adjusted return. We constantly monitor our investment portfolio and credit
markets to respond appropriately to a significant reduction in credit rating or other indicators.
FINANCIAL INFORMATION
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Trade and Other Receivables and Prepayments
During the Track Record Period, our trade receivables primarily arise from sales to
customers on credit under various business lines, including provision of the System integral
software solutions in hospitals and out of hospitals, research projects, and certain other sales
of hardware, software and user accounts. Our other receivables primarily include (i) value
added tax recoverable; (ii) rental and other deposits; (iii) short-term loan receivables in relation
to outstanding loans balances due from third parties; (iv) deferred share issue cost for IPO in
relation to the part of listing expenses that will be capitalized upon the completion of the IPO;
(v) receivables from third party payment platforms which provide online payment settlement
and clearance services; and (vi) refund receivables in relation to proceeds we had paid to a third
party with which we had terminated cooperation. Our prepayments primarily include (i)
prepayment for purchases of property, plant and equipment; (ii) prepayment for purchases of
intangible assets; and (iii) prepayments to suppliers and service providers.
The following table sets forth our trade and other receivables and prepayments as of the
dates indicated:
As of December 31, As of
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 1,136 8,422 50,740 78,818
Less: allowance for credit
losses 13 63 891 (5,033)
1,123 8,359 49,849 73,785
Prepayments for purchase of
property, plant and
equipment 1,126 5 18 763
Prepayments for purchase of
intangible assets – 2,101 101 101
V alue added tax recoverable 1,463 364 1,649 952
Prepayments to suppliers and
service providers 2,248 7,526 11,742 11,338
Rental deposits 2,202 2,293 3,880 2,933
Other deposits 461 97 107 143
Short-term loan receivables 9,500 – 500 500
Receivables from third party
payment platforms 222 864 1,005 3,994
Refund receivable 1,000 1,000 – –
Deferred share issue costs – – 7,689 10,370
Prepayments for listing
expenses – – 318 318
Others 457 502 1,204 1,269
Total 19,802 23,111 78,062 106,466
Analyzed as:
Non-current 3,328 3,437 2,009 2,822
Current 16,474 19,674 76,053 103,644
Total 19,802 23,111 78,062 106,466
FINANCIAL INFORMATION
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Our trade receivables increased from RMB1.1 million as of December 31, 2021 to
RMB8.4 million as of December 31, 2022, further to RMB50.7 million as of December 31,
2023, and further to RMB78.8 million as of June 30, 2024, primarily due to an increase in
revenue under our various types of service and the resulting increase in sales on credit, as well
as because we established new cooperation with research institutions under our research
projects business, which led to increased credit period at the initial cooperation stage. We
typically grant customers credit terms that range from 30 to 180 days. We consider a number
of factors in determining the credit term of a customer, including length of cooperation with
the customers and their past payment timeliness. As of the Latest Practicable Date, we did not
hold any collateral or other credit enhancements over our trade receivables balance and such
receivables are non-interest bearing. We seek to maintain strict control over its outstanding
receivables and overdue balances and they are reviewed regularly by the finance department.
Our prepayments for purchase of intangible assets increased from nil as of December 31,
2021 to RMB2.1 million as of December 31, 2022, decreased to RMB0.1 million as of
December 31, 2023 and remained relatively stable at RMB0.1 million as of June 30, 2024,
primarily due to an RMB2.0 million prepayment for patent purchase in 2022. The purchased
patents include “A Human-computer Interaction Method and System for Multidimensional
Assessment of Cognitive Impairment” (ʿӻ୕, patent
number 202210985424.2) and “Modeling Method for Cognitive Task Assessment and
Cognitive Task Assessment Method and System” (΂ਕ಻
ʿӻ୕, patent number 202211512702.9), and primarily relate to cognitive impairment
assessment methods and system. See “Business—Intellectual Property” for details. The patent
rights were transferred to us in May 2023.
Our prepayments to suppliers and service providers increased significantly from RMB2.2
million as of December 31, 2021 to RMB7.5 million as of December 31, 2022 and further to
RMB11.7 million as of December 31, 2023, primarily due to an increase in the amount of
prepaid cloud and technical services as well as certain prepaid research services which were
incurred to support our ongoing R&D activities and expanding product portfolio. Our
prepayment to suppliers and service providers remained relatively stable at RMB11.3 million
as of June 30, 2024.
Our short-term loan receivables relate to (i) an RMB9.5 million loan as of December 31,
2021 which was completely repaid in 2022; and (ii) an RMB0.5 million loan made to a third
party as of December 31, 2023 and as of June 30, 2024.
Deferred share issue costs of RMB7.7 million as of December 31, 2023 and RMB10.4
million as of June 30, 2024 are primarily related to listing expenses that will be capitalized
upon the completion of IPO.
During the Track Record Period and up to the Latest Practicable Date, we did not have
any material dispute or disagreement with our customers in relation to the timing, amounts of
billing or the collection of our trade and other receivables.
FINANCIAL INFORMATION
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Receivables from third party payment platforms represents amount to be settled by
third-party payment platforms, such as WeChat and Alipay, with whom users of our System
integral software solutions out of hospitals settle payments for their purchases increased from
RMB1.0 million as of December 31, 2023 to RMB4.0 million as of June 30, 2024, primarily
due to the significant sales of the System integral software solutions out of hospitals in the six
months ended June 30, 2024.
In determining impairment of trade receivables, we conduct regular reviews of aging
analysis and evaluate collectivity, taking into account of the historical loss patterns of our
customers.
The following table sets forth our average trade receivables turnover days during the
periods indicated.
For the year ended December 31,
For the six
months
ended
June 30,
20242021 2022 2023
Average trade receivables
turnover days (1) 114.6 153.3 160.7 227.2
Note:
(1) Trade receivable turnover days for a period equals the arithmetic mean of the beginning and ending
trade receivable balances divided by revenue for that period and multiplied by the number of days in
that period.
The average trade receivables turnover days were 114.6 days in 2021, 153.3 days in 2022,
160.7 days in 2023 and 227.2 days for the six months ended June 30, 2024. The increase in
average trade receivables turnover days from 2021 to the six months ended June 30, 2024 was
primarily due to the significant increase in trade receivables in 2022 as we began serving more
cognitive centers and delayed payments from scientific research projects. Hospitals with which
we establish new sales relationship typically have longer payment time compared to existing
ones. We intend to continue to develop our relationships with these new hospitals and enhance
our receivable settlement efforts to drive down our trade receivable turnover days.
FINANCIAL INFORMATION
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The following table sets forth the aging analysis of trade receivables based on the invoice
date and net of loss allowance as of the dates indicated:
As of December 31,
As of
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables
0~90 days 546 5,594 22,906 20,062
91~180 days 303 2,449 10,577 21,587
181~270 days 88 221 5,093 19,141
271~360 days 10 61 6,370 5,673
over 1 year 176 34 4,903 7,322
Total 1,123 8,359 49,849 73,785
In order to minimize the credit risk, our Board of Directors has overall responsibility for
the establishment and oversight of our risk management framework. The finance department is
responsible for determination of credit limits, credit approvals and other monitoring procedures
to ensure that follow-up action is taken to recover overdue debts. In addition, we perform
impairment assessment under expected credit loss model on trade balances individually or
based on provision matrix. Assessments are done based on our historical credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions and an
assessment of both the current conditions at the reporting date as well as the forecast of future
conditions.
Our Directors confirm that there is no material recoverability issues with respect to our
trade receivables, and the provision for allowance for credit losses is adequate under the
circumstances. Several hospital customers typically go through a lengthy internal approval
process to pay service fees, and we have not received any notifications that such customers
would not be able to make such payment. With respect to hospital customers that involve the
Operational Service Provider, pursuant to the cooperation agreement between us and the
Operational Service Provider, we are entitled to demand the Operational Service Provider to
request and collect payment for the System from the hospitals on our behalf from time to time.
Further, the cooperation agreements between the Operational Service Provider and the hospital
customers set forth the payment and settlement arrangements between the hospitals and the
Operational Service Provider, and provide that a breaching party (including breach of
obligation to timely make payments by the hospitals) is liable to the non-breaching for any
damages arising from breaches. In addition, the current amounts of impairment loss under ECL
model, net of reversal of RMB0.01 million, RMB0.05 million, RMB0.9 million, RMB0.2
million and RMB4.1 million recognized in 2021, 2022, 2023, and the six months ended June
30, 2023 and 2024, respectively, have reflected our consideration of recoverability issue, which
FINANCIAL INFORMATION
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we believe is sufficient in light of the relevant accounting policy information and the
abovementioned cooperation agreements between the Operational Service Provider and us and
cooperation agreements between the Operational Service Provider and the hospitals.
As of October 31, 2024, RMB23.1 million, representing 29.4% of the trade receivables
outstanding as of June 30, 2024 were subsequently settled.
Financial Assets at FVTPL
Financial assets at FVTPL primarily consists of short-term Level II structured deposits
and wealth management products we purchased from reputable commercial banks in China.
Our financial assets at fair value through profit or loss increased from nil as of December 31,
2021 to RMB228.8 million as of December 31, 2022, primarily due to new purchases or
redemptions of such financial assets, as well as fluctuations of their fair values. Our financial
assets at fair value through profit or loss decreased from RMB228.8 million as of December
31, 2022 to nil as of December 31, 2023 and remained nil as of June 30, 2024, primarily due
to the complete disposal of financial assets at FVTPL in 2023.
Our Investment Policy in Wealth Management and Structured Products
We have adopted the Financial Internal Control Policy which prohibits investments in
financial management or investment portfolios with a maturity of more than 12 months and that
we will only make low-risk investments.
We have adopted the Major Matters Decision Making Policy, which covers overseas
investment and entrusted financial management. The Major Matters Decision Making Policy
provides that if the transaction involves amounts exceeding a prescribed proportionate
threshold of our assets, income or net profit, the transaction shall be submitted to the Board of
Directors for review. The policy also provides that the type of matters specified by the laws and
regulations of the SFC and the HKEx as requiring board review for listed companies should
also be submitted to our Board for review. In addition, matters that do not meet the criteria for
Board review are subject to the approval of the Chairman of the Board or the CEO in
accordance with their respective authorities.
Furthermore, we have adopted the Money Market Fund Management Policy, which
requires us to strengthen our oversight of the management of money market funds. The finance
department is responsible for the day-to-day management of money market funds, and the
internal audit department is responsible for supervision. We have adopted the Information
Disclosure Management Policy, which specifies the responsibilities of information disclosure
management, the types of information to be disclosed, and the procedures for disclosing
information. In addition, any of our investment in wealth management or structured products
will be subject to compliance with Chapter 14 of the Listing Rules.
FINANCIAL INFORMATION
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Trade and Other Payables
Our trade and other payables primarily consist of (i) trade payables in relation to certain
operational support, promotional and marketing services; (ii) accrued salaries and other
allowances; (iii) refund payables arising from termination of cooperation with certain
third-party distributors; (iv) deposits for the hardware for provision of the System integral
software solutions out of hospitals arising from deposits paid by patients for the hardware
(computers and/or tablets) we provide them; (v) payables for acquisition of property, plant and
equipment in relation to renovations of our corporate office, purchase of fixed assets, and
purchase of patent rights; and (vi) accrued listing expenses and accrued share issue costs for
IPO in relation to this Global Offering.
The following table sets forth our trade and other payables as of the dates indicated.
As of December 31,
As of
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 159 1,761 8,251 7,476
Accrued salaries and other
allowances 6,424 4,747 8,927 6,308
Refund payables 6,422 6,422 5,222 3,743
Deposits for the hardware for
provision of the System integral
software solutions out of
hospitals 136 444 1,879 4,827
Payables for acquisition of
property, plant and equipment 146 1,850 670 1,552
Accrued listing expenses and share
issue costs – – 12,622 18,753
Other tax payables 471 1,036 2,761 1,573
Payables for research and
development activities – – 1,026 1,641
Others 216 1,486 1,903 969
Total 13,974 17,746 43,261 46,842
Our trade payables increased significantly from RMB0.2 million as of December 31, 2021
to RMB1.8 million as of December 31, 2022 and further to RMB8.3 million as of December
31, 2023, primarily due to the expansion of our business scale and the amount of operational
support, promotional and marketing services we engaged to ensure smooth operations of the
System in cognitive centers of our hospital customers and efforts to connect with and sell our
products to more hospitals. Our trade payables then decreased from RMB8.3 million as of
December 31, 2023 to RMB7.5 million as of June 30, 2024, primarily due to settlement of our
payment obligations.
FINANCIAL INFORMATION
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Our accrued salaries and other allowances decreased from RMB6.4 million as of
December 31, 2021 to RMB4.7 million as of December 31, 2022, primarily due to a decrease
in year-end bonuses for our staff and a decrease in our overall headcount, especially in selling
and distribution department as we further streamlined our management efficiency. Our accrued
salaries and other allowances subsequently increased from RMB4.7 million as of December 31,
2022 to RMB8.9 million as of December 31, 2023, primarily due to accrued but unpaid salaries
for one of our employees, as well as accrued salaries and other allowances from certain newly
founded subsidiaries.
Our accrued salaries and other allowances then decreased from RMB8.9 million as of
December 31, 2023 to RMB6.3 million as of June 30, 2024, primarily due to payment of
year-end bonus in the six months ended June 30, 2024. Our accrued listing expenses and share
issue costs were nil, nil, RMB12.6 million, and RMB18.8 million as of December 31, 2021,
2022, 2023, and June 30, 2024, respectively, which were incurred in connection with services
we engaged and costs incurred in connection with this Global Offering.
Our refund payables remained at RMB6.4 million as of December 31, 2021 and 2022, and
decreased to RMB5.2 million and RMB3.7 million as of December 31, 2023 and June 30, 2024.
The decreases were due to our payment of refunds. In 2020, we engaged several distributors
to market the System in order to leverage their sales network and connections with potential
customers in their respective regions. We received prepayments for our product pursuant to
these cooperations, which were terminated before 2021 as we decided to pursue the cognitive
center approach. See “Business—Sales and Marketing—Our Marketing
Model—Collaborations with Top Hospitals and Research Institutions” for details. The relevant
third-party distributors did not request immediate repayment upon termination of our contracts
with them primarily because (i) the termination in 2020 was the result of friendly mutual
consent; (ii) the third-party distributors had sold a portion of our products in their inventory
and had established solid and trusting relationships with us before the termination of our
cooperations; and (iii) we are exploring other purchase and sale relationship with these
distributors in the future, leveraging their business relationships in the industry. The relevant
termination agreements with the third-party distributors were silent as to the timing of the
repayments from us. We do not have any relationships with these third-party distributors other
than engaging them as distributors before 2021.
FINANCIAL INFORMATION
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The following table sets forth our average trade payables turnover days during the periods
indicated.
For the year ended December 31,
For the six
months
ended
June 30,
20242021 2022 2023
Average trade payables
turnover days (1) 29.1 43.8 52.0 52.3
Note:
(1) Trade payable turnover days for a period equals the arithmetic mean of the beginning and ending trade
payables balances divided by cost of sales for that period and multiplied by the number of days in that
period.
The average trade payables turnover days were 29.1 days in 2021, 43.8 days in 2022, and
52.0 days in 2023. The increase in average trade payables turnover days from 2021 to 2023 was
primarily due to longer payment settlement periods with respect to suppliers. The average trade
payables turnover days remained relatively stable at 52.3 days in the six months ended June 30,
2024.
The following table sets forth an aging analysis of trade payables as of the dates
indicated:
As of December 31,
As of
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables
within one year 159 1,669 6,514 7,476
over one year – 92 1,737 –
Total 159 1,761 8,251 7,476
As of October 31, 2024, RMB5.5 million, representing 73.8% of the trade payables as of
June 30, 2024, were subsequently settled.
FINANCIAL INFORMATION
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Contract Liabilities
Our contract liabilities primarily relate to payments received from customers of provision
of the System integral software solutions out of hospitals, research projects, and other products
or services (in relation to sales of hardware equipment, software and user accounts) for which
we had not fulfilled the relevant contract obligations. Our contract liabilities increased
significantly from RMB0.7 million as of December 31, 2021 to RMB1.5 million as of
December 31, 2022, further to RMB3.9 million as of December 31, 2023 and further to
RMB5.9 million as of June 30, 2024, primarily due to an increase in sales of products and
services to more hospitals, patients, and third-party research institutions.
The following table sets forth a breakdown of our contract liabilities by types of services
as of the dates indicated.
As of December 31,
As of
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Research projects 581 424 967 854
Provision of the System
integral software solutions
in hospitals – – 401 279
Provision of the System
integral software solutions
out of hospitals 68 705 2,254 4,547
Other sales 84 321 308 198
733 1,450 3,930 5,878
As of October 31, 2024, RMB4.0 million, representing 67.4% of the contract liabilities
as of June 30, 2024 were subsequently recognized as revenue.
Net Liabilities
Our net liabilities increased from RMB681.3 million as of December 31, 2021 to
RMB1,094.2 million as of December 31, 2022, primarily due to an RMB502.5 million loss and
total comprehensive expense for the year in 2022, partially offset by an RMB89.5 million
capital injection from our financing transactions. Our net liabilities decreased from
RMB1,094.2 million as of December 31, 2022 to RMB332.2 million as of December 31, 2023,
primarily due to (i) an RMB1,012.3 million reclassification from financial liabilities at FVTPL
to equity when preferential rights for certain pre-IPO investors were terminated; and (ii) an
RMB64.0 million capital injection from our financing transactions in 2023, which is partially
offset by an RMB359.1 million in loss and total comprehensive expense for the year. Our net
liabilities increased from RMB332.2 million as of December 31, 2023 to RMB411.3 million as
of June 30, 2024, primarily due to an RMB114.4 million loss and total comprehensive expense
for the period, partially offset by an RMB35.3 million recognition of equity settled
shared-based payments.
FINANCIAL INFORMATION
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Upon Listing, our preferred shares will transfer from liabilities to equity as a result of the
automatic conversion into ordinary shares at Listing. Further, we expect this Global Offering
(including the proceeds received therefrom and equity issued) to contribute to the conversion
from net liabilities position into net assets position.
LIQUIDITY AND CAPITAL RESOURCES
Overview
During the Track Record Period, we primarily relied on capital contribution from
shareholders, issuance of redeemable preference shares and long-term bonds as major sources
of liquidity.
With respect to cash management, our objective is to optimize liquidity to secure a stable
return for Shareholders in a risk-averse manner. Specifically, we have policies in place to
monitor and manage the settlement of trade receivables. When determining the credit term of
a customer, we consider a number of factors, including length of past cooperation and its past
payment timeliness. To monitor the settlement of our trade receivables and avoid credit losses,
we conduct annual review of each customer’s financial performance, which is primarily based
on the amount and aging of the trade receivables due from such customer in the respective
period.
Cash Flows
The following table sets forth our cash flows for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss before tax (697,838) (502,461) (359,116) (234,570) (114,389)
Net cash used in operating activities (49,206) (100,680) (136,872) (66,006) (75,527)
Net cash (used in) from investing
activities (21,476) (334,462) 102,553 11,166 86,002
Net cash from (used in) financing
activities 393,609 139,647 63,527 57,199 (12,190)
Net increase/(decrease) in cash and
cash equivalents 322,927 (295,495) 29,208 2,359 (1,715)
Cash and cash equivalents at the
beginning of the year/period 813 323,740 28,251 28,251 57,577
Cash and cash equivalents at the end
of the year/period 323,740 28,251 57,577 30,871 55,906
FINANCIAL INFORMATION
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Operating Activities
For the six months ended June 30, 2024, our net cash used in operating activities was
RMB75.5 million, which was primarily attributable to loss before tax of RMB114.4 million,
adjusted for non-cash and non-operating items. Positive adjustments for non-cash and
non-operating items primarily include recognition of equity settled share-based payments of
RMB35.3 million, finance costs of RMB10.9 million and depreciation of property, plant and
equipment of RMB8.6 million; and negative adjustments for non-cash and non-operating items
primarily include interest income of RMB0.4 million. The amount was then adjusted by
changes in working capital, primarily including increase in trade and other receivables and
prepayments of RMB30.1 million and increase in trade and other payables of RMB1.3 million.
In 2023, our net cash used in operating activities was RMB136.9 million, which was
primarily attributable to loss before tax of RMB359.1 million, adjusted for non-cash and
non-operating items. Positive adjustments for non-cash and non-operating items primarily
include fair value loss of financial liabilities at FVTPL of RMB165.2 million, recognition of
equity-settled share-based payments of RMB44.9 million, finance costs of RMB20.2 million,
depreciation of property, plant and equipment of RMB13.8 million and depreciation of
right-of-use assets of RMB7.0 million; and negative adjustments for non-cash and non-
operating items include fair value gains on financial assets at FVTPL of RMB2.7 million and
interest income of RMB2.1 million. The amount was then adjusted by changes in working
capital, primarily including an increase in trade and other receivables and prepayments of
RMB48.0 million and an increase in trade and other payables of RMB23.4 million.
In 2022, our net cash used in operating activities was RMB100.7 million, which was
primarily attributable to loss before tax of RMB502.5 million, adjusted for non-cash and
non-operating item. Positive adjustments for non-cash and non-operating items primarily
include fair value loss of financial liabilities at FVTPL of RMB385.9 million, finance costs of
RMB19.2 million, depreciation of right-of-use assets of RMB6.6 million, and depreciation of
property, plant and equipment of RMB5.7 million; and negative adjustments for non-cash and
non-operating items include interest income of RMB3.9 million and fair value gains on
financial assets at FVTPL of RMB3.2 million. The amount was then adjusted by changes in
working capital, primarily including increase in trade and other receivables and prepayments
of RMB11.8 million and increase in trade and other payables of RMB2.1 million.
In 2021, our net cash used in operating activities was RMB49.2 million, which was
primarily attributable to loss before tax of RMB697.8 million, adjusted for non-cash and
non-operating item. Positive adjustments for non-cash and non-operating items primarily
include fair value loss of financial liabilities at FVTPL of RMB623.8 million, recognition of
equity-settled share-based payment of RMB19.4 million, and finance costs of RMB6.4 million
and negative adjustments for non-cash and non-operating items include interest income of
RMB1.3 million. The amount was then adjusted by changes in working capital, primarily
including increase in trade and other receivables and prepayments of RMB6.0 million and
increase in trade and other payables of RMB4.9 million.
FINANCIAL INFORMATION
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--- page 475 ---
We intend to implement the following measures in order to improve our operating cash
outflows position. See “Business—Business Sustainability and Commercialization Strategies”
for more details.
 Further commercialization. We intend to continue to help hospitals establish
cognitive centers, and fully capitalize on the commercialization potential of our
System in new cognitive centers of these hospitals. In particular, we became the first
organizer of a project initiated by the NHC under which we are tasked with helping
to establish cognitive centers in over 2,100 public hospitals across China and
promoting the development of cognitive impairment DTx market in China over the
next five years.
 Brand and product awareness. We intend to recruit more talents with academic and
professional experiences in the field of cognitive impairment DTx to expand our
commercialization team and enhance the team’s academic and marketing
capabilities.
 Product innovation and indication expansion. We plan to accelerate the
development, registration, and commercialization processes to expand our System to
more cognitive impairment indications by developing upgraded versions of the
System or developing new products. As of the Latest Practicable Date, our System
had several other indications under various stages of preclinical and clinical
development. We also have four other products with regulatory approvals, and six
additional product candidates under different stages of preclinical and clinical
development or registration process.
Investing Activities
In the six months ended June 30, 2024, our net cash from investing activities was
RMB86.0 million, primarily due to withdrawal of restricted bank deposit of RMB95.0 million;
partially offset by purchases of property, plant and equipment of RMB9.9 million.
In 2023, our net cash from investing activities was RMB102.6 million, primarily due to
(i) proceeds from disposal of financial assets at FVTPL of RMB790.5 million; (ii) disposal of
term deposits with original maturity over three months of RMB122.0 million; and (iii) disposal
of restricted bank deposit of RMB200.1 million; partially offset by (i) purchases of financial
assets at FVTPL of RMB559.0 million; and (ii) placement of restricted bank deposit for the
purchase of financial assets at FVTPL of RMB414.1 million.
FINANCIAL INFORMATION
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--- page 476 ---
In 2022, our net cash used in investing activities was RMB334.5 million, primarily due
to (i) purchases of financial assets at FVTPL of RMB1,261.1 million; (ii) placements of term
deposits with original maturity over three months of RMB102.0 million; and (iii) purchases of
property, plant and equipment of RMB16.4 million; partially offset by (i) proceeds from
disposal of financial assets at FVTPL of RMB1,035.5 million; and (ii) repayment of loan to a
third party of RMB9.5 million.
In 2021, our net cash used in investing activities was RMB21.5 million, primarily due to
(i) purchases of property, plant and equipment of RMB10.8 million; (ii) loan to third parties
of RMB9.5 million; and (iii) payments for rental deposits of RMB2.2 million; partially offset
by interest received of RMB1.3 million.
Financing Activities
In the six months ended June 30, 2024, we had RMB12.2 million of net cash flows used
in financing activities, primarily due to (i) repayment of bank borrowings of RMB6.0 million;
(ii) repayment of lease liabilities of RMB4.5 million and (iii) payments of share issue costs of
RMB1.2 million.
In 2023, we had RMB63.5 million of net cash flows from financing activities, primarily
due to capital injection of RMB64.0 million, partially offset by repayments of lease liabilities
of RMB7.9 million.
In 2022, we had RMB139.6 million of net cash flows from financing activities, primarily
due to (i) capital injection of RMB89.5 million; and (ii) proceeds from issue of financial
liabilities at FVTPL of RMB50.0 million; partially offset by repayments of lease liabilities of
RMB6.2 million.
In 2021, we had RMB393.6 million of net cash flows from financing activities, primarily
due to (i) proceeds from issue of long-term bonds of RMB300.0 million; (ii) capital injection
of RMB63.7 million; and (iii) proceeds from issue of financial liabilities at FVTPL of
RMB50.0 million, partially offset by (i) payment of financial advisory fees in relation to
long-term bond of RMB15.0 million; and (ii) repayments to related parties of RMB4.1 million.
FINANCIAL INFORMATION
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CASH OPERATING COSTS
The following table sets forth key information relating to our cash operating costs
(unaudited) for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Research and Development Costs
Research and Development Costs
for Core Product
Staff costs 25,927 53,632 39,293 20,041 26,484
Service expenses 702 3,426 3,418 1,605 4,247
Procurement expenses 391 1,979 8,388 2,304 4,309
Collaboration expenses 14 4,707 3,523 1,035 1,174
Research and Development Costs
for Other Product Candidates
Staff costs – 3,993 2,718 1,679 1,923
Service expenses – 251 261 280 349
Procurement expenses – 120 595 205 314
Collaboration expenses –––––
Workforce Employment 10,216 17,063 18,076 8,550 9,401
Product Marketing 2,010 5,570 23,260 14,186 14,551
Direct Production Cost
(1) 554 5,135 28,031 11,492 26,516
Non-income Taxes, Royalties and
Other Governmental Charges –––––
Contingency Allowances –––––
Other Significant Costs –––––
Note:
(1) Represents cash expenditures under our cost of sales, which primarily include cash paid to (i)
third-party service providers we engage to provide operational support to cognitive centers; (ii)
research institutions and hospitals for costs in relation to research projects; and (iii) hardware suppliers
to serve customers that purchased our hardware equipment which preinstalls our System.
FINANCIAL INFORMATION
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WORKING CAPITAL
The Directors are of the opinion that, taking into account of the following financial
resources available to us described below, we have sufficient working capital to cover at least
125% of our costs, including R&D expenses, selling and distribution expenses, administrative
expenses, finance costs and other expenses for at least the next 12 months from the date of this
Prospectus:
 our future operating cash flows;
 our cash and cash equivalents as of the Latest Practicable Date;
 available equity and debt financing; and
 the estimated net proceeds from the Global Offering.
Our cash burn rate refers to the average monthly (i) net cash used in operating activities,
which includes research and development expenses, and (ii) capital expenditures. We had bank
balances and cash of RMB36.2 million as of October 31, 2024. We estimate that we will
receive net proceeds of approximately HK$501.3 million after deducting the underwriting fees
and expenses payable by us in the Global Offering, assuming no Over-allotment Option is
exercised and assuming an Offer Price of HK$3.22 per Offer Share. Assuming an average cash
burn rate going forward of one and half times the level for the first half of 2024, we estimate
that our cash and cash equivalents, the current portion of restricted bank deposits and the
current portion of financial assets as of October 31, 2024 will be able to maintain our financial
viability for at least six months or, if we also take into account the estimated net proceeds from
the Listing, for at least 29 months. Pursuant to the terms of the restricted bank deposit account,
we are allowed to withdraw proceeds, subject to approvals by the Shaoxing Binhai New Area
Biomedical Industry Equity Investment Fund Partnership (LP) (ٰ
ΥྫΆุ(Υྫ)) (the “ Shaoxing Fund ”). During the Track Record Period, the
Shaoxing Fund routinely granted such approvals whenever we raised withdrawal requests. As
such, we included the restricted bank deposit in our calculation above. If restricted bank
deposits are not included, our Directors can still confirm that we have sufficient working
capital to cover at least 125% of our costs, including R&D expenses, selling and distribution
expenses, administrative expenses, finance costs and other expenses for at least the next 12
months from the date of this Prospectus. We will continue to monitor our cash flows from
operations closely and expect to raise our next round of financing.
FINANCIAL INFORMATION
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INDEBTEDNESS
Save as disclosed below, we did not have any bank and other loan, or any loan capital
issued and outstanding or agreed to be issued, bank overdraft, borrowing or similar
indebtedness, liabilities under acceptance (other than normal trade bills) or acceptance credits,
debentures, mortgages, charges, hire purchases or finance lease commitments, guarantees or
other material contingent liabilities as of the Latest Practicable Date for our indebtedness
statement (being October 31, 2024). Save as otherwise disclosed in the “—Borrowings” section
below, our Directors confirm that there has not been any material change in our indebtedness
since October 31, 2024 up to the date of this prospectus. The following table sets forth the
breakdown of our financial indebtedness as of the dates indicated:
As of December 31,
As of
June 30,
As of
October 31,
2021 2022 2023 2024 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Financial liabilities at
FVTPL 726,746 1,162,632 315,544 315,787 275,906
Bank and other
borrowings – 6,965 22,083 16,127 7,125
Lease liabilities 17,566 11,319 12,554 6,659 19,319
Long-term bond 291,197 309,855 329,438 337,640 343,822
Amounts due to related
parties 2,364 2,364 – – –
Total 1,037,873 1,493,135 682,777 676,213 646,172
Financial Liabilities at FVTPL
Our financial liabilities at FVTPL primarily represent paid-in capital with preferential
rights (the “ Preference Shares ”) subscribed by various series of Pre-IPO investors, and an
obligation under Series B Financing (the “ Obligation ”). The Preference Shares contain
redemption features and other embedded derivatives, and were recorded as financial liabilities
at FVTPL on initial recognition. Fair value changes of Preference Shares are recognized to
profit or loss except for the portion attributable to credit risk change.
FINANCIAL INFORMATION
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--- page 480 ---
In July 2023, the preferential rights related to the Preference Shares held by all investors
of Series Angel, Series A and Series B, except for one of the Series A investors, were
terminated. After the termination, the Preference Shares whose special rights were terminated
met the definition of equity and were accordingly reclassified from financial liabilities at
FVTPL into equity, resulting in an increase of paid-in capital of RMB10.1 million and an
increase of capital reserve of RMB1,002.2 million. In July 2023, we terminated preferential
rights of certain investor in exchange for issuance of Series A-1 Preferred Shares, which led
to the elimination of the RMB1,162.6 million non-current financial liabilities at FVTPL as of
December 31, 2022, and the RMB315.5 million of current financial liabilities at FVTPL as of
December 31, 2023 in relation to Series A-1 Preferred Share issuance. See Note 27 to the
Accountants’ Report set out in Appendix I to this Prospectus for more details on the Preference
Shares, the valuation process, and the termination of special rights. The fair value of the
Preference Shares as of December 31, 2021, 2022, 2023 and June 30, 2024 was valued with the
assistance of an independent qualified professional valuer with appropriate qualifications.
Discounted cash flow model was used. The financial liabilities at FVTPL is unsecured and
unguaranteed.
Borrowings
In November 2024, we obtained a bank borrowing of RMB10.0 million which will mature
in May 2025 and carries an interest rate of 5.00% per year. In December 2024, we obtained a
bank borrowing of RMB4.1 million which will mature in May 2025 and carries an initial
interest rate of 3.00% per year, which will be repriced every three months based on the then
prevailing loan prime rate.
In April 2024, we repaid the bank loan of RMB6.0 million that carried an interest rate of
5.50% per year. In August 2024, we repaid the bank loan of RMB9.0 million that carried an
interest rate of 5.50% per year.
In August 2023, we obtained a bank borrowing of RMB9.0 million with a maturity date
in August 2024 and carries an interest rate of 5.50% per year. In October 2023, we obtained
a bank borrowing of RMB6.0 million with a maturity date in April 2024 and carries an interest
rate of 5.50% per year.
In December 2022, our subsidiary in the U.S. incurred an interest-free loan with a
principal amount of US$1.0 million, which is due after the FDA approves our Section 510(k)
registration for our Cognitive Impairment Assessment Software and Cognitive Impairment
Treatment Software in the U.S. Changes in balance from December 31, 2022 to December 31,
2023, from December 31 2023 to June 30, 2024 and from June 30, 2024 to October 31, 2024
was due to fluctuations in foreign exchange rate between U.S. dollars and RMB. The other
borrowing is unsecured and unguaranteed as of October 31, 2024.
As of October 31, 2024, we have an aggregate of RMB30.0 million in unutilized banking
facilities.
FINANCIAL INFORMATION
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The above borrowings do not contain any covenants on us which may affect our ability
to undertake additional debt or equity financing.
Lease Liabilities
Our lease liabilities was RMB17.6 million, RMB11.3 million, RMB12.6 million, RMB6.7
million and RMB19.3 million as of December 31, 2021, 2022, 2023, and June 30 and October
31, 2024, respectively. The lease liabilities are measured at the present value of the lease
payments that are not yet paid. The incremental borrowing rates applied to lease liabilities
range from 4.00% to 4.85% per annum, 4.00% to 4.85% per annum, 4.00% to 4.85% per
annum, 4.00% per annum and 4.00% per annum as of December 31, 2021, 2022, 2023, June
30, 2024 and October 31, 2024, respectively. The lease liabilities is secured by rental deposits
and unguaranteed.
Long-term Bond
In July 2021, we entered into a long-term bond agreement with a third-party fund with an
aggregate subscription amount of RMB300.0 million, an annual interest rate of 6%, and will
mature on the fifth anniversary of a qualified IPO of our Group. The lender fund had a
conversion option of no more than RMB100.0 million before the submission of the listing
application with no later than December 31, 2025 at a conversion price to be further negotiated
between the two parties. In June 2023, we entered into a supplementary contract with the lender
fund which cancelled the abovementioned conversion rights. The fair value of the
abovementioned conversion right was considered minimal as there was no specific conversion
price. See Note 23 to the Accountants’ Report set out in Appendix I to this Prospectus for more
details. The long-term bond is unsecured and unguaranteed as of October 31, 2024.
Amounts Due to Related Parties
See “—Related Party Transactions” for details.
Except as disclosed above, as of the Latest Practicable Date, we did not have any
outstanding mortgages, charges, debentures, other issued debt capital, bank overdrafts,
borrowings, liabilities under acceptance or other similar indebtedness, any guarantees or other
material contingent liabilities. Our Directors confirm that we did not have any material
covenants on our outstanding debt, any default in payment of borrowings or breach of
covenants, or, other than disclosed above, any material changes in our indebtedness position
during the Track Record Period and up to the Latest Practicable Date. Our Directors further
confirm that our Group did not experience any difficulty in obtaining bank loans and other
borrowings, default in payment of bank loans and other borrowings or breach of covenants
during the Track Record Period and up to the Latest Practicable Date.
FINANCIAL INFORMATION
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--- page 482 ---
CAPITAL EXPENDITURES
We make capital expenditures to expand our operations, upgrade our property, plant and
equipment and facilities, and increase our operating efficiency. The following table sets forth
our capital expenditures for the periods indicated.
For the year ended December 31,
For the six
months
ended
June 30,
20242021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Additions of property, plant
and equipment 9,819 19,226 14,773 10,002
Additions of right-of-use
assets 18,657 – 10,286 –
Additions of intangible assets 24 559 4,153 267
Total 28,500 19,785 29,212 10,269
We expect to incur capital expenditures in 2024 primarily in relation to, among others,
purchase of property, plant and equipment. We expect to finance such capital expenditures
through a combination of operating cash flows, net proceeds from the Global Offering and bank
and other borrowings. We may adjust our capital expenditures for any given period according
to our development plans or in light of market conditions and other factors we believe to be
appropriate.
CONTRACTUAL OBLIGATIONS
Capital Commitments
As of December 31, 2021, 2022, 2023, and June 30, 2024, we had capital commitments
of RMB8.2 million, RMB10.2 million, RMB0.7 million, and RMB0.4 million, respectively,
primarily in connection with expenditures in respect of the acquisition of equipment and
machineries and leasehold improvements.
CONTINGENT LIABILITIES
As of December 31, 2021, 2022, 2023, and June 30, 2024, we did not have any contingent
liabilities. Our Directors confirm that as of the Latest Practicable Date, there had been no
material changes or arrangements to our contingent liabilities.
FINANCIAL INFORMATION
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--- page 483 ---
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, aside from our capital commitments as disclosed above,
we had not entered into any off-balance sheet transactions.
KEY FINANCIAL RATIOS
The following table sets forth the key financial ratios of our Group for the periods or as
of the dates indicated:
For the year ended/
As of December 31,
For the
six months
ended/As of
June 30,
2021 2022 2023 2024
Gross margin 56.7% 29.2% 47.7% 47.3%
Current ratio (1) 1.9 8.6 0.8 0.7
Average trade payables
turnover days (2) 29.1 43.8 52.0 52.3
Average trade receivables
turnover days (3) 114.6 153.3 160.7 227.2
Notes:
(1) Current ratio equals current assets divided by current liabilities as of the end of the year/period.
(2) Trade payable turnover days for a period equals the arithmetic mean of the beginning and ending trade
payables balances divided by cost of sales for that period and multiplied by the number of days in that
period.
(3) Trade receivable turnover days for a period equals the arithmetic mean of the beginning and ending
trade receivable balances divided by revenue for that period and multiplied by the number of days in
that period.
Our gross margin was 56.7%, 29.2%, 47.7%, and 47.3% in 2021, 2022, 2023, and the six
months ended June 30, 2024, respectively. See “—Period-to-Period Comparison” for more
details.
Our current ratio increased from 1.9 as of December 31, 2021 to 8.6 as of December 31,
2022, primarily due to the significant decrease of the current portion of the financial liabilities
at FVTPL. Our current ratio decreased significantly from 8.6 as of December 31, 2022, to 0.8
as of December 31, 2023 and remained relatively stable at 0.7 as of June 30, 2024, primarily
due to the significant increase of the current portion of financial liabilities at FVTPL. See
“—Net Current Assets/(Liabilities)” for further detailed explanations on current assets and
current liabilities.
FINANCIAL INFORMATION
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--- page 484 ---
The average trade payables turnover days were 29.1 days in 2021, 43.8 days in 2022 and
52.0 days in 2023. The increase in average trade payables turnover days from 2021 to 2023 was
primarily due to longer payment settlement periods with respect to suppliers. The average trade
payables turnover days subsequently decreased to 52.3 days for the six months ended June 30,
2024, primarily due to our bill settlement efforts.
The average trade receivables turnover days were 114.6 days in 2021, 153.3 days in 2022,
160.7 days in 2023 and 227.2 days for the six months ended June 30, 2024. The increase in
average trade receivables turnover days from 2021 to the six months ended June 30, 2024 was
primarily due to the significant increase in trade receivables as we began serving more
cognitive centers and delayed payments from scientific research projects.
RELATED-PARTY TRANSACTIONS
The following table sets forth transactions between us and our related parties during the
Track Record Period.
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Non-trade loan to:
Zhipan LP 6––––
Advance to:
Shuhui LP – – 3,718 1,900 –
Dr. Wang – – 2,200 – –
Repayment of loan from:
Zhipan LP – – 29 – –
Repayment of advance from:
Shuhui LP – – 3,718 – –
Dr. Wang – – 2,200 – –
Repayments to:
Zhipan LP 1 8––––
Shuhui LP 4,063 – 2,267 2,267 –
Dr. Wang 5 – 97 – –
The transactions above were carried out in accordance with the terms agreed with the
counterparties.
FINANCIAL INFORMATION
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--- page 485 ---
The following table sets forth outstanding balances with related parties as of the dates
indicated.
As of December 31,
For the six
months ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Amounts due from related parties
Zhipan LP 29 29 – –
Amounts due to related parties
Dr. Wang 97 97 – –
Shuhui LP 2,267 2,267 – –
The amounts due from related parties and due to related parties are all non-trade in nature
unsecured, interest-free and repayable on demand as of each of the dates indicated in the table
above.
Our Directors confirm that all material related party transactions during the Track Record
Period were conducted on an arm’s length basis, and would not distort our results of operations
over the Track Record Period or make our historical results over the Track Record Period not
reflective of our expectations for our future performance. We settled all outstanding balances
with related parties as of the date of this Prospectus, and do not intend to incur further such
transactions after Listing. Details of our transactions with related parties during the Track
Record Period are set out in Note 37 to the Accountants’ Report included in Appendix I to this
Prospectus.
MARKET AND OTHER FINANCIAL RISK DISCLOSURE
We are exposed to a variety of market and financial risks, including currency risk, interest
rate risk, other price risk and liquidity risk. See Note 33 to the Accountants’ Report included
in Appendix I to this Prospectus for details regarding these risks.
DIVIDEND
No dividend had been proposed, paid or declared by our Company since our incorporation
till the Latest Practicable Date. We do not currently have a dividend policy.
We are a holding company incorporated in the Cayman Islands. We may need dividends
and other distributions on equity from our PRC subsidiaries to satisfy our liquidity
requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only
out of their accumulated profits, if any, determined in accordance with PRC accounting
standards and regulations. In addition, our PRC subsidiaries are required to set aside at least
FINANCIAL INFORMATION
– 476 –


--- page 486 ---
10.0% of their respective accumulated profits each year, if any, to fund certain reserve funds
until the total amount set aside reaches 50.0% of their respective registered capital. Our PRC
subsidiaries may also allocate a portion of its after-tax profits based on PRC accounting
standards to employee welfare and bonus funds at their discretion. These reserves are not
distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own
behalf in the future, the instruments governing the debt may restrict their ability to pay
dividends or make other payments to us.
We currently expect to retain all future earnings for use in the operation and expansion
of our business and do not anticipate paying cash dividends in the foreseeable future. Any
declaration and payment as well as the amount of dividends will be subject to our constitutional
documents and the Cayman Companies Act. The declaration and payment of any dividends in
the future may be determined by our Board as it thinks fit, and will depend on a number of
factors, including our earnings, capital requirements, overall financial condition and
contractual restrictions. Our shareholders in a general meeting may approve any declaration of
dividends, which must not exceed the amount recommended by our Board. As advised by our
Cayman counsel, under the Cayman Companies Act, a Cayman Islands company may pay a
dividend out of either profits or share premium account, provided that in no circumstances may
a dividend be paid if this would result in the company being unable to pay its debts as they fall
due in the ordinary course of business. In light of our accumulated losses as disclosed in this
Prospectus, it is unlikely that we will be eligible to pay a dividend out of our profits in the
foreseeable future. We may, however, pay a dividend out of our share premium account unless
the payment of such a dividend would result in our Company being unable to pay our debts as
they fall due in the ordinary course of business. There is no assurance that dividends of any
amount will be declared to be distributed in any year.
DISTRIBUTABLE RESERVES
As of June 30, 2024, we did not have any distributable reserves.
LISTING-RELATED EXPENSE
The total listing expenses payable by our Company are estimated to be approximately
RMB75.7 million, representing 14.0% of the total gross proceeds from the Global Offering,
assuming the Over-allotment Option is not exercised and based on an Offer Price of HK$3.22.
These Listing expenses mainly comprise legal and other professional fees paid and payable to
the professional parties, commissions payable to the Underwriters, and printing and other
expenses for their services rendered in relation to the Listing and the Global Offering.
Approximately RMB49.5 million of such listing expenses is expected to be charged to our
consolidated statements of profit or loss, and approximately RMB26.6 million of which is
expected to be deducted from equity (relating to listing expenses directly attributable to the
issue of shares). During the Track Record Period, listing expenses of RMB44.7 million were
incurred, of which RMB34.4 million were charged to our consolidated statements of profit or
loss and other comprehensive income and RMB10.4 million were recognized to our
FINANCIAL INFORMATION
– 477 –


--- page 487 ---
consolidated statements of financial position. We estimate that we will further incur listing
expenses of RMB31.4 million, of which RMB15.1 million will be charged to our consolidated
statements of comprehensive income and RMB16.2 million is expected to be accounted for as
a deduction from equity upon completion of the Global Offering.
The following table sets forth a breakdown of the listing expenses for the Global Offering
based on the Offer Price of HK$3.22.
Listing Expenses
Based on an
Offer Price of
HK$3.22
HK$’000
Non-underwriting related expenses
Legal and audit expenses 37,926
Other expenses 15,695
Underwriting related expenses 28,237
Total 81,857
During the Track Record Period, the amount of the listing expenses charged to our
consolidated statements of profit or loss was nil, nil, RMB25.8 million, RMB10.3 million and
RMB8.6 million in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024,
respectively, and the amount of the listing expenses recognized to our consolidated statements
of financial position which will be deducted in equity upon Listing was nil, nil, RMB7.7
million, RMB1.8 million and RMB2.7 million in 2021, 2022, 2023, and the six months ended
June 30, 2023 and 2024, respectively.
SUBSEQUENT EVENTS
On December 24, 2024, our Shareholders resolved to, among other things, conduct the
Share Subdivision pursuant to which each share in our then issued and unissued share capital
was split into 1,000 shares of the corresponding class with nominal value of US$0.0000001
each effective upon the conditions of the Global Offering being fulfilled. Our Shareholders also
resolved to, immediately upon completion of the Share Subdivision, automatically convert
each issued and unissued Series A Preferred Shares into ordinary Shares on a one-to-one basis
by way of re-designation upon Listing.
FINANCIAL INFORMATION
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--- page 488 ---
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of our Group attributable to owners of our Company prepared in accordance with paragraph
4.29 of the Listing Rules is set out below to illustrate the effect of the Global Offering on the
audited consolidated total tangible assets less liabilities of our Group attributable to owners of
our Company as of June 30, 2024 as if the Global Offering had taken place on that date.
The unaudited pro forma statement of adjusted consolidated net tangible assets of our
Group attributable to owners of our Company has been prepared for illustrative purposes only
and, because of its hypothetical nature, it may not give a true picture of the consolidated net
tangible assets of our Group attributable to owners of our Company as of June 30, 2024 or any
future dates.
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of our Group attributable to owners of our Company is prepared based on the audited
consolidated total tangible assets less liabilities of our Group attributable to owners of our
Company as of June 30, 2024 as derived from the Accountants’ Report, the text of which is set
out in Appendix I to this Prospectus, and adjusted as described below:
Audited
consolidated
total tangible
assets less
liabilities of
the Group
attributable to
owners of the
Company as at
June 30, 2024
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
of the Group
attributable to
owners of the
Company as at
June 30, 2024
Unaudited pro forma adjusted
consolidated net tangible assets
of the Group attributable to
owners of the Company as at
June 30, 2024 per Share
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an
Offer Price of
HK$3.22 per
Share (414,782) 497,802 83,020 0.08 0.09
Notes:
1. The amount is calculated based on the consolidated net liabilities of our Group attributable to owners
of our Company amounted to RMB411,162,000, with adjustments for intangible assets as of June 30,
2024 of RMB3,620,000 as extracted from the Accountants’ Report of our Group set out in Appendix I
to the prospectus.
2. The estimated net proceeds from the Global Offering are based on 181,112,000 new Shares to be issued
at the Offer Price of HK$3.22 per Offer Share, after deduction of the estimated underwriting fees and
other related expenses expected to be incurred by our Group, other than those expenses which had been
recognized in profit or loss prior to June 30, 2024. The calculation of such estimated net proceeds does
not take into account (i) any Shares which may be allotted and issued upon the exercise of the
Over-allotment Option; (ii) the Shares issued to Wisdomspirit Holding Limited and granted to the
specified participants under the Pre-IPO Share Award Scheme; or (iii) any Shares which may be issued
or repurchased by our Company pursuant to the general mandates.
FINANCIAL INFORMATION
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--- page 489 ---
For the purpose of the estimated net proceeds from the Global Offering, the amount denominated in HK$
has been converted into RMB at an exchange rate of HK$1 to RMB0.9244, which was the exchange rate
prevailing on December 16, 2024 with reference to the rate published by the People’ s Bank of China.
No representation is made that HK$ amounts have been, could have been or may be converted to RMB,
or vice versa, at that rate or at any other rates or at all.
3. The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible
assets of our Group attributable to owners of our Company per Share is based on 1,085,234,000 Shares
outstanding immediately following completion of the Global Offering, which represent the number of
Ordinary Shares and Series A-2 Preferred Shares of our Company issued as of June 30, 2024 assuming
that Share Subdivision had been completed and 181,112,000 new Shares issued under the Global
Offering. It does not take into account (i) any Shares which may be allotted and issued upon the exercise
of the Over-allotment Option; (ii) the Shares issued to Wisdomspirit Holding Limited and granted to the
specified participants under the Pre-IPO Share Award Scheme; (iii) any Shares which may be issued or
repurchased by our Company pursuant to the general mandates; and (iv) the conversion of the Series
A-1 Preferred Shares into ordinary Shares as stated in Note 5 below.
4. The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners
of our Company per Share is converted from RMB to HK$ at the rate of HK$1 to RMB0.9244, which
was the exchange rate prevailing on December 16, 2024 with reference to the rate published by the
People’ s Bank of China. No representation is made that the RMB amounts have been, would have been
or may be converted to HK$, or vice versa, at that rate or at any other rates or at all.
5. No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of
our Group attributable to owners of our Company as of June 30, 2024 to reflect any operating result
or other transactions of our Group entered into subsequent to June 30, 2024. In particular , the
unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners of
our Company as shown on page II-1 of Appendix II to the Prospectus have not been adjusted to illustrate
the effect of the conversion of the Series A-1 Preferred Shares into ordinary Shares.
Had the conversion of Series A-1 Preferred Shares been assumed to take place as of June 30, 2024, the
unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners of
our Company as of June 30, 2024 would have increased by approximately RMB315,787,000, which
represents the carrying amount of Series A-1 Preferred Shares as of June 30, 2024, and the total Shares
in issue would have increased by 95,878,000 Shares to a total of 1,181,112,000 Shares in issue.
The unaudited pro forma adjusted consolidated net tangible assets of our Group attributable to owners
of our Company as of June 30, 2024 taking into account of the above subsequent event and the Global
Offering would be RMB0.34 per share (equivalent to HK$0.37 per Share) based on an Offer Price of
HK$3.22 per Share, assuming the amounts denominated in RMB could have been converted into HK$
at the rate of HK$1 to RMB0.9244, which was the exchange rate prevailing on December 16, 2024 with
reference to the rate published by the People’ s Bank of China.
Please refer to “Appendix II—Unaudited Pro Forma Financial Information” for further
details.
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that up to the date of this Prospectus, there has been no material
adverse change in our financial, operational or trading positions or prospects since June 30,
2024 being the end of the period reported on as set out in the Accountants’ Report included in
Appendix I to this Prospectus.
DISCLOSURE UNDER RULES 13.13 TO 13.19 OF THE LISTING RULES
Our Directors have confirmed that, as of the Latest Practicable Date, there were no
circumstances that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of
the Listing Rules.
FINANCIAL INFORMATION
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--- page 490 ---
FUTURE PLANS
Please see “Business—Our Strategies” for a detailed description of our future plans.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$501.3 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, assuming no Over-allotment Option is
exercised, at the Offer Price of HK$3.22 per Share.
(i) approximately 40.0% of the net proceeds, or approximately HK$200.5 million, is
expected to be used for the payment of expenses for conducting further research and
development activities, advancing clinical trials for more indications, and advancing
selling and distribution activities of our Core Product, the System:
 approximately 23.0% of the net proceeds, or approximately HK$115.3 million,
is expected to be used for the payment of expenses for the ongoing and future
clinical trials and future commercialization efforts in China to expand the
application of the System to new indications for the treatment of cognitive
impairments induced by vascular diseases, neurodegenerative diseases,
psychiatric disorder, child development deficiency and other disorders. In
particular, we plan to use our proceeds as follows:
o approximately 13.6% of the net proceeds, or approximately HK$68.2
million, is expected to be paid out for the following clinical trials and
future commercialization efforts: (i) approximately 3.6% of the net
proceeds, or approximately HK$18.0 million, is expected to be paid out
for atrial fibrillation induced cognitive impairment, for which we
completed patient enrollment of 200 patients in 2023 and data collection
was completed in October 2024 and data analysis is expected to be
completed by the second quarter of 2025. We expect to pay approximately
HK$3.0 million for research fees at cooperating hospitals (which are
typically responsible for patient enrollment, management, in-trial medical
check-ups, data collections and advising on medical science related
issues), approximately HK$1.5 million for test subject related fees,
approximately HK$1.1 million for test-related equipment, approximately
HK$5.0 million for technical support, approximately HK$3.2 million for
third party clinical services, approximately HK$0.9 million for obtaining
regulatory approval and approximately HK$3.3 million for product
promotion; (ii) approximately 4.1% of the net proceeds, or approximately
HK$20.6 million, is expected to be paid out for hypertension induced
cognitive impairment, for which we completed patient enrollment of 200
patients in 2023 and data collection was completed in October 2024 and
data analysis is expected to be completed by the second quarter of 2025.
FUTURE PLANS AND USE OF PROCEEDS
– 481 –


--- page 491 ---
We expect to pay approximately HK$4.1 million for research fees at
cooperating hospitals (which are typically responsible for patient
enrollment, management, in-trial medical check-ups, data collections and
advising on medical science related issues), approximately HK$1.2
million for test subject related fees, approximately HK$1.4 million for
clinical trial equipment, approximately HK$5.1 million for technical
support, approximately HK$4.6 million for third party clinical services,
approximately HK$0.9 million for obtaining regulatory approval and
approximately HK$3.3 million for product promotion; (iii) approximately
4.1% of the net proceeds, or approximately HK$20.6 million, is expected
to be paid out for coronary heart disease induced cognitive impairment,
for which we completed patient enrollment of 200 patients in 2023 and
data collection was completed in October 2024 and data analysis is
expected to be completed by the second quarter of 2025. We expect to pay
approximately HK$4.1 million for research fees at cooperating hospitals
(which are typically responsible for patient enrollment, management,
in-trial medical check-ups, data collections and advising on medical
science related issues), approximately HK$1.2 million for test subject
related fees, approximately HK$1.4 million for clinical trial equipment,
approximately HK$5.1 million for technical support, approximately
HK$4.6 million for third party clinical services, approximately HK$0.9
million for obtaining regulatory approval and approximately HK$3.3
million for product promotion; (iv) approximately 0.2% of the net
proceeds, or approximately HK$1.0 million, is expected to be paid out for
amnestic mild cognitive impairment, for which we have completed
patient enrollment in May 2023. We expect to complete data collection
and perform data cleaning and analysis in 2025. We expect to pay
approximately HK$0.4 million for research fees at cooperating hospitals
(which are typically responsible for patient enrollment, management,
in-trial medical check-ups, data collections and advising on medical
science related issues), approximately HK$0.2 million for test subject
related fees and approximately HK$0.4 million for obtaining regulatory
approval; and (v) approximately 1.6% of the net proceeds, or
approximately HK$8.0 million will be paid out for the application of the
System to bone fracture induced pain. The trial has commenced and is
expected to be completed by the fourth quarter of 2025. Trial expenses
are expected to be broken down into approximately HK$1.5 million for
R&D and technical support, approximately HK$1.1 million for researcher
fees, approximately HK$0.7 million for insurance, approximately
HK$1.1 million for testing and inspection fees, approximately HK$0.9
million for test subject related fees, approximately HK$1.1 million for
data management and analysis, approximately HK$1.5 million for third
party clinical trial services and approximately HK$0.1 million for ethics
committee approval related fees. See “Business—Our Product
Pipeline—Core Product: Brain Function Information Management
FUTURE PLANS AND USE OF PROCEEDS
– 482 –


--- page 492 ---
Platform Software System—Future Development Plans for Our System”
for more details on ongoing clinical trials. Based on the clinical trial
timeline described above, the following table sets forth a detailed
breakdown of the amount we expect to incur for the abovementioned
indications of the System.
For the year ending December 31,
2025 2026
(HK$ in millions)
Atrial fibrillation induced cognitive
impairment 7.2 10.8
Hypertension induced cognitive
impairment 8.2 12.4
Coronary heart disease induced
cognitive impairment 8.2 12.4
Amnestic mild cognitive impairment 0.4 0.6
Bone fracture induced pain 3.2 4.8
o approximately 9.4% of the net proceeds, or approximately HK$47.1
million, is expected to be used for the payment of expenses for
conducting future clinical trials for other indications of the System.
▪ approximately 1.2% of the net proceeds, or approximately HK$6.0
million will be paid out for the application of the System for
post-cardiac surgery rehabilitation, which is expected to enroll 200
subjects. The trial is expected to commence in the first quarter of
2025 and complete by the second half of 2026. Trial expenses are
expected to be broken down into approximately HK$1.0 million for
R&D and technical support, approximately HK$1.0 million for
researcher fees, approximately HK$0.4 million for insurance,
approximately HK$0.7 million for testing and inspection fees,
approximately HK$0.4 million for test subject related fees,
approximately HK$0.7 million for data management and analysis,
approximately HK$1.7 million for third party clinical trial services
and approximately HK$0.1 million for ethics committee approval
related fees.
FUTURE PLANS AND USE OF PROCEEDS
– 483 –


--- page 493 ---
▪ approximately 0.8% of the net proceeds, or approximately HK$4.0
million will be paid out for the application of the System to heart
failure induced cognitive impairment, which is expected to enroll
200 subjects. The trial is expected to commence in the first half of
2026 and complete by the second half of 2028. Trial expenses are
expected to be broken down into approximately HK$0.4 million for
R&D and technical support, approximately HK$0.6 million for
researcher fees, approximately HK$0.4 million for insurance,
approximately HK$0.7 million for testing and inspection fees,
approximately HK$0.4 million for test subject related fees,
approximately HK$0.4 million for data management and analysis,
approximately HK$1.0 million for third party clinical trial services
and approximately HK$0.1 million for ethics committee approval
related fees.
▪ approximately 1.8% of the net proceeds, or approximately HK$9.0
million will be paid out for the application of the System to anxiety.
The trial is expected to commence in the first quarter of 2025 and
complete by the second half of 2026. Trial expenses are expected to
be broken down into approximately HK$1.5 million for R&D and
technical support, approximately HK$1.5 million for researcher
fees, approximately HK$0.5 million for insurance, approximately
HK$0.7 million for testing and inspection fees, approximately
HK$1.0 million for test subject related fees, approximately HK$0.7
million for data management and analysis, approximately HK$2.6
million for third party clinical trial services and approximately
HK$0.5 million for ethics committee approval related fees.
▪ approximately 1.8% of the net proceeds, or approximately HK$9.0
million will be paid out for the application of the System to
dyslexia, which is expected to enroll 400 subjects. The trial is
expected to commence in the first quarter of 2025 and complete by
the second half of 2026. Trial expenses are expected to be broken
down into approximately HK$2.7 million for R&D and technical
support, approximately HK$1.5 million for researcher fees,
approximately HK$0.6 million for insurance, approximately
HK$1.2 million for testing and inspection fees, approximately
HK$0.6 million for test subject related fees, approximately HK$1.0
million for data management and analysis, approximately HK$1.3
million for third party clinical trial services and approximately
HK$0.1 million for ethics committee approval related fees.
FUTURE PLANS AND USE OF PROCEEDS
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▪ approximately 1.8% of the net proceeds, or approximately HK$9.0
million will be paid out for the application of the System to diabetes,
which is expected to enroll 200 subjects. The trial is expected to
commence in the first quarter of 2025 and complete by the second
half of 2026. Trial expenses are expected to be broken down into
approximately HK$2.2 million for R&D and technical support,
approximately HK$1.5 million for researcher fees, approximately
HK$0.7 million for insurance, approximately HK$1.0 million for
testing and inspection fees, approximately HK$0.7 million for test
subject related fees, approximately HK$1.0 million for data
management and analysis, approximately HK$1.7 million for third
party clinical trial services and approximately HK$0.2 million for
ethics committee approval related fees.
▪ approximately 2.0% of the net proceeds, or approximately HK$10.0
million will be paid out for the upgrade of the System’s utility as an
integrated DTx for depression, which is expected to enroll 200
subjects. The trial is expected to commence in the first quarter of
2025 and complete by the second half of 2026. Trial expenses are
expected to be broken down into approximately HK$1.5 million for
R&D and technical support, approximately HK$1.5 million for
researcher fees, approximately HK$0.7 million for insurance,
approximately HK$1.2 million for testing and inspection fees,
approximately HK$0.9 million for test subject related fees,
approximately HK$1.5 million for data management and analysis,
approximately HK$2.5 million for third party clinical trial services
and approximately HK$0.2 million for ethics committee approval
related fees.
Based on the clinical trial timeline described above, the following
table sets forth a detailed breakdown of the amount we expect to incur for
the abovementioned indications of the System.
For the year ending
December 31,
2025 2026
(HK$ in millions)
Post-cardiac surgery
rehabilitation 5.1 0.9
Heart failure induced
cognitive impairment 2.5 1.5*
Anxiety 7.4 1.6
Dyslexia 9.0 –
Diabetes 6.6 2.4
Depression 6.5 3.5
Note:
* Represents amount for 2026 and beyond.
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 approximately 8.5% of the net proceeds, or approximately HK$42.6 million, is
expected to be used for the payment of expenses for further R&D of our
System:
o approximately 3.0% of the net proceeds, or approximately HK$15.0
million, is expected to be used for the payment of expenses for preclinical
research for new indications of the System; and
▪ approximately 0.5% of the net proceeds, or approximately HK$2.5
million will be used for the application of the System to epilepsy.
The project will involve conducting pre-tests in patients with
epilepsy to assess whether the System design meets the needs of
patients and to provide an initial assessment of efficacy and safety.
The project has commenced in the first half of 2021. The clinical
trial is expected to initiate in the second quarter of 2025 and data
analysis is expected to be completed by the second quarter of 2026.
▪ approximately 0.2% of the net proceeds, or approximately HK$1.0
million will be paid out for the application of the System to
phenylketonuria induced cognitive impairment. The project will
evaluate markers of cognitive impairment due to phenylketonuria
and apply the pre-test data to support product development and
improvement. The project has commenced in the first half of 2021.
The clinical trial is expected to initiate in the first quarter of 2025,
and data analysis is expected to be completed by the second half of
2026.
▪ approximately 0.4% of the net proceeds, or approximately HK$2.0
million will be paid out for the application of the System to kidney
disease induced cognitive impairment. The project will organize
pre-tests to evaluate the efficacy and safety of the product and using
the pre-test data to support product improvement. The project has
commenced in the first half of 2021. The clinical trial is expected to
be initiated in the first quarter of 2025 and data analysis is expected
to be complete by the second half of 2026.
▪ approximately 0.7% of the net proceeds, or approximately HK$3.5
million will be paid out for the application of the System to multiple
sclerosis. The project will involve conducting assessments of
cognitive impairment in patients with multiple sclerosis and
organizing pre-tests to evaluate the efficacy and safety of the
product. The project is expected to commence clinical trials in the
first quarter of 2025 and complete by the second half of 2026.
FUTURE PLANS AND USE OF PROCEEDS
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▪ approximately 0.2% of the net proceeds, or approximately HK$1.0
million will be paid out for the application of the System to hepatic
encephalopathy. The project will organize pre-tests to investigate
markers of cognitive impairment in patients with hepatic
encephalopathy and develop cognitive assessment and intervention
tools based on the data collected. The project is expected to
commence clinical trials in the third quarter of 2025 and complete
by the second half of 2026.
▪ approximately 0.2% of the net proceeds, or approximately HK$1.0
million will be paid out for the application of the System to
post-breast cancer surgery rehabilitation. The project will involve
organizing pre-testing and preliminary evaluation of the efficacy
and safety of the System in application to post-breast cancer surgery
rehabilitation. The project has commenced in the first half of 2021.
The clinical trial is expected to be initiated in the first quarter of
2025 and data analysis is expected to be completed by the first half
of 2026.
▪ approximately 0.2% of the net proceeds, or approximately HK$1.0
million will be paid out for the application of the System to
post-lung cancer surgery rehabilitation. The project will involve
organizing pre-testing and preliminary evaluation of the efficacy
and safety of the System in application to post-lung cancer surgery
rehabilitation. The project has commenced in the first half of 2021.
The clinical trial is expected to be initiated in the first quarter of
2025 and data analysis is expected to be completed by the first half
of 2026.
▪ approximately 0.6% of the net proceeds, or approximately HK$3.0
million will be paid out for the application of the System to drug
addiction. The project will involve organizing pre-testing and
preliminary evaluation of the efficacy and safety of the System in
application to drug-addiction. The project has commenced in the
first half of 2021. The clinical trial is expected to be initiated in the
first quarter of 2025 and data analysis is expected to be completed
by the second half of 2026.
FUTURE PLANS AND USE OF PROCEEDS
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Based on the R&D timeline described above, the following table
sets forth a detailed breakdown of the amount we expect to incur for the
abovementioned indications of the System.
For the year ending on
December 31,
2025 2026
(HK$ in millions)
Epilepsy 1.6 0.9
Phenylketonuria induced
cognitive impairment 0.6 0.4
Kidney disease induced
cognitive impairment 1.2 0.8
Multiple sclerosis 1.4 2.1
Hepatic encephalopathy 0.7 0.3
Post-breast cancer surgery
rehabilitation 0.7 0.3
Post-lung cancer surgery
rehabilitation 0.7 0.3
Drug addiction 1.6 1.4
o approximately 5.5% of the net proceeds, or approximately HK$27.6
million, is expected to be used to recruit additional key R&D personnel
with relevant academic and industry experience in brain sciences, DTx
and other related fields for the further R&D of our System to satisfy our
near-term R&D needs. Specifically, we intend to hire approximately 13
and 14 employees in 2025 and 2026, respectively, for the further
development of the System in terms of AI-related capabilities and product
pipeline development capabilities. We intend to identify the R&D
personnel to be hired through review of resume submissions and internal
referrals that meet our requirements for the position, specifically:
▪ approximately 2.1% of the net proceeds, or approximately HK$10.5
million, is expected to be used for the recruitment of seven
algorithm engineers to develop large language models and other AI
models for diagnostic and intervention applications in cognitive
impairment.
▪ approximately 0.7% of the net proceeds, or approximately HK$3.5
million, is expected to be used for the recruitment of four product
managers/training task planners to design diagnostic and
intervention products.
FUTURE PLANS AND USE OF PROCEEDS
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▪ approximately 0.8% of the net proceeds, or approximately HK$4.0
million, is expected to be used for the recruitment of five front-end
developers to support the development of training tasks and the
creation of front-end rendering and presentation for DTx products.
▪ approximately 1.3% of the net proceeds, or approximately HK$6.5
million, is expected to be used for the recruitment of eight back-end
developers to support back-end development of training tasks and
implementation of back-end storage and front-end/back-end
interaction for DTx products.
▪ approximately 0.6% of the net proceeds, or approximately HK$3.0
million, is expected to be used for the recruitment of three Android
development engineers to develop mobile interactive experiences
for different application and training task formats.
 approximately 8.5% of the net proceeds, or approximately HK$42.6 million, is
expected to be used for advancing selling and distribution activities of the
System in the next two years:
o approximately 5.5% of the net proceeds, or approximately HK$27.6
million, is expected to be used for expanding our selling and distribution
team to roll out marketing campaigns and other marketing efforts to
promote the System; and
o approximately 3.0% of the net proceeds, or approximately HK$15.0
million, is expected to be used for participating in more academic
conferences and other industry events on cognitive impairment DTx to
accelerate market acceptance of the System among hospitals and other
customers.
See “Business—Sales and Marketing—Our Marketing Model” for details
on our key marketing areas.
(ii) approximately 16.5% of the net proceeds, or approximately HK$82.7 million, is
expected to be used for helping establish new cognitive centers for more hospitals
across China through which hospitals can use our products to diagnose and treat
patients with cognitive impairment and/or other disorders. We plan to help to
establish cognitive centers in at least 2,100 hospitals in China in the long term, with
the goal of establishing approximately 300 to 500 cognitive centers in the next two
years; specifically, we intend to renovate the involved premises and purchase the
necessary equipment and multimodal devices. We believe these cognitive centers are
expected to enhance the market penetration of our products and boost our market
share; We intend to seek cognitive center collaborations with medical institutions
across China, focusing on provinces with large elderly populations such as Beijing,
FUTURE PLANS AND USE OF PROCEEDS
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--- page 499 ---
Sichuan, Guangdong, Henan and Shandong. We intend to follow a three-phase
penetration strategy. In the first phase, we intend to focus on top medical institutions
with advanced clinical experience in relevant therapeutic areas, such as Xuanwu
Hospital for neurodegenerative diseases and Anzhen Hospital for cardiovascular
diseases. The goal is to establish a base of model cognitive center collaborations as
a foundation for further expansion. In the second stage, we intend to reach out to
large general hospitals and specialized hospitals in various cities. We intend to
prioritize provinces with a large population and a high proportion of elderly people.
In the third stage, we intend to rely on the experience of cognitive center
cooperation with top hospitals to widely promote the cognitive center cooperation
model in second- and third-tier cities.
(iii) approximately 15.0% of the net proceeds, or approximately HK$75.2 million, is
expected to be used for strengthening our capabilities in AI and related technologies
in the next two years:
 approximately 5.0% of the net proceeds, or approximately HK$25.1 million, is
expected to be used for (i) strengthening our virtual human technology; and (ii)
building and/or improving various models under our AI technology, such as a
multimodal cognitive computing model to enable more accurate assessment
and diagnosis, a causal-based adaptive collaborative intervention model to
make the System offer more personalized and self-adaptive trainings that lead
to enhancement of patient cognitive functions, a multimodal affective
computing model and a large language model to better understand and interpret
patient input during assessment. The multimodal cognitive computing model is
a model that uses various types of data, including a patient’s speech, gait,
expression, eye movement, and other data, to create a recognition model. By
integrating different modalities of information, this model can efficiently and
accurately analyze large amounts of multimodal data input. It helps in the
analysis of cognitive impairments and improves diagnostic capabilities. The
causal-based adaptive collaborative intervention model is a model based on
causal inference that aims to provide optimal recommendations on the
combination of interventions for patients; and
 approximately 10.0% of the net proceeds, or approximately HK$50.1 million,
is expected to be used for recruiting personnel to strengthen our capabilities in
AI and related technologies.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 500 ---
(iv) approximately 5.0% of the net proceeds, or approximately HK$25.1 million, is
expected to be paid out for accelerating the research, development and
commercialization of other product candidates in and beyond our current product
pipeline, prioritizing indications with promising prospects:
 approximately 2.5% of the net proceeds, or approximately HK$12.5 million, is
expected to be paid out for conducting and completing ongoing preclinical and
clinical development of our current products and product candidates other than
the System; and
 approximately 2.5% of the net proceeds, or approximately HK$12.5 million, is
expected to be paid out for developing DTx products to cover new types of
cognitive impairments and beyond. We have commenced the initial
commercialization of BCA T, SAS and DSS and expect to reach full
commercialization of these products in 2025. We also plan to commence the
commercialization of the Cognitive Impairment Treatment Software in the EU
in April 2025. For example, we plan to develop DTx products that focus on
cognitive impairments as well as neurological and psychiatric symptoms (such
as signs of depression, anxiety and Symptoms of post-traumatic stress disorder
(the “ PTSD ”)) arising out of orthopedics and endocrine related injuries and/or
diseases. In addition, we also intend to develop DTx products to help manage
the rehabilitation plan design and daily execution for bone fracture and other
orthopedic patients; and
(v) approximately 15.0% of the net proceeds, or approximately HK$75.2 million, is
expected to be used for brain science and DTx research centers in collaboration with
academic institutions and hospitals in the next two years, prioritizing collaborations
that are expected to generate near-term benefits to our R&D progress:
 approximately 10.0% of the net proceeds, or approximately HK$50.1 million,
is expected to be used for supporting the operational activities of R&D projects
at these research centers, including expenses to enable the execution of various
stages of preclinical and clinical trials such as patient enrollment, trial
administration, data collection and analysis, among other activities;
 approximately 3.0% of the net proceeds, or approximately HK$15.0 million, is
expected to be used for obtaining the necessary licenses, equipment and other
infrastructure to initiate the operations of the research centers and the R&D
projects; and
 approximately 2.0% of the net proceeds, or approximately HK$10.0 million, is
expected to be used for recruiting R&D personnel to work for the research
centers.
(vi) approximately 8.5% of the net proceeds, or approximately HK$42.6 million, is
expected to be used for our working capital and other general corporate purposes.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 501 ---
To the extent our net proceeds are either more or less than expected, we will increase or
decrease the allocation of the net proceeds to the above purposes on a pro rata basis.
If the Over-allotment Option is fully exercised, the net proceeds that we will receive will
be approximately HK$585.7 million, at the Offer Price of HK$3.22 per Share, and after
deducting the underwriting fees and commissions payable by our Company. The additional
amount raised will be applied to the above areas of use of proceeds on pro rata basis.
To the extent that our net proceeds are not sufficient to fund the purposes set out above,
we intend to fund the balance through a variety of means, including cash generated from
operations, bank loans and other borrowings. To the extent that the net proceeds from the
Global Offering are not immediately used for the purposes described above and to the extent
permitted by the relevant laws and regulations, they will be placed in short-term interest-
bearing accounts at licensed commercial banks and/or other authorized financial institutions
(as defined under the Securities and Futures Ordinance or applicable laws and regulations in
other jurisdictions). We will issue an appropriate announcement if there is any material change
to the above proposed use of proceeds.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 502 ---
HONG KONG UNDERWRITERS
China International Capital Corporation Hong Kong Securities Limited
SPDB International Capital Limited
CMB International Capital Limited
Fosun International Securities Limited
Tiger Brokers (HK) Global Limited
GF Securities (Hong Kong) Brokerage Limited
CCB International Capital Limited
BOCI Asia Limited
China Everbright Securities (HK) Limited
ABCI Securities Company Limited
CMBC Securities Company Limited
China Industrial Securities International Capital Limited
Haitong International Securities Company Limited
UNDERWRITING ARRANGEMENTS
Hong Kong Public Offering
Hong Kong Underwriting Agreement
The Hong Kong Underwriting Agreement was entered into on December 26, 2024.
Pursuant to the Hong Kong Underwriting Agreement, the Company is offering 18,112,000
Hong Kong Offer Shares (subject to reallocation) for subscription by the public in Hong Kong
on the terms and subject to the conditions in this Prospectus at the Offer Price.
Subject to the Hong Kong Stock Exchange granting the listing of, and permission to deal
in, the Shares in issue and to be issued pursuant to the Global Offering (including any Shares
that may be issued under the Over-allotment Option), Share Subdivision, and certain other
conditions set out in the Hong Kong Underwriting Agreement (including, amongst others, the
Overall Coordinators (for themselves and on behalf of the Underwriters)) and the Company,
agreeing upon the Offer Price), the Hong Kong Underwriters have agreed, severally but not
jointly, to subscribe, or procure subscribers to subscribe, for the Hong Kong Offer Shares
which are being offered but are not taken up under the Hong Kong Public Offering on the terms
and subject to the conditions set out in this Prospectus and the Hong Kong Underwriting
Agreement.
The Hong Kong Underwriting Agreement is conditional on and subject to, amongst other
things, the International Underwriting Agreement having been signed and becoming
unconditional and not having been terminated in accordance with its terms.
UNDERWRITING
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--- page 503 ---
Grounds for Termination
The Overall Coordinators may (for themselves and on behalf of the Hong Kong
Underwriters) in their sole and absolute discretion and upon giving notice orally or in writing
to the Company, terminate the Hong Kong Underwriting Agreement with immediate effect, if
at any time prior to 8:00 a.m. on the day that trading in the Shares commences on the Stock
Exchange:
(A) there develops, occurs, exists or comes into force:
(a) any new law or regulation or any change or development involving a
prospective change in existing law or regulation, or any change or development
involving a prospective change in the interpretation or application thereof by
any court or other competent authority in or affecting Hong Kong, the PRC, the
Cayman Islands, Singapore, Japan, Russia, the United States, the United
Kingdom, the European Union (or any member thereof) or any other
jurisdiction relevant to any member of the Group (each a “ Relevant
Jurisdiction ”); or
(b) any change or development involving a prospective change or development, or
any event or circumstances or series of events likely to result in or representing
a change or development, or prospective change or development, in local,
national, regional or international financial, political, military, industrial,
economic, currency market, legal, fiscal, regulatory, credit or market matters or
conditions, equity securities, exchange control or any monetary or trading
settlement system (including, without limitation, conditions in stock and bond
markets, money and foreign exchange markets and inter-bank markets, a
change in the system under which the value of the Hong Kong currency is
linked to that of the currency of the United States or a change of the Hong
Kong dollars or of the Renminbi against any foreign currencies) in or affecting
any Relevant Jurisdiction; or
(c) any event or series of events, whether in continuation, or circumstances in the
nature of force majeure (including, without limitation, acts of government,
labor disputes, strikes, lock-outs, fire, explosion, earthquake, flooding,
tsunami, volcanic eruption, civil commotion, riots, rebellion, public disorder,
acts of war (whether declared or undeclared), acts of terrorism (whether or not
responsibility has been claimed), acts of God, accident or interruption or delay
in transportation, destruction of power plant, outbreak, escalation, mutation or
aggravation of diseases, epidemics or pandemics including, but not limited to,
COVID-19, SARS, swine or avian flu, H5N1, H1N1, H1N7, H7N9, Ebola
virus, Middle East respiratory syndrome (MERS) and such related/mutated
forms, economic or comprehensive sanction, any local, national, regional or
international outbreak or escalation of hostilities (whether or not war is or has
UNDERWRITING
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--- page 504 ---
been declared) or other state of emergency or calamity or crisis in whatever
form, political change, paralysis of government operations, other industrial
action in or directly or indirectly affecting any Relevant Jurisdiction; or
(d) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in securities of generally on the Hong Kong Stock
Exchange, the New Y ork Stock Exchange, the NASDAQ Global Market, the
London Stock Exchange, the Tokyo Stock Exchange, the Singapore Exchange
Limited, the Shanghai Stock Exchange or the Shenzhen Stock Exchange; or
(e) any general moratorium on commercial banking activities in Hong Kong
(imposed by the Financial Secretary or the Hong Kong Monetary Authority or
other competent governmental authority), New Y ork (imposed at the U.S.
Federal or New Y ork State level or other competent governmental authority),
Russia, London, Singapore, the PRC, the European Union (or any member
thereof), Japan or any Relevant Jurisdiction or any disruption in commercial
banking or foreign exchange trading or securities settlement or clearance
services, procedures or matters in or affecting any Relevant Jurisdiction; or
(f) the imposition of economic or comprehensive sanctions under any sanctions
laws or regulations in, or the withdrawal of trading privileges which existed on
the date of the Hong Kong Underwriting Agreement, in whatever form, directly
or indirectly, by, or for, the United States, the United Kingdom, the European
Union (or any member thereof), the PRC or any other Relevant Jurisdiction on
the Company or any members of the Group); or
(g) any change or development involving a prospective change or amendment in
or affecting taxation or exchange controls, currency exchange rates or foreign
investment regulations (including, without limitation, a change of the United
States dollars, the Hong Kong dollars or RMB against any foreign currencies,
a change in the system under which the value of the Hong Kong dollars is
linked to that of the United States dollars or RMB is linked to any foreign
currency or currencies), or the implementation of any exchange control in any
Relevant Jurisdiction or adversely affecting an investment in the Offer Shares;
or
(h) the issue or requirement to issue by the Company of a supplemental or
amendment to this Prospectus, the preliminary offering circular or the offering
circular or other documents in connection with the offer and sale of the Offer
Shares pursuant to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance or the Listing Rules or upon any requirement or request of the Hong
Kong Stock Exchange or the SFC; or
UNDERWRITING
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--- page 505 ---
(i) any change or development involving a prospective change which has the
effect of materialization of any of the risks set out in the section headed “Risk
Factors” in the Prospectus; or
(j) any litigation, dispute, arbitration, legal action, proceeding or claim or
regulatory investigation or action being threatened, instigated or announced
against the Company, any member of the Group, any Director or any of the
Controlling Shareholders; or
(k) any contravention of the Companies Ordinance, the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, the PRC Company Law or the
Listing Rules or any other applicable laws by the Company, any member of the
Group, any Director or any of the Controlling Shareholders; or
(l) any Director vacating his/her office; or
(m) any adverse change or prospective adverse change in the earnings, results of
operations, business, business prospects, financial or trading position,
conditions (financial or otherwise) or prospects of any member of the Group
(including any litigation or claim of any third party being threatened or
instigated against any member of the Group; or
(n) any demand by creditors for repayment of indebtedness or a petition being
presented for the winding-up or liquidation of any Group Company, or any
Group Company making any composition or arrangement with its creditors or
entering into a scheme of arrangement or any resolution being passed for the
winding-up of any Group Company or a provisional liquidator, receiver or
manager being appointed over all or part of the assets or undertaking of any
Group Company or anything analogous thereto occurs in respect of any Group
Company; or
(o) any order or petition for the winding up or liquidation of any member of the
Group or any composition or arrangement made by any member of the Group
with its creditors or a scheme of arrangement entered into by any member of
the Group or any resolution for the winding-up of any member of the Group or
the appointment of a provisional liquidator, receiver or manager over all or part
of the assets or undertaking of any member of the Group or anything analogous
thereto occurring in respect of any member of the Group,
which, in any such case individually or in the aggregate, in the sole and absolute
opinion of the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters): (A) is or will be or may be materially adverse to, or materially and
prejudicially affects, the assets, liabilities, business, general affairs, management,
shareholder’s equity, profit, losses, earnings, results of operations, performance,
financial position or condition (financial, operational or otherwise), or prospects of
UNDERWRITING
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--- page 506 ---
the Company or the Group as a whole or to any present or prospective shareholder
of the Company in its capacity as such; or (B) has or will have or may have a
material adverse effect on the success or marketability of the Global Offering or the
level of Offer Shares being applied for or accepted or subscribed for or purchased
or the distribution of Offer Shares and/or has made or is likely to make or may make
it impracticable or inadvisable or incapable for any material part of the Hong Kong
Underwriting Agreement, the Hong Kong Public Offering or the Global Offering to
be performed or implemented as envisaged; or (C) makes or will make it or may
make it inexpedient, impracticable or inadvisable or incapable to proceed with the
Hong Kong Public Offering and/or the Global Offering or the delivery of the Offer
Shares on the terms and in the manner contemplated by this Prospectus, the formal
notice, the preliminary offering circular or the offering circular; or (D) has had or
will have or may have the effect of making a part of the Hong Kong Underwriting
Agreement (including underwriting) incapable of performance in accordance with
its terms or which prevents or delays the processing of applications and/or payments
pursuant to the Global Offering or pursuant to the underwriting thereof; or
(B) there has come to the notice of the Overall Coordinators (for themselves and on
behalf of the Hong Kong Underwriters):
(a) that any statement contained in the Offering Documents (as defined in the
Hong Kong Underwriting Agreement) and/or any notices, announcements,
advertisements, communications or other documents (including any
announcement, circular, document or other communication pursuant to the
Hong Kong Underwriting Agreement) issued or used by or on behalf of the
Company in connection with the Global Offering (including any supplement or
amendment thereto) (collectively, the “ Offer Related Documents ”) was or has
become untrue, incomplete, incorrect, inaccurate in any respect or misleading
or deceptive or any forecasts, estimate, expressions of opinion, intention or
expectation contained in any of such documents are not fair and honest and
made on reasonable grounds or, where appropriate, based on reasonable
assumptions; or
(b) the issue or requirement to issue by the Company of any supplement or
amendment to this Prospectus, the preliminary offering circular or the offering
circular or any other documents in connection with the offer and sale of the
Offer Shares pursuant to the Companies Ordinance, the Companies (Winding
Up and Miscellaneous Provisions) Ordinance or the Listing Rules or any
requirement or request of the Hong Kong Stock Exchange and/or the SFC; or
(c) any material non-compliance of this Prospectus (or any other documents used
in connection with the contemplated subscription and sale of the Offer Shares),
the CSRC Filings (as defined in the Hong Kong Underwriting Agreement) or
any aspect of the Global Offering with the Listing Rules or any other
applicable Law; or
UNDERWRITING
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--- page 507 ---
(d) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this Prospectus, not having been
disclosed in this Prospectus, constitutes an omission from, or misstatement in,
any of the Offer Related Documents; or
(e) either (i) there has been a breach of any of the representations, warranties,
undertakings or provisions of either the Hong Kong Underwriting Agreement
or the International Underwriting Agreement by the Company and/or the
Controlling Shareholders; or (ii) any of the representations, warranties and
undertakings given by the Company and/or the Controlling Shareholders in the
Hong Kong Underwriting Agreement or the International Underwriting
Agreement, as applicable, is (or would when repeated be) untrue, incorrect,
incomplete or misleading; or
(f) any event, act or omission which gives or is likely to give rise to any liability
of the Company and/or the Controlling Shareholders pursuant to the
indemnities given by the Company and/or the Controlling Shareholders under
the Hong Kong Underwriting Agreement or the International Underwriting
Agreement; or
(g) any litigation or dispute, which would materially and adversely affect the
operation, financial condition or reputation of the Group; or
(h) any breach of any of the obligations of the Company and/or the Controlling
Shareholders under the Hong Kong Underwriting Agreement or the
International Underwriting Agreement (including any supplement or
amendment thereto); or
(i) any breach of, or any event or circumstance rendering any of the warranties
untrue or incorrect or incomplete or misleading in any respect; or
(j) a significant portion of the orders placed or confirmed in the book-building
process at the time of the International Underwriting Agreement is entered
into, or the investment commitments by any cornerstone investors after signing
of agreements with such cornerstone investors, have been withdrawn,
terminated or cancelled; or
(k) any cornerstone investor is unlikely to fulfil its obligation under the respective
agreement; or
(l) any expert, whose consent is required for the issue of this Prospectus with the
inclusion of its reports, letters or opinions and references to its name included
in the form and context in which it respectively appears, has withdrawn its
respective consent (other than the Joint Sponsors) prior to the issue of this
Prospectus; or
UNDERWRITING
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--- page 508 ---
(m) any material adverse change or prospective material adverse change or
development involving a prospective material adverse change in the assets,
liabilities, business, general affairs, management, shareholder’s equity, profits,
losses, properties, earnings, solvency, liquidity position, funding, results of
operations, performance, position or condition (financial, operational or
otherwise) or prospects of the Company and its subsidiaries, as a whole; or
(n) Admission (as defined in the Hong Kong Underwriting Agreement) is refused
or not granted, other than subject to customary conditions, on or before the
Listing Date, or if granted, the Admission is subsequently withdrawn,
canceled, qualified (other than by customary conditions), revoked or withheld;
or
(o) the Company has withdrawn this Prospectus (and/or any other documents
issued or used in connection with the Global Offering) or the Global Offering;
or
(p) a prohibition on the Company for whatever reason from offering, allotting,
issuing or selling the Offer Shares (including the Over-allotment Option
Shares) pursuant to the terms of the Global Offering; or
(q) any of the chairman, chief executive officer, or Director of the Company
vacating his/her office; or
(r) any Director or member of senior management of the Company is being
charged with an indictable offence or is prohibited by operation of law or
otherwise disqualified from taking part in the management of a company or
there is the commencement by any governmental, political or regulatory body
of any investigation or other action against any Director or member of senior
management of the Company in his or her capacity as such or any member of
the Group or an announcement by any governmental, political or regulatory
body that it intends to commence any such investigation or take any such
action; or
(s) any order or petition for the winding-up of any member of the Group or any
composition or arrangement made by any member of the Group with its
creditors or a scheme of arrangement entered into by any member of the Group
or any resolution for the winding-up of any member of the Group or the
appointment of a provisional liquidator, receiver or manager over all or part of
the assets or undertaking of any member of the Group or anything analogous
thereto occurring in respect of any member of the Group.
UNDERWRITING
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--- page 509 ---
Indemnity
The Company has agreed to indemnify, among others, the Overall Coordinators, the Joint
Global Coordinators, the Joint Sponsors, the Joint Bookrunners, the Joint Lead Managers and
the Hong Kong Underwriters for certain losses which they may suffer, including, among other
matters, losses incurred arising from the performance of their obligations under the Hong Kong
Underwriting Agreement and any breach by the Company of the Hong Kong Underwriting
Agreement.
Undertaking to the Stock Exchange pursuant to the Listing Rules
Undertakings by the Company
Pursuant to Rule 10.08 of the Listing Rules, the Company has undertaken to the Hong
Kong Stock Exchange that it will not issue any further Shares or securities convertible into
equity securities of the Company (whether or not of a class already listed) or form the subject
of any agreement to such issue within six months from the date on which our Shares first
commence dealing on the Hong Kong Stock Exchange (whether or not such issue of Shares or
securities will be completed within six months from the commencement of dealing), except
pursuant to the Share Division, Global Offering (including the exercise of the Over-allotment
Option) or under any of the circumstances provided under Rule 10.08 of the Listing Rules.
Undertakings by the Controlling Shareholders
Pursuant to Rule 10.07(1) of the Listing Rules, each of the Controlling Shareholders has
undertaken to the Hong Kong Stock Exchange that, except pursuant to the Share Subdivision
and the Global Offering and the Over-allotment Option, it shall not and shall procure that the
relevant registered holders of the Shares in which it is beneficially interested shall not, unless
in compliance with the requirements of the Listing Rules,
(a) in the period commencing on the date by reference to which disclosure of its
shareholding is made in this Prospectus and ending on the date which is six months
from the Listing Date, dispose of, nor enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances in respect of, any of
the Shares in respect of which it is shown by this Prospectus to be the beneficial
owner; and
(b) in the period of six months commencing on the date on which the period referred to
in the preceding paragraph expires, dispose of, or enter into any agreement to
dispose of or otherwise create, any options, rights, interests or encumbrances in
respect of, any of the Shares referred to in the preceding paragraph to such an extent
that immediately following such disposal, or upon the exercise or enforcement of
such options, rights, interests or encumbrances, it would cease to be a Controlling
Shareholder of our Company or a member of the group of Controlling Shareholders
of our Company or would together with the other Controlling Shareholders cease to
be Controlling Shareholders of our Company.
UNDERWRITING
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--- page 510 ---
Pursuant to Note (3) to Rule 10.07(2) of the Listing Rules, each of the Controlling
Shareholders has further undertaken to the Hong Kong Stock Exchange and to the Company
that within the period commencing on the date by reference to which disclosure of its
shareholding is made in this Prospectus and ending on the date which is 12 months from the
Listing Date, it shall:
(a) when it pledges or charges any Shares beneficially owned by it in favor of an
authorized institution (as defined in the Banking Ordinance (Chapter 155 of the
Laws of Hong Kong)) for a bona fide commercial loan pursuant to Note 2 to Rule
10.07(2) of the Listing Rules, immediately inform the Company of such pledge or
charge together with the number of Shares so pledged or charged; and
(b) when it receives indications, either verbal or written, from the pledgee or chargee of
any Shares that any of the pledged or charged Shares will be disposed of,
immediately inform the Company in writing of such indications.
Undertakings pursuant to the Hong Kong Underwriting Agreement
Undertakings by the Company
The Company has undertaken to each of the Overall Coordinators, the Joint Sponsors, the
Joint Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters that except pursuant
to the Global Offering (including pursuant to the Over-allotment Option), at any time during
the period commencing on the date of the Hong Kong Underwriting Agreement and ending, and
including, the date falling six months after the Listing Date (the “ First Six-Month Period ”),
it will not, and will procure each other member of the Group not to, without the prior written
consent of the Joint Sponsors and the Overall Coordinators (for themselves and on behalf of
the Hong Kong Underwriters) and unless in compliance with the requirements of the Listing
Rules:
(i) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, assign, mortgage, charge, pledge, hypothecate, lend, grant or
sell any option, warrant, contract or right to subscribe for or purchase, grant or
purchase any option, warrant, contract or right to allot, issue or sell, or otherwise
transfer or dispose of or create an Encumbrance (as defined in the Hong Kong
Underwriting Agreement) over, or agree to transfer or dispose of or create an
Encumbrance over, either directly or indirectly, conditionally or unconditionally, or
repurchase, any legal or beneficial interest in the share capital or any other securities
of the Company or any shares or other securities of such other member of the Group,
as applicable, or any interest in any of the foregoing (including, without limitation,
any securities convertible into or exchangeable or exercisable for or that represents
the right to receive, or any warrants or other rights to purchase any share capital or
other securities of the Company or such other member of the Group, as applicable),
or deposit any share capital or other securities of the Company or such other member
of the Group, as applicable, with a depositary in connection with the issue of
depositary receipts; or
UNDERWRITING
– 501 –


--- page 511 ---
(ii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership (legal or beneficial) of the
Shares or any other securities of the Company or any shares or other securities of
such other member of the Group, as applicable, or any interest in any of the
foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares or any shares of such other member of the
Group, as applicable); or
(iii) enter into any transaction with the same economic effect as any transaction specified
in (i) or (ii) above; or
(iv) offer to or agree to do any of the foregoing or announce any intention to do so,
in each case, whether any of the foregoing transactions is to be settled by delivery of share
capital or such other securities, in cash or otherwise (whether or not the issue of such share
capital or other securities will be completed within the First Six-Month Period). The Company
further agrees that, in the event the Company is allowed to enter into any of the transactions
described in (i), (ii) or (iii) above or offers to or agrees to or announces any intention to effect
any such transaction during the period of six months commencing on the date on which the
First Six Month Period expires (the “ Second Six-Month Period ”), it will take all reasonable
steps to ensure that such an issue or disposal will not, and no other act of the Company will,
create a disorderly or false market for any Shares or other securities of the Company. Each of
the Controlling Shareholders undertakes to each of the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the CMIs and the Hong Kong Underwriters to procure the Company and each other member
of the Group to comply with the undertakings.
Undertakings by the Controlling Shareholders
Each of the Controlling Shareholders jointly and severally undertakes to each of the
Company, the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the CMIs and the Hong Kong Underwriters that,
except pursuant to the Global Offering (including pursuant to the Over-allotment Option and
the Stock Borrowing Agreement, at any time after the date of this Agreement up to and
including the date falling twelve months after the Listing Date (the “ Lock-up Period for
Controlling Shareholders ”), it will not, and will procure that none of its associates will,
without the prior written consent of the Overall Coordinators (for themselves and on behalf of
the Hong Kong Underwriters):
(i) offer, accept subscription for, pledge, charge, allot, issue, sell, lend, mortgage,
hypothecate, assign, contract to allot, issue or sell, sell any option, warrant or
contract to purchase, purchase any option, warrant or contract to sell, grant or agree
to grant any option, right or warrant to purchase or subscribe for, lend or otherwise
transfer or dispose of or create an Encumbrance over, or agree to transfer or dispose
UNDERWRITING
– 502 –


--- page 512 ---
of, either directly or indirectly, conditionally or unconditionally, or repurchase any
of its share capital or other securities of the Company or any interest therein
(including but not limited to any securities convertible into or exercisable or
exchangeable for or that represent the right to receive any such share capital or
securities or any interest therein); or
(ii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership (legal or beneficial) of such
share capital or securities or any interest therein, as applicable, or any interest in any
of the foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares); or
(iii) enter into any transaction with the same economic effect as any transaction specified
in (i) or (ii) above; or
(iv) offer to or agree to do any of the foregoing or announce any intention to do so,
in each case, whether any or the foregoing transactions is to be settled by delivery of share
capital or such other securities, in cash or otherwise (whether or not the issue of share capital
or such other securities will be completed within the Lock-up Period for Controlling
Shareholders).
Undertakings by existing Shareholders
Each of the existing Shareholders of the Company has entered into a deed of lock-up
undertaking (the “ Lock-up Undertaking ”) in favor of the Joint Sponsors, the Overall
Coordinators and the Company imposing certain restrictions on dealings with their respective
Shares.
Pursuant to the Lock-up Undertakings, which are largely similar in form, save for certain
special circumstances, each of the existing Shareholders undertakes that, inter alia, it will not,
and will procure that no company or legal entity controlled by it or any nominee or trustee
holding in trust for it will, at any time during the period ending on, and including, the date
falling twelve months after the Listing Date (the “ Lock-up Period ”), without prior written
consent of the Company and the Overall Coordinators:
(i) offer, pledge, charge, sell, mortgage, lend, create, transfer, assign or otherwise
dispose of (as defined in the Lock-up Undertakings), any legal or beneficial interest,
or create any third party right of whatever nature over, any legal or beneficial
interest in the Relevant Shares (as defined in the Lock-up Undertakings) (the
“Relevant Shares ”) or any other securities convertible into or exercisable or
exchangeable for such Relevant Shares, or that represent the right to receive, such
Relevant Shares, or any interest in them, or contract to do so, whether directly or
indirectly and whether conditionally or unconditionally;
UNDERWRITING
– 503 –


--- page 513 ---
(ii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of, any Relevant Shares;
(iii) engage into any transaction with the same economic effect as any transaction
described in (i) or (ii) above; or
(iv) offer to or contract to or agree to or publicly disclose that he/she/it will or may enter
into any transaction described in (i), (ii) or (iii) above.
The Lock-up Undertakings are subject to certain exceptions, including, for example, (i)
any transfer with the prior written consent of the Company and the Overall Coordinators; and
(ii) any transfer to any of the existing Shareholder’s wholly-owned subsidiary provided that
prior to such transfer such wholly-owned subsidiary shall give a written undertaking
(addressed to and in favor of the Company, the Joint Sponsors and the Overall Coordinators in
terms satisfactory to them and substantially the same as the Lock-up Undertaking) agreeing to,
and the existing Shareholder undertakes to procure that such wholly-owned subsidiary of it
will, be bound by the undertaking.
For the undertakings by our Controlling Shareholders, please also refer to the section
headed “History, Reorganization and Corporate Structure — Lock-up Arrangements” in this
prospectus and the sub-sections headed “Undertaking to the Stock Exchange pursuant to the
Listing Rules — Undertakings by the Controlling Shareholders” above and “Undertakings
pursuant to the Hong Kong Underwriting Agreement — Undertakings by the Controlling
Shareholders” above in this section.
Indemnity
The Company has agreed to indemnify the Overall Coordinators, the Joint Global
Coordinators, the Joint Sponsors, the Joint Bookrunners, the Joint Lead Managers and the
Hong Kong Underwriters for certain losses which they may suffer, including, among other
matters, losses incurred arising from the performance of their obligations under the Hong Kong
Underwriting Agreement and any breach by us of the Hong Kong Underwriting Agreement.
Commissions and Expenses
The Hong Kong Underwriters will receive an underwriting commission of 2.5% of the
aggregate Offer Price payable for the Hong Kong Offer Shares offered under the Hong Kong
Public Offering (excluding any Hong Kong Offer Shares reallocated to the International
Offering), and the International Underwriters are expected to receive an underwriting
commission of 2.5% of the aggregate Offer Price payable for the International Offer Shares
offered under the International Offering. For unsubscribed Hong Kong Offer Shares reallocated
to the International Offering and International Offer Shares reallocated to the Hong Kong
Public Offering, if any, the Company will pay an underwriting commission at the rate
applicable to the International Offering as set out in the International Underwriting Agreement,
and such commission will be paid to the Overall Coordinators (for themselves and on behalf
UNDERWRITING
– 504 –


--- page 514 ---
of the International Underwriters), and no underwriting commission will be paid to the Hong
Kong Underwriters for such reallocated Offer Shares. In addition, at the discretion of the
Company, the Underwriters may also receive an incentive fee of not more than 1.0% of the
aggregate Offer Price in respect of all the Offer Shares to be issued by the Company under the
Global Offering (including any Offer Shares to be issued pursuant to the exercise of the
Over-allotment Option). The ratio of fixed fee and discretionary fee payable by the Company
to all syndicate members participating in the Global Offering is expected to be approximately
71:29 (assuming the discretionary fee will be paid in full).
Assuming the full payment of the discretionary incentive fee and the exercise of the
Over-allotment Option in full, the aggregate commissions and fees, together with the Hong
Kong Stock Exchange listing fees, the Hong Kong Stock Exchange trading fee of 0.00565% per
Offer Share, SFC transaction levy of 0.0027% per Offer Share, AFRC transaction levy of
0.00015%, legal and other professional fees and printing and other expenses relating to the
Global Offering, payable by us, are estimated to be approximately HK$81.9 million, which is
subject to adjustment to be agreed by the Company, the Overall Coordinators and other parties.
An amount of US$500,000 is payable by the Company as sponsor fees to each Joint
Sponsors.
Hong Kong Underwriters’ Interests in the Company
Save for the obligations under the Hong Kong Underwriting Agreement and as disclosed
in this Prospectus, none of the Hong Kong Underwriters has any shareholding or beneficial
interests in any member of the Group or has any right or option (whether legally enforceable
or not) to subscribe for or purchase or to nominate persons to subscribe for or purchase
securities in any member of the Group.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the Shares as a result of fulfilling their
obligations under the Hong Kong Underwriting Agreement.
The International Offering
In connection with the International Offering, it is expected that the Company will enter
into the International Underwriting Agreement with, among others, the Overall Coordinators
(for themselves and on behalf of the International Underwriters). Under the International
Underwriting Agreement and subject to the Over-allotment Option, it is expected that the
International Underwriters would, subject to certain conditions set out therein, severally but
not jointly, agree to procure purchasers for, or to purchase, the International Offer Shares being
offered pursuant to the International Offering or procure purchasers for their respective
applicable proportions of International Offer Shares. Please refer to the section headed
“Structure of the Global Offering – The International Offering” in this Prospectus for details.
UNDERWRITING
– 505 –


--- page 515 ---
Over-allotment Option
The Company expects to grant to the International Underwriters, exercisable by the
Overall Coordinators (for themselves and on behalf of the International Underwriters), the
Over-allotment Option, which will be exercisable from the date of the International
Underwriting Agreement until 30 days after the last day for the lodging of applications under
the Hong Kong Public Offering, to issue up to 27,166,000 Shares by the Company, representing
approximately 15% of the initial Offer Shares, at the same price per Offer Share under the
International Offering, to, among other things, cover over-allocations in the International
Offering, if any.
RESTRICTIONS ON THE OFFER SHARES
No action has been taken to permit a public offering of the Offer Shares or the publication
of this Prospectus in any jurisdiction other than Hong Kong. Accordingly, without limitation
to the following, this Prospectus may not be used for the purpose of, and does not constitute,
an offer or invitation in any jurisdiction or in any circumstances in which such an offer or
invitation is not authorized or to any person to whom it is unlawful to make such an offer or
invitation. The publication of this Prospectus and the offering and sales of the Offer Shares in
other jurisdictions are subject to restrictions and may not be made except as permitted under
the applicable securities laws of such jurisdictions pursuant to registration with or
authorization by the relevant securities regulatory authorities or an exemption therefrom. In
particular, the Hong Kong Offer Shares have not been publicly offered or sold, directly or
indirectly, in China or the United States.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering
(together, the “ Syndicate Members ”) and their affiliates may each individually undertake a
variety of activities (as further described below) which do not form part of the underwriting.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, funds management, trading, hedging,
investing and other activities for their own account and for the account of others. In the
ordinary course of their various business activities, the Syndicate Members and their respective
affiliates may purchase, sell or hold a broad array of investments and actively trade securities,
derivatives, loans, commodities, currencies, credit default swaps and other financial
instruments for their own account and for the accounts of their customers. Such investment and
trading activities may involve or relate to assets, securities and/or instruments of the Company
and/or persons and entities with relationships with the Company and may also include swaps
and other financial instruments entered into for hedging purposes in connection with the
Group’s loans and other debt.
UNDERWRITING
– 506 –


--- page 516 ---
In relation to the Shares, the activities of the Syndicate Members and their affiliates could
include acting as agent for buyers and sellers of the Shares, entering into transactions with
those buyers and sellers in a principal capacity, including as a lender to initial purchasers of
the Shares (which financing may be secured by the Shares) in the Global Offering, proprietary
trading in the Shares, and entering into over-the-counter or listed derivative transactions or
listed and unlisted securities transactions (including issuing securities such as derivative
warrants listed on a stock exchange) which have as their underlying assets, assets including the
Shares. Such transactions may be carried out as bilateral agreements or trades with selected
counterparties. Those activities may require hedging activity by those entities involving,
directly or indirectly, the buying and selling of the Shares, which may have a negative impact
on the trading price of the Shares. All such activity could occur in Hong Kong and elsewhere
in the world and may result in the Syndicate Members and their affiliates holding long and/or
short positions in the Shares, in baskets of securities or indices including the Shares, in units
of funds that may purchase the Shares, or in derivatives related to any of the foregoing.
In relation to issues by the Syndicate Members or their affiliates of any listed securities
having the Shares as their underlying securities, whether on the Hong Kong Stock Exchange
or on any other stock exchange, the rules of the exchange may require the issuer of those
securities (or one of its affiliates or agents) to act as a market maker or liquidity provider in
the security, and this will also result in hedging activity in the Shares in most cases.
Such activities may affect the market price or value of the Shares, the liquidity or trading
volume in the Shares and the volatility of the price of the Shares, and the extent to which this
occurs from day to day cannot be estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
(a) the Syndicate Members must not, in connection with the distribution of the Offer
Shares, effect any transactions (including issuing or entering into any option or other
derivative transactions relating to the Offer Shares), whether in the open market or
otherwise, with a view to stabilizing or maintaining the market price of any of the
Offer Shares at levels other than those which might otherwise prevail in the open
market; and
(b) the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market
manipulation.
Certain of the Syndicate Members or their respective affiliates have provided from time
to time, and expect to provide in the future, investment banking and other services to the
Company and its affiliates for which such Syndicate Members or their respective affiliates have
received or will receive customary fees and commissions.
UNDERWRITING
– 507 –


--- page 517 ---
THE GLOBAL OFFERING
This Prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. The Global Offering comprises:
(i) the Hong Kong Public Offering of initially 18,112,000 Offer Shares (subject to
reallocation) in Hong Kong as described in “– The Hong Kong Public Offering” in
this section below; and
(ii) the International Offering of initially 163,000,000 Offer Shares (subject to
reallocation and the Over-allotment Option) outside the United States in offshore
transactions in reliance on Regulation S, as described in “– The International
Offering” in this section below.
Investors may either apply for the Hong Kong Offer Shares under the Hong Kong Public
Offering or apply for or indicate an interest for the International Offer Shares under the
International Offering, but may not do both.
References in this Prospectus to applications, application monies or the procedure for
applications relate solely to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares Initially Offered
The Company is initially offering 18,112,000 Hong Kong Offer Shares, representing
approximately 10% of the total number of Offer Shares initially available under the Global
Offering, at the Offer Price for subscription by the public in Hong Kong. Subject to the
reallocation of Shares between (i) the International Offering and (ii) the Hong Kong Public
Offering, the Hong Kong Offer Shares will represent approximately 1.4% of the Company’s
issued share capital immediately after completion of the Share Subdivision and Global
Offering (assuming the Over-allotment Option is not exercised)
The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors. Professional investors generally include brokers,
dealers and companies (including fund managers) whose ordinary business involves dealing in
shares and other securities, and corporate entities which regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions as set out in
“– Conditions of the Global Offering” in this section below.
STRUCTURE OF THE GLOBAL OFFERING
– 508 –


--- page 518 ---
Allocation
Allocation of the Offer Shares to investors under the Hong Kong Public Offering will be
based solely on the level of valid applications received under the Hong Kong Public Offering.
The basis of allocation may vary, depending on the number of Hong Kong Offer Shares validly
applied for by applicants. Such allocation could, where appropriate, consist of balloting, which
would mean that some applicants may receive a higher allocation than others who have applied
for the same number of Hong Kong Offer Shares, and those applicants who are not successful
in the ballot may not receive any Hong Kong Offer Shares.
The total number of Hong Kong Offer Shares available under the Hong Kong Public
Offering (after taking account of any reallocation referred to below) will be divided equally
into two pools, Pool A and Pool B, with any odd board lots being allocated to Pool A, for
allocation purposes:
Pool A: The Hong Kong Offer Shares in Pool A will be allocated on an equitable basis
to applicants who have applied for Hong Kong Offer Shares with an aggregate
subscription price of HK$5 million (excluding brokerage, SFC transaction
levy, AFRC transaction levy and the Hong Kong Stock Exchange trading fee
payable) or less.
Pool B: The Hong Kong Offer Shares in Pool B will be allocated on an equitable basis
to applicants who have applied for Hong Kong Offer Shares with an aggregate
subscription price of more than HK$5 million (excluding brokerage, SFC
transaction levy, AFRC transaction levy and the Hong Kong Stock Exchange
trading fee payable) and up to the total value of pool B.
For the purpose of this sub-section only, the “subscription price” for Hong Kong Offer
Shares means the price payable on application (without regard to the Offer Price as finally
determined).
Applicants should be aware that applications in Pool A and applications in Pool B may
receive different allocation ratios. If Hong Kong Offer Shares in one (but not both) of the two
pools are undersubscribed, the surplus Hong Kong Offer Shares will be transferred to the other
pool to satisfy demand in that other pool and be allocated accordingly.
Applicants can only receive an allocation of Hong Kong Offer Shares from either Pool A
or Pool B, but not from both pools. Multiple or suspected multiple applications and any
application for more than 9,056,000 Hong Kong Offer Shares (being approximately 50% of the
18,112,000 Offer Shares initially available under the Hong Kong Public Offering) will be
rejected.
STRUCTURE OF THE GLOBAL OFFERING
– 509 –


--- page 519 ---
Reallocation and Clawback
The allocation of the Offers Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation. Paragraph 4.2 of Practice Note 18 of the
Listing Rules requires a clawback mechanism to be put in place, which would have the effect
of increasing the number of Hong Kong Offer Shares to a certain percentage of the total
number of Offer Shares offered under the Global Offering if certain prescribed total demand
levels are reached (“ Mandatory Reallocation ”):
(a) 18,112,000 Offer Shares are initially available in the Hong Kong Public Offering,
representing approximately 10% of the Offer Shares initially available under the
Global Offering;
In the event that the International Offer Shares are fully subscribed or oversubscribed
(b) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 15 times or more but less than 50 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the Offer Shares will be reallocated to the Hong Kong Public Offering from the
International Offering, such that the total number of Offer Shares initially available
under the Hong Kong Public Offering will be 54,334,000 Offer Shares, representing
approximately 30% of the Offer Shares initially available under the Global Offering;
(c) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 50 times or more but less than 100 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the Offer Shares will be reallocated to the Hong Kong Public Offering from the
International Offering, such that the total number of Offer Shares initially available
under the Hong Kong Public Offering will be 72,445,000 Offer Shares, representing
approximately 40% of the Offer Shares initially available under the Global Offering;
and
(d) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 100 times or more the number of Offer Shares initially available
for subscription under the Hong Kong Public Offering, then the Offer Shares will be
reallocated to the Hong Kong Public Offering from the International Offering, such
that the total number of Offer Shares initially available under the Hong Kong Public
Offering will be 90,556,000 Offer Shares, representing 50% of the Offer Shares
initially available under the Global Offering.
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering
will be allocated between Pool A and Pool B and the number of Offer Shares allocated to the
International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deem appropriate. In addition, the Overall Coordinators may reallocate the Offer
Shares from the International Offering to the Hong Kong Public Offering to satisfy valid
STRUCTURE OF THE GLOBAL OFFERING
– 510 –


--- page 520 ---
applications under the Hong Kong Public Offering. In addition, if the Hong Kong Public
Offering is not fully subscribed for, the Overall Coordinators (for themselves and on behalf of
the Underwriters) have the authority to reallocate all or any unsubscribed Hong Kong Offer
Shares to the International Offering, in such proportions as the Overall Coordinators deem
appropriate.
In addition to any Mandatory Reallocation which may be required, the Overall
Coordinators (for themselves and on behalf of the Underwriters) may, at their discretion,
reallocate Offer Shares initially allocated for the International Offering to the Hong Kong
Public Offering to satisfy valid applications in Pool A and Pool B under the Hong Kong Public
Offering. In the event that (i) the International Offer Shares are undersubscribed and the Hong
Kong Offer Shares are fully subscribed or oversubscribed irrespective of the number of times;
or (ii) the International Offer Shares are fully subscribed or oversubscribed and the Hong Kong
Offer Shares are fully subscribed or oversubscribed as to less than 15 times of the number of
Hong Kong Offer Shares initially available under the Hong Kong Public Offering, up to
18,111,000 Offer Shares may be reallocated to the Hong Kong Public Offering from the
International Offering, so that the total number of the Offer Shares available under the Hong
Kong Public Offer will be increased to 36,223,000 Offer Shares, representing approximately
20% of the number of the Offer Shares initially available after the completion of Share
Subdivision, and under the Global Offering (before any exercise of the Over-Allotment Option)
in accordance with Chapter 4.14 of the Guide for New Listing Applicants issued by the Hong
Kong Stock Exchange.
Applications
Each applicant under the Hong Kong Public Offering will also be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he is making the application have not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any International Offer
Shares under the International Offering, and such applicant’s application is liable to be rejected
if such undertaking and/or confirmation is breached and/or untrue (as the case may be) or it has
been or will be placed or allocated International Offer Shares under the International Offering.
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the price of HK$3.22 per Offer Share in addition to
brokerage, SFC transaction levy, AFRC transaction levy and the Hong Kong Stock Exchange
trading fee payable on each Offer Share. Further details are set out in the section headed “How
to Apply for Hong Kong Offer Shares” in this Prospectus.
STRUCTURE OF THE GLOBAL OFFERING
–5 1 1–


--- page 521 ---
THE INTERNATIONAL OFFERING
Number of Offer Shares Initially Offered
Subject to the reallocation as described above, the number of Offer Shares to be initially
offered under the International Offering will be 163,000,000, representing approximately 90%
of the total number of Offer Shares initially available under the Global Offering. Subject to the
reallocation of the Offer Shares between the International Offering and the Hong Kong Public
Offering, the number of Offer Shares initially offered under the International Offering will
represent approximately 12.9% of the Company’s issued share capital immediately after
completion of the Share Subdivision and the Global Offering (assuming the Over-allotment
Option is not exercised).
Allocation
International Offer Shares will be selectively placed by the International Underwriters or
through selling agents appointed by them with certain professional and institutional investors
and other investors anticipated to have a sizeable demand for such Offer Shares in Hong Kong
and other jurisdictions outside the United States in offshore transactions in reliance on
Regulation S. The International Offering is subject to the Hong Kong Public Offering being
unconditional.
Allocation of Offer Shares pursuant to the International Offering will be effected in
accordance with the “book-building” process described in “– Pricing and Allocation” in this
section below and based on a number of factors, including the level and timing of demand, total
size of the relevant investor’s invested assets or equity assets in the relevant sector and whether
or not it is expected that the relevant investor is likely to hold or sell Shares, after the listing
of our Shares on the Hong Kong Stock Exchange. Such allocation is intended to result in a
distribution of the Shares on a basis which would lead to the establishment of a solid
shareholder base to the benefit of the Company and its Shareholders as a whole.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may require
any investor who has been offered Offer Shares under the International Offering and who has
made an application under the Hong Kong Public Offering, to provide sufficient information
to the Overall Coordinators (for themselves and on behalf of the Underwriters) so as to allow
it to identify the relevant applications under the Hong Kong Public Offering and to ensure that
they are excluded from any application of Offer Shares under the Hong Kong Public Offering.
Reallocation and Clawback
The total number of Offer Shares to be issued or sold pursuant to the International
Offering may change as a result of the clawback arrangement described in “– The Hong Kong
Public Offering – Reallocation and Clawback” above, the exercise of the Over-allotment
Option in whole or in part and/or any reallocation of unsubscribed Offer Shares originally
included in the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 512 –


--- page 522 ---
OVER-ALLOTMENT OPTION
In connection with the Global Offering, it is expected that the Company will grant the
Over-allotment Option to the International Underwriters, which will be exercisable by the
Overall Coordinators (for themselves and on behalf of the International Underwriters).
Pursuant to the Over-allotment Option, the International Underwriters have the right,
exercisable by the Overall Coordinators (for themselves and on behalf of the International
Underwriters) at any time from the effective date of the International Underwriting Agreement
to the 30th day after the last day for lodging applications under the Hong Kong Public Offering,
to require the Company to issue up to 27,166,000 additional Shares, representing in aggregate
approximately 15% of the total number of Offer Shares initially available under the Global
Offering, at the Offer Price under the International Offering, to, among other things, cover
over-allocations in the International Offering, if any. In the event that the Over-allotment
Option is exercised, a public announcement will be made.
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the
distribution of securities. To stabilize, the underwriters may bid for, or purchase, the securities
in the secondary market, during a specified period of time, to curb and, if possible, prevent any
decline in the market price of the securities below the offer price. It may be effected in
jurisdictions where it is permissible to do so and subject to all applicable laws and regulatory
requirements. In Hong Kong, the price at which stabilization is effected is not permitted to
exceed the Offer Price.
In connection with the Global Offering, the Stabilizing Manager or any person acting for
it, on behalf of the Underwriters, may over-allocate or effect short sales or any other stabilizing
transactions with a view to stabilizing or maintaining the market price of the Offer Shares at
a level higher than that which might otherwise prevail in the open market. Short sales involve
the sale by the Stabilizing Manager of a greater number of Shares than the Underwriters are
required to purchase in the Global Offering. “Covered” short sales are sales made in an amount
not greater than the Over-allotment Option. The Stabilizing Manager may close out the covered
short position by either exercising the Over-allotment Option to purchase additional Offer
Shares or purchasing Shares in the open market. In determining the source of the Offer Shares
to close out the covered short position, the Stabilizing Manager will consider, among other
things, the price of Offer Shares in the open market as compared to the price at which they may
purchase additional Offer Shares pursuant to the Over-allotment Option. Stabilizing
transactions consist of certain bids or purchases made for the purpose of preventing or curbing
a decline in the market price of the Offer Shares while the Global Offering is in progress.
However, there is no obligation on the Stabilizing Manager or any person acting for it to
conduct any such stabilizing action. Such stabilizing activity, if commenced, will be done at
the absolute discretion of the Stabilizing Manager and may be discontinued at any time.
STRUCTURE OF THE GLOBAL OFFERING
– 513 –


--- page 523 ---
Any such stabilizing activity is required to be brought to an end within 30 days of the last
day for the lodging of applications under the Hong Kong Public Offering. The number of the
Offer Shares that may be over-allocated will not exceed the number of the Shares that may be
sold under the Over-allotment Option, namely, 27,166,000 Offer Shares, which is
approximately 15% of the number of Offer Shares initially available under the Global Offering,
and cover such over-allocations by exercising the Over-allotment Option or by making
purchases in the secondary market at prices that do not exceed the Offer Price or through stock
borrowing arrangements or a combination of these means.
In Hong Kong, stabilizing activities must be carried out in accordance with the Securities
and Futures (Price Stabilizing) Rules. Stabilizing actions permitted pursuant to the Securities
and Futures (Price Stabilizing) Rules include:
(a) over-allocating for the purpose of preventing or minimizing any reduction in the
market price of our Shares;
(b) selling or agreeing to sell the Shares so as to establish a short position in them for
the purpose of preventing or minimizing any reduction in the market price of the
Shares;
(c) purchasing or subscribing for, or agreeing to purchase or subscribe for, our Shares
pursuant to the Over-allotment Option in order to close out any position established
under (a) or (b) above;
(d) purchasing, or agreeing to purchase, any of the Shares for the sole purpose of
preventing or minimizing any reduction in the market price;
(e) selling or agreeing to sell any of our Shares in order to liquidate any position
established as a result of those purchases; and
(f) offering or attempting to do anything as described in (b), (c), (d) or (e) above.
Stabilizing actions by the Stabilizing Manager, or any person acting for it, will be entered
into in accordance with the laws, rules and regulations in place in Hong Kong on stabilization.
As a result of effecting transactions to stabilize or maintain the market price of the Shares,
the Stabilizing Manager, or any person acting for it, may maintain a long position in the Shares.
The size of the long position, and the period for which the Stabilizing Manager, or any person
acting for it, will maintain the long position is at the discretion of the Stabilizing Manager and
is uncertain. In the event that the Stabilizing Manager liquidates this long position by making
sales in the open market, this may lead to a decline in the market price of the Shares.
Stabilizing action by the Stabilizing Manager, or any person acting for it, is not permitted
to support the price of the Shares for longer than the stabilizing period, which begins on the
day on which trading of the Shares commences on the Hong Kong Stock Exchange and ends
on the 30th day after the last day for the lodging of applications under the Hong Kong Public
Offering. The stabilizing period is expected to end on Sunday, February 2, 2025. As a result,
demand for the Shares, and their market price, may fall after the end of the stabilizing period.
STRUCTURE OF THE GLOBAL OFFERING
– 514 –


--- page 524 ---
These activities by the Stabilizing Manager may stabilize, maintain or otherwise affect the
market price of the Shares. As a result, the price of the Shares may be higher than the price that
otherwise may exist in the open market. Any stabilizing action taken by the Stabilizing
Manager, or any person acting for it, may not necessarily result in the market price of the
Shares staying at or above the Offer Price either during or after the stabilizing period. Bids for
or market purchases of the Shares by the Stabilizing Manager, or any person acting for it, may
be made at a price at or below the Offer Price and therefore at or below the price paid for the
Shares by purchasers. A public announcement in compliance with the Securities and Futures
(Price Stabilizing) Rules will be made within seven days of the expiration of the stabilizing
period.
STOCK BORROWING AGREEMENT
In order to facilitate the settlement of over-allocations in connection with the Global
Offering, the Stabilizing Manager (or its affiliate(s)) may choose to borrow up to 27,166,000
Shares from ZTan Limited, representing approximately 15% of the Offer Shares initially being
offered under the Global Offering, pursuant to the stock borrowing agreement. If such stock
borrowing agreement is entered into, it will comply with the requirements set forth in Rule
10.07(3) of the Listing Rules and thus not subject to the restrictions of Rule 10.07(1) of the
Listing Rules. The stock borrowing arrangement will only be effected by the Stabilizing
Manager for settlement of over-allocations in the International Offering and will be for the sole
purpose of covering any short position prior to the exercise of the Over-allotment Option.
The same number of Shares so borrowed must be returned to ZTan Limited or its
nominees, as the case may be, on or before the third business day following the earlier of (a)
the last day for exercising the Over-allotment Option and (b) the day on which the
Over-allotment Option is exercised in full.
The stock borrowing arrangement described above will be effected in compliance with all
applicable laws, rules and regulatory requirements. No payment will be made to ZTan Limited
by the Stabilizing Manager (or any person acting for it) in relation to such stock borrowing
arrangement.
PRICING AND ALLOCATION
The International Underwriters will be soliciting from prospective investors indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building,” is expected to continue up to, and to
cease on or around, the last day for lodging applications under the Hong Kong Public Offering.
Price Payable on Application
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the Offer Price of HK$3.22 per Hong Kong Offer Share (plus
1% brokerage, 0.0027% SFC transaction levy, 0.00015% AFRC transaction levy and 0.00565%
Hong Kong Stock Exchange trading fee).
STRUCTURE OF THE GLOBAL OFFERING
– 515 –


--- page 525 ---
Reduction in Offer Price and/or Number of Offer Shares
The Overall Coordinators (for themselves and on behalf of the Underwriters) may, where
considered appropriate, based on the level of interest expressed by prospective professional
and institutional investors during the book-building process, and with the consent of the
Company, reduce the number of Offer Shares and/or the Offer Price as stated in this Prospectus
at any time on or prior to the morning of the last day for lodging applications under the Hong
Kong Public Offering. In such case, we will, as soon as practicable following the decision to
make such reduction, and in any event not later than the morning of the last day for lodging
applications under the Hong Kong Public Offering, cause to be published on the website of the
Hong Kong Stock Exchange at www.hkexnews.hk and the Company at 66nao.cn , notices of
the reduction of the Offer Shares and/or the Offer Price, and the cancellation of the Global
Offering and relaunch of the offer at the revised number of Offer Shares and/or the revised
Offer Price.
We will also, as soon as practicable following the decision to make any such reduction,
issue a supplemental prospectus or a new prospectus updating investors of the change in the
number of Offer Shares being offered under the Global Offering and/or the Offer Price, and
giving investors at least three business days to consider the new information. The supplemental
or new prospectus should include at least the following: updated (i) Offer Price and market
capitalization; (ii) listing timetable and underwriting obligations; (iii) price/earning multiple,
unaudited pro forma and adjusted net tangible assets; and (iv) use of proceeds and working
capital adequacy confirmation based on revised proceeds. The Global Offering must first be
cancelled and subsequently relaunched on FINI pursuant to the supplemental prospectus.
In the absence of any such notice and supplemental prospectus so published, the number
of Offer Shares and the Offer Price will not be reduced.
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
and/or the Offer Price may not be made until the last day for lodging applications under the
Hong Kong Public Offering.
If there is any change to the offer size due to change in the number of Offer Shares offered
in the Global Offering (other than pursuant to the exercise of the Over-allotment Option and/or
the reallocation mechanism as disclosed in this Prospectus), or change to the Offer Price, or if
the Company becomes aware that there has been a significant change affecting any matter
contained in this Prospectus or a significant new matter has arisen, the inclusion of information
in respect of which would have been required to be in this Prospectus if it had arisen before
this Prospectus was issued, after the issue of this Prospectus and before the commencement of
dealings in our Shares as prescribed under Rule 11.13 of the Listing Rules, we are required to
cancel the Global Offering and relaunch the offer on FINI and issue a supplemental prospectus
or a new prospectus.
STRUCTURE OF THE GLOBAL OFFERING
– 516 –


--- page 526 ---
In the event of a reduction in the number of Offer Shares, the Overall Coordinators (for
themselves and on behalf of the Underwriters) may, at their discretion, reallocate the number
of Offer Shares to be offered in the Hong Kong Public Offering and the International Offering,
provided that the number of Offer Shares comprised in the Hong Kong Public Offering shall
not be less than 10% of the total number of Offer Shares available under the Global Offering.
The Offer Shares to be offered in the Hong Kong Public Offering and the Offer Shares to be
offered in the International Offering may, in certain circumstances, be reallocated between
these offerings at the discretion of the Overall Coordinators (for themselves and on behalf of
the Underwriters).
Announcement of Basis of Allocations
The level of indications of interest in the Global Offering, the results of allocations and
the basis of allotment of the Hong Kong Offer Shares are expected to be announced on
Tuesday, January 7, 2025 on the website of the Hong Kong Stock Exchange at
www.hkexnews.hk and on the website of the Company at 66nao.cn .
UNDERWRITING
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement and is subject to the Company and
the Overall Coordinators, for themselves and on behalf of the Underwriters, agreeing on the
Offer Price.
We expect to enter into the International Underwriting Agreement relating to the
International Offering on or about January 6, 2025.
These underwriting arrangements, and the Hong Kong Underwriting Agreement and the
International Underwriting Agreement, are summarized in the section headed “Underwriting”
in this Prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares will be conditional on:
(a) the Hong Kong Stock Exchange granting approval for the listing of, and permission
to deal in, the Shares in issue and to be issued pursuant to the Share Subdivision and
the Global Offering and the exercise of Over-allotment Option on the Main Board
of the Hong Kong Stock Exchange and such approval not subsequently having been
withdrawn or revoked prior to the Listing Date;
(b) the Offer Price having been agreed between the Overall Coordinators (for
themselves and on behalf of the Underwriters) and the Company;
STRUCTURE OF THE GLOBAL OFFERING
– 517 –


--- page 527 ---
(c) the execution and delivery of the International Underwriting Agreement on or about
January 6, 2025; and
(d) the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the
International Underwriting Agreement becoming and remaining unconditional and
not having been terminated in accordance with the terms of the respective
agreements,
in each case on or before the dates and times specified in the Underwriting Agreements (unless
and to the extent such conditions are validly waived on or before such dates and times).
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional
and not having been terminated in accordance with its terms.
If the above conditions are not fulfilled or waived prior to the times and dates specified,
the Global Offering will lapse and the Hong Kong Stock Exchange will be notified
immediately. Notice of the lapse of the Hong Kong Public Offering will be published by the
Company on the websites of the Hong Kong Stock Exchange at www.hkexnews.hk and the
Company at 66nao.cn on the next business day following such lapse. In such eventuality, all
application monies will be returned, without interest, on the terms set out in the section headed
“How to Apply for Hong Kong Offer Shares – D. Despatch/Collection of Share Certificates and
refund of application monies” in this Prospectus. In the meantime, all application monies will
be held in separate bank account(s) with the receiving bank or other bank(s) in Hong Kong
licensed under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong) (as amended).
Share certificates for the Offer Shares will only become valid evidence of title at 8:00
a.m. on Wednesday, January 8, 2025, provided that the Global Offering has become
unconditional in all respects and the right of termination as described in the section headed
“Underwriting – Underwriting Arrangements – Hong Kong Public Offering – Grounds for
Termination” in this Prospectus has not been exercised at or before that time.
APPLICATION FOR LISTING ON THE HONG KONG STOCK EXCHANGE
We have applied to the Hong Kong Stock Exchange for the listing of, and permission to
deal in, the Shares in issue (upon completion of the Share Subdivision and including the Shares
to be converted from the Preferred Shares); and the Shares to be issued pursuant to the Global
Offering (including any Shares which may be issued pursuant to the exercise of the
Over-allotment Option).
No part of the Company’s share or loan capital is listed on or dealt in on any other stock
exchange and no such listing or permission to deal is being or proposed to be sought in the near
future.
STRUCTURE OF THE GLOBAL OFFERING
– 518 –


--- page 528 ---
SHARES WILL BE ELIGIBLE FOR CCASS
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS, established and operated by the HKSCC.
If the Hong Kong Stock Exchange grants the listing of, and permission to deal in, the
Shares and the Company complies with the stock admission requirements of HKSCC, the
Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement
in CCASS with effect from the date of commencement of dealings in the Shares on the Hong
Kong Stock Exchange or any other date HKSCC chooses. Settlement of transactions between
participants of the Hong Kong Stock Exchange is required to take place in CCASS on the
second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
DEALINGS IN THE SHARES
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Wednesday, January 8, 2025, it is expected that dealings in the Shares
on the Hong Kong Stock Exchange will commence at 9:00 a.m. on Wednesday, January 8,
2025.
The Shares will be traded in board lots of 1,000 Shares each and the stock code of the
Shares will be 6681.
STRUCTURE OF THE GLOBAL OFFERING
– 519 –


--- page 529 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering and below are the procedures for application.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing
Information” section, and our website at 66nao.cn.
The contents of this prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
Y ou can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying for:
 are 18 years of age or older; and
 have a Hong Kong address (for the HK eIPO White Form service only) .
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the
Stock Exchange to us, you cannot apply for any Hong Kong Offer Shares if you or the
person(s) for whose benefit you are applying for:
 are an existing Shareholder or close associates; or
 are a Director or any of his/her close associates.
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Monday, December 30,
2024 and end at 12:00 noon on Friday, January 3, 2025 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 520 –


--- page 530 ---
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application Channel Platform Target Investors Application Time
HK eIPO White Form
service
www.hkeipo.hk ; Investors who would like
to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in your own name.
From 9:00 a.m. on
Monday, December 30,
2024 to 11:30 a.m. on
Friday, January 3, 2025,
Hong Kong time.
The latest time for
completing full payment
of application monies
will be 12:00 noon on
Friday, January 3, 2025,
Hong Kong time.
HKSCC EIPO channel Y our broker or custodian
who is a HKSCC
Participant will submit an
EIPO application on your
behalf through HKSCC’s
FINI system in
accordance with your
instruction
Investors who would not
like to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
CCASS and credited to
your designated HKSCC
Participant’s stock
account.
Contact your broker or
custodian for the earliest
and latest time for giving
such instructions, as this
may vary by broker or
custodian.
The HK eIPO White Form service and the HKSCC EIPO channel are facilities subject
to capacity limitations and potential service interruptions and you are advised not to wait until
the last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the HK eIPO White Form service, once you complete
payment in respect of any application instructions given by you or for your benefit through the
HK eIPO White Form service to make an application for Hong Kong Offer Shares, an actual
application shall be deemed to have been made. If you are a person for whose benefit the
electronic application instructions are given, you shall be deemed to have declared that only
one set of electronic application instructions has been given for your benefit. If you are an
agent for another person, you shall be deemed to have declared that you have only given one
set of electronic application instructions for the benefit of the person for whom you are an
agent and that you are duly authorized to give those instructions as an agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 521 –


--- page 531 ---
For the avoidance of doubt, giving an application instruction under the HK eIPO White
Form service more than once and obtaining different payment reference numbers without
effecting full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the HK eIPO White Form service, you are deemed to have
authorized the HK eIPO White Form Service Provider to apply on the terms and conditions
in this prospectus, as supplemented and amended by the terms and conditions of the HK eIPO
White Form service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on your
behalf through the HKSCC EIPO Channel, you (and, if you are joint applicants, each of you
jointly and severally) are deemed to have instructed and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong Kong
Offer Shares on your behalf and to do on your behalf all the things stated in this prospectus
and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instructions given by you or for your benefit to HKSCC
(in which case an application will be made by HKSCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time
of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this prospectus.
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual Applicants For Corporate Applicants
 Full name(s) 2 as shown on your
identity document
 Full name(s) 2 as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document’s issuing country
or jurisdiction
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 532 ---
For Individual Applicants For Corporate Applicants
 Identity document type, with order
of priority:
i. HKID card; or
ii. National identification
document; or
iii. Passport; and
 Identity document number
 Identity document type, with order
of priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration certificate;
or
iv. Other equivalent document; and
 Identity document number
Notes:
1. If you are applying through the HK eIPO White Form service, you are required to provide a valid
e-mail address, a contact telephone number and a Hong Kong address. Y ou are also required to declare
that the identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card. The number of joint applicants may not exceed four. If you are a firm, the applicant must be in
the individual members’ names.
2. The applicant’s full name as shown on their identity document must be used. If an applicant’s identity
document contains both an English and Chinese name, both English and Chinese names must be used.
Otherwise, either English or Chinese names will be accepted. The order of priority of the applicant’s
identity document type must be strictly followed and where an individual applicant has a valid HKID
card, the HKID number must be used when making an application to subscribe for shares in a public
offer. Similarly for corporate applicants, a LEI number must be used if an entity has a LEI certificate.
3. If the applicant is a trustee, the client identification data (“CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
4. The maximum number of joint account holders on FINI is capped at 4 in accordance with market
practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii),
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any
other stock exchange.
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“Statutory control” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Overall Coordinators, as our agent, have discretion to consider
whether to accept it on any conditions we think fit, including evidence of the attorney’s
authority.
Failing to provide any required information may result in your application being rejected.
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 1,000
Permitted number of
Hong Kong Public
Offer Shares for
application and amount
payable on
application/successful
allotment
: Hong Kong Offer Shares are available for
application in specified board lot sizes only.
Please refer to the amount payable associated
with each specified board lot size in the table
below.
The Offer Price is HK$3.22 per Share.
If you are applying through the HKSCC EIPO
channel, you are required to prefund your
application based on the amount specified by
your broker or custodian, as determined based
on the applicable laws and regulations in
Hong Kong.
By instructing your broker or custodian to apply
for the Hong Kong Offer Shares on your
behalf through the HKSCC EIPO Channel, you
(and, if you are joint applicants, each of you
jointly and severally) are deemed to have
instructed and authorized HKSCC to cause
HKSCC Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange
payment of the Offer Price, brokerage, SFC
transaction levy, the Stock Exchange trading
fee and the AFRC transaction levy by debiting
the relevant nominee bank account at the
Designated Bank for your broker or custodian.
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--- page 534 ---
If you are applying through the HK eIPO White
Form service, you may refer to the table
below for the amount payable for the number
of Shares you have selected. Y ou must pay the
respective amount payable on application in
full upon application for Hong Kong Offer
Shares.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
1,000 3,252.47 25,000 81,311.84 300,000 975,742.11 6,000,000 19,514,842.20
2,000 6,504.94 30,000 97,574.21 400,000 1,300,989.48 7,000,000 22,767,315.90
3,000 9,757.42 35,000 113,836.58 500,000 1,626,236.86 8,000,000 26,019,789.60
4,000 13,009.90 40,000 130,098.95 600,000 1,951,484.22 9,056,000
(1) 29,454,401.83
5,000 16,262.36 45,000 146,361.32 700,000 2,276,731.59
6,000 19,514.84 50,000 162,623.69 800,000 2,601,978.95
7,000 22,767.31 60,000 195,148.43 900,000 2,927,226.34
8,000 26,019.80 70,000 227,673.17 1,000,000 3,252,473.70
9,000 29,272.26 80,000 260,197.90 2,000,000 6,504,947.40
10,000 32,524.74 90,000 292,722.62 3,000,000 9,757,421.10
15,000 48,787.10 100,000 325,247.36 4,000,000 13,009,894.80
20,000 65,049.48 200,000 650,494.75 5,000,000 16,262,368.50
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong Offer
Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made through
the application channel of the HK eIPO White Form Service Provider) while the SFC transaction levy, the
Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and
the AFRC, respectively.
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--- page 535 ---
5. Multiple Applications Prohibited
Y ou or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “– A. Applications for Hong Kong
Offer Shares – 3. Information Required to Apply” in this section. If you are suspected of
submitting or cause to submit more than one application, all of your applications will be
rejected.
Multiple applications made either through (i) the HK eIPO White Form service,
(ii) HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be
rejected. If you have made an application through the HK eIPO White Form service or
HKSCC EIPO channel, you or the person(s) for whose benefit you have made the application
shall not apply further for Offer Shares under the Global Offering.
The Hong Kong Share Registrar would record all applications into its system and identify
suspected multiple applications with identical names and identification document numbers
according to the Best Practice Note on Treatment of Multiple/Suspected Multiple Applications
(“Best Practice Note ”) issued by the Federation of Share Registrars Limited.
Since applications are subject to personal information collection statements,
identification document numbers displayed are redacted.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorise us and/or the
Overall Coordinators, as our agents, to execute any documents for you and to do on
your behalf all things necessary to register any Hong Kong Offer Shares allocated
to you in your name or in the name of HKSCC Nominees as required by the Articles
of Association, and (if you are applying through the HKSCC EIPO channel) to
deposit the allotted Hong Kong Offer Shares directly into CCASS for the credit of
your designated HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the HK eIPO
White Form service (or as the case may be, the agreement you entered into with
your broker or custodian), and agree to be bound by them;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 536 ---
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out
in this prospectus and they do not apply to you, or the person(s) for whose benefit
you have made the application;
(v) confirm that you have read this prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
(vi) agree that the Company, the Joint Sponsors, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, any of their respective directors, officers, employees, partners, agents
or representatives and any other parties involved in the Global Offering (the
“Relevant Persons ”), the Hong Kong Share Registrar and HKSCC will not be liable
for any information and representations not in this prospectus and any supplement
to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to us, the Relevant Persons, the Hong Kong Share
Registrar, HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other
statutory regulatory or governmental bodies or otherwise as required by laws, rules
or regulations, for the purposes under the paragraph headed “– G. Personal Data –
3. Purposes and 4. Transfer of personal data” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the Hong Kong Share
Registrar by way of publication of the results at the time and in the manner as
specified in the paragraph headed “– B. Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed “– C.
Circumstances In Which Y ou Will Not Be Allocated Hong Kong Offer Shares” in
this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
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--- page 537 ---
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor the
Relevant Persons will breach any law inside and/or outside Hong Kong as a result
of the acceptance of your offer to purchase, or any action arising from your rights
and obligations under the terms and conditions contained in this prospectus;
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of the Company or
any of its subsidiaries or any of their respective close associates; and (b) you are not
accustomed or will not be accustomed to taking instructions from the Company, any
of the directors, chief executives, substantial shareholder(s) or existing
shareholder(s) of the Company or any of its subsidiaries or any of their respective
close associates in relation to the acquisition, disposal, voting or other disposition
of the Shares registered in your name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinators will rely on your
declarations and representations in deciding whether or not to allocate any Hong
Kong Offer Shares to you and that you may be prosecuted for making a false
declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xvii) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xviii) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC directly or indirectly or through the application channel of
the HK eIPO White Form Service Provider or by any one as your agent or by any
other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC and the HK
eIPO White Form Service Provider and (2) you have due authority to give
electronic application instructions on behalf of that other person as its agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 538 ---
B. PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through the HK eIPO White Form service or HKSCC EIPO channel:
Website From the “Allotment
Results” page at
www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result )
with a “search by ID” function
The full list of (i) wholly
or partially successful
applicants using the HK eIPO
White Form service and
HKSCC EIPO channel, and (ii)
the number of Hong Kong
Offer Shares conditionally
allotted to them, among other
things, will be displayed at
www.hkeipo.hk/IPOResult or
www.tricor.com.hk/ipo/result .
24 hours, from 11:00 p.m.
Tuesday, January 7, 2025 to
12:00 midnight on Monday,
January 13, 2025 (Hong Kong
time)
The Stock Exchange’s website at
www.hkexnews.hk and our
website at 66nao.cn which will
provide links to the above
mentioned websites of the
Hong Kong Share Registrar.
No later than 11:00 p.m. on
Tuesday, January 7, 2025
(Hong Kong time).
Telephone +852 3691 8488 – the allocation
results telephone enquiry line
provided by the Hong Kong
Share Registrar
between 9:00 a.m. and 6:00 p.m.,
from Wednesday, January 8,
2025 to Monday, January 13,
2025 (Hong Kong time) on a
business day
For those applying through HKSCC EIPO channel, you may also check with your broker
or custodian from 6:00 p.m. on Monday, January 6, 2025 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 539 ---
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Monday, January 6, 2025 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the results of the level of indications of interest in the Global
Offering, the level of applications in the Hong Kong Public Offering and the basis of
allocations of Hong Kong Offer Shares on the Stock Exchange’s website at www.hkexnews.hk
and our website at 66nao.cn by no later than 11:00 p.m. on Tuesday, January 7, 2025 (Hong
Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Y our application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Overall Coordinators, the Hong Kong Share Registrar and their respective agents
and nominees have full discretion to reject or accept any application, or to accept only part of
any application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not
grant permission to list the Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies us of that
longer period within three weeks of the closing date of the application lists.
4. If:
 you make multiple applications or suspected multiple applications. Y ou may refer to
the paragraph headed “– A. Applications for Hong Kong Offer Shares – 5. Multiple
Applications Prohibited” in this section on what constitutes multiple applications;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 540 ---
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Overall Coordinators believe that by accepting your application, it or we
would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the Receiving
Bank will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Share allotment from their Designated Bank.
There is a risk of money settlement failure. In the extreme event of money settlement
failure by a HKSCC Participant (or its Designated Bank), who is acting on your behalf in
settling payment for your allotted shares, HKSCC will contact the defaulting HKSCC
Participant and its Designated Bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the Global Offering. Hong Kong Offer Shares
applied for by you through the broker or custodian may be affected to the extent of the
settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer Shares
due to the money settlement failure by such HKSCC Participant. None of us, the Relevant
Persons, the Hong Kong Share Registrar and HKSCC is or will be liable if Hong Kong Offer
Shares are not allocated to you due to the money settlement failure.
D. DESPATCH/COLLECTION OF SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the Share certificates will be deposited into CCASS as described
below).
No temporary document of title will be issued in respect of the Shares. No receipt will
be issued for sums paid on application.
Share certificates will only become valid evidence of title at 8:00 a.m. on Wednesday,
January 8, 2025 (Hong Kong time), provided that the Global Offering has become
unconditional and the right of termination described in the section headed “Underwriting” has
not been exercised. Investors who trade Shares prior to the receipt of Share certificates or the
Share certificates becoming valid do so entirely at their own risk.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 541 ---
The right is reserved to retain any Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/collection of Share certificate (Note)
For application
of 1,000,000
Hong Kong
Offer Shares
or more
Collection in person at the
Hong Kong Share Registrar,
Tricor Investor Services
Limited, at 17/F, Far East
Finance Centre, 16 Harcourt
Road, Hong Kong
Time: 9:00 a.m. to 1:00 p.m.
on Wednesday, January 8,
2025 (Hong Kong time)
If you are an individual, you
must not authorise any other
person to collect for you. If
you are a corporate applicant,
your authorised representative
must bear a letter of
authorization from your
corporation stamped with
your corporation’s chop.
Both individuals and
authorised representatives
must produce, at the time of
collection, evidence of
identity acceptable to the
Hong Kong Share Registrar.
Note: If you do not collect
your Share certificate(s)
personally within the time
above, it/they will be sent to
the address specified in your
application instructions by
ordinary post at your own
risk.
Share certificate(s) will be
issued in the name of
HKSCC Nominees, deposited
into CCASS and credited to
your designated HKSCC
Participant’s stock account
No action by you is required
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 542 ---
HK eIPO White Form service HKSCC EIPO channel
For application
of less than
1,000,000
Hong Kong
Offer Shares
Y our Share certificate(s) will be
sent to the address specified
in your application
instructions by ordinary post
at your own risk
Date: Tuesday, January 7,
2025
Refund mechanism for surplus application monies paid by you
Date Wednesday, January 8, 2025 Subject to the arrangement
between you and your broker
or custodian
Responsible
party
Hong Kong Share Registrar Y our broker or custodian
Application
monies paid
through single
bank account
HK eIPO White Form e-Auto
Refund payment instructions
to your designated bank
account
Y our broker or custodian will
arrange refund to your
designated bank account
subject to the arrangement
Application monies paid
between you and it
Application
monies paid
between you
and it
through
multiple bank
accounts
Refund cheque(s) will be
despatched to the address as
specified in your application
instructions by ordinary post
at your own risk
Note: Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning
and/or an “extreme conditions” announcement issued after a super typhoon in force in Hong Kong in
the morning on Tuesday, January 7, 2025 rendering it impossible for the relevant Share certificates to
be dispatched to HKSCC in a timely manner, the Company shall procure the Hong Kong Share Registrar
to arrange for delivery of the supporting documents and Share certificates in accordance with the
contingency arrangements as agreed between them. Y ou may refer to “– E. Bad Weather Arrangements”
in this section.
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--- page 543 ---
E. BAD WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Friday, January 3, 2025 if, there is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 Extreme Conditions , (collectively, “ Bad Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, January 3,
2025.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have Bad Weather Signals in force at any time between
9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this prospectus, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnews.hk and our website at 66nao.cn of the revised timetable.
If a Bad Weather Signal is hoisted on Tuesday, January 7, 2025, the Hong Kong Share
Registrar will make appropriate arrangements for the delivery of the Share certificates to the
CCASS Depository’s service counter so that they would be available for trading on Wednesday,
January 8, 2025.
If a Bad Weather Signal is hoisted on Tuesday, January 7, 2025, for application of less
than 1,000,000 Offer Shares, the dispatch of physical Share certificates will be made by
ordinary post when the post office re-opens after the Bad Weather Signal is lowered or
cancelled (e.g. in the afternoon of Tuesday, January 7, 2025 or on Wednesday, January 8,
2025).
If a Bad Weather Signal is hoisted on Wednesday, January 8, 2025, for application of
1,000,000 Offer Shares or more, the physical Share certificates will be available for collection
in person at the Hong Kong Share Registrar’s office after the Bad Weather Signal is lowered
or cancelled (e.g. in the afternoon of Wednesday, January 8, 2025 or on Thursday, January 9,
2025).
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--- page 544 ---
Prospective investors should be aware that if they choose to receive physical Share
certificates issued in their own name, there may be a delay in receiving the Share
certificates.
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares on the
Stock Exchange and we comply with the stock admission requirements of HKSCC, the Shares
will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in
CCASS with effect from the date of commencement of dealings in the Shares or any other date
HKSCC chooses. Settlement of transactions between Exchange Participants is required to take
place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS.
Y ou should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the Hong Kong Share Registrar, the receiving bank and the
Relevant Persons about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. This personal data may include client identifier(s) and your
identification information. By giving application instructions to HKSCC, you acknowledge
that you have read, understood and agree to all of the terms of the Personal Information
Collection Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of the Company and the Hong Kong
Share Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter
486 of the Laws of Hong Kong).
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--- page 545 ---
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to the Company or its agents and the Hong Kong Share Registrar
is accurate and up-to-date when applying for Hong Kong Offer Shares or transferring Hong
Kong Offer Shares into or out of their names or in procuring the services of the Hong Kong
Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of the
Company or the Hong Kong Share Registrar to effect transfers or otherwise render their
services. It may also prevent or delay registration or transfers of Hong Kong Offer Shares
which you have successfully applied for and/or the despatch of Share certificate(s) to which
you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the
Company and the Hong Kong Share Registrar immediately of any inaccuracies in the personal
data supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund cheque and HK eIPO White Form e-Auto
Refund payment instruction(s), where applicable, verification of compliance with
the terms and application procedures set out in this prospectus and announcing
results of allocation of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of the
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of the Company;
 verifying identities of applicants for and holders of the Shares and identifying any
duplicate applications for the Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the Shares, such as dividends, rights
issues, bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 536 –


--- page 546 ---
 compiling statistical information and profiles of the holder of the Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the Hong Kong Share Registrar to discharge their obligations to
applicants and holders of the Shares and/or regulators and/or any other purposes to
which applicants and holders of the Shares may from time to time agree.
4. Transfer of personal data
Personal data held by the Company and the Hong Kong Share Registrar relating to the
applicants for and holders of Hong Kong Offer Shares will be kept confidential but the
Company and the Hong Kong Share Registrar may, to the extent necessary for achieving any
of the above purposes, disclose, obtain or transfer (whether within or outside Hong Kong) the
personal data to, from or with any of the following:
 the Company’s appointed agents such as financial advisers, receiving bank and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the Hong Kong Share Registrar, in each case for the purposes of
providing its services or facilities or performing its functions in accordance with its
rules or procedures and operating FINI and CCASS (including where applicants for
the Hong Kong Offer Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the
Hong Kong Share Registrar in connection with their respective business operation;
 the Stock Exchange, the SFC and any other statutory regulatory or governmental
bodies or otherwise as required by laws, rules or regulations, including for the
purpose of the Stock Exchange’s administration of the Listing Rules and the SFC’s
performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 537 –


--- page 547 ---
5. Retention of personal data
The Company and the Hong Kong Share Registrar will keep the personal data of the
applicants and holders of Hong Kong Offer Shares for as long as necessary to fulfil the
purposes for which the personal data were collected. Personal data which is no longer required
will be destroyed or dealt with in accordance with the Personal Data (Privacy) Ordinance
(Chapter 486 of the Laws of Hong Kong).
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
the Company or the Hong Kong Share Registrar hold their personal data, to obtain a copy of
that data, and to correct any data that is inaccurate. The Company and the Hong Kong Share
Registrar have the right to charge a reasonable fee for the processing of such requests. All
requests for access to data or correction of data should be addressed to the Company and the
Hong Kong Share Registrar, at their registered address disclosed in the section headed
“Corporate information” in this prospectus or as notified from time to time, for the attention
of the company secretary, or the Hong Kong Share Registrar for the attention of the privacy
compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 538 –


--- page 548 ---
The following is the text of a report set out on pages I-1 to I-78, received from the
Company’ s reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus.
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF BRAINAURORA MEDICAL TECHNOLOGY LIMITED ( ໘ਗ฽Έᔼᐕ
ʮ̡) AND CHINA INTERNATIONAL CAPITAL CORPORATION HONG
KONG SECURITIES LIMITED AND SPDB INTERNATIONAL CAPITAL LIMITED
Introduction
We report on the historical financial information of BrainAurora Medical Technology
Limited (ʮ̡) (the “Company”) and its subsidiaries (together, the
“Group”) set out on pages I-4 to I-78, which comprises the consolidated statements of financial
position of the Group as at December 31, 2021, 2022 and 2023 and June 30, 2024, the
statements of financial position of the Company as at December 31, 2023 and June 30, 2024,
the consolidated statements of profit or loss and other comprehensive income, the consolidated
statements of changes in equity and the consolidated statements of cash flows for each of the
three years ended December 31, 2023 and the six months ended June 30, 2024 (the “Track
Record Period”) and a summary of material accounting policy information and other
explanatory information (together, the “Historical Financial Information”). The Historical
Financial Information set out on pages I-4 to I-78 forms an integral part of this report, which
has been prepared for inclusion in the prospectus of the Company dated December 30, 2024
(the “Prospectus”) in connection with the initial listing of shares of the Company on the Main
Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
Directors’ responsibility for the Historical Financial Information
The directors of the Company (the “Directors”) are responsible for the preparation and
presentation of the Historical Financial Information that gives a true and fair view in
accordance with the basis of preparation set out in Note 2 to the Historical Financial
Information, and for such internal control as the Directors determine is necessary to enable the
preparation of the Historical Financial Information that is free from material misstatement,
whether due to fraud or error.
Reporting accountants’ responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical
Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified
Public Accountants (the “HKICPA”). This standard requires that we comply with ethical
standards and plan and perform our work to obtain reasonable assurance about whether the
Historical Financial Information is free from material misstatement.
APPENDIX I ACCOUNTANTS’ REPORT
– I-1 –


--- page 549 ---
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgment, including the assessment of risks of material misstatement of
the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation and presentation set out in Note 2 to the Historical Financial
Information in order to design procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our
work also included evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the overall
presentation of the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountants’ report, a true and fair view of the Group’s financial position as at December 31,
2021, 2022 and 2023 and June 30, 2024, of the Company’s financial position as at December
31, 2023 and June 30, 2024 and of the Group’s financial performance and cash flows for the
Track Record Period in accordance with the basis of preparation and presentation set out in
Note 2 to the Historical Financial Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for
the six months ended June 30, 2023 and other explanatory information (the “Stub Period
Comparative Financial Information”). The Directors are responsible for the preparation and
presentation of the Stub Period Comparative Financial Information in accordance with the
basis of preparation and presentation set out in Note 2 to the Historical Financial Information.
Our responsibility is to express a conclusion on the Stub Period Comparative Financial
Information based on our review. We conducted our review in accordance with Hong Kong
Standard on Review Engagements 2410 “Review of Interim Financial Information Performed
by the Independent Auditor of the Entity” issued by the HKICPA. A review consists of making
inquiries, primarily of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope than an audit
conducted in accordance with Hong Kong Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review,
nothing has come to our attention that causes us to believe that the Stub Period Comparative
Financial Information, for the purposes of the accountants’ report, is not prepared, in all
material respects, in accordance with the basis of preparation and presentation set out in Note 2
to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 550 ---
Report on matters under the Rules Governing the Listing of Securities on the Stock
Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to Note 14 to the Historical Financial Information which states that no dividend
was declared or paid by group entities comprising the Group in respect of the Track Record
Period.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
December 30, 2024
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 551 ---
HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, have been prepared in accordance with the
accounting policies which conform with International Financial Reporting Standards (“IFRSs”)
issued by the International Accounting Standards Board (the “IASB”) and were audited by us
in accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying
Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 552 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the year ended December 31,
For the six months
ended June 30,
NOTES 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 6 2,299 11,291 67,200 24,412 51,887
Cost of sales (995) (7,994) (35,136) (12,309) (27,367)
Gross profit 1,304 3,297 32,064 12,103 24,520
Other income 7 1,478 3,915 2,079 1,692 582
Other gains and losses,
net 8 (3) 3,098 2,318 2,139 2,135
Fair value loss of
financial liabilities at
fair value through
profit or loss
(“FVTPL”) 27 (623,764) (385,886) (165,216) (163,543) (243)
Impairment loss under
expected credit loss
(“ECL”) model, net of
reversal (13) (50) (848) (248) (4,142)
Selling and distribution
expenses (10,813) (11,928) (38,399) (17,024) (25,376)
Administrative expenses (26,782) (27,762) (54,398) (15,047) (28,138)
Research and
development expenses (32,760) (67,627) (90,733) (34,371) (64,231)
Finance costs 9 (6,391) (19,223) (20,216) (9,962) (10,904)
Listing expenses – – (25,767) (10,309) (8,592)
Other expenses (94) (295) – – –
Loss before tax (697,838) (502,461) (359,116) (234,570) (114,389)
Income tax expense 10 –––––
Loss and total
comprehensive expense
for the year/period 11 (697,838) (502,461) (359,116) (234,570) (114,389)
(Loss) profit for
the year/period
attributable to:
Owners of the
Company (697,837) (502,452) (359,083) (234,597) (114,328)
Non-controlling
interests (1) (9) (33) 27 (61)
(697,838) (502,461) (359,116) (234,570) (114,389)
Loss per share (RMB) 15
Basic (4.64) (1.79) (0.62) (0.76) (0.13)
Diluted (4.64) (1.79) (0.62) (0.76) (0.13)
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 553 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31,
As at
June 30,
NOTES 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property, plant and equipment 16 9,479 22,821 23,503 24,828
Right-of-use assets 17 17,721 11,088 13,155 7,802
Intangible assets 18 70 562 4,222 3,620
Prepayments and other receivables 19 3,328 3,437 2,009 2,822
Term deposits 21 – 73,006 – –
Restricted bank deposit 21 – – 49,241 –
30,598 110,914 92,130 39,072
CURRENT ASSETS
Contract costs 457 251 4,094 884
Trade and other receivables and
prepayments 19 16,474 19,674 76,053 103,644
Amounts due from related parties 37 29 29 – –
Financial assets at FVTPL 20 – 228,789 – –
Restricted bank deposit 21 – – 165,000 119,421
Term deposits 21 – 30,180 – –
Bank balances and cash 21 323,740 28,251 57,577 55,906
340,700 307,174 302,724 279,855
CURRENT LIABILITIES
Trade and other payables 22 13,974 17,746 43,261 46,842
Contract liabilities 25 450 1,023 3,804 5,837
Amounts due to related parties 37 2,364 2,364 – –
Lease liabilities 24 6,686 7,523 7,927 5,534
Bank and other borrowings 26 – 6,965 22,083 16,127
Deferred Income – – 225 993
Financial liabilities at FVTPL 27 153,465 – 315,544 315,787
176,939 35,621 392,844 391,120
NET CURRENT ASSETS
(LIABILITIES) 163,761 271,553 (90,120) (111,265)
TOTAL ASSETS LESS CURRENT
LIABILITIES 194,359 382,467 2,010 (72,193)
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 554 ---
As at December 31,
As at
June 30,
NOTES 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
NON-CURRENT LIABILITIES
Contract liabilities 25 283 427 126 41
Lease liabilities 24 10,880 3,796 4,627 1,125
Long-term bond 23 291,197 309,855 329,438 337,640
Financial liabilities at FVTPL 27 573,281 1,162,632 – –
Deferred Income – – – 267
875,641 1,476,710 334,191 339,073
NET LIABILITIES (681,282) (1,094,243) (332,181) (411,266)
CAPITAL AND RESERVES
Paid-in capital/share capital 28 3,935 4,430 1 1
Reserves (685,216) (1,098,663) (332,139) (411,163)
Equity attributable to owners of the
Company (681,281) (1,094,233) (332,138) (411,162)
Non-controlling interests (1) (10) (43) (104)
TOTAL DEFICITS (681,282) (1,094,243) (332,181) (411,266)
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 555 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
NOTES
As at
December 31,
2023
As at
June 30,
2024
RMB’000 RMB’000
NON-CURRENT ASSET
Investments in subsidiaries 38 353,361 388,665
CURRENT ASSETS
Other receivables and prepayments 19 8,007 10,688
Bank balances and cash 21 15,584 12,154
23,591 22,842
CURRENT LIABILITIES
Other payables 22 12,673 18,803
Amount due to a subsidiary 37 7,012 7,056
Financial liabilities at FVTPL 27 315,544 315,787
335,229 341,646
NET CURRENT LIABILITIES (311,638) (318,804)
TOTAL ASSETS LESS CURRENT LIABILITIES 41,723 69,861
NET ASSETS 41,723 69,861
CAPITAL AND RESERVES
Share capital 28 11
Reserves 29 41,722 69,860
TOTAL EQUITY 41,723 69,861
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 556 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Paid-in
capital/
Share
capital
Share
premium
Capital
reserve
Share-based
payments
reserve
Other
reserve
Shares
held under
Pre-IPO
Share Award
Scheme
Accumulated
losses Subtotal
Non-
controlling
interests Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note v) (Note vi)
At January 1, 2021 2,194 – – 630 8,938 – (78,271) (66,509) – (66,509)
Loss and total
comprehensive
expense for the year – – – – – – (697,837) (697,837) (1) (697,838)
Capital injection
(Note i) 1,741 – 61,954 – – – – 63,695 – 63,695
Recognition of equity-
settled share-based
payments (Note 32) – – – 19,370 – – – 19,370 – 19,370
V esting of equity
granted (Note 32) – – – (20,000) 20,000 – ––––
At December 31, 2021 3,935 – 61,954 – 28,938 – (776,108) (681,281) (1) (681,282)
Loss and total
comprehensive
expense for the year – – – – – – (502,452) (502,452) (9) (502,461)
Capital injection
(Note ii) 495 – 89,005 – – – – 89,500 – 89,500
At December 31, 2022 4,430 – 150,959 – 28,938 – (1,278,560) (1,094,233) (10) (1,094,243)
Loss and total
comprehensive
expense for the year – – – – – – (359,083) (359,083) (33) (359,116)
Capital injection
(Note iii) 354 – 63,646 – – – – 64,000 – 64,000
Recognition of equity-
settled share-based
payments (Note 32) – – – 44,873 – – – 44,873 – 44,873
Reclassification from
financial liabilities
at FVTPL (Note 27) 10,107 – 1,002,197 – – – – 1,012,304 – 1,012,304
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 557 ---
Attributable to owners of the Company
Paid-in
capital/
Share
capital
Share
premium
Capital
reserve
Share-based
payments
reserve
Other
reserve
Shares
held under
Pre-IPO
Share Award
Scheme
Accumulated
losses Subtotal
Non-
controlling
interests Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note v) (Note vi)
Adjustment arising
from the
Reorganization
(Note iv) (14,891) – 8,668 – – – – (6,223) – (6,223)
Issue of Ordinary
Shares (as defined in
Note 2) (Note 28) 1 6,223 – – – – – 6,224 – 6,224
Issue of Awarded
Shares (Note vi) – * – – – – – * ––––
At December 31, 2023 1 6,223 1,225,470 44,873 28,938 –* (1,637,643) (332,138) (43) (332,181)
Loss and total
comprehensive
expense for the
period – – – – – – (114,328) (114,328) (61) (114,389)
Recognition of equity-
settled share-based
payments (Note 32) – – – 35,304 – – – 35,304 – 35,304
At June 30, 2024 1 6,223 1,225,470 80,177 28,938 –* (1,751,971) (411,162) (104) (411,266)
For the six months
ended June 30, 2023
(unaudited)
At January 1, 2023 4,430 – 150,959 – 28,938 – (1,278,560) (1,094,233) (10) (1,094,243)
(Loss) profit and total
comprehensive
(expense) income
for the period – – – – – – (234,597) (234,597) 27 (234,570)
Capital injection
(Note iii) 354 – 63,646 – – – – 64,000 – 64,000
At June 30, 2023
(unaudited) 4,784 – 214,605 – 28,938 – (1,513,157) (1,264,830) 17 (1,264,813)
* The amount represents 85,166 shares of the Company with a par value of USD0.0001 each, issued at an amount
of USD8.5 (equivalent to RMB61) during the year ended December 31, 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 558 ---
Notes:
i. On September 8, 2021, Zhejiang BrainAurora Medical Technology Co., Ltd.* (ʮ
̡, which was formerly known as Nanjing Wise Spirit Education Technology Co., Ltd.* (߅
ʮ̡) before September 2021)) (“BrainAurora Zhejiang”) entered into an investment agreement (the
“Series B+ Financing”) with three independent investors (collectively as the “Series B+ Investors”), pursuant
to which Series B+ Investors shall make total investments of RMB63,695,000 to subscribe new paid-in capital
of RMB1,741,000 in BrainAurora Zhejiang (representing 12.40% equity interests in BrainAurora Zhejiang).
The cash consideration was fully settled in 2021. The excess of RMB61,954,000 between the cash
consideration of RMB63,695,000 and the new paid-in capital of RMB1,741,000 was recorded in capital
reserve.
ii. On March 20, 2022, BrainAurora Zhejiang entered into an investment agreement (the “Series C Financing”)
with two independent investors and two of its existing shareholders (collectively as the “Series C Investors”),
pursuant to which Series C Investors shall make total investments of RMB138,000,000 to subscribe new
paid-in capital of RMB764,000 in BrainAurora Zhejiang (representing 5.16% equity interests in BrainAurora
Zhejiang), out of which RMB89,500,000 was settled in 2022. The excess of RMB89,005,000 between the cash
consideration of RMB89,500,000 and the new paid-in capital of RMB495,000 was recorded in capital reserve.
iii. The remaining consideration of RMB48,500,000 of Series C Financing was settled in March 2023. The excess
of RMB48,232,000 between the cash consideration of RMB48,500,000 and the new paid-in capital of
RMB268,000 was recorded in capital reserve.
Besides, on February 15, 2023, BrainAurora Zhejiang entered into an additional investment agreement with
one of the Series C Investors, pursuant to which the investor shall make additional investments of
RMB15,500,000 to subscribe new paid-in capital of RMB86,000 in BrainAurora Zhejiang (representing 0.58%
equity interests in BrainAurora Zhejiang). The consideration was fully settled in March 2023. The excess of
RMB15,414,000 between the cash consideration of RMB15,500,000 and the new paid-in capital of
RMB86,000 was recorded in capital reserve.
iv. On June 30, 2023, as part of the group reorganization as set out in Note 2 to the Historical Financial
Information, Zhejiang Zhiling Ruidong Medical Technology Co., Ltd.* (ʮ̡)
(“Zhiling Ruidong”), a subsidiary of the Company, acquired the then shareholders’ respective equity interests
in BrainAurora Zhejiang for an aggregate cash consideration of RMB89,119,000. Included in the total
consideration of RMB89,119,000, (i) consideration of RMB74,351,000 will be contributed to a subsidiary of
Zhiling Ruidong, (ii) consideration of RMB6,223,000 will be invested to the Company’s Ordinary Shares (as
defined in Note 2) which will be recognized as share capital and share premium and debited to capital reserve
and (iii) consideration of RMB8,545,000 will be invested to the Company’s Series A-1 Preferred Shares (as
defined in Note 2). The paid-in capital of BrainAurora Zhejiang of RMB14,891,000 was transferred to capital
reserve upon the completion of the reorganization.
v. Other reserve represents the balance of equity-settled share-based payments transferred from share-based
payments reserve upon vesting.
vi. On August 2, 2023, a total of 85,166 shares (the “Awarded Shares”) of the Company had been allotted and
issued to Wisdomspirit Holding Limited (“HoldCo”), a company wholly owned by Trident Trust Company
(HK) Limited (“Trident”), to facilitate the administration of the Pre-IPO Share Award Scheme as defined in
Note 32. The Award Shares will be held in the HoldCo for the relevant selected participants until such Awarded
Shares are vested. Based on the arrangements among the Company and Trident, the Company is able to control
Trident and its subsidiary HoldCo. Therefore, the Group accounts for Trident and HoldCo as consolidated
structured entities. The ordinary shares of the Company held by HoldCo are accounted for as a debit to the
Group’s reserve and are presented under the heading of “Shares held under Pre-IPO Share Award Scheme” in
the consolidated statements of changes in equity.
* English name is for identification purpose only.
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 559 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31,
For the
six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
OPERA TING ACTIVITIES
Loss before tax (697,838) (502,461) (359,116) (234,570) (114,389)
Adjustment for:
Fair value gains on
financial assets at
FVTPL – (3,239) (2,672) (2,672) –
Depreciation of property,
plant and equipment 611 5,730 13,779 6,172 8,642
Depreciation of right-of-
use assets 936 6,633 6,994 3,318 3,938
Amortization of
intangible assets 81 67 493 112 869
Release of deferred
government grants –––– (150)
Impairment loss under
ECL model, net of
reversal 13 50 848 248 4,142
(Gains) losses on
disposal of property,
plant and equipment (6) 131 64 64 –
Interest income (1,326) (3,903) (2,079) (1,692) (432)
Losses on lease
modifications – – 223 – 7
Finance costs 6,391 19,223 20,216 9,962 10,904
Fair value loss of
financial liabilities at
FVTPL 623,764 385,886 165,216 163,543 243
Gain on re-estimated
repayments of
long-term bond –––– (2,151)
Recognition of equity-
settled share-based
payments 19,370 – 44,873 – 35,304
Operating cash flows
before movements in
working capital (48,004) (91,883) (111,161) (55,515) (53,073)
(Increase) decrease in
contract costs (439) 206 (3,843) (829) 3,210
Increase in trade and
other receivables and
prepayments (6,009) (11,788) (48,010) (25,334) (30,067)
Increase in trade and
other payables 4,854 2,068 23,437 13,354 1,270
Increase in contract
liabilities 392 717 2,480 2,318 1,948
Increase in deferred
income – – 225 – 1,185
NET CASH USED IN
OPERA TING
ACTIVITIES (49,206) (100,680) (136,872) (66,006) (75,527)
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 560 ---
For the year ended December 31,
For the
six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
INVESTING ACTIVITIES
Interest received 1,308 2,626 2,918 2,828 198
Purchases of property,
plant and equipment (10,799) (16,401) (15,966) (6,454) (9,865)
Payments for right-of-
use assets (285) – (110) – –
Proceeds from disposal
of property, plant and
equipment 14 23 248 244 35
Payments for rental
deposits (2,184) – (1,474) – –
Purchases of financial
assets at FVTPL – (1,261,080) (559,011) (559,011) –
Proceeds from disposal
of financial assets at
FVTPL – 1,035,530 790,472 774,199 –
Placement of restricted
bank deposit – – (414,100) (314,100) –
Withdrawal of restricted
bank deposit – – 200,100 14,100 95,000
Placements of term
deposits with original
maturity over three
months – (102,000) (20,000) (20,000) –
Disposal of term
deposits with original
maturity over three
months – – 122,000 122,000 –
Payments for intangible
assets (24) (2,660) (2,053) (240) (367)
Refund of rental deposit
at end of a lease –––– 1,001
Loans to third parties (9,500) – (500) (500) –
Repayment of loan from
a third party – 9,50 0–––
Loan to a related party (6) ––––
Advance to related
parties – – (5,918) (1,900) –
Repayment of loan from
a related party – – 29 – –
Repayment of advance
from related parties – – 5,918 – –
NET CASH (USED IN)
FROM INVESTING
ACTIVITIES (21,476) (334,462) 102,553 11,166 86,002
APPENDIX I ACCOUNTANTS’ REPORT
– I-13 –


--- page 561 ---
For the year ended December 31,
For the
six months
ended June 30,
NOTES 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
FINANCING
ACTIVITIES
Capital injection 63,695 89,500 64,000 64,000 –
Proceeds from bank
and other
borrowings – 6,959 15,000 – –
Proceeds from issue
of long-term bond 23 300,000 ––––
Proceeds from issue
of financial
liabilities at FVTPL 27 50,000 50,000 – – –
Issue of Ordinary
Shares – – 6,224 – –
Payments to
shareholders in
relation to the
group
reorganization 2 – – (89,119) – –
Receipts from
shareholders in
relation to the
group
reorganization – – 82,896 – –
Payment of financial
advisory fees in
relation to long-
term bond (15,000) ––––
Repayment of bank
borrowings –––– (6,000)
Payments of share
issue costs – – (4,531) (393) (1,152)
Interest paid (194) (565) (633) (189) (551)
Repayment of lease
liabilities (806) (6,247) (7,946) (3,952) (4,487)
Repayment to related
parties (4,086) – (2,364) (2,267) –
NET CASH FROM
(USED IN)
FINANCING
ACTIVITIES 393,609 139,647 63,527 57,199 (12,190)
NET INCREASE
(DECREASE) IN
CASH AND CASH
EQUIV ALENTS 322,927 (295,495) 29,208 2,359 (1,715)
CASH AND CASH
EQUIV ALENTS A T
THE BEGINNING OF
THE YEAR/PERIOD 813 323,740 28,251 28,251 57,577
Effect of foreign
exchange rate changes – 6 118 261 44
CASH AND CASH
EQUIV ALENTS A T
THE END OF THE
YEAR/PERIOD 21 323,740 28,251 57,577 30,871 55,906
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 562 ---
NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION
The Company was incorporated in the Cayman Islands as an exempted company with limited liability under
the Companies Law section 165 of the Cayman Islands on April 25, 2023. The address of the Company’s registered
office is at 3-212 Governors Square, 23 Lime Tree Bay Avenue, P .O. Box 30746, Seven Mile Beach, Grand Cayman
KY1-1203, Cayman Islands. The principal place of business of the Company is Block A, Dongsheng Science and
Technology Park & Fengyeyuan Digital Industry Economic Park, Zhongguancun, 135 Qinghe Road, Haidian District,
Beijing, the People’s Republic of China (the “PRC”).
On December 20, 2020, the acting in concert parties, namely Mr. Tan Zheng, Dr. Wang Xiaoyi and two entities
controlled by Dr. Wang Xiaoyi (collectively referred to as the “the Onshore AIC Parties”), entered into an acting in
concert agreement, pursuant to which, among others, the Onshore AIC Parties agreed to (i) act in concert for so long
as they remain interested in the equity of BrainAurora Zhejiang; (ii) consult each other and reach a consensus before
voting at the board meetings and shareholders’ meetings of BrainAurora Zhejiang; and (iii) in case the parties fail
to reach a consensus, vote based on the opinion of Mr. Tan Zheng.
On August 6, 2023, the acting in concert parties, namely Mr. Tan Zheng, Dr. Wang Xiaoyi, ZTan Limited, a
company wholly owned by Mr. Tan Zheng, and Wispirits Limited, a company wholly owned by Dr. Wang Xiaoyi
(collectively referred to as the “the Offshore AIC Parties”), entered into another acting in concert agreement, pursuant
to which, among others, the Offshore AIC Parties (i) acknowledged and confirmed that, the Offshore AIC Parties have
acted in concert with respect to the management of BrainAurora Zhejiang during the period when BrainAurora
Zhejiang was the holding company of the Group and with respect to the management of the Company since it became
the holding company of the Group; and (ii) agreed to act in concert for so long as they remain interested in the shares
of the Company, consult each other and reach a consensus before voting at the board meetings and shareholders’
meetings of the Company, and in case the parties fail to reach a consensus, vote based on the opinion of Mr. Tan
Zheng.
The Company is an investment holding company. Its subsidiaries are principally engaged to offer cognitive
impairment digital therapeutics (“DTx”) integral software solutions in the PRC.
The Historical Financial Information is presented in RMB, which is also the functional currency of the
Company.
No statutory financial statements of the Company have been prepared since its date of incorporation as it is
incorporated in jurisdiction where there is no statutory audit requirements.
2. GROUP REORGANIZATION, BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL
FINANCIAL INFORMATION
Prior to the group reorganization as detailed in the section headed “History, Reorganization and Corporate
Structure” in the Prospectus (the “Reorganization”), the operations of the Group were mainly carried out by
BrainAurora Zhejiang and its subsidiaries in the PRC.
For the purpose of the proposed listing on the Stock Exchange, the Group underwent the Reorganization which
comprised the following steps:
1. The Company was incorporated as an exempted company with limited liability in the Cayman Islands
on April 25, 2023 with an authorized share capital of United States Dollars (“USD”) 50,000 divided into
500,000,000 ordinary shares of USD0.0001 each.
2. On April 28, 2023, BrainAurora Limited (“BrainAurora”) was incorporated in the British Virgin Islands
with an authorized share capital of USD50,000 divided into 50,000 ordinary shares of USD1 each,
which were issued to the Company on incorporation. BrainAurora is wholly-owned by the Company.
3. On May 11, 2023, BrainAurora (HK) Medical Technology Limited (“BrainAurora (HK)”) was
incorporated in Hong Kong as a direct wholly-owned subsidiary of BrainAurora.
4. On June 16, 2023, Zhiling Ruidong was established in the PRC with a registered capital of
RMB100,000,000. Zhiling Ruidong is wholly-owned by BrainAurora (HK).
APPENDIX I ACCOUNTANTS’ REPORT
– I-15 –


--- page 563 ---
5. Between April 2023 and July 2023, the Company issued a total of 1,000,000 shares, consisted of
873,146 ordinary shares, 95,878 series A-1 preferred shares (“Series A-1 Preferred Shares”) and 30,976
series A-2 preferred shares (“Series A-2 Preferred Shares”) (“Series A-1 Preferred Shares” and “Series
A-2 Preferred Shares” are collectively referred to as “Series A Preferred Shares”), for a subscription
price of USD0.0001 per share proportionately to companies owned by the then shareholders of
BrainAurora Zhejiang. The preferential rights for Series A-1 Preferred Shares and Series A-2 Preferred
Shares are detailed in Note 27. The Company’s ordinary shares and Series A-2 Preferred Shares are
collectively referred to as “Ordinary Shares”.
6. On June 15, 2023, Zhiling Ruidong entered into capital injection agreements to make aggregate capital
injection of RMB20,000,000 to BrainAurora Zhejiang to subscribe new paid-in capital of
RMB1,655,000 of BrainAurora Zhejiang. The cash consideration was settled in August 2023.
7. On June 30, 2023, Zhiling Ruidong entered into equity transfer agreements with the then shareholders
of BrainAurora Zhejiang, pursuant to which Zhiling Ruidong acquired the then shareholders’ respective
interest in BrainAurora Zhejiang for an aggregate cash consideration of RMB89,119,000. After the
transfer, BrainAurora Zhejiang became a wholly-owned subsidiary of Zhiling Ruidong.
Upon completion of the Reorganization, the Company has become the holding company of the companies now
comprising the Group by interspersing the Company, BrainAurora, BrainAurora (HK) and Zhiling Ruidong between
BrainAurora Zhejiang and its then shareholders. The Group comprising of the Company and its subsidiaries resulting
from the Reorganization is regarded as a continuing entity, and accordingly, the Historical Financial Information has
been prepared as if the Company had always been the holding company of the Group.
The consolidated statements of profit or loss and other comprehensive income, consolidated statements of
changes in equity and consolidated statements of cash flows of the Group for the Track Record Period and the
consolidated statements of financial position as at December 31, 2021 and 2022 are prepared using the then carrying
amounts in the financial statements of the companies comprising the Group as if the current group structure had been
in existence throughout the Track Record Period or since their respective dates of incorporation or acquisition, where
there is a shorter period.
The Group was in net current liabilities position of RMB111,265,000 mainly due to the balance of financial
liabilities at FVTPL, i.e. Series A-1 Preferred Shares, of RMB315,787,000 as at June 30, 2024. The Series A-1
Preferred Shares will not be redeemed within the next twelve months from June 30, 2024 as disclosed in Note 27 that
the redemption date has been extended to December 31, 2025 and was subsequently extended to June 30, 2026. After
taking into account of the Group’s cashflow projection, expected working capital requirements and the commitment
of continuous financial support provided by Mr. Tan Zheng, a controlling shareholder, the management of the Group
is satisfied that the Group is able to meet in full its financial obligations as they fall due for a period of twelve months
from the end of Track Record Period and it is appropriate to prepare the Historical Financial Information on a going
concern basis.
3. APPLICATION OF NEW AND AMENDMENTS TO IFRSs
For the purpose of preparing and presenting the Historical Financial Information for the Track Record Period,
the Group has consistently applied the accounting policies which conform with IFRSs, which are effective for the
accounting period beginning on January 1, 2024, throughout the Track Record Period.
New and amendments to IFRSs in issue but not yet effective
The Group has not early applied the following new and amendments to IFRSs that have been issued but are
not yet effective:
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its
Associate or Joint V enture
1
Amendments to IAS 21 Lack of Exchangeability 2
Amendments to IFRS 9 and IFRS 7 Amendments to the Classification and Measurement of
Financial Instruments 3
Amendments to IFRS Accounting
Standards
Annual Improvements to IFRS Accounting Standards
– V olume 11 3
IFRS 18 Presentation and Disclosure in Financial Statements 4
1 Effective for annual periods beginning on or after a date to be determined
2 Effective for annual periods beginning on or after January 1, 2025
3 Effective for annual periods beginning on or after January 1, 2026
4 Effective for annual periods beginning on or after January 1, 2027
The Directors anticipate that the application of the above new and amendments to IFRSs will have no material
impact on the Group’s financial statements in the foreseeable future.
APPENDIX I ACCOUNTANTS’ REPORT
– I-16 –


--- page 564 ---
4. MATERIAL ACCOUNTING POLICY INFORMATION
The Historical Financial Information has been prepared in accordance with the following accounting policies
which conform with IFRSs issued by the IASB. For the purpose of preparation of the Historical Financial
Information, information is considered material if such information is reasonably expected to influence decisions
made by primary users. In addition, the Historical Financial Information included applicable disclosures required by
the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.
Basis of consolidation
The Historical Financial Information incorporates the financial statements of the Company and its subsidiaries.
Control is achieved when the Company:
 has power over the investee;
 is exposed, or has rights, to variable returns from its involvement with the investee; and
 has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year/period are included in the consolidated statements of profit or loss and other comprehensive income
from the date the Group gains control until the date when the Group ceases to control the subsidiary.
Profit or loss and each item of other comprehensive income are attributed to the owners of the Company and
to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein, which
represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant
subsidiaries upon liquidation.
Investments in subsidiaries
Investments in subsidiaries are stated in the statements of financial position of the Company at cost less
identified impairment loss, if any.
Revenue from contracts with customers
Information about the Group’s accounting policies relating to contracts with customers is provided in Note 6.
APPENDIX I ACCOUNTANTS’ REPORT
– I-17 –


--- page 565 ---
Leases
The Group as lessee
Right-of-use assets
The cost of right-of-use assets includes:
 the amount of the initial measurement of the lease liability;
 any lease payments made at or before the commencement date, less any lease incentives received; and
 any initial direct costs incurred by the Group.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities.
Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the
lease term.
The Group presents right-of-use assets as a separate line item on the consolidated statements of financial
position.
Refundable rental deposits
Refundable rental deposits paid are accounted under IFRS 9 Financial Instruments and initially measured at
fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included
in the cost of right-of-use assets.
Lease liabilities
At the commencement date of a lease, the Group recognizes and measures the lease liability at the present
value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not
readily determinable.
The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives
receivable.
After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.
The Group presents lease liabilities as a separate line item on the consolidated statements of financial position.
Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies other than the
functional currency of that entity (foreign currencies) are recognized at the rates of exchanges prevailing on the dates
of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items,
are recognized in profit or loss in the period in which they arise.
For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s
operations are translated into the presentation currency of the Group (i.e. RMB) using exchange rates prevailing at
the end of each reporting period. Income and expenses items are translated at the average exchange rates for the
period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date
of transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and
accumulated in equity under the heading of translation reserve (attributed to non-controlling interests as appropriate).
APPENDIX I ACCOUNTANTS’ REPORT
– I-18 –


--- page 566 ---
Employee benefits
Retirement benefit costs
Payments to state-managed retirement benefit scheme are recognized as an expense when employees have
rendered services entitling them to the contributions.
Short-term employee benefits
Short-term employee benefits are recognized at the undiscounted amount of the benefits expected to be paid
as and when employees rendered the services. All short-term employee benefits are recognized as an expense unless
another IFRS requires or permits the inclusion of the benefit in the cost of an asset.
A liability is recognized for benefits accruing to employees (such as wages and salaries and annual leave) after
deducting any amount already paid.
Share-based payments
Equity-settled share-based payment transactions
Shares granted to employees
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at
the grant date.
The fair value of the equity-settled share-based payments determined at the grant date without taking into
consideration all non-market vesting conditions is expensed on a straight-line basis over the vesting period, based on
the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity
(share-based payments reserve). At the end of each reporting period, the Group revises its estimate of the number of
equity instruments expected to vest based on assessment of all relevant non-market vesting conditions. The impact
of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to the share-based payments reserve. For shares that
vest immediately at the date of grant, the fair value of the shares granted is expensed immediately to profit or loss.
When shares granted are vested, the amount previously recognized in share-based payments reserve will be
transferred to other reserve.
Taxation
Income tax expense represents the sum of current and deferred income tax expenses.
The tax currently payable is based on taxable profit for the year/period. Taxable profit differs from loss before
tax because of income or expense that are taxable or deductible in other years and items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the end of each reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in
the Historical Financial Information and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit
and at the time of the transaction does not give rise to equal taxable and deductible temporary differences.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable
that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments are only recognized to the extent that it is probable that there
will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
APPENDIX I ACCOUNTANTS’ REPORT
– I-19 –


--- page 567 ---
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset is realized, based on tax rate (and tax laws) that have been enacted or substantively
enacted by the end of each reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Group expects, at the end of each reporting period, to recover or settle the carrying amount
of its assets and liabilities.
For the purposes of measuring deferred tax for leasing transactions in which the Group recognizes the
right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions are
attributable to the right-of-use assets or the lease liabilities.
For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group applies
IAS 12 Income Taxes requirements to right-of-use assets and lease liabilities separately. The Group will recognize
a deferred tax asset (to the extent that it is probable that taxable profit will be available against which the deductible
temporary difference can be utilized) and a deferred tax liability for all deductible and taxable temporary differences
associated with the right-of-use assets and the lease liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied to the same taxable entity by the same
taxation authority.
Current and deferred tax are recognized in profit or loss.
Property, plant and equipment
Property, plant and equipment are tangible assets that are held for use in the production or supply of goods or
services, or for administrative purposes. Property, plant and equipment (other than construction in progress), are
stated in the consolidated statements of financial position at cost, less subsequent accumulated depreciation and
subsequent accumulated impairment losses, if any.
Property, plant and equipment in the course of construction for production, supply or administrative purposes
are carried at cost, less any recognized impairment loss. Costs include any costs directly attributable to bringing the
asset to the location and condition necessary for it to be capable of operating in the manner intended by management
and, for qualifying assets, borrowing costs capitalized, in accordance with the Group’s accounting policy.
Depreciation of these assets, on the same basis as other property, plant and equipment, commences when the assets
are ready for their intended use.
Depreciation is recognized so as to write off the cost of property, plant and equipment, other than construction
in progress less their residual values over their estimated useful lives, using the straight-line method. The estimated
useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of
an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognized in profit or loss.
Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated
amortization and any accumulated impairment losses. Amortization for intangible assets with finite useful lives is
recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization
method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted
for on a prospective basis.
APPENDIX I ACCOUNTANTS’ REPORT
– I-20 –


--- page 568 ---
Internally-generated intangible assets – research and development expenditure
Expenditure on research activities is recognized as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development activities (or from the development phase
of an internal project) is recognized if, and only if, all of the following have been demonstrated:
 the technical feasibility of completing the intangible asset so that it will be available for use or sale;
 the intention to complete the intangible asset and use or sell it;
 the ability to use or sell the intangible asset;
 how the intangible asset will generate probable future economic benefits;
 the availability of adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset; and
 the ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The amount initially recognized for internally-generated intangible asset is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated
intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it
is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated
amortization and accumulated impairment losses (if any), on the same basis as intangible assets that are acquired
separately.
Impairment on property, plant and equipment, intangible assets, right-of-use assets and contract costs
At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and
equipment, intangible assets with finite useful lives and right-of-use assets and contract costs to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the relevant asset is estimated in order to determine the extent of the impairment loss (if any).
The recoverable amount of property, plant and equipment, intangible assets and right-of-use assets are
estimated individually. When it is not possible to estimate the recoverable amount individually, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
In testing a cash-generating unit for impairment, corporate assets are allocated to the relevant cash-generating
unit when a reasonable and consistent basis of allocation can be established, or otherwise they are allocated to the
smallest group of cash generating units for which a reasonable and consistent allocation basis can be established. The
recoverable amount is determined for the cash-generating unit or group of cash-generating units to which the
corporate asset belongs, and is compared with the carrying amount of the relevant cash-generating unit or group of
cash-generating units.
Before the Group recognizes an impairment loss for assets capitalized as contract costs under IFRS 15 Revenue
from Contracts with Customers , the Group assesses and recognizes any impairment loss on other assets related to the
relevant contracts in accordance with applicable standards. Then, impairment loss, if any, for assets capitalized as
contract costs is recognized to the extent the carrying amounts exceeds the remaining amount of consideration that
the Group expects to receive in exchange for related goods or services less the costs which relate directly to providing
those goods or services that have not been recognized as expenses. The assets capitalized as contract costs are then
included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating
impairment of that cash-generating unit.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset (or a cash-generating unit)
for which the estimates of future cash flows have not been adjusted.
APPENDIX I ACCOUNTANTS’ REPORT
– I-21 –


--- page 569 ---
If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. For
corporate assets or portion of corporate assets which cannot be allocated on a reasonable and consistent basis to a
cash-generating unit, the Group compares the carrying amount of a group of cash-generating units, including the
carrying amounts of the corporate assets or portion of corporate assets allocated to that group of cash-generating
units, with the recoverable amount of the group of cash-generating units. In allocating the impairment loss, the
impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) and then to the other
assets on a pro-rata basis based on the carrying amount of each asset in the unit or the group of cash-generating units.
The carrying amount of an asset is not reduced below the highest of its fair value less costs of disposal (if
measurable), its value in use (if determinable) and zero. The amount of the impairment loss that would otherwise have
been allocated to the asset is allocated pro rata to the other assets of the unit or the group of cash-generating units.
An impairment loss is recognized immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit or
a group of cash-generating units) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognized for the asset (or a cash-generating unit or a group of cash-generating units) in prior
years/periods. A reversal of an impairment loss is recognized immediately in profit or loss.
Financial instruments
Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual
provisions of the instrument. All regular way purchases or sales of financial assets are recognized and derecognized
on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery
of assets within the time frame established by regulation or convention in the market place.
Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising
from contracts with customers which are initially measured in accordance with IFRS 15. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
or liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities at FVTPL are recognized immediately in profit or loss.
The effective interest method is a method of calculating the amortized cost of a financial asset or financial
liability and of allocating interest income and interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial asset or financial liability, or, where appropriate, a shorter period, to the
net carrying amount on initial recognition.
Financial assets
Classification and subsequent measurement of financial assets
Financial assets that meet the following conditions are subsequently measured at amortized cost:
 the financial asset is held within a business model whose objective is to collect contractual cash flows;
and
 the contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
All other financial assets of the Group are subsequently measured at fair value.
Amortized cost and interest income
Interest income is recognized using the effective interest method for financial assets measured subsequently
at amortized cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount
of a financial asset, except for financial assets that have subsequently become credit-impaired (see below).
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 570 ---
Financial assets at FVTPL
The Group’s financial assets that do not meet the criteria for being measured at amortized cost are measured
at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value
gains or losses recognized in profit or loss. The net gain or loss recognized in profit or loss includes any interest
earned on the financial asset and is included in the “other gains and losses, net” line item.
Impairment of financial assets
The Group performs impairment assessment under ECL on financial assets (including bank balances, term
deposits, restricted bank deposit, trade and other receivables, and amounts due from related parties) which are subject
to impairment assessment under IFRS 9. The amount of ECL is updated at each reporting date to reflect changes in
credit risk since initial recognition.
Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the
relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected
to result from default events that are possible within 12 months after the reporting date. Assessments are done based
on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic
conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future
conditions.
The Group always recognizes lifetime ECL for trade receivables.
For all other financial assets, the Group measures the loss allowance equal to 12m ECL, unless there has been
a significant increase in credit risk since initial recognition, in which case the Group recognizes lifetime ECL. The
assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or risk
of a default occurring since initial recognition.
(i) Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of
a default occurring on the financial instrument as at the date of initial recognition. In making this assessment,
the Group considers both quantitative and qualitative information that is reasonable and supportable, including
historical experience and forward-looking information that is available without undue cost or effort.
In particular, the following information is taken into account when assessing whether credit risk has
increased significantly:
 an actual or expected significant deterioration in the financial instrument’s external (if available)
or internal credit rating;
 significant deterioration in external market indicators of credit risk, e.g. a significant increase in
the credit spread, the credit default swap prices for the debtor;
 existing or forecast adverse changes in business, financial or economic conditions that are
expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
 an actual or expected significant deterioration in the operating results of the debtor;
 an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor that results in a significant decrease in the debtor’s ability to meet its
debt obligations.
APPENDIX I ACCOUNTANTS’ REPORT
– I-23 –


--- page 571 ---
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has
increased significantly since initial recognition when contractual payments are more than 30 days past due,
unless the Group has reasonable and supportable information that demonstrates otherwise.
Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has not increased
significantly since initial recognition if the debt instrument is determined to have low credit risk at the
reporting date. A debt instrument is determined to have low credit risk if i) it has a low risk of default, ii) the
borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse
changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability
of the borrower to fulfill its contractual cash flow obligations. The Group considers a debt instrument to have
low credit risk when it has an internal or external credit rating of ‘investment grade’ as per globally understood
definitions.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been
a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of
identifying significant increase in credit risk before the amount becomes past due.
(ii) Definition of default
The Group considers the following as constituting an event of default for internal credit risk
management purposes as historical experience indicates that receivables that meet either of the following
criteria are generally not recoverable.
 when there is a breach of financial covenants by the counterparty; or
 information developed internally or obtained from external sources indicates that the debtor is
unlikely to pay its creditors, including the Group, in full (without taking into account any
collaterals held by the Group).
Irrespective of the above, the Group considers that default has occurred when a financial asset is more
than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more
lagging default criterion is more appropriate.
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired includes observable data about the following events:
(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not
otherwise consider; or
(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganization.
(iv) Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in
severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been
placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be
subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice
where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognized in
profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
– I-24 –


--- page 572 ---
(v) Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given default (i.e. the
magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of
default and loss given default is based on historical data adjusted by forward-looking information. Estimation
of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of
default occurring as the weights.
Generally, the ECL is the difference between all contractual cash flows that are due to the Group in
accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective
interest rate determined at initial recognition.
For collective assessment, the Group takes into consideration the following characteristics when
formulating the grouping:
 Past-due status;
 Nature, size and industry of debtors; and
 External credit ratings where available.
The grouping is regularly reviewed by management to ensure the constituents of each group continue
to share similar credit risk characteristics.
Interest income is calculated based on the gross carrying amount of the financial asset unless the
financial asset is credit-impaired, in which case interest income is calculated based on amortized cost of the
financial asset.
The Group recognizes an impairment gain or loss in profit or loss for all financial instruments by
adjusting their carrying amount, with the exception of trade receivables where the corresponding adjustment
is recognized through a loss allowance account.
Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset
to another entity.
On derecognition of a financial asset measured at amortized cost, the difference between the asset’s carrying
amount and the sum of consideration received and receivable is recognized in profit or loss.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity
in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an
equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct
issue costs.
Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at
FVTPL.
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


--- page 573 ---
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of
an acquirer in a business combination to which IFRS 3 Business Combinations applies, (ii) held for trading or (iii)
designated as at FVTPL.
A financial liability other than a financial liability held for trading or contingent consideration of an acquirer
in a business combination may be designated as at FVTPL upon initial recognition if:
 such designation eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise; or
 the financial liability forms part of a group of financial assets or financial liabilities or both, which is
managed and its performance is evaluated on a fair value basis, in accordance with the Group’s
documented risk management or investment strategy, and information about the grouping is provided
internally on that basis; or
 it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire
consolidated contract to be designated as at FVTPL.
For financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income,
unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would
create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s
credit risk that are recognized in other comprehensive income are not subsequently reclassified to profit or loss;
instead, they are transferred to accumulated losses upon derecognition of the financial liability.
Financial liabilities at amortized cost
Financial liabilities including trade and other payables, amounts due to related parties, bank and other
borrowings and long-term bond are subsequently measured at amortized cost, using the effective interest method.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the
end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of
the instruments. These foreign exchange gains and losses are recognized in the ‘Other gains and losses, net’ line item
in profit or loss as part of net foreign exchange gains (losses) for financial liabilities that are not part of a designated
hedging relationship.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at
FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or
loss for financial liabilities that are not part of a designated hedging relationship.
Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the
consideration paid and payable is recognized in profit or loss.
Modification of financial liabilities
For non-substantial modifications of financial liabilities that do not result in derecognition, the carrying
amount of the relevant financial liabilities will be calculated at the present value of the modified contractual cash
flows discounted at the financial liabilities’ original effective interest rate. Any adjustment to the carrying amount
of the financial liability is recognized in profit or loss at the date of modification.
APPENDIX I ACCOUNTANTS’ REPORT
– I-26 –


--- page 574 ---
Derivative financial instruments
Derivatives are initially recognized at fair value at the date when derivative contracts are entered into and are
subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss is recognized
in profit or loss.
5. CRITICAL ACCOUNTING JUDGMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in Note 4, the Directors are required
to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision affects both current and future periods.
Critical judgment in applying accounting policies
The following is the critical judgment, apart from those involving estimations (see below), that the Directors
have made in the process of applying the Group’s accounting policies and that have the most significant effect on
the amounts recognized in the Historical Financial Information.
Research and development expenditures
Development costs incurred on the Group’s digital therapy for cognitive impairment are capitalized and
deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it
will be available for use or sale, the Group’s intention to complete and use or sell the asset, how the asset will
generate probable future economic benefits, the availability of adequate technical, financial and other resources to
complete the pipeline, the Group’s ability to use or sell the asset and the ability to measure reliably the expenditure
during the development. Development costs which do not meet these criteria are expensed when incurred.
The Directors assess the progress of each of the research and development projects and determine whether the
criteria are met for capitalization. During the Track Record Period, all development costs are expensed when
incurred.
Key sources of estimation uncertainty
The followings are the key assumptions concerning the future, and other key sources of estimation uncertainty
at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the coming twelve months.
Fair value measurement of financial liabilities at FVTPL
No quoted prices in an active market are available for the Group’s financial liabilities at FVTPL. These
financial liabilities were valued by the Directors with the assistance of an independent qualified professional valuer
not connected to the Group, which has appropriate qualifications and experience in valuation of similar financial
instruments. The fair value of these financial liabilities is established by using valuation techniques as disclosed in
Notes 27 and 34. V aluation techniques are certified by the valuer before being implemented for valuation and are
calibrated to ensure that outputs reflect market conditions. V aluation models established by the valuer make the
maximum use of market inputs and rely as little as possible on the Group’s specific data. However, it should be noted
that some inputs, such as possibilities under different scenarios such as IPO, liquidation and redemption, or discount
for lack of marketability as appropriate, require management estimates. The estimates and assumptions are reviewed
periodically by the Directors and adjusted if necessary. Should any of the estimates and assumptions changed, it may
lead to a change in the fair value of financial liabilities at FVTPL. The fair value of financial liabilities at FVTPL
at December 31, 2021, 2022 and 2023 and June 30, 2024 was RMB726,746,000, RMB1,162,632,000,
RMB315,544,000 and RMB315,787,000, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 575 ---
6. REVENUE AND SEGMENT INFORMATION
(i) Disaggregation of revenue
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Provision of the System
integral
software solutions
In hospitals 967 4,075 41,224 15,216 35,282
Out of hospitals 240 1,095 5,723 1,901 10,544
1,207 5,170 46,947 17,117 45,826
Research projects 413 5,993 14,290 5,119 5,914
Training facilitation
service (Note i) – – 5,085 1,324 –
Others (Note ii) 679 128 878 852 147
Total 2,299 11,291 67,200 24,412 51,887
Notes:
i The Group signed a three-year contract with the customer in October 2023 for training facilitation
service and suspended it in January 2024 as requested by the customer. In April 2024, the Group and
the customer entered into a termination agreement in relation to the training facilitation service.
ii Others are mainly generated from sales of software systems and sales of electronic equipment with
software systems.
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Timing of recognition
At a point in time 1,707 6,777 56,118 19,840 41,249
Over time 592 4,514 11,082 4,572 10,638
2,299 11,291 67,200 24,412 51,887
Geographical market
Mainland China 2,299 11,291 67,200 24,412 51,887
APPENDIX I ACCOUNTANTS’ REPORT
– I-28 –


--- page 576 ---
(ii) Performance obligations for contracts with customers and revenue recognition policies
Revenue from provision of the System integral software solutions in hospitals and out of hospitals, research
project and training facilitation service, are principal activities from which the Group generated its revenue during
the Track Record Period.
(a) Provision of the System integral software solutions
The Group earns revenue by (i) provision of the System integral software solutions through the Group’s core
product, the brain function information management platform software system (the “System”) in hospitals which
enable hospitals to offer assessment and intervention to their cognitive impairment patients; (ii) provision of the
System integral software solutions out of hospitals to individual patients. Revenue relating to provision of the System
integral software solutions in hospitals is recognized at a point in time when performance obligation is completed and
the Group has a present right to collect payment for the services performed. The revenue relating to provision of the
System integral software solutions out of hospitals is generated from subscription contracts under which a
prepayment was received from a customer for unlimited number of services provided during the subscription period.
The revenue relating to provision of the System integral software solutions out of hospitals is recognized over time
and prepayment received is recognized as a contract liability and is released on a straight-line basis over the period
of services.
(b) Research projects
The Group provide software development and data analysis service according to the customer’s requirements.
Revenue relating to most of the research projects is recognized at a point in time when the software
development or the data analysis report is completed and accepted by customers. The Group incurs costs to fulfil a
contract in such research projects. The Group first assesses whether these costs qualify for recognition as an asset
in terms of other relevant standards, failing which it recognizes an asset for these costs only if they meet all of the
following criteria: (a) the costs relate directly to a contract or to an anticipated contract that the Group can
specifically identify; (b) the costs generate or enhance resources of the Group that will be used in satisfying (or in
continuing to satisfy) performance obligations in the future; and (c) the costs are expected to be recovered. The asset
so recognized is subsequently amortized to profit or loss when the research project is completed and the relevant
software or data analysis report is accepted by customers. The asset is subject to impairment review.
Revenue from certain research project is recognized over time as performance obligation is satisfied, because
the Group’s performance does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date. The progress towards complete satisfaction of a
performance obligation is measured based on input method, which is to recognize revenue on the basis of the Group’s
actual costs incurred on the relevant projects relative to the total expected costs to the completion of the research
projects, that best depict the Group’s performance in transferring control of research services.
(c) Training facilitation service
The Group earn revenue via assisting the customer, the organizer of the training sessions, in performing the
organizational and logistical groundwork of training sessions for medical specialists in the cognitive impairment
specialty. The revenue is recognized at a point in time when the training sessions are completed and the service fee
is collected according to the number of medical specialists attending.
For certain contract of training facilitation service, the Group may be required to pay compensation to the
customer if the number of medical specialists attended the training sessions for a period of one year is less than the
required number that agreed in the contract, the Group accounts for the compensation as variable consideration
contained in the contract and estimates the amount of consideration to which it will be entitled using the most likely
amount, which better predicts the amount of consideration to which the Group will be entitled.
APPENDIX I ACCOUNTANTS’ REPORT
– I-29 –


--- page 577 ---
(iii) Transaction price allocated to the remaining performance obligation for contracts with customers
For the services related to provision of the System integral software solutions in hospitals, the Group is entitled
to bill a fixed amount for each time of the assessment and intervention provided. The Group elected to apply the
practical expedient by recognizing revenue in the amount to which the Group has right to invoice. As permitted under
IFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.
Provision of the System integral software solutions out of hospitals and most of research projects are for
periods of one year or less. As permitted by IFRS 15, the transaction price allocated to these unsatisfied performance
obligations is not disclosed.
The transaction price of research projects for the period over one year allocated to the remaining performance
obligations as at December 31, 2021, 2022 and 2023, and June 30, 2024 and the expected timing of recognizing
revenue are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within one year – 5,494 7,723 2,285
More than one year but not more
than two years 189 682 435 –
More than two years 189 317 – –
Total 378 6,493 8,158 2,285
(iv) Segment information
Information reported to the executive directors, being the chief operating decision makers (the “CODM”) for
the purpose of resources allocation and assessment of segment performance, focuses on types of goods or services
delivered or provided. During the Track Record Period, the CODM assesses the operating performance and allocates
resources of the Group as a whole, as all of the Group’s activities are considered to be primarily the provision of
cognitive impairment DTx integral software solutions. Accordingly, the executive directors consider there is only one
operating segment under the requirements of IFRS 8 Operating Segments . In this regard, no segment information is
presented.
No geographic information is presented as the revenue, non-current assets and operations of the Group are all
derived from its activities in the PRC.
(v) Information about major customers
During the Track Record Period, revenue from customers of the corresponding years/period contributing over
10% of the total revenue of the Group are as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Customer A – 4,416 26,821 11,123 14,540
Customer B 815 2,239 10,970 5,616 5,674
Customer F – N/A* 6,821 N/A* 5,849
Customer H 28 3––––
The revenue from customer A and customer B included revenue from provision of the System integral software
solutions in hospitals and research projects. The revenue from customer F included revenue from research projects.
The revenue from customer H is revenue from other sales.
* During the year ended December 31, 2022 and the six months ended June 30, 2023 (unaudited), revenue
from customer F contributed less than 10% of the total revenue of the Group.
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 578 ---
7. OTHER INCOME
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest income on bank
balances,
term deposits and
restricted bank deposit 1,308 3,812 1,973 1,642 378
Interest income from rental
deposits 18 91 106 50 54
Government grants related
to research and
development activities –––– 1 5 0
Others 152 1 2–––
Total 1,478 3,915 2,079 1,692 582
8. OTHER GAINS AND LOSSES, NET
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Fair value gains on
financial assets at
FVTPL – 3,239 2,672 2,672 –
Gains (losses) on disposal
of property, plant and
equipment 6 (131) (64) (64) –
Losses on lease
modifications – – (223) – (7)
Net foreign exchange loss – – (67) (469) (9)
Gain on re-estimated
repayments of long-term
bond –––– 2,151
Others (9) (10) – – –
Total (3) 3,098 2,318 2,139 2,135
9. FINANCE COSTS
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest on bank borrowing – – 212 – 365
Interest expense on long-
term bond 6,197 18,658 19,583 9,773 10,353
Interest on lease liabilities 194 565 421 189 186
Total 6,391 19,223 20,216 9,962 10,904
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 579 ---
10. INCOME TAX EXPENSE AND DEFERRED TAXATION
Income tax expense
The Company was incorporated in the Cayman Islands and is exempted from income tax.
No Hong Kong profit tax was provided for as there was no estimated assessable profit of the Group’s Hong
Kong subsidiary that was subject to Hong Kong profit tax during the Track Record Period.
Under the law of the PRC on Enterprise Income Tax (the “EIT Law”) and implementation regulations of the
EIT Law, the statutory tax rate of the PRC subsidiaries is 25%.
BrainAurora Zhejiang and Beijing Zhijingling Technology Co., Ltd.* (ʮ̡) (“Beijing
Zhijingling”) have been accredited as a High-New Technology Enterprise (the “HNTE”) by the Science and
Technology Bureau of Beijing and relevant authorities in December 2019 for a term of three years ended December
31, 2021. The HNTE qualification of Beijing Zhijingling was further renewed and extended to year 2024. Beijing
Zhijingling was subject to a preferential income tax rate of 15% from year 2019 to 2024. Pursuant to the notice of
the Ministry of Finance and the State Administration of Taxation on extending the loss carrying forward period of
HNTE and high-tech small and medium enterprises (Cai Shui 2018 No. 76), with effect from January 1, 2018, for
qualified HNTE and high-tech small and medium enterprises, the unutilized tax losses incurred in the previous 5
years can be utilized in 10 years from the year of loss. The unutilized tax losses of Beijing Zhijingling incurred since
year 2014 will be expired in 10 years from the year of loss. The unutilized tax losses of BrainAurora Zhejiang
incurred since year 2014 to 2021 will be expired in 10 years from the year of loss.
No provision for PRC income tax was made as BrainAurora Zhejiang and its PRC subsidiaries incurred tax
losses during the Track Record Period.
Income tax expense for the Track Record Period can be reconciled to loss before tax per the consolidated
statements of profit or loss and other comprehensive income as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Loss before tax (697,838) (502,461) (359,116) (234,570) (114,389)
Tax at the statutory tax
rate of 25% (174,460) (125,615) (89,779) (58,643) (28,597)
Tax effect of expenses not
deductible for tax
purpose (Note i) 160,868 97,072 62,528 44,950 12,090
Tax effect of income not
taxable for tax purpose –––– (538)
Tax effect of super
deduction for research
and development
expenses (Note ii) (4,629) (15,173) (12,018) (7,028) (8,440)
Tax effect of deductible
temporary differences
not recognized 3 12 207 62 1,083
Tax effect of tax losses not
recognized and
utilization of tax losses
not recognized
previously 18,218 43,704 39,062 20,659 24,402
–––––
APPENDIX I ACCOUNTANTS’ REPORT
– I-32 –


--- page 580 ---
Notes:
i. Tax effect of expenses not deductible for tax purpose mainly includes fair value loss of financial
liabilities at FVTPL, share-based payments and the listing expenses of the Company.
ii. Pursuant to Cai Shui 2018 No. 99 and Cai Shui 2021 No. 6, BrainAurora Zhejiang, Beijing Zhijingling
and Changsha Zhijingling Education Technology Co., Ltd.* (ʮ̡)
(“Changsha Zhijingling”) are entitled to claim 175% qualified research and development expenses so
incurred as tax deductible expenses when determining their assessable profits from January 1, 2019 to
December 31, 2023.
Pursuant to Caishui 2022 circular No. 16, Beijing Zhijingling enjoyed accelerated deduction of 200%
on qualifying research and development expenses from January 1, 2022 to December 31, 2022 since it
has been accredited as a technology-based small and medium-sized enterprise. Pursuant to Caishui 2022
circular No. 28, BrainAurora Zhejiang, Changsha Zhijingling and BrainAu Medical Technology
(Nanjing) Co., Ltd.* (Ҧ(ԯ)ʮ̡) (“BrainAurora Nanjing”) enjoyed accelerated
deduction of 200% on qualifying research and development expenses from October 1, 2022 to December
31, 2022. Pursuant to Caishui 2023 circular No. 7, BrainAurora Zhejiang and all its PRC subsidiaries
enjoy accelerated deduction of 200% on qualifying research and development expenses from January 1,
2023.
* English name is for identification purpose only.
Deferred taxation
For the purpose of presentation in the consolidated statements of financial position, certain deferred tax assets
and liabilities have been offset. The following is the analysis of the deferred tax balances for financial reporting
purposes:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Deferred tax assets 4,363 2,728 3,237 1,920
Deferred tax liabilities (4,363) (2,728) (3,237) (1,920)
––––
The followings are the deferred tax liabilities and assets recognized and movements thereon during the Track
Record Period:
Tax losses
Right-of-use
assets
Lease
liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2021 ––––
Credit (charge) to profit or loss 23 (4,363) 4,340 –
At December 31, 2021 23 (4,363) 4,340 –
(Charge) credit to profit or loss (15) 1,635 (1,620) –
At December 31, 2022 8 (2,728) 2,720 –
Credit (charge) to profit or loss 90 (509) 419 –
At December 31, 2023 98 (3,237) 3,139 –
Credit (charge) to profit or loss 176 1,317 (1,493) –
At June 30, 2024 274 (1,920) 1,646 –
APPENDIX I ACCOUNTANTS’ REPORT
– I-33 –


--- page 581 ---
As at December 31, 2021, 2022 and 2023 and June 30, 2024, the Group had estimated unused tax losses of
approximately RMB72,516,000, RMB247,273,000, RMB403,885,000 and RMB502,191,000, respectively, which are
available for offset against future profits. Deferred tax asset has been recognized in respect of approximately
RMB93,000, RMB33,000, RMB396,000 and RMB1,096,000 of such losses as at December 31, 2021, 2022 and 2023
and June 30, 2024. No deferred tax asset has been recognized in respect of the remaining approximately
RMB72,423,000, RMB247,240,000, RMB403,489,000 and RMB501,095,000 due to the unpredictability of future
profit streams as at December 31, 2021, 2022 and 2023 and June 30, 2024.
The unrecognized tax losses with expiry dates are disclosed in the following table:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
2026 1,806 1,806 1,806 1,806
2027 – 21,077 21,077 21,077
2028 2,054 2,054 27,719 27,719
2029 2,818 2,818 2,818 25,674
2030 3,282 3,282 3,282 3,282
2031 62,463 62,463 62,463 62,463
2032 – 153,740 153,740 153,740
2033 – – 130,584 130,584
2034 – – – 74,750
Total 72,423 247,240 403,489 501,095
As at December 31, 2021, 2022 and 2023 and June 30, 2024, the Group has deductible temporary differences
of RMB13,000, RMB63,000, RMB891,000 and RMB5,221,000 in relation to the impairment loss under ECL model
and certain expenses. No deferred tax asset has been recognized in relation to such deductible temporary differences
as it is not probable that taxable profit will be available against which the deductible temporary differences can be
utilized.
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 582 ---
11. LOSS FOR THE YEAR/PERIOD
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Loss for the year/period
has been arrived at after
charging:
Staff costs, including
directors’ remuneration
– salaries and other
allowances 30,905 66,869 69,079 29,911 33,031
– retirement benefits 2,702 7,326 6,301 3,015 3,446
– equity-settled share-
based payments
included in selling and
distribution expenses 7,186 – 8,127 – 6,404
– equity-settled share-
based payments
included in
administrative
expenses 7,186 – 17,921 – 14,106
– equity-settled share-
based payments
included in research
and development
expenses 4,998 – 18,825 – 14,794
Total staff costs 52,977 74,195 120,253 32,926 71,781
Auditor’s remuneration 6 9 13 13 62
Listing expenses – – 25,767 10,309 8,592
Depreciation of property,
plant and equipment 611 5,730 13,779 6,172 8,642
Depreciation of right-of-
use assets 936 6,633 6,994 3,318 3,938
Amortization of intangible
assets 81 67 493 112 869
Total depreciation and
amortization 1,628 12,430 21,266 9,602 13,449
Short-term lease expense 1,382 273 102 48 65
Sub-contracting costs in
relation to clinical trials
included in research and
development expenses – 264 7,049 2,311 1,300
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 583 ---
12. DIRECTORS’, CHIEF EXECUTIVE’S EMOLUMENTS
The emoluments paid or payable to the directors and chief executive of the Company (including emoluments
for the services as employee of the group entities prior to becoming directors of the Company), during the Track
Record Period disclosed pursuant to the applicable Listing Rules and Hong Kong Companies Ordinance are as
follows:
Y ear ended December 31, 2021
Salaries
and other
allowances
Retirement
benefits
Equity-
settled
share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Tan Zheng (Note a) – – 14,372 14,372
Dr. Wang Xiaoyi (Note b) 648 31 – 679
Total 648 31 14,372 15,051
Y ear ended December 31, 2022
Salaries
and other
allowances
Retirement
benefits
Equity-
settled
share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Tan Zheng (Note a) 3,892 17 – 3,909
Dr. Wang Xiaoyi (Note b) 805 60 – 865
Total 4,697 77 – 4,774
Y ear ended December 31, 2023
Salaries
and other
allowances
Retirement
benefits
Equity-
settled
share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Tan Zheng (Note a) 2,649 37 14,785 17,471
Dr. Wang Xiaoyi (Note b) 4,739 65 14,685 19,489
Sub-total 7,388 102 29,470 36,960
Non-executive directors:
Mr. Li Sirui (Note c) ––––
Ms. Li Mingqiu (Note c) ––––
Mr. Deng Feng (Note c) ––––
Sub-total ––––
Total 7,388 102 29,470 36,960
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 584 ---
Six months ended June 30, 2023 (Unaudited)
Salaries and
other
allowances
Retirement
benefits
Equity-
settled
share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Tan Zheng (Note a) 1,881 17 – 1,898
Dr. Wang Xiaoyi (Note b) 405 32 – 437
Total 2,286 49 – 2,335
Six months ended June 30, 2024
Salaries
and other
allowances
Retirement
benefits
Equity-
settled
share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Tan Zheng (Note a) 511 24 11,656 12,191
Dr. Wang Xiaoyi (Note b) 408 34 11,578 12,020
Sub-total 919 58 23,234 24,211
Non-executive directors:
Mr. Li Sirui (Note c) ––––
Ms. Li Mingqiu (Note c) ––––
Mr. Deng Feng (Note c) ––––
Sub-total ––––
Total 919 58 23,234 24,211
Notes:
a. Mr. Tan Zheng joined the Group and was appointed as a director of BrainAurora Zhejiang in December
2020. Mr. Tan Zheng was appointed as a director of the Company in April 2023 and was re-designated
as the chairman and an executive director in July 2023.
b. Dr. Wang Xiaoyi joined the Group in September 2012. Dr. Wang Xiaoyi was appointed as chief
executive officer and chief research officer of the Group since June 2020. Dr. Wang Xiaoyi was
appointed as a director of the Company in April 2023 and was re-designated as an executive director in
July 2023.
c. Mr. Li Sirui, Ms. Li Mingqiu and Mr. Deng Feng were appointed as non-executive directors of the
Company on July 30, 2023.
The executive directors’ emoluments shown above were for their services in connection with the management
of the affairs of the Group.
No independent non-executive director was appointed during the Track Record Period. Mr. Lam Yiu Por, Dr.
Duan Tao and Mr. Li Y uezhong were appointed as independent non-executive directors on December 19, 2024.
During the Track Record Period, Mr. Tan Zheng and Dr. Wang Xiaoyi were granted equity interest in
BrainAurora Zhejiang and the Company at a discount to the fair value, in respect of their services to the Group, of
which details are set out in Note 32.
There was no arrangement under which a director of the Company or the chief executive of the Group waived
or agreed to waive any remuneration during the Track Record Period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 585 ---
13. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees of the Group included two, one, two, two (unaudited) and two directors for
the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, respectively,
details of whose remuneration are set out in Note 12 above. Details of the remuneration for the remaining three, four,
three, three (unaudited) and three employees who are not a director of the Company or chief executive of the Group
for the Track Record Period were as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries and other
allowances 1,462 4,204 3,614 1,451 1,664
Retirement benefits 59 235 195 96 102
Equity-settled share-based
payments 4,998 – 6,937 – 6,975
Total 6,519 4,439 10,746 1,547 8,741
The number of the highest paid employees who are not the directors of the Company or chief executive of the
Group whose remuneration fell within the following bands is as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
No. of
employees
No. of
employees
No. of
employees
No. of
employees
No. of
employees
(Unaudited)
Nil to Hong Kong dollar
(“HKD”) 1,000,000 2––3–
HKD1,000,001 to
HKD1,500,000 –3––2
HKD1,500,001 to
HKD2,000,000 –12––
HKD6,500,001 to
HKD7,000,000 1––––
HKD7,000,001 to
HKD7,500,000 ––––1
HKD8,000,001 to
HKD8,500,000 ––1––
Total 34333
During the Track Record Period, no emoluments were paid by the Group to the directors of the Company or
chief executive of the Group or the five highest paid employees as an inducement to join or upon joining the Group
or as compensation for loss of office.
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 586 ---
14. DIVIDENDS
No dividend has been paid or declared by the group entities comprising the Group during the Track Record
Period.
15. LOSS PER SHARE
The calculation of the basic and diluted loss per share attributable to owners of the Company is based on the
following data:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Loss
Loss for the year/period
attributable to owners of
the Company (697,837) (502,452) (359,083) (234,597) (114,328)
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
Shares Shares Shares Shares Shares
(’000) (’000) (’000) (’000) (’000)
(Unaudited)
Number of shares
Weighted average number
of Ordinary Shares for
the purpose of basic and
diluted loss per share 150,261 280,652 583,796 309,682 904,122
The weighted average number of Ordinary Shares for the purpose of calculating basic loss per share for the
Track Record Period has been determined on the assumptions that the Share Subdivision as set out in Note 41 and
“Share Capital” section of the Prospectus had been effective since January 1, 2021 and the Series A-1 Preferred
Shares are not treated as outstanding Ordinary Shares and excluded in the calculation of basic loss per share.
For the purpose of calculation of diluted loss per share, it did not assume the conversion of Series A-1
Preferred Shares and did not take into account the effect of the share awards of the Company since the assumed
conversion and the assumed vesting would result in a decrease in loss per share.
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 587 ---
16. PROPERTY, PLANT AND EQUIPMENT
Office
equipment Machineries Vehicles
Leasehold
improvement
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST
At January 1, 2021 418 2 6––– 4 4 4
Additions 3,363 886 – – 5,570 9,819
Transfer – – – 438 (438) –
Disposals (10) –––– (10)
At December 31, 2021 3,771 912 – 438 5,132 10,253
Additions 2,835 4,364 442 – 11,585 19,226
Transfer – – – 15,838 (15,838) –
Disposals (308) (94) – – – (402)
At December 31, 2022 6,298 5,182 442 16,276 879 29,077
Additions 2,335 4,966 700 – 6,772 14,773
Transfer 752 – – 6,427 (7,179) –
Disposals – (381) – – – (381)
At December 31, 2023 9,385 9,767 1,142 22,703 472 43,469
Additions 4,879 2,660 – – 2,463 10,002
Transfer – – – 2,935 (2,935) –
Disposals – (41) – – – (41)
At June 30, 2024 14,264 12,386 1,142 25,638 – 53,430
ACCUMULA TED
DEPRECIA TION
At January 1, 2021 139 2 6––– 1 6 5
Provided for the year 493 52 – 66 – 611
Disposals (2) –––– ( 2 )
At December 31, 2021 630 78 – 66 – 774
Provided for the year 1,572 791 22 3,345 – 5,730
Disposals (213) (35) – – – (248)
At December 31, 2022 1,989 834 22 3,411 – 6,256
Provided for the year 2,000 2,289 88 9,402 – 13,779
Disposals – (69) – – – (69)
At December 31, 2023 3,989 3,054 110 12,813 – 19,966
Provided for the period 1,315 1,773 44 5,510 – 8,642
Disposals – (6) – – – (6)
At June 30, 2024 5,304 4,821 154 18,323 – 28,602
CARRYING V ALUES
At December 31, 2021 3,141 834 – 372 5,132 9,479
At December 31, 2022 4,309 4,348 420 12,865 879 22,821
At December 31, 2023 5,396 6,713 1,032 9,890 472 23,503
At June 30, 2024 8,960 7,565 988 7,315 – 24,828
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 588 ---
Property, plant and equipment other than construction in progress are depreciated using the straight-line
method after taking into account of their estimated residual values with the following useful lives:
Office equipment 3 years to 5 years
Machineries 3 years
V ehicles 5 years
Leasehold improvement Shorter of lease terms or cooperation terms with hospitals and 5 years
17. RIGHT-OF-USE ASSETS
Leasehold
properties
RMB’000
COST
At January 1, 2021 –
Addition 18,657
At December 31, 2021 and 2022 18,657
Additions 10,286
Lease modified (500)
Early termination of a lease (Note i) (5,797)
At December 31, 2023 22,646
Reduction of the leased space (Note ii) (2,673)
At June 30, 2024 19,973
ACCUMULA TED DEPRECIA TION
At January 1, 2021 –
Charge for the year 936
At December 31, 2021 936
Charge for the year 6,633
At December 31, 2022 7,569
Charge for the year 6,994
Early termination of a lease (Note i) (5,072)
At December 31, 2023 9,491
Charge for the period 3,938
Reduction of the leased space (Note ii) (1,258)
At June 30, 2024 12,171
CARRYING V ALUES
At December 31, 2021 17,721
At December 31, 2022 11,088
At December 31, 2023 13,155
At June 30, 2024 7,802
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 589 ---
Notes:
i. In September 2023, the Group early terminated a lease with the lessor. The Group derecognized the
right-of-use assets of RMB725,000 and lease liabilities of RMB495,000, resulting in a loss of
RMB223,000 in profit or loss after consideration of refund of rental deposits.
ii. In January 2024, the Group reduced certain leased space. The Group remeasured lease liabilities of
RMB1,408,000 and right-of-use assets of RMB1,415,000 resulting in a loss of RMB7,000 in profit or
loss.
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Expense relating to short-
term leases 1,382 273 102 48 65
Total cash outflow for
leases 2,680 7,101 8,660 4,172 4,711
Right-of-use assets are depreciated on a straight-line basis over the lease terms.
The Group leases properties to operate its business. These leases are made for fixed terms of 2 to 5 years. Lease terms
are negotiated on an individual basis and contain different payment terms and conditions. In determining the lease
term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and
determines the period for which the contract is enforceable.
The Group’s lease agreements do not contain any contingent rent nor any extension, termination option or purchase
option for lessee. The lease agreements do not impose any covenants other than the security interests in the leased
properties that are held by the lessor. Leased properties may not be used as security for borrowing purposes.
The Group regularly entered into short-term leases for properties. As at December 31, 2021, 2022 and 2023 and June
30, 2024, the portfolio of short-term leases is similar to the portfolio of short-term leases to which the short-term
lease expense is disclosed in Note 11.
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 590 ---
18. INTANGIBLE ASSETS
Software Patent Others Total
RMB’000 RMB’000 RMB’000 RMB’000
COST
At January 1, 2021 700 – – 700
Addition 24 – – 24
At December 31, 2021 724 – – 724
Addition 559 – – 559
At December 31, 2022 1,283 – – 1,283
Addition 1,953 2,000 200 4,153
At December 31, 2023 3,236 2,000 200 5,436
Additions 267 – – 267
At June 30, 2024 3,503 2,000 200 5,703
AMORTIZA TION
At January 1, 2021 573 – – 573
Charge for the year 81 – – 81
At December 31, 2021 654 – – 654
Charge for the year 67 – – 67
At December 31, 2022 721 – – 721
Charge for the year 265 128 100 493
At December 31, 2023 986 128 100 1,214
Charge for the period 438 381 50 869
At June 30, 2024 1,424 509 150 2,083
CARRYING V ALUE
At December 31, 2021 70 – – 70
At December 31, 2022 562 – – 562
At December 31, 2023 2,250 1,872 100 4,222
At June 30, 2024 2,079 1,491 50 3,620
The above intangible assets have finite useful lives, and are amortized on a straight-line basis over the
following periods:
Software 3 years to 10 years
Patent 5 years
Others 2 years
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 591 ---
19. TRADE AND OTHER RECEIV ABLES AND PREPAYMENTS
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 1,136 8,422 50,740 78,818
Less: allowance for credit losses (13) (63) (891) (5,033)
1,123 8,359 49,849 73,785
Prepayments for purchase of
property, plant and equipment 1,126 5 18 763
Prepayments for purchase of
intangible assets – 2,101 101 101
V alue added tax recoverable 1,463 364 1,649 952
Prepayments to suppliers and service
providers 2,248 7,526 11,742 11,338
Rental deposits 2,202 2,293 3,880 2,933
Other deposits 461 97 107 143
Short-term loan receivables (Note) 9,500 – 500 500
Receivables from third party
payment platforms 222 864 1,005 3,994
Refund receivable 1,000 1,000 – –
Deferred share issue costs – – 7,689 10,370
Prepayments for listing expenses – – 318 318
Others 457 502 1,204 1,269
Total 19,802 23,111 78,062 106,466
Analyzed as:
Non-current 3,328 3,437 2,009 2,822
Current 16,474 19,674 76,053 103,644
Total 19,802 23,111 78,062 106,466
Note: These receivables were short-term loans to non-related parties, unsecured, interest free and repayable
within one year.
As at January 1, 2021, trade receivables from contracts with customers amounted to RMB321,000.
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 592 ---
Before accepting any new customer, the Group uses an internal credit scoring system to assess the potential
customer’s credit quality and defines credit limits by customer. The Group allows a credit period of 30 to 180 days
to its customers. The following is an aged analysis of trade receivables, net of allowance for credit losses, presented
based on the respective revenue recognition dates at the end of the reporting period:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables
0~90 days 546 5,594 22,906 20,062
91~180 days 303 2,449 10,577 21,587
181~270 days 88 221 5,093 19,141
271~360 days 10 61 6,370 5,673
over 1 year 176 34 4,903 7,322
Total 1,123 8,359 49,849 73,785
As at December 31, 2021, 2022 and 2023 and June 30, 2024, included in the Group’s trade receivables balance
are debtors with aggregate carrying amount of RMB860,000, RMB7,371,000, RMB42,265,000 and RMB64,698,000
which are past due as at the reporting date. Out of the past due balances, RMB439,000, RMB829,000,
RMB17,393,000 and RMB44,735,000 has been past due 90 days or more and is not considered as in default because
the customers are mainly state-owned hospitals or state-owned universities which are with high credit ratings and
frequently repay after due dates but usually settle the amounts in full and the amounts are still considered recoverable.
Details of impairment assessment of trade and other receivables are set out in Note 33.
The Company
As at
December 31,
2023
As at
June 30,
2024
RMB’000 RMB’000
Deferred share issue costs 7,689 10,370
Prepayments for listing expenses 318 318
Total 8,007 10,688
20. FINANCIAL ASSETS AT FVTPL
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at FVTPL – 228,789 – –
The Group invested in financial products managed by banks in the PRC which can be redeemed at any time
or at maturity. There is no predetermined or guaranteed return for each product. Such financial products are accounted
for as financial assets at FVTPL under IFRS 9.
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 593 ---
21. RESTRICTED BANK DEPOSIT, TERM DEPOSITS AND BANK BALANCES AND CASH
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Restricted bank deposit – – 214,241 119,421
The restricted bank deposit carries interest at prevailing market rate of 0.25% per annum as at December 31,
2023 and 0.15% per annum as at June 30, 2024 and withdrawal from the account is subject to endorsement of
Shaoxing Binhai New Area Biomedical Industry Equity Investment Fund Partnership (LP)* (ᔼᖹ
ΥྫΆุ (Υྫ)) (“Shaoxing Fund”), the details of which is set out in Note 23.
* English names are for identification purpose only.
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash on hand 13 2 11 3
Bank balances 323,727 28,249 57,566 55,903
Term deposits – 103,186 – –
323,740 131,437 57,577 55,906
Term deposits with original maturity
over three months (Note i) – 103,186 – –
Cash and cash equivalents as stated
in the consolidated statements of
cash flows (Note ii) 323,740 28,251 57,577 55,906
323,740 131,437 57,577 55,906
Restricted bank deposit, term
deposits and bank balances
and cash
Analyzed as:
Non-current – 73,006 49,241 –
Current 323,740 58,431 222,577 175,327
323,740 131,437 271,818 175,327
Restricted bank deposit, term
deposits and bank balances
and cash denominated in:
RMB 323,740 124,473 261,191 168,121
USD – 6,964 10,627 7,206
323,740 131,437 271,818 175,327
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 594 ---
Notes:
i. Term deposits with original maturity over three months were held within banks and carry interest at
prevailing market rate of 3.30% to 3.50% per annum as at December 31, 2022. As at December 31, 2022,
term deposits of RMB73,006,000 will mature in year 2025. All the term deposits were sold in the
secondary market by June 2023.
ii. Cash and cash equivalents comprise cash on hand and bank balances carry interest at prevailing market
rate of 0.25% to 0.30% per annum, 0.25% to 0.30% per annum and 0.01% to 0.35% per annum and
0.01% to 0.25% per annum as at December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.
The Company
As at
December 31,
2023
As at
June 30,
2024
RMB’000 RMB’000
Bank balances 15,584 12,154
Bank balances denominated in:
RMB 5,025 5,021
USD 10,559 7,133
15,584 12,154
Bank balances carry interest at market rate of 0.01% per annum as at December 31, 2023 and June 30, 2024.
22. TRADE AND OTHER PAYABLES
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 159 1,761 8,251 7,476
Accrued salaries and other
allowances 6,424 4,747 8,927 6,308
Refund payables (Note) 6,422 6,422 5,222 3,743
Deposits for the hardware for
cognitive training out of hospital 136 444 1,879 4,827
Payables for acquisition of property,
plant and equipment 146 1,850 670 1,552
Accrued listing expenses and share
issue costs – – 12,622 18,753
Other tax payables 471 1,036 2,761 1,573
Payables for research and
development activities – – 1,026 1,641
Others 216 1,486 1,903 969
13,974 17,746 43,261 46,842
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 595 ---
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and other payables
denominated in:
USD – – 9,202 13,850
HKD – – 315 309
RMB 13,974 17,746 33,744 32,683
13,974 17,746 43,261 46,842
Note: In December 2020, the Group terminated certain contracts relate to sales of the System with distributors
and a contract relate to service for software development. These balances represent refundable
prepayments received from distributors and customer and agreed compensation for the early termination
of contracts.
The credit period granted by service providers is generally within 30 days. The following is an aged analysis
of trade payables based on the date when service provided at the end of the reporting period:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables
within 1 year 159 1,669 6,514 7,476
over 1 year – 92 1,737 –
Total 159 1,761 8,251 7,476
The Company
As at
December 31,
As at
June 30,
2023 2024
RMB’000 RMB’000
Accrued listing expenses and share issue costs 12,622 18,753
Others 51 50
12,673 18,803
As at
December 31,
As at
June 30,
2023 2024
RMB’000 RMB’000
USD 9,202 13,850
HKD 315 309
RMB 3,156 4,644
12,673 18,803
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 596 ---
23. LONG-TERM BOND
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Carrying amounts repayable:
Between one to two years – – – 72,380
Between two to five years 61,971 65,942 70,216 –
More than five years 229,226 243,913 259,222 265,260
Amounts shown under non-current
liabilities 291,197 309,855 329,438 337,640
In July 2021, BrainAurora Zhejiang entered into a long-term bond subscription agreement and a supplementary
agreement with Shaoxing Fund. The aggregate subscription amount was RMB300 million. The long-term bond carries
nominal interests of 6% per annum and will mature on the fifth anniversary of a qualified IPO of the Group.
BrainAurora Zhejiang shall pay the nominal interest of 6% per annum calculated on a simple basis up to December
31, 2025 no later than December 31, 2025. The principal and the interest from January 1, 2026 to the maturity date
shall be settled within seven working days from the maturity date. The total subscription amount of RMB300 million
was received in August 2021. The Shaoxing Fund may exercise its conversion option in relation to the long-term bond
of no more than RMB100 million before the submission of the listing application with no later than December 31,
2025 and the conversion price is subject to further negotiation between the Shaoxing Fund and BrainAurora Zhejiang.
The long-term bond includes conversion option that do not meet equity instrument classification by applying IAS 32
Financial Instruments : Presentation . The host debt component is measured at amortized cost and the derivative
component of the conversion option is measured at fair value. Since there is no specific conversion price in the
agreement, the fair value of the conversion option is considered nil. Therefore, the financial liability is measured at
amortized cost and the effective interest rate calculated after taking into account of nominal interest rate and other
directly related issue costs is 6.23%.
In respect of the long-term bond, the Group is required to comply with the following financial covenants as
long as long-term bond is outstanding. The repayment on demand clauses mainly include:
 the investment of the Group to Binhai New Area, Shaoxing city is not lower than RMB50 million until
the first anniversary of the subscription amount received; (the “First Y ear Investment”)
 the investment of the Group to Binhai New Area, Shaoxing city is not lower than RMB100 million until
the second anniversary of the subscription amount received; (the “Second Y ear Investment”)
 the investment of the Group to Binhai New Area, Shaoxing city is not lower than RMB360 million until
the third anniversary of the subscription amount received; (the “Third Y ear Investment”)
 the subscription amount is limited to be used for certain purposes, such as the Group’s ordinary
operation, capital expenditure and working Capital (the “Usage Limitation”).
If the First Y ear Investment or Second Y ear Investment is lower than the abovementioned amounts, a grace
period of 12 months will be given. If the Third Y ear Investment is lower than RMB360 million, Shaoxing Fund has
the right to demand immediate payment of the long-term bond with nominal interests of 8% per annum. If the Group
violates the Usage Limitation, Shaoxing Fund has the right to demand immediate repayment of the long-term bond
with nominal interests of 6% per annum.
The abovementioned terms are collectively referred to as the “Repayment on Demand Clauses.”
The Group has complied with these covenants during the Track Record Period. The long-term bond was
guaranteed by certain shareholders and their close family members and friends.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 597 ---
In June 2023, the Group and Shaoxing Fund signed a supplementary agreement, pursuant to which the
conversion right, Repayment on Demand Clauses and the original guarantee obligation of certain shareholders and
their close family members and friends were cancelled. Furthermore, if the Group fails to complete its IPO before
December 31, 2025, the Repayment on Demand Clauses (not including Usage Limitation) and the original guarantee
obligation will be restored.
The Group set up a new bank account and made deposits of RMB300,000,000 to this account as at June 30,
2023 according to above supplementary agreement and the withdrawal from the account is subject to approval of
Shaoxing Fund. From July to December 2023, the Group withdrew RMB186,000,000 and placed back
RMB100,000,000 of restricted bank deposits, and the restricted bank deposits was RMB214,000,000 without
considering the interest as at December 31, 2023. From January 1, 2024 to June 30, 2024, the Group withdrew
RMB95,000,000 restricted bank deposits, and the restricted bank deposits was RMB119,000,000 without considering
the interest as at June 30, 2024.
24. LEASE LIABILITIES
The exposure of the Group’s lease liabilities are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities payable:
Within one year 6,686 7,523 7,927 5,534
Within a period of more than one
year but not more than
two years 7,236 2,604 3,707 926
More than two years, but not
exceeding five years 3,644 1,192 920 199
17,566 11,319 12,554 6,659
Less: Amount due for settlement
with 12 months shown under
current liabilities (6,686) (7,523) (7,927) (5,534)
Amount due for settlement after 12
months shown under
non-current liabilities 10,880 3,796 4,627 1,125
The lease liabilities are measured at the present value of the lease payments that are not yet paid. The
incremental borrowing rates applied to lease liabilities range from 4.00% to 4.85% per annum respectively as at
December 31, 2021, 2022 and 2023 and June 30, 2024.
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are
monitored within the Group’s treasury function.
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 598 ---
25. CONTRACT LIABILITIES
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Research projects 581 424 967 854
Provision of the System integral
software solutions in hospitals – – 401 279
Provision of the System integral
software solutions out of hospitals 68 705 2,254 4,547
Other sales 84 321 308 198
733 1,450 3,930 5,878
Current 450 1,023 3,804 5,837
Non-current 283 427 126 41
733 1,450 3,930 5,878
As at January 1, 2021, contract liabilities from customers amounted to RMB341,000.
Revenue recognized during the years ended December 31, 2021, 2022 and 2023 and six months ended June
30, 2024 related to contract liabilities balance at the beginning of the period amounted to RMB341,000,
RMB450,000, RMB1,023,000 and RMB2,422,000, respectively.
26. BANK AND OTHER BORROWINGS
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Other borrowing (Note i) – 6,965 7,083 7,127
Bank borrowings (Note ii) – – 15,000 9,000
– 6,965 22,083 16,127
Bank and other borrowings
denominated in:
USD – 6,965 7,083 7,127
RMB – – 15,000 9,000
– 6,965 22,083 16,127
Notes:
i. In December 2022, BrainAu Medical Technology (Delaware) Co., LLC (“BrainAu (Delaware)”), a
subsidiary of the Group, entered into a financing agreement with China Frontier Capital Holding Ltd.,
a shareholder of the Group. The borrowing amounted to USD1 million and is interest free and is due
after the U.S. Food and Drug Administration approves the Section 510(k) registration for the Cognitive
Impairment Assessment Software and Cognitive Impairment Treatment Software in the United States of
America.
ii. In August and October 2023, the Group obtained two new bank borrowings of RMB9,000,000 and
RMB6,000,000 respectively, the bank borrowing of RMB6,000,000 was matured and repaid in April
2024 and the bank borrowing of RMB9,000,000 will be matured in August 2024. The borrowings carry
interest of 5.50% per annum.
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 599 ---
27. FINANCIAL LIABILITIES AT FVTPL
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Issued by BrainAurora Zhejiang:
Paid-in capital with preferential
rights 573,281 1,162,632 – –
Obligation under Series B Financing 153,465 – – –
Issued by the Company:
Series A-1 Preferred Shares – – 315,544 315,787
726,746 1,162,632 315,544 315,787
Analyzed as:
Non-current 573,281 1,162,632 – –
Current 153,465 – 315,544 315,787
726,746 1,162,632 315,544 315,787
Series Angel Financing
On March 2, 2015, BrainAurora Zhejiang entered into an investment agreement (the “Series Angel Financing”)
with two independent investors (collectively as the “Series Angel Investors”), pursuant to which the Series Angel
Investors would make total investments of RMB5,128,000 to subscribe new paid-in capital of RMB327,000 with
certain preferential rights in BrainAurora Zhejiang. The cash consideration was fully settled in 2015.
In May 2016, the capital reserve of BrainAurora Zhejiang amounting to RMB4,984,000 was transferred to
paid-in capital and the paid-in capital attributable to Series Angel Investors increased to RMB1,025,000.
Series A Financing
On June 21, 2016, BrainAurora Zhejiang entered into an investment agreement (the “Series A Financing”) with
two independent investors (collectively as the “Series A Investors”), pursuant to which the Series A Investors would
make total investments of RMB26,530,000 to subscribe new paid-in capital of RMB1,904,000 with certain
preferential rights in BrainAurora Zhejiang. The cash consideration was fully settled in 2016.
Series B Financing
On December 18, 2020, BrainAurora Zhejiang entered into an investment agreement (the “Series B
Financing”) with two independent investors (collectively as the “Series B Investors”), pursuant to which the Series
B Investors would make total investments of RMB100,000,000 to subscribe new paid-in capital of RMB3,075,000
with certain preferential rights in BrainAurora Zhejiang. One of the investors is also known as Mr. Tan Zheng, who
was appointed as a director of BrainAurora Zhejiang in December 2020. The cash consideration of RMB50,000,000
from Mr. Tan Zheng was settled in July 2022. The cash consideration of RMB50,000,000 from the other investor was
settled in February 2021. As at December 31, 2021, BrainAurora Zhejiang had an obligation to issue an interest in
new paid-in capital of RMB1,538,000 at a consideration of RMB50,000,000 to Mr. Tan Zheng and a financial liability
was recognized accordingly.
According to the Series B Financing agreement, the preferential rights for the Series Angel Investors, Series
A Investors and Series B Investors were redesignated and the key terms of are summarized as follows:
APPENDIX I ACCOUNTANTS’ REPORT
– I-52 –


--- page 600 ---
(a) Liquidation preferences
In the event of any liquidation including deemed liquidation, dissolution or winding up of BrainAurora
Zhejiang:
The Series B Investors shall be entitled to receive the higher of the following amounts:(i) the amount
equal to the original investment amount plus interest of 12% per annum calculated on a simple basis and (ii)
any dividends that have been declared but not yet paid.
The Series A Investors shall be entitled to receive the amount equal to the original investment amount
plus interest of 12% per annum calculated on a simple basis and no greater than 200% of the original
investment amount.
The Series Angel Investors shall be entitled to receive the amount equal to the original investment
amount.
(b) Anti-dilution right
If BrainAurora Zhejiang raises new paid-in capital at a price lower than the price paid by the Series B
Investors, the Series B Investors shall have the right to require Mr. Tan Zheng to transfer paid-in capital or
BrainAurora Zhejiang to raise new paid-in capital to the Series B Investors at nil consideration or nominal
value permitted under the PRC laws, so that the amount paid by the Series B Investors divided by the total
paid-in capital obtained is not higher than the price of the newly raised paid-in capital.
If BrainAurora Zhejiang raises new paid-in capital at a price lower than the price paid by the Series A
Investors, the Series A Investors shall have the right to receive compensation through any of the following
compensation methods: (i) BrainAurora Zhejiang and/or Mr. Tan Zheng to pay the Series A Investors in cash;
or (ii) Mr. Tan Zheng to transfer paid-in capital or BrainAurora Zhejiang to raise new paid-in capital to the
Series A Investors at consideration of RMB1, so that the amount paid by the Series A Investors divided by the
total paid-in capital obtained is not higher than the price of the newly raised paid-in capital.
If BrainAurora Zhejiang raises new paid-in capital at a price lower than the price paid by the Series
Angel Investors, the Series Angel Investors shall have the right to require Mr. Tan Zheng to transfer paid-in
capital or BrainAurora Zhejiang to raise new paid-in capital to the Series Angel Investors at consideration of
RMB1, so that the amount paid by the Series Angel Investors divided by the total paid-in capital obtained is
not higher than the price of the newly raised paid-in capital.
(c) Redemption right
The investment from the Series Angel Investors, Series A Investors and Series B Investors shall be
redeemed by BrainAurora Zhejiang and/or Mr. Tan Zheng, at the option of the investors if BrainAurora
Zhejiang failed to complete a qualified IPO before December 31, 2024 and/or upon the occurrence of certain
contingent events.
The Series B Investors shall be entitled to receive the redemption amount equal to the original
investment amount plus interest of 12% per annum calculated on a simple basis.
The Series A Investors shall be entitled to receive the redemption amount equal to the original
investment amount plus interest of 12% per annum calculated on a simple basis.
The Series Angel Investors shall be entitled to receive the redemption amount equal to the original
investment amount plus interest of 10% per annum calculated on a simple basis.
APPENDIX I ACCOUNTANTS’ REPORT
– I-53 –


--- page 601 ---
Termination of preferential rights in BrainAurora Zhejiang and preferred shares issued by the Company
On July 17, 2023, BrainAurora Zhejiang entered into an agreement with Series Angel Investors, Series A
Investors and Series B Investors, pursuant to which the preferential rights for all these pre-IPO investors were
terminated (“Termination Agreement”). Upon signing of the Termination Agreement, the Series Angel Investors,
Series A Investors and Series B Investors terminated all their preferential rights in BrainAurora Zhejiang except for
one of the Series A Investors, Immense V antage Limited (“IVL”), whose preferential rights in BrainAurora Zhejiang
would be taken over by Series A-1 Preferred Shares to be issued by the Company. Hence, the paid-in capital
subscribed by Series Angel Investors, Series A Investors (excluding IVL) and Series B Investors meet the definition
of equity as the Group has no contractual obligation to deliver cash or a variable number of shares and therefore were
reclassified from financial liabilities to equity at their fair value of RMB1,012,304,000, resulting in an increase of
paid-in capital of RMB10,107,000 and an increase of capital reserve of RMB1,002,197,000.
On July 30, 2023, as part of the Reorganization, the Company issued 95,878 Series A-1 Preferred Shares and
30,976 Series A-2 Preferred Shares to three affiliates of IVL (IVL and its three affiliates are collectively referred to
as “IVL Shareholders”) to mirror the paid-in capital with preferential rights of IVL in BrainAurora Zhejiang and
paid-in capital of IVL in BrainAurora Zhejiang respectively. The fair value of Series A-1 Preferred Shares issued by
the Company as at July 30, 2023 was RMB317,033,000, and the fair value of paid-in capital with preferential rights
of IVL in BrainAurora being taken over by Series A-1 Preferred Shares was RMB313,871,000 and fair value change
of RMB3,162,000 was recognized.
The shareholders of Series A Preferred Shares (the “Series A Preferred Shareholders”) have the rights to
convert their respective Series A Preferred Shares into ordinary shares at any time after the date of issuance of such
Series A Preferred Shares. Series A Preferred Shares shall be automatically converted into ordinary shares upon the
closing of the listing. The conversion ratio for Series A Preferred Shares to ordinary shares is 1:1. The shareholders
of Series A-2 Preferred Shares have priority to sell shares to new investors. The Group has no contractual obligation
to deliver cash or a variable number of shares to shareholders of Series A-2 Preferred Shares and thus the Series A-2
Preferred Shares meet the definition of equity.
The key terms of preferential rights for Series A-1 Preferred Shares are summarized as follows:
(a) Liquidation preferences
In the event of any liquidation including deemed liquidation, dissolution or winding up of the Company,
the shareholders of Series A-1 Preferred Shares (“Series A-1 Preferred Shareholders”) shall be entitled to
receive the amount equal to USD3 million principal investment plus interest of 12% per annum calculated on
a simple basis from the issue date of the Series A Financing and no greater than USD6 million.
(b) Anti-dilution right
If without the prior written consent of the Series A-1 Preferred Shareholders, the Company issues new
share(s) at a price less than Series A-1 Preferred Shareholders (except for the price of shares pursuant to or
in connection with the global offering under the listing, restructuring, and employee share incentive plan), the
Series A-1 Preferred Shareholders shall have the right to request for the Company or founder parties (“Founder
Parties”) including ZTan Limited, Wispirits Limited, Wiseforward Limited or Neurobright Limited (companies
wholly owned by or controlled by Mr. Tan Zheng or Dr. Wang Xiaoyi) to compensate in cash, so that the
amount paid by the Series A-1 Preferred Shareholders divided by the total shares obtained is not higher than
the price of the newly issued shares.
(c) Redemption right
The investment from the Series A-1 Preferred Shareholders shall be redeemed by the Company and/or
the Founder Parties, at the option of the Series A-1 Preferred Shareholders if the Company failed to complete
a qualified IPO before December 31, 2024, which was extended to December 31, 2025 in March 2024 and was
further extended to June 30, 2026 in October 2024, and/or upon the occurrence of certain contingent events.
The Series A-1 Preferred Shareholders shall be entitled to receive the redemption amount equal to the USD3
million principal investment plus interest of 12% per annum or 20% per annum calculated on a simple basis.
APPENDIX I ACCOUNTANTS’ REPORT
– I-54 –


--- page 602 ---
Presentation and classification
The paid-in capital subscribed by Series Angel Investors, Series A Investors and Series B Investors are
collectively referred to as BrainAurora Zhejiang Preference Shares. BrainAurora Zhejiang Preference Shares and
Series A-1 Preferred Shares are collectively referred to as Preference Shares.
The Group has designated Preference Shares which contain redemption features and other embedded
derivatives as financial liabilities at FVTPL on initial recognition.
The fair value change of Preference Shares is recognized to profit or loss except for the portion attributable
to credit risk change which shall be recognized to other comprehensive income, if any. The Directors considered that
the credit risk change on the financial liabilities that drive the fair value change of the financial liabilities during the
Track Record Period is immaterial.
The movements in the financial liabilities at FVTPL are as follows:
Obligation
under Series
B Financing
BrainAurora
Zhejiang
Preferred
Shares
Series A-1
Preferred
Shares Total
RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2021 – 52,982 – 52,982
Addition – 50,000 – 50,000
Change in fair value 153,465 470,299 – 623,764
At December 31, 2021 153,465 573,281 – 726,746
Change in fair value 91,018 294,868 – 385,886
Settlement of obligation under
Series B Financing (244,483) 294,483 – 50,000
At December 31, 2022 – 1,162,632 – 1,162,632
Change in fair value – 163,543 1,673 165,216
Termination of preferential rights in
BrainAurora Zhejiang and
partially exchange with issue of
Series A-1 Preferred Shares – (1,326,175) 313,871 (1,012,304)
At December 31, 2023 – – 315,544 315,544
Change in fair value – – 243 243
At June 30, 2024 – – 315,787 315,787
The fair value of the Preference Shares at December 31, 2021, 2022 and 2023 and June 30, 2024 were valued
by the Directors with the assistance of an independent qualified professional valuer, which is not connected to the
Group and has appropriate qualifications and experiences in valuation of similar instruments.
Discounted cash flow model was used to determine the underlying equity value of BrainAurora Zhejiang as
at December 31, 2021 and 2022 and the underlying equity value of the Company as at December 31, 2023 and
June 30, 2024.
Hybrid method was adopted to allocate the equity value amongst different classes of securities of BrainAurora
Zhejiang or the Company at the end of each reporting period. The hybrid method is a hybrid between the
probability-weighted expected return method (“ PWERM ”) and the option pricing method (“ OPM”), estimating the
probability-weighted value across multiple scenarios while using the OPM to estimate the allocation of value within
one or more of those scenarios.
APPENDIX I ACCOUNTANTS’ REPORT
– I-55 –


--- page 603 ---
Under a PWERM, the values of various classes of securities are estimated based on an analysis of future values
for the enterprise, assuming various future outcomes, and on the probability-weighted present value of expected
future investment returns, considering each of the possible future outcomes available to the enterprise, as well as the
rights of each class of securities. Common future outcomes model might include IPO, liquidation or redemption.
The OPM treats the rights of Preference Shares and ordinary paid-in capital as equivalent to that of call options
on the Group’s equity value, with strike prices based on the liquidation preferences and redemption provisions of
Preference Shares. Thus, the equity value of the ordinary paid-in capital can be determined by estimating the value
of its portion of each of these call option rights.
Key valuation assumptions used to determine the fair value of Preference Shares are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
Time to IPO 3.00 2.00 0.25 0.25
Time to liquidation 3.00 2.00 1.00 1.50
Risk-free interest rate 2.45% 2.34% 4.79% 4.90%
Discount for lack of marketability 20.00% 20.00% 10.00% 9.00%
Discount rate 17.00% 16.00% 16.00% 16.00%
V olatility 60.90% 74.85% 87.91% 70.58%
Dividend yield ––––
Possibilities under liquidation
scenario 27.50% 20.00% 20.00% 20.00%
Possibilities under IPO scenario 45.00% 60.00% 60.00% 60.00%
Possibilities under redemption
scenario 27.50% 20.00% 20.00% 20.00%
Risk-free interest rate was estimated based on the China government bond yield curve with maturity matching
to the expected exit period as at December 31, 2021 and 2022 and the risk-free interest rate was estimated based on
the yield of US treasury bonds with maturity matching to the expected exit period as at December 31, 2023 and June
30, 2024.
The discount for lack of marketability was estimated based on the Finnerty model with reference to the
comparable companies in the same industry.
Discount rate was estimated by weighted average cost of capital with reference to the comparable companies
in the same industry.
V olatility was estimated on the valuation date based on average of historical volatilities of the comparable
companies in the same industry for a period from the valuation date to expected liquidation or redemption dates,
where applicable.
The Company
Series A-1
Preferred Shares
RMB’000
As at April 25, 2023 (date of incorporation) –
Issue of Series A-1 Preferred Shares 317,033
Change in fair value (1,489)
At December 31, 2023 315,544
Change in fair value 243
At June 30, 2024 315,787
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 604 ---
28. PAID-IN CAPITAL/SHARE CAPITAL
The Group
For the purpose of presentation of the consolidated statements of financial position prior to the completion of
the Reorganization as disclosed in Note 2, the balances of paid-in capital as at January 1, 2021 and December 31,
2021 and 2022 represent the paid-in capital of BrainAurora Zhejiang which are classified as equity. The share capital
as at December 31, 2023 and June 30, 2024 represented the issued share capital of the Company.
The Company
Number of shares Share capital
USD
Ordinary Shares
Ordinary Shares of USD0.0001 each
Authorized
As at April 25, 2023 (date of incorporation) 500,000,000 50,000
Reclassification and re-designation on issuance of
Series A-1 Preferred Shares (95,878) (10)
As at December 31, 2023 and June 30, 2024 499,904,122 49,990
Issued and fully paid
Issue of Ordinary Shares for the Reorganization (Note) 904,122 90
Issue of ordinary shares to HoldCo (Note) 85,166 9
As at December 31, 2023 and June 30, 2024 989,288 99
As at December 31, As at June 30,
2023 2024
RMB’000
Presented as 1 1
Note: During the year ended December 31, 2023, the Company issued 904,122 Ordinary Shares with a par
value of USD0.0001 each at total consideration of RMB6,224,000 to its shareholders, which are entities
owned by the then shareholders or beneficial owners of BrainAurora Zhejiang as part of the
Reorganization. The difference of RMB6,223,000 between the total consideration of RMB6,224,000 and
the par value of Ordinary Shares issued of USD90 (equivalent to RMB626) is credited to share premium.
On August 2, 2023, the Company issued 85,166 ordinary shares with a par value of USD0.0001 each
at total consideration of USD8.5 (equivalent to RMB61) to HoldCo for the Pre-IPO Share Award
Scheme.
APPENDIX I ACCOUNTANTS’ REPORT
– I-57 –


--- page 605 ---
29. RESERVES
Share
premium
Share-based
payments
reserve
Accumulated
losses Total
RMB’000 RMB’000 RMB’000 RMB’000
At the date of incorporation ––––
Issue of Ordinary Shares 6,223 – – 6,223
Loss and total comprehensive
expense for the year – – (9,374) (9,374)
Recognition of equity-settled share-
based payments (Note 32) – 44,873 – 44,873
At December 31, 2023 6,223 44,873 (9,374) 41,722
Loss and total comprehensive
expense for the period – – (7,166) (7,166)
Recognition of equity-settled share-
based payments (Note 32) – 35,304 – 35,304
At June 30, 2024 6,223 80,177 (16,540) 69,860
30. ACQUISITION OF ASSETS THROUGH ACQUISITION OF A SUBSIDIARY
Beijing Hongze Technology Development Co., Ltd.* (ʮ̡) (“Beijing Hongze”) was
established on December 16, 2001 by two individual equity holders who are non-related to the Group. On February
21, 2023, BrainAurora Zhejiang acquired 100% equity interest of Beijing Hongze at consideration of RMB700,000.
At the time of acquisition of Beijing Hongze, Beijing Hongze did not carry out any business activities nor did
Beijing Hongze have any assets or liabilities except for holding two vehicles with licence plates of Beijing city. The
acquisition of Beijing Hongze is regarded as an asset acquisition.
* English name is for identification purpose only.
31. RETIREMENT BENEFITS PLANS
The PRC employees of the Group are members of a state-managed retirement benefits plan operated by the
government of the PRC. BrainAurora Zhejiang and its PRC subsidiaries are required to contribute a specified
percentage of payroll costs to the retirement benefits plan to fund the employee benefits. The only obligation of the
Group with respect to the retirement benefits plan is to make the specified contributions. The retirement benefits cost
charged to profit or loss for the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30,
2023 and 2024 amounted to RMB2,702,000, RMB7,326,000, RMB6,301,000, RMB3,015,000 (unaudited) and
RMB3,446,000, respectively.
32. SHARE-BASED PAYMENT TRANSACTIONS
(a) Share awards in 2020
Pursuant to the agreement entered between Dr. Wang Xiaoyi and Mr. Tan Zheng on December 20, 2020, Dr.
Wang Xiaoyi agreed to transfer RMB1,384,000 of paid-in capital of BrainAurora Zhejiang to Mr. Tan Zheng through
an entity owned by Dr. Wang Xiaoyi at the total consideration of RMB4,500,000 upon certain non-market conditions
(including development of cognitive centers and successful financings for the Group) are met (“ 2020 Share
Awards ”). The total fair value of 2020 Share Awards is RMB15,002,000 at the grant date which were determined with
reference to the raise price of the Series B Financing and the purchase price.
Certain non-market conditions of the 2020 Share Awards were waived on September 8, 2021 and the Group
recognized a share-based payment expense of RMB14,372,000 during the year ended December 31, 2021.
APPENDIX I ACCOUNTANTS’ REPORT
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(b) Share awards in 2021
On August 31, 2021, Dr. Wang Xiaoyi transferred RMB246,000 of paid-in capital of the BrainAurora Zhejiang
held through an entity owned by Dr. Wang Xiaoyi to Mr. Jing Yiliang, a senior management of the Group at that time,
at the total consideration of RMB4,000,000 with no condition (“ 2021 Share Awards ”) attached. The total fair value
of 2021 Share Awards is RMB4,998,000 at the grant date which were determined with reference to the subscription
price of the Series B+ Financing and the purchase price. The Group recognized a share-based payment expense of
RMB4,998,000 during the year ended December 31, 2021.
(c) Pre-IPO Share Award Scheme
On July 30, 2023 (the “Adoption Date”), the Company adopted a pre-IPO share award scheme (the “Pre-IPO
Share Award Scheme”) to recognize and reward the contributions of certain eligible employees of the Group, and
incentivize them for their future contribution to the continual operation and development of the Company. Subject
to any early termination as may be determined by the board of directors, the Pre-IPO Share Award Scheme shall be
valid and effective for a term of 10 years commencing on the Adoption Date.
Under the Pre-IPO Share Award Scheme, the maximum number of awards that may be granted under the
Pre-IPO Share Award Scheme in aggregate (excluding the awards that have lapsed or been cancelled in accordance
with the rules of the Pre-IPO Share Award Scheme) shall be 85,166 shares held or to be held by HoldCo for the
purpose of the Pre-IPO Share Award Scheme.
On July 31, 2023, the Company granted 85,166 Awarded Shares under the Pre-IPO Share Award Scheme to 46
grantees (including directors, members of the senior management, and other employees of the Group) (the “Pre-IPO
Share Award”). Included in the Pre-IPO Share Award, 27,129 Awarded Shares were granted to Mr. Tan Zheng, 26,946
Awarded Shares were granted to Dr. Wang Xiaoyi, 15,163 Awarded Shares were granted to the other three senior
managements and the remaining 15,928 Awarded Shares were granted to other employees. Subject to the
consummation of the listing of the Company’s shares (the “Listing”) and if certain performance and service
conditions are met, the Awarded Shares granted shall vest in the following manner: 30% of such Awarded Shares shall
be vested on the date of the first anniversary of the Listing; 30% of such Awarded Shares shall be vested on the date
of the second anniversary of the Listing; and 40% of such Awarded Shares shall be vested on the date of the third
anniversary of the Listing.
The following table discloses movements of the Pre-IPO Share Award Scheme:
Category
Outstanding
as at
January 1,
2023
Granted
during the
year
Forfeited
during the
year
Outstanding as at
December 31,
2023
Pre-IPO Share Award Scheme – 85,166 – 85,166
Category
Outstanding
as at
January 1,
2024
Granted
during the
period
Forfeited
during the
period
Outstanding as at
June 30, 2024
Pre-IPO Share Award Scheme 85,166 – – 85,166
The fair value of each Award Share was RMB3,222.98 which was determined based on the price of the
Company’s ordinary shares at the grant date.
The Group recognized a share award expense of RMB44,873,000 and RMB35,304,000 in respect of the
Pre-IPO Share Award during the year ended December 31, 2023 and the six months ended June 30, 2024.
APPENDIX I ACCOUNTANTS’ REPORT
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33. FINANCIAL INSTRUMENTS
The Group
Categories of financial instruments
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Amortized cost 338,734 144,581 328,363 257,951
Financial assets at FVTPL – 228,789 – –
338,734 373,370 328,363 257,951
Financial liabilities
Amortized cost 300,640 331,147 383,094 392,728
Financial liabilities at FVTPL 726,746 1,162,632 315,544 315,787
1,027,386 1,493,779 698,638 708,515
Lease liabilities 17,566 11,319 12,554 6,659
The Company
Categories of financial instruments
As at
December 31,
As at
June 30,
2023 2024
RMB’000 RMB’000
Financial assets
Amortized cost 15,584 12,154
Financial liabilities
Amortized cost 19,685 25,859
Financial liabilities at FVTPL 315,544 315,787
335,229 341,646
Financial risk management objectives and policies
The Group’s major financial instruments include trade and other receivables, bank balances and cash, restricted
bank deposit, term deposits, amounts due from related parties, financial assets at FVTPL, trade and other payables,
lease liabilities, bank and other borrowings, long-term bond, financial liabilities at FVTPL and amounts due to related
parties. The Company’s major financial instruments include bank balances, other payables, amount due to a
subsidiary and financial liabilities at FVTPL. Details of these financial instruments are disclosed in the respective
notes. The risks associated with these financial instruments include market risk (currency risk, interest rate risk and
other price risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The
management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and
effective manner.
APPENDIX I ACCOUNTANTS’ REPORT
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Market risk
(i) Currency risk
The Group
As at the end of each reporting period, the Group had the following monetary assets and monetary
liabilities denominated in currencies other than RMB.
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Assets
USD – 6,964 10,627 7,206
Liabilities
USD – 6,964 331,829 336,764
HKD – – 315 309
The Company
As at December 31, 2023 and June 30, 2024, the Company had the following monetary assets and
monetary liabilities denominated in currencies other than RMB.
As at
December 31,
As at
June 30,
2023 2024
RMB’000 RMB’000
Assets
USD 10,559 7,133
Liabilities
USD 331,758 336,693
HKD 315 309
Sensitivity analysis
The Group and the Company were primarily subject to foreign currency risk from the movement
of the exchange rates between RMB against USD. At the end of each reporting period, if the exchange
rate of RMB had been weaken against USD by 5% and all other variables were held constant, the
Group’s and the Company’s post-tax loss for each reporting period would increase as follows. For a 5%
strengthening of RMB against USD, there would be an opposite impact on the post-tax loss for the
year/period.
APPENDIX I ACCOUNTANTS’ REPORT
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The Group
Increase in post-tax loss
For the year ended December 31,
For the
six months
ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
USD – – 16,060 16,478
The Company
Increase in
post-tax loss
For the
year ended
December 31,
2023
For the
six months
ended June 30,
2024
RMB’000 RMB’000
USD 16,060 16,478
(ii) Interest rate risk
The Group’s fair value interest rate risk relates primarily to fixed-rate lease liabilities (Note 24),
fixed-rate long-term bond (Note 23), fixed-rate bank borrowing (Note 26) and fixed-rate Preference Shares
(Note 27). The Group is also exposed to cash flow interest risk in relation to variable-rate bank balances (Note
21) which carry prevailing market interests. The Company’s fair value interest rate risk relates primarily to
fixed-rate Preference Shares (Note 27). The Group currently does not have a specified policy to manage its
interest rate risk but will closely monitor their interest rate risk exposure in the future. No sensitivity analysis
on cash flow interest rate risk is presented as the management considers the sensitivity on interest rate risk on
bank balances is insignificant.
(iii) Other price risk
The Group is exposed to other price risk through Preference Shares and associated obligation measured
at FVTPL and investments in financial products measured at FVTPL. The Company is exposed to other price
risk through Series A-1 Preferred Shares.
Sensitivity analyses for Preference Shares and associated obligation with fair value measurement
categorized within Level 3 were disclosed in Note 34. The management of the Group considers the fluctuation
in fair value changes on financial products is insignificant, taking into account the short-term duration of such
financial products.
APPENDIX I ACCOUNTANTS’ REPORT
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Credit risk and impairment assessment
The Group and the Company
The Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to
discharge an obligation by the counterparties is arising from the carrying amount of the respective recognized
financial assets (including bank balances, restricted bank deposit, financial assets at FVTPL, trade and other
receivables, amounts due from related parties and term deposits). The Company’s maximum exposure to credit risk
which will cause a financial loss to the Company due to failure to discharge an obligation by the counterparties is
arising from the carrying amount of bank balances. The Group and the Company do not hold any collaterals or other
credit enhancement to cover the credit risks associated with its financial assets.
In order to minimize the credit risk, the Group and the Company monitor the exposure to credit risk on an
on-going basis. Except for financial assets at FVTPL, the Group and the Company assessed the ECL on its financial
assets measured at amortized cost at the end of each reporting period.
The Group’s and the Company’s internal credit risk grading assessment comprises the following categories:
Internal
credit rating Description Trade receivables
Other financial
assets
Low risk The counterparty has a low risk of
default and does not have any
past-due amounts or the
counterparty frequently repays
after due dates but usually settle
the amounts in full
Lifetime ECL – not
credit-impaired
12m ECL
Doubtful There have been significant
increases in credit risk since
initial recognition through
information developed internally
or external resources
Lifetime ECL – not
credit-impaired
Lifetime ECL – not
credit-impaired
Loss There is evidence indicating the
asset is credit-impaired
Lifetime ECL –
credit-impaired
Lifetime ECL –
credit-impaired
Write-off There is evidence indicating that
the debtor is in severe financial
difficulty and the Group and the
Company have no realistic
prospect of recovery
Amount is written off Amount is written off
APPENDIX I ACCOUNTANTS’ REPORT
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The Group
Trade receivables, receivables from third party payment platforms, short-term loan receivables and other receivables
In order to minimize credit risk, the Group has tasked its credit management team to develop and maintain the
credit risk grading for the Group’s trade receivables, receivables from third party payment platforms, short-term loan
receivables and other receivables and to categorize exposures according to their degree of risk of default. The credit
management team uses publicly available financial information and the Group’s own trading records to rate its major
customers and other debtors. The Group’s exposure and the credit ratings of its counterparties are continuously
monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
The Group engages a provider of operations services during the Track Record Period to facilitate the sales to
a hospital. The management of the Group is of the view that the credit period of public hospitals are normally longer,
as the internal procedures of public hospitals regarding decision making and approval, and reconciliation and
settlement typically take a longer period of time and thus would affect the collection of trade receivables of hospitals
and the provider of operations services from the hospital and in turn affect the collection of trade receivable.
The Group assessed the ECL for its receivables from third party payment platforms, short-term loan
receivables and other receivables individually based on internal credit rating which, in the opinion the management
of the Group, there is no significant increase in credit risk since initial recognition. No 12m ECL was made for
receivables from third party payment platforms, short-term loan receivables and other receivables, the estimated loss
rates are limited as the historical observed default rates of counterparties above are minimal, therefore the Group
assessed the ECL for receivables from third party payment platforms, short-term loan receivables and other
receivables are insignificant.
The Group has concentration risk with approximately 77.41% and 13.55% of the Group’s account receivables
placed with the provider of operations services relate to customer B, customer K respectively at December 31, 2021,
with approximately 55.22%, 14.02% and 11.94% of the Group’s account receivables placed with customer A, the
provider of operations services relate to customer B and customer C respectively at December 31, 2022, and with
approximately 35.60%, 25.59% and 15.05% of the Group’s account receivables placed with customer A, the provider
of operations services relate to customer B and customer F respectively at December 31, 2023 and with approximately
35.07%, 17.58% and 20.30% of the Group’s account receivables placed with customer A, customer F and the provider
of operations services relate to customer B respectively at June 30, 2024.
Bank balances, term deposits and restricted bank deposit
The Group’s bank balances, term deposits and restricted bank deposit are placed with state-owned banks or
commercial banks with high credit ratings in the Mainland China, Hong Kong, and the United States of America. The
management of the Group considers that the credit risk on bank balances, term deposits and restricted bank deposit
is insignificant and no loss allowance was recognized.
The Group has concentration risk with approximately 17.36% and 81.15% of the Group’s bank balances placed
with bank A and bank B respectively at December 31, 2021, with approximately 30.28%, 11.70% and 34.46% of the
Group’s bank balances placed with bank A, bank C and bank D respectively at December 31, 2022, and with
approximately 79.15% of the Group’s bank balances and restricted bank deposit placed with bank B at December 31,
2023 and with approximately 68.12% of the Group’s bank balances and restricted bank deposit placed with bank B
at June 30, 2024.
Other than the concentration of credit risks of trade receivables and bank balances mentioned above, the Group
does not have any other significant concentration of credit risk.
APPENDIX I ACCOUNTANTS’ REPORT
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The tables below detail the credit risk exposures of the Group’s financial assets, which are subject to ECL
assessment upon application of IFRS 9:
Gross carrying amount
As at December 31,
As at
June 30,
Notes 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at
amortized cost
Trade receivables 19 Low risk Lifetime ECL (not
credit-impaired)
1,136 8,422 50,740 36,705
Doubtful Lifetime ECL (not
credit-impaired)
– – – 39,385
Loss Lifetime ECL
(credit-impaired)
– – – 2,728
Receivables from
third party
payment
platforms, short-
term loan
receivables and
other receivables
19 Low risk 12m ECL 13,842 4,756 6,696 8,839
Amounts due from
related parties
37 Low risk 12m ECL 29 29 – –
Restricted bank
deposit
21 Low risk 12m ECL – – 214,241 119,421
Bank balances 21 Low risk 12m ECL 323,727 28,249 57,566 55,903
Term deposits 21 Low risk 12m ECL – 103,186 – –
The management of the Group estimates the amount of lifetime ECL of trade receivables based on provision
matrix through grouping of various debtors that have similar loss patterns, after considering aging, internal credit
ratings of trade debtors, repayment history and/or past due status of respective trade receivables. Estimated loss rates
are based on historical observed default rates over the expected life of the debtors and are adjusted for
forward-looking information that is available without undue cost or effort. In addition, trade receivables with
credit-impaired are assessed for ECL individually.
On that basis, the average loss rates as at December 31, 2021, 2022, 2023 and June 30, 2024 were 1.14%,
0.75% and 1.76% and 3.03%, respectively which were assessed on a collective basis by using provision matrix within
lifetime ECL (not credit-impaired).
APPENDIX I ACCOUNTANTS’ REPORT
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The following table shows the movement in lifetime ECL that has been recognized for trade receivables under
the simplified approach.
Lifetime ECL
(not credit-
impaired)
Lifetime ECL
(credit-
impaired) Total
RMB’000 RMB’000 RMB’000
As at January 1, 2021 – – –
New financial assets originated 13 – 13
As at December 31, 2021 13 – 13
Changes due to financial instruments recognized
as at January 1, 2022:
– Impairment losses reversed (13) – (13)
New financial assets originated 63 – 63
As at December 31, 2022 63 – 63
Changes due to financial instruments recognized
as at January 1, 2023:
– Impairment losses recognized 131 – 131
– Transfer to credit-impaired (20) 20 –
– Written-off – (20) (20)
– Impairment losses reversed (30) – (30)
New financial assets originated 747 – 747
As at December 31, 2023 891 – 891
Changes due to financial instruments recognized
as at January 1, 2024:
– Impairment losses recognized 708 1,790 2,498
– Transfer to credit-impaired (20) 20 –
– Impairment losses reversed (253) – (253)
New financial assets originated 979 918 1,897
As at June 30, 2024 2,305 2,728 5,033
APPENDIX I ACCOUNTANTS’ REPORT
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The Company
Bank balances
The Company’s bank balances are placed with commercial banks with high credit ratings in the Hong Kong.
The management of the Company considers that the credit risk on bank balances is insignificant and no loss
allowance was recognized.
The Company has concentration risk with approximately 100% of the Company’s bank balances placed with
bank E at December 31, 2023 and June 30, 2024.
Liquidity risk
In management of the liquidity risk, the Group monitor and maintain levels of cash and cash equivalents
deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash
flows. The Group relies on long-term bond, Preference Shares and shareholders’ investment as a significant source
of liquidity.
The following table details the Group’s remaining contractual maturity for its financial liabilities based on the
agreed repayment terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay. The table includes both interest and principal
cash flows.
The Group
Interest rates
On
demand
Within
1 year 1-2 years 2-5 years >5 years
Total
undiscounted
cash flows
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2021
Trade and other payables N/A 6,422 65 7––– 7,079 7,079
Amounts due to related
parties N/A 2,36 4–––– 2,364 2,364
Paid-in capital with
preferential rights 10.00-12.00 – – – 151,487 – 151,487 573,281
Long-term bond 6.2 3––– 79,447 354,049 433,496 291,197
8,786 657 – 230,934 354,049 594,426 873,921
Lease liabilities 4.00-4.85 – 6,813 7,675 4,098 – 18,586 17,566
Interest rates
On
demand
Within
1 year 1-2 years
2- 5
years >5 years
Total
undiscounted
cash flows
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2022
Trade and other payables N/A 6,422 5,54 1––– 1 1,963 11,963
Amounts due to related
parties N/A 2,36 4–––– 2,364 2,364
Paid-in capital with
preferential rights 10.00-12.00 – – 201,487 – – 201,487 1,162,632
Other borrowing – – 6,96 5––– 6,965 6,965
Long-term bond 6.2 3––– 79,447 354,049 433,496 309,855
8,786 12,506 201,487 79,447 354,049 656,275 1,493,779
Lease liabilities 4.00-4.85 – 7,675 2,746 1,352 – 11,773 11,319
APPENDIX I ACCOUNTANTS’ REPORT
– I-67 –


--- page 615 ---
Interest rates
On
demand
Within
1 year 1-2 years
2- 5
years >5 years
Total
undiscounted
cash flows
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2023
Trade and other payables N/A 5,222 26,35 1––– 31,573 31,573
Series A-1 Preferred
Shares 12.00 – 42,61 0––– 42,610 315,544
Bank and other
borrowings 0.00-5.50 – 22,53 0––– 22,530 22,083
Long-term bond 6.2 3––– 79,447 354,049 433,496 329,438
5,222 91,491 – 79,447 354,049 530,209 698,638
Lease liabilities 4.00-4.85 – 8,095 5,480 1,132 – 14,707 12,554
Interest rates
On
demand
Within
1 year 1-2 years
2- 5
years >5 years
Total
undiscounted
cash flows
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At June 30, 2024
Trade and other payables N/A 3,743 35,21 8––– 38,961 38,961
Series A-1 Preferred
Shares 12.00 – – 45,441 – – 45,441 315,787
Bank and other
borrowings 0.00-5.50 – 16,19 7––– 16,197 16,127
Long-term bond 6.23 – – 79,447 – 367,512 446,959 337,640
3,743 51,415 124,888 – 367,512 547,558 708,515
Lease liabilities 4.00-4.85 – 5,656 984 211 – 6,851 6,659
The Company
Interest rates
On
demand
Within
1 year 1-2 years
2- 5
years >5 years
Total
undiscounted
cash flows
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2023
Other payables N/A – 12,67 3––– 12,673 12,673
Amount due to a
subsidiary N/A 7,01 2–––– 7,012 7,012
Series A-1 Preferred
Shares 12.00 – 42,61 0––– 42,610 315,544
7,012 55,28 3––– 62,295 335,229
Interest rates
On
demand
Within
1 year 1-2 years
2- 5
years >5 years
Total
undiscounted
cash flows
Carrying
amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At June 30, 2024
Other payables N/A – 18,80 3––– 18,803 18,803
Amount due to a
subsidiary N/A 7,05 6–––– 7,056 7,056
Series A-1 Preferred
Shares 12.00 – – 45,441 – – 45,441 315,787
7,056 18,803 45,441 – – 71,300 341,646
APPENDIX I ACCOUNTANTS’ REPORT
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34. FAIR V ALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Some of the Group’s financial instruments are measured at fair value for financial reporting purposes. In
estimating the fair value, the management of the Group uses market-observable data to the extent it is available.
Where Level 1 inputs are not available, the management of the Group determines the appropriate valuation techniques
and inputs for fair value measurements and works closely with the qualified valuer to establish the appropriate
valuation techniques and inputs to the model.
Except for financial assets at FVTPL and financial liabilities at FVTPL as set out below, there is no financial
instrument measured at fair value on a recurring basis.
The Group
Financial asset
NOTE Fair value as at
Fair value
hierarchy
Valuation
techniques and
key inputs
December 31, June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at
FVTPL
20 – 228,789 – – Level 2 Redemption
value quoted
by banks
Financial liabilities
NOTE Fair value as at
Fair value
hierarchy
Valuation
techniques
Significant
unobservable
inputs
Relationships of
unobservable
inputs to fair
value
December 31, June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial
liabilities at
FVTPL
Paid-in capital
with
preferential
rights
27 573,281 1,162,632 – – Level 3 Discounted cash
flow model,
PWERM and
OPM
Discount rate The higher the
discount rate,
the lower the
fair value, and
vice versa
(Note i)
Obligation under
Series B
Financing
27 153,465 – – – Level 3 Discounted cash
flow model,
PWERM and
OPM
Discount rate The higher the
discount rate,
the lower the
fair value, and
vice versa
(Note ii)
Series A-1
Preferred
Shares
27 – – 315,544 315,787 Level 3 Discounted cash
flow model,
PWERM and
OPM
Discount rate The higher the
discount rate,
the lower the
fair value, and
vice versa
(Note iii)
APPENDIX I ACCOUNTANTS’ REPORT
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The Company
Financial liability
NOTE
Fair value
as at
December 31,
2023
As at
June 30,
2024
Fair
value
hierarchy
Valuation
techniques
Significant
unobservable
inputs
Relationships of
unobservable
inputs to fair
value
RMB’000 RMB’000
Financial
liabilities at
FVTPL
Series A-1
Preferred
Shares
27 315,544 315,787 Level 3 Discounted
cashflow
model,
PWERM
and OPM
Discount rate The higher the
discount rate,
the lower the
fair value, and
vice versa
(Note iii)
Notes:
i. If the discount rate was 1% higher to 18.00% or 1% lower to 16.00% while holding all other variables constant,
the carrying amount of financial liabilities at FVTPL would decrease by RMB64,966,000 or increase by
RMB77,046,000 as at December 31, 2021.
If the discount rate was 1% higher to 17.00% or 1% lower to 15.00% while holding all other variables constant,
the carrying amount of financial liabilities at FVTPL would decrease by RMB144,810,000 or increase by
RMB172,015,000 as at December 31, 2022.
ii. If the discount rate was 1% higher to 18.00% or 1% lower to 16.00% while holding all other variables constant,
the carrying amount of financial liabilities at FVTPL would decrease by RMB22,142,000 or increase by
RMB26,318,000 as at December 31, 2021.
iii. If the discount rate was 1% higher to 17.00% or 1% lower to 15.00% while holding all other variables constant,
the carrying amount of financial liabilities at FVTPL would decrease by RMB39,375,000 or increase by
RMB46,479,000 as at December 31, 2023.
If the discount rate was 1% higher to 17.00% or 1% lower to 15.00% while holding all other variables constant,
the carrying amount of financial liabilities at FVTPL would decrease by RMB38,991,000 or increase by
RMB45,903,000 as at June 30, 2024.
Details of reconciliation of Level 3 fair value measurement for the financial liabilities at FVTPL are set out
in Note 27.
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at
amortized cost in the Historical Financial Information approximate their respective fair values at the end of each
reporting period except for the long-term bond, of which the fair value is expected to be less than the carrying
amount.
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 618 ---
35. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Group’s liabilities arising from financing activities, including both cash
and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash
flows will be classified in the Group’s consolidated statements of cash flows as cash flows from financing activities.
Lease
liabilities
Financial
liabilities
at
FVTPL
Long-
term
bond
Bank and
other
borrowings
Amounts
due to
related
parties
Accrued
share
issue
costs Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2021 – 52,982 – – 6,450 – 59,432
Financing cash flows (1,000) 50,000 285,000 – (4,086) – 329,914
Commencement of
lease 18,372 – – – – – 18,372
Interest expenses
recognized 194 – 6,197 – – – 6,391
Fair value changes – 623,764 – – – – 623,764
At December 31, 2021 17,566 726,746 291,197 – 2,364 – 1,037,873
Financing cash flows (6,812) 50,000 – 6,959 – – 50,147
Interest expenses
recognized 565 – 18,658 – – – 19,223
Effect of foreign
exchange rate
changes – – – 6––6
Fair value changes – 385,886 – – – – 385,886
At December 31, 2022 11,319 1,162,632 309,855 6,965 2,364 – 1,493,135
Financing cash flows (8,367) – – 14,788 (2,364) (4,531) (474)
Interest expenses
recognized 421 – 19,583 212 – – 20,216
Effect of foreign
exchange rate
changes – – – 118 – – 118
Deferred share issue
costs – – – – – 7,689 7,689
Fair value changes – 165,216 – – – – 165,216
Commencement of
lease 10,176 – – – – – 10,176
Lease modification (500) – – – – – (500)
Early termination of a
lease (495) – – – – – (495)
Reclassification from
financial liabilities
at FVTPL – (1,012,304) – – – – (1,012,304)
At December 31, 2023 12,554 315,544 329,438 22,083 – 3,158 682,777
Financing cash flows (4,673) – – (6,365) – (1,152) (12,190)
Interest expenses
recognized 186 – 10,353 365 – – 10,904
Gain on re-estimated
repayments of
long-term bond – – (2,151) – – – (2,151)
Effect of foreign
exchange rate
changes – – – 44 – – 44
Deferred share issue
costs – – – – – 2,681 2,681
Fair value changes – 243 – – – – 243
Reduction of the
leased space (1,408) – – – – – (1,408)
At June 30, 2024 6,659 315,787 337,640 16,127 – 4,687 680,900
APPENDIX I ACCOUNTANTS’ REPORT
– I-71 –


--- page 619 ---
36. MAJOR NON-CASH TRANSACTIONS
During the year ended December 31, 2021, the Group entered into three new leases agreements for the use of
leased properties for 2 years to 5 years. On the lease commencements, the Group recognized right-of-use assets and
lease liabilities of RMB18,372,000 and RMB18,372,000.
During the year ended December 31, 2023, the Group remeasured the lease liabilities of RMB500,000 due to
a lease modification and made a corresponding adjustment of RMB500,000 to the right-of-use assets and the Group
entered into two new lease agreements for the use of leased property for 2 years and 3 years and recognized
right-of-use assets and lease liabilities of RMB10,176,000 and RMB10,176,000 on the lease commencements.
During the six months ended June 30, 2024, the Group remeasured the lease liabilities of RMB1,408,000 and
right-of-use assets of RMB1,415,000 due to a reduction of the leased space and recognized the difference of
RMB7,000 in profit or loss.
37. RELATED PARTY BALANCES AND TRANSACTIONS
a. Name and relationship
Names Relationships
Dr. Wang Xiaoyi The Chief Executive Officer
Nanjing Zhipan Information Consulting Partnership
(Limited Partnership)* (ፔ༔ΥྫΆุ
(Υྫ)) (“Zhipan LP”) (Note)
Entity controlled by Dr. Wang Xiaoyi
Tianjin Shuhui Information Consulting Partnership
(Limited Partnership)* (ፔ༔ΥྫΆุ
(Υྫ)) (“Shuhui LP”) (Note)
Entity controlled by Dr. Wang Xiaoyi
Note: Zhipan LP was formerly known as Shanghai Zhipan Business Information Consulting Center (Limited
Partnership)* (ፔ༔ʕː(Υྫ)) before December 2021 and Tianjin Zhipan
Information Consulting Partnership (Limited Partnership)* (ፔ༔ΥྫΆุ(Υྫ))
between December 2021 and July 2022.
Shuhui LP was formerly known as Shanghai Shuhui Business Information Consulting Center (Limited
Partnership)* (ፔ༔ʕː(Υྫ) before December 2021.
* English name is for identification purpose only.
b. The Group and the Company had the following related party transactions and related parties balance during
the Track Record Period:
The Group
Loan to a related party
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Non-trade nature
Zhipan LP 6––––
APPENDIX I ACCOUNTANTS’ REPORT
– I-72 –


--- page 620 ---
Advance to related parties
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Non-trade nature
Shuhui LP – – 3,718 1,900 –
Dr. Wang Xiaoyi – – 2,200 – –
– – 5,918 1,900 –
Repayment of loan from a related party
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Non-trade nature
Zhipan LP – – 29 – –
Repayment of advance from related parties
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Non-trade nature
Shuhui LP – – 3,718 – –
Dr. Wang Xiaoyi – – 2,200 – –
– – 5,918 – –
Repayment to related parties
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Non-trade nature
Zhipan LP 1 8––––
Shuhui LP 4,063 – 2,267 2,267 –
Dr. Wang Xiaoyi 5 – 97 – –
4,086 – 2,364 2,267 –
APPENDIX I ACCOUNTANTS’ REPORT
– I-73 –


--- page 621 ---
The Group
Amounts due from related parties
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-trade nature
Zhipan LP 29 29 – –
29 29 – –
The maximum amounts outstanding during the years ended December 31, 2021, 2022 and 2023 were
RMB29,000, RMB29,000 and RMB5,918,000, respectively. These amounts were fully settled by November
2023.
Amounts due from related parties as at December 31, 2021 and 2022 are unsecured, interest free and
repayable on demand.
Amounts due to related parties
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-trade nature
Shuhui LP 2,267 2,267 – –
Dr. Wang Xiaoyi 97 97 – –
2,364 2,364 – –
Amounts due to related parties as at December 31, 2021 and 2022 are unsecured, interest free and
repayable on demand. These amounts were fully settled in July 2023.
The Company
Amount due to a subsidiary
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-trade nature
BrainAu (Delaware) – – 7,012 7,056
Amount due to a subsidiary of USD990,000 (equivalent to RMB7,012,000) and USD990,000
(equivalent to RMB7,056,000) as at December 31, 2023 and June 30, 2024 are unsecured, interest free and
repayable on demand.
APPENDIX I ACCOUNTANTS’ REPORT
– I-74 –


--- page 622 ---
c. Compensation of key management personnel
The emoluments of key management during the Track Record Period are as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Short-term employee
benefits 2,312 9,369 9,787 4,001 2,123
Retirement benefits 104 333 297 177 160
Equity-settled share-based
payments 19,370 – 36,980 – 30,503
21,786 9,702 47,064 4,178 32,786
38. PARTICULARS OF SUBSIDIARIES OF THE COMPANY
Details of all the subsidiaries directly and indirectly held by the Company during the Track Record Period and
on the date of this report are set out below:
Name of the
subsidiaries
Place/date of
establishment
Issued and fully paid
registered capital
Equity interest attributable to the Company
December 31, June 30,
Date of
the
report
Principal
activities2021 2022 2023 2024
BrainAurora (Note v) British Virgin
Islands
April 28, 2023
Registered capital of
USD50,000 and
issued and paid
share capital of nil
N/A N/A 100% 100% 100% Investment
holding
BrainAurora (HK)
(Note iv)
Hong Kong May
11, 2023
Registered capital of
HKD50,000 and
issued and paid
share capital of nil
N/A N/A 100% 100% 100% Investment
holding
Zhiling Ruidong
(Note iv)
PRC June 16,
2023
Registered capital of
RMB100,000,000
and issued and paid
share capital of
RMB3,000,000
N/A N/A 100% 100% 100% Investment
holding
BrainAurora Zhejiang
(Note i)
PRC
September 21,
2012
Registered capital of
RMB16,546,000
and paid-in capital
of RMB16,546,000
100% 100% 100% 100% 100% Cognitive
impairment
DTx
Changsha Zhijingling
(Note i)
PRC
August 11, 2017
Registered capital of
RMB1,000,000 and
issued and paid
share capital of
RMB690,000
100% 100% 100% 100% 100% Cognitive
impairment
DTx
Beijing Zhijingling
(Note i)
PRC
September 23,
2014
Registered capital of
RMB2,000,000 and
issued and paid
share capital of
RMB500,000
100% 100% 100% 100% 100% Cognitive
impairment
DTx
APPENDIX I ACCOUNTANTS’ REPORT
– I-75 –


--- page 623 ---
Name of the
subsidiaries
Place/date of
establishment
Issued and fully paid
registered capital
Equity interest attributable to the Company
December 31, June 30,
Date of
the
report
Principal
activities2021 2022 2023 2024
Beijing Yihui
Technology Co.,
Ltd.* (“߅
ʮ̡”)
(Note v)
PRC April 18,
2023
Registered capital of
RMB51,126,000
and issued and paid
share capital of
RMB50,126,000
N/A N/A 98% 98% 98% Inactive
BrainAu Medical
Technology
(Shaanxi) Co.,
Ltd.* (“ ໘ਗ฽Έᔼ
Ҧ(৯Г)ʮ
̡”) (Note ii)
PRC
September 29,
2021
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
80% 80% 80% 80% 80% Marketing
BrainAu Medical
Technology
(Liaoning) Co.,
Ltd.* (“ ໘ਗ฽Έᔼ
Ҧ(፱ྐྵ)ʮ
̡”) (Note iii)
PRC
February 25,
2022
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
N/A 70% 85% 85% 85% Marketing
Beijing Naoyu
Technology Co.,
Ltd.* (“߅
ʮ̡”)
(Note iii)
PRC
April 6, 2022
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
N/A 92% 92% 92% 92% Marketing
BrainAurora Nanjing
(Note iii)
PRC
May 20, 2022
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
N/A 100% 100% 100% 100% Marketing
Beijing Wanxiang
Aurora Technology
Co., Ltd.*
(“߅
ʮ̡”)
(Note v)
PRC
March 10, 2023
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
N/A N/A 70% 70% 70% Marketing
Beijing Hongze
(Notes 30 and vi)
PRC
December 16,
2001
Registered capital of
RMB1,428,600 and
issued and paid
share capital of
RMB1,428,600
N/A N/A 70% 70% 70% Inactive
Sichuan Huiyu Aurora
Medical
Technology Co.,
Ltd.* (“ ̬ʇᅆᚑ฽
ʮ
̡”)
(Note v)
PRC
May 22, 2023
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
N/A N/A 80% 80% 80% Marketing
BrainAu (Delaware)
(Note iii)
United States of
America
March 4, 2022
Registered capital of
USD50,000 and
issued and paid
share capital of nil
N/A 100% 100% 100% 100% Inactive
Shenzhen BrainAu
Medical
Technology Co.,
Ltd.* (“ ଉέ໘ਗ฽
ʮ
̡”) (Note v)
PRC
October 17,
2023
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
N/A N/A 100% 100% 100% Inactive
Sichuan BrainAu
Medical
Technology Co.,
Ltd.* ( ̬ʇ໘ਗ฽
ʮ
̡) (Note v)
PRC
November 15,
2023
Registered capital of
RMB100,000,000
and issued and paid
share capital of nil
N/A N/A 100% 100% 100% Cognitive
impairment
DTx
APPENDIX I ACCOUNTANTS’ REPORT
– I-76 –


--- page 624 ---
Name of the
subsidiaries
Place/date of
establishment
Issued and fully paid
registered capital
Equity interest attributable to the Company
December 31, June 30,
Date of
the
report
Principal
activities2021 2022 2023 2024
Luzhou BrainAu
Medical
Technology Co.,
Ltd.* ( ᖐψ໘ਗ฽
ʮ
̡) (Note vii)
PRC
January 12,
2024
Registered capital of
RMB1,000,000 and
issued and paid
share capital of nil
N/A N/A N/A 100% 100% Inactive
BrainAu Medical
Technology (Hebei)
Co., Ltd.* ( ໘ਗ฽
Έ(̏)ҦϞ
ʮ̡)
(“BrainAurora
Hebei ”) (Note vii)
PRC
July 26,
2024
Registered capital of
RMB3,000,000 and
issued and paid
share capital of nil
N/A N/A N/A N/A 100% Marketing
Jiangsu BrainAu
Medical
Technology Co.,
Ltd.* ( Ϫᘽ໘ਗ฽
ʮ
̡)( “ BrainAurora
Jiangsu ”) (Note
vii)
PRC
August 8,
2024
Registered capital of
RMB36,500,000
and issued and paid
share capital of nil
N/A N/A N/A N/A 100% Cognitive
impairment
DTx
Notes:
i. These subsidiaries are limited liability company. The financial statements of BrainAurora Zhejiang, Changsha
Zhijingling and Beijing Zhijingling for the years ended December 31, 2021 and 2022 were prepared in
accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC
and were audited by Beijing Dongshen Dingli International Accounting Firm Co., Ltd.* (ᄲཻͭ਷ყึ
ப΂ʮ̡) (“Dongshen”). The financial statements of BrainAurora Zhejiang, Beijing
Zhijingling for the year ended December 31, 2023 were prepared in accordance with Accounting Standards for
Business Enterprises issued by the Ministry of Finance of the PRC and were audited by Dongshen. No audited
statutory financial statements of Changsha Zhijingling were available for the year ended December 31, 2023
as there was no requirement to issue audited accounts by the local authorities.
ii. No audited statutory financial statements were available for the years ended December 31, 2021, 2022 and
2023 as there was no requirement to issue audited accounts by the local authorities.
iii. No audited statutory financial statements were available for the year ended December 31, 2021 as these entities
were established after December 31, 2021. No audited statutory financial statements were available for the
period/year ended December 31, 2022 and 2023 as there was no requirement to issue audited accounts by the
local authorities.
iv. No audited statutory financial statements were available for the years ended December 31, 2021 and 2022 as
the entities were established after December 31, 2022. The financial statements of Zhiling Ruidong for the
period ended December 31, 2023 were prepared in accordance with Accounting Standards for Business
Enterprises issued by the Ministry of Finance of the PRC and were audited by Dongshen. The statutory
financial statements of BrainAurora (HK) for the period ended December 31, 2023 were prepared in
accordance with Hong Kong Financial Reporting Standards and audited by Anthony Lau Hoi Ho, a certified
public accountant (practising) registered in Hong Kong.
v. No audited statutory financial statements were available for the years ended December 31, 2021 and 2022 as
the entities were established after December 31, 2022 and no audited statutory financial statements were
available for the period ended December 31, 2023 as there was no requirement to issue audited accounts by
the local authorities.
vi. No audited statutory financial statements were available for the year ended December 31, 2023 as there was
no requirement to issue audited accounts by the local authorities.
vii. No audited statutory financial statements were available for the years ended December 31, 2021, 2022 and
2023 as the entity was established after December 31, 2023.
* English name is for identification purpose only.
APPENDIX I ACCOUNTANTS’ REPORT
– I-77 –


--- page 625 ---
As at December 31, 2023, the investments in subsidiaries of the Company comprise i) deemed investment to
its subsidiaries of RMB44,873,000 during the year ended December 31, 2023 for Pre-IPO Share Award of the
Company granted to employees of its subsidiaries and ii) a deemed investment in BrainAurora Zhejiang amounted
of RMB308,488,000, represented the difference between the Series A-1 Preferred Shares of RMB317,033,000 issued
to take over the paid-in capital with preferential rights of IVL in BrainAurora Zhejiang (detailed in Note 27) and the
consideration receivable from IVL for the Series A-1 Preferred Shares of RMB8,545,000.
As at June 30, 2024, the investments in subsidiaries of the Company comprise i) deemed investment to its
subsidiaries of RMB80,177,000 for Pre-IPO Share Award of the Company granted to employees of its subsidiaries
and ii) a deemed investment in BrainAurora Zhejiang amounted of RMB308,488,000 as described above.
39. CAPITAL RISK MANAGEMENT
As at June 30, 2024, the Group had net current liabilities of RMB111,265,000 and net liabilities of
RMB411,266,000. The Group manages its capital to ensure that entities in the Group will be able to continue as a
going concern while maximizing the return to shareholders through the optimization of the debt and equity balance.
The Group’s overall strategy remains unchanged during the Track Record Period.
The capital structure of the Group consists of net debt, which includes the long-term bond, lease liabilities,
bank and other borrowings and financial liabilities at FVTPL as disclosed in Notes 23, 24, 26 and 27, net of cash and
cash equivalents and equity attributable to owners of the Group, comprising paid-in capital/share capital and reserves.
The Directors review the capital structure on a continuous basis taking into account the cost of capital and the
risks associated with each class of capital. Based on recommendations of the Directors, the Group will balance its
overall capital structure through new share issues as well as the issue of new debts.
40. CAPITAL COMMITMENTS
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Capital expenditure contracted but
not provided for in respect of
acquisition of equipment and
machineries and leasehold
improvements 8,232 10,163 678 367
41. EVENTS AFTER THE REPORTING PERIOD
Save as disclosed in Note 27 in the Historical Financial Information, events and transactions took place
subsequent to June 30, 2024 are detailed as below:
Pursuant to the written resolutions of all shareholders of the Company passed on December 24, 2024, each
share in the then issued and unissued share capital with par value of USD0.0001 each has been split into 1,000 shares
of the corresponding class with nominal value of USD0.0000001 each effective upon the conditions of the global
offering being fulfilled (the “Share Subdivision”).
42. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of its subsidiaries in respect of any
period subsequent to June 30, 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-78 –


--- page 626 ---
The information set out in this Appendix does not form part of the accountants’ report on
the historical financial information of the Group for each of the three years ended December
31, 2023 and the six months ended June 30, 2024 (the “ Accountants’ Report ”) prepared by
Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the Company’ s Reporting
Accountants, as set out in Appendix I to this prospectus, and is included herein for information
only. The unaudited pro forma financial information should be read in conjunction with the
section headed “Financial Information” in this prospectus and the Accountants’ Report set out
in Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS OF THE GROUP ATTRIBUTABLE TO OWNERS OF THE
COMPANY
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of the Group attributable to owners of the Company prepared in accordance with paragraph
4.29 of the Listing Rules is set out below to illustrate the effect of the Global Offering on the
audited consolidated total tangible assets less liabilities of the Group attributable to owners of
the Company at June 30, 2024 as if the Global Offering had taken place on that date.
The unaudited pro forma statement of adjusted consolidated net tangible assets of the
Group attributable to owners of the Company has been prepared for illustrative purposes only
and, because of its hypothetical nature, it may not give a true picture of the consolidated net
tangible assets of the Group attributable to owners of the Company as at June 30, 2024 or any
future dates.
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of the Group attributable to owners of the Company is prepared based on the audited
consolidated total tangible assets less liabilities of the Group attributable to owners of the
Company as at June 30, 2024 as derived from the Accountants’ Report, the text of which is set
out in Appendix I to this prospectus, and adjusted as described below:
Audited
consolidated
total tangible
assets less
liabilities of
the Group
attributable to
owners of the
Company as at
June 30, 2024
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
of the Group
attributable to
owners of the
Company as at
June 30, 2024
Unaudited pro forma adjusted
consolidated net tangible assets
of the Group attributable to
owners of the Company as at
June 30, 2024 per Share
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an
Offer Price of
HK$3.22 per
Share (414,782) 497,802 83,020 0.08 0.09
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 627 ---
Notes:
1. The amount is calculated based on the consolidated net liabilities of the Group attributable to owners
of the Company amounted to RMB411,162,000 with adjustments for intangible assets as at June 30,
2024 of RMB3,620,000 as extracted from the Accountants’ Report of the Group set out in Appendix I
to the prospectus.
2. The estimated net proceeds from the Global Offering are based on 181,112,000 new Shares to be issued
at the Offer Price of HK$3.22 per Offer Share, after deduction of the estimated underwriting fees and
other related expenses expected to be incurred by the Group, other than those expenses which had been
recognized in profit or loss prior to June 30, 2024. The calculation of such estimated net proceeds does
not take into account (i) any Shares which may be allotted and issued upon the exercise of the
Over-allotment Option; (ii) the Shares issued to Wisdomspirit Holding Limited and granted to the
specified participants under the Pre-IPO Share Award Scheme; or (iii) any Shares which may be issued
or repurchased by the Company pursuant to the general mandates.
For the purpose of the estimated net proceeds from the Global Offering, the amount denominated in HK$
has been converted into RMB at an exchange rate of HK$1 to RMB0.9244, which was the exchange rate
prevailing on December 16, 2024 with reference to the rate published by the People’s Bank of China.
No representation is made that HK$ amounts have been, could have been or may be converted to RMB,
or vice versa, at that rate or at any other rates or at all.
3. The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible
assets of the Group attributable to owners of the Company per Share is based on 1,085,234,000 Shares
outstanding immediately following completion of the Global Offering, which represent the number of
ordinary Shares and Series A-2 Preferred Shares of the Company as at June 30, 2024 assuming that the
Share Subdivision had been completed and 181,112,000 new Shares issued under the Global Offering.
It does not take into account (i) any Shares which may be allotted and issued upon the exercise of the
Over-allotment Option; (ii) the Shares issued to Wisdomspirit Holding Limited and granted to the
specified participants under the Pre-IPO Share Award Scheme; (iii) any Shares which may be issued or
repurchased by the Company pursuant to the general mandates; and (iv) the conversion of the Series A-1
Preferred Shares into ordinary Shares as stated in Note 5 below.
4. The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners
of the Company per Share is converted from RMB to HK$ at the rate of HK$1 to RMB0.9244, which
was the exchange rate prevailing on December 16, 2024 with reference to the rate published by the
People’s Bank of China. No representation is made that the RMB amounts have been, would have been
or may be converted to HK$, or vice versa, at that rate or at any other rates or at all.
5. No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of
the Group attributable to owners of the Company as at June 30, 2024 to reflect any operating result or
other transactions of the Group entered into subsequent to June 30, 2024. In particular, the unaudited
pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the Company
as shown on II-1 have not been adjusted to illustrate the effect of the conversion of the Series A-1
Preferred Shares into ordinary Shares.
Had the conversion of Series A-1 Preferred Shares been assumed to take place as at June 30, 2024, the
unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the
Company as at June 30, 2024 would have increased by approximately RMB315,787,000, which
represents the carrying amount of Series A-1 Preferred Shares as at June 30, 2024, and the total Shares
in issue would have increased by 95,878,000 Shares to a total of 1,181,112,000 Shares in issue.
The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners
of the Company as at June 30, 2024 taking into account of the above subsequent event and the Global
Offering would be RMB0.34 per share (equivalent to HK$0.37 per Share) based on an Offer Price of
HK$3.22 per Share, assuming the amounts denominated in RMB could have been converted into HK$
at the rate of HK$1 to RMB0.9244, which was the exchange rate prevailing on December 16, 2024 with
reference to the rate published by the People’s Bank of China.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 628 ---
B. ASSURANCE REPORT FROM THE REPORTING ACCOUNTANTS ON
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following is the text of the independent reporting accountants’ assurance report
received from Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the
reporting accountants of the Company, in respect of the Group’ s unaudited pro forma financial
information prepared for the purpose of incorporation in this prospectus.
Independent Reporting Accountants’ Assurance Report on the Compilation of Unaudited
Pro Forma Financial Information
To the Directors of BrainAurora Medical Technology Limited
ʮ̡
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of BrainAurora Medical Technology Limited߅
ʮ̡ (the “ Company ”) and its subsidiaries (hereinafter collectively referred to as the
“Group ”) by the directors of the Company (the “ Directors ”) for illustrative purposes only. The
unaudited pro forma financial information consists of the unaudited pro forma statement of
adjusted consolidated net tangible assets as at June 30, 2024 and related notes as set out on
pages II-1 to II-2 of Appendix II to the prospectus issued by the Company dated December 30,
2024 (the “ Prospectus ”). The applicable criteria on the basis of which the Directors have
compiled the unaudited pro forma financial information are described on pages II-1 to II-2 of
Appendix II to the Prospectus.
The unaudited pro forma financial information has been compiled by the Directors to
illustrate the impact of the proposed initial listing of shares of the Company (the “ Global
Offering ”) on the Group’s financial position as at June 30, 2024 as if the proposed Global
Offering had taken place at June 30, 2024. As part of this process, information about the
Group’s financial position has been extracted by the Directors from the Group’s historical
financial information for each of the three years ended December 31, 2023 and the six months
ended June 30, 2024, on which an accountants’ report set out in Appendix I to the Prospectus
has been published.
Directors’ Responsibilities for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the unaudited pro forma financial
information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and with reference to
Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in
Investment Circulars” (“ AG 7 ”) issued by the Hong Kong Institute of Certified Public
Accountants (the “ HKICPA ”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 629 ---
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the “Code of
Ethics for Professional Accountants” issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behavior.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1 “Quality
Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements” issued by the HKICPA, which requires the firm
to design, implement and operate a system of quality management including policies and
procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Reporting Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the unaudited pro forma financial information and to report our opinion to
you. We do not accept any responsibility for any reports previously given by us on any
financial information used in the compilation of the unaudited pro forma financial information
beyond that owed to those to whom those reports were addressed by us at the dates of their
issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires
that the reporting accountants plan and perform procedures to obtain reasonable assurance
about whether the Directors have compiled the unaudited pro forma financial information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the unaudited pro
forma financial information, nor have we, in the course of this engagement, performed an audit
or review of the financial information used in compiling the unaudited pro forma financial
information.
The purpose of unaudited pro forma financial information included in an investment
circular is solely to illustrate the impact of a significant event or transaction on unadjusted
financial information of the Group as if the event had occurred or the transaction had been
undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not
provide any assurance that the actual outcome of the event or transaction at June 30, 2024
would have been as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 630 ---
A reasonable assurance engagement to report on whether the unaudited pro forma
financial information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether the applicable criteria used by the Directors
in the compilation of the unaudited pro forma financial information provide a reasonable basis
for presenting the significant effects directly attributable to the event or transaction, and to
obtain sufficient appropriate evidence about whether:
 the related pro forma adjustments give appropriate effect to those criteria; and
 the unaudited pro forma financial information reflects the proper application of
those adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the event or transaction
in respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion:
(a) the unaudited pro forma financial information has been properly compiled on the
basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial
information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
December 30, 2024
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 631 ---
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of the Companies Act (as amended) of the
Cayman Islands (the “ Companies Act ”).
The Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 25 April 2023 under the Companies Act. The Company’s constitutional
documents consist of its Memorandum and its Articles.
1 MEMORANDUM OF ASSOCIATION
1.1 The Memorandum provides, inter alia, that the liability of members of the Company is
limited and that the objects for which the Company is established are unrestricted (and
therefore include acting as an investment company), and that the Company shall have and
be capable of exercising any and all of the powers at any time or from time to time
exercisable by a natural person or body corporate whether as principal, agent, contractor
or otherwise and, since the Company is an exempted company, that the Company will not
trade in the Cayman Islands with any person, firm or corporation except in furtherance of
the business of the Company carried on outside the Cayman Islands.
1.2 By special resolution the Company may alter the Memorandum with respect to any
objects, powers or other matters specified in it.
2 ARTICLES OF ASSOCIATION
The Articles were adopted on December 24, 2024. A summary of certain provisions of the
Articles is set out below.
2.1 Shares
(a) Classes of shares
The share capital of the Company consists of ordinary shares.
(b) V ariation of rights of existing shares or classes of shares
Subject to the Companies Act, if at any time the share capital of the Company is divided
into different classes of shares, all or any of the special rights attached to any class of shares
may (unless otherwise provided for by the terms of issue of the shares of that class) be varied,
modified or abrogated either with the consent in writing of not less than three-fourths of the
voting rights of the holders of that class or with the sanction of a special resolution passed at
a separate general meeting of the holders of the shares of that class. The provisions of the
Articles relating to general meetings shall mutatis mutandis apply to every such separate
general meeting, but so that the necessary quorum shall be not less than persons together
holding (or, in the case of a shareholder being a corporation, by its duly authorised
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-1 –


--- page 632 ---
representative) or representing by proxy holding not less than one-third of the issued shares of
that class. Every holder of shares of the class shall be entitled on a poll to one vote for every
such share held by him, and any holder of shares of the class present in person or by proxy may
demand a poll.
Any special rights conferred upon the holders of any shares or class of shares shall not,
unless otherwise expressly provided in the rights attaching to the terms of issue of such shares,
be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
(c) Alteration of capital
The Company may, by an ordinary resolution of its members:
(i) increase its share capital by the creation of new shares of such amount as it thinks
expedient;
(ii) consolidate or divide all or any of its share capital into shares of larger or smaller
amount than its existing shares;
(iii) divide its unissued shares into several classes and attach to such shares any
preferential, deferred, qualified or special rights, privileges or conditions;
(iv) subdivide its shares or any of them into shares of an amount smaller than that fixed
by the Memorandum;
(v) cancel any shares which, at the date of the resolution, have not been taken or agreed
to be taken by any person and diminish the amount of its share capital by the amount
of the shares so cancelled;
(vi) make provision for the allotment and issue of shares which do not carry any voting
rights;
(vii) change the currency of denomination of its share capital; and
(viii) reduce its share premium account in any manner authorised and subject to any
conditions prescribed by law.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-2 –


--- page 633 ---
(d) Transfer of shares
Subject to the Companies Act and the requirements of The Stock Exchange of Hong Kong
Limited (the “ Stock Exchange ”), all transfers of shares shall be effected by an instrument of
transfer in the usual or common form or in such other form as the Board may approve and may
be under hand or, if the transferor or transferee is a Clearing House or its nominee(s), under
hand or by machine imprinted signature, or by such other manner of execution as the Board
may approve from time to time.
Execution of the instrument of transfer shall be by or on behalf of the transferor and the
transferee, provided that the Board may dispense with the execution of the instrument of
transfer by the transferor or transferee or accept mechanically executed transfers. The
transferor shall be deemed to remain the holder of a share until the name of the transferee is
entered in the register of members of the Company in respect of that share.
The Board may, in its absolute discretion, at any time and from time to time remove any
share on the principal register to any branch register or any share on any branch register to the
principal register or any other branch register.
Unless the Board otherwise agrees, no shares on the principal register shall be removed
to any branch register nor shall shares on any branch register be removed to the principal
register or any other branch register. All removals and other documents of title shall be lodged
for registration and registered, in the case of shares on any branch register, at the relevant
registration office and, in the case of shares on the principal register, at the place at which the
principal register is located.
The Board may, in its absolute discretion, decline to register a transfer of any share (not
being a fully paid up share) to a person of whom it does not approve or on which the Company
has a lien. It may also decline to register a transfer of any share issued under any share option
scheme upon which a restriction on transfer subsists or a transfer of any share to more than four
joint holders.
The Board may decline to recognise any instrument of transfer unless a certain fee, up to
such maximum sum as the Stock Exchange may determine to be payable, is paid to the
Company, the instrument of transfer is properly stamped (if applicable), is in respect of only
one class of share and is lodged at the relevant registration office or the place at which the
principal register is located accompanied by the relevant share certificate(s) and such other
evidence as the Board may reasonably require is provided to show the right of the transferor
to make the transfer (and if the instrument of transfer is executed by some other person on their
behalf, the authority of that person so to do).
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-3 –


--- page 634 ---
The register of members may, subject to the Listing Rules, be closed on terms equivalent
to section 632 of the Companies Ordinance (Cap. 622 of the Laws of Hong Kong as amended
from time to time) as at the date of the adoption of the Articles (or its equivalent provision from
time to time) at such time or for such period not exceeding in the whole 30 days in each year
as the Board may determine.
Fully paid shares shall be free from any restriction on transfer (except when permitted by
the Stock Exchange) and shall also be free from all liens.
(e) Power of the Company to purchase its own shares
The Company may purchase its own shares subject to certain restrictions and the Board
may only exercise this power on behalf of the Company subject to any applicable requirement
imposed from time to time by the Articles or any code, rules or regulations issued from time
to time by the Stock Exchange and/or the Securities and Futures Commission of Hong Kong.
Where the Company purchases for redemption a redeemable Share, purchases not made
through the market or by tender shall be limited to a maximum price and, if purchases are by
tender, tenders shall be available to all members alike.
(f) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles relating to the ownership of shares in the Company
by a subsidiary.
(g) Calls on shares and forfeiture of shares
The Board may, from time to time, make such calls as it thinks fit upon the members in
respect of any monies unpaid on the shares held by them respectively (whether on account of
the nominal value of the shares or by way of premium) and not by the conditions of allotment
of such shares made payable at fixed times. A call may be made payable either in one sum or
by instalments. If the sum payable in respect of any call or instalment is not paid on or before
the day appointed for payment thereof, the person or persons from whom the sum is due shall
pay interest on the same at such rate not exceeding 20% per annum as the Board shall fix from
the day appointed for payment to the time of actual payment, but the Board may waive payment
of such interest wholly or in part. The Board may, if it thinks fit, receive from any member
willing to advance the same, either in money or money’s worth, all or any part of the money
uncalled and unpaid or instalments payable upon any shares held by him, and in respect of all
or any of the monies so advanced the Company may pay interest at such rate (if any) not
exceeding 20% per annum as the Board may decide.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-4 –


--- page 635 ---
If a member fails to pay any call or instalment of a call on the day appointed for payment,
the Board may, for so long as any part of the call or instalment remains unpaid, serve not less
than 14 days’ notice on the member requiring payment of so much of the call or instalment as
is unpaid, together with any interest which may have accrued and which may still accrue up
to the date of actual payment. The notice shall name a further day (not earlier than the
expiration of 14 days from the date of the notice) on or before which the payment required by
the notice is to be made, and shall also name the place where payment is to be made. The notice
shall also state that, in the event of non-payment at or before the appointed time, the shares in
respect of which the call was made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in respect of
which the notice has been given may at any time thereafter, before the payment required by the
notice has been made, be forfeited by a resolution of the Board to that effect. Such forfeiture
will include all dividends and bonuses declared in respect of the forfeited share and not
actually paid before the forfeiture.
A person whose shares have been forfeited shall cease to be a member in respect of the
forfeited shares but shall, nevertheless, remain liable to pay to the Company all monies which,
at the date of forfeiture, were payable by them to the Company in respect of the shares together
with (if the Board shall in its discretion so require) interest thereon from the date of forfeiture
until payment at such rate not exceeding 20% per annum as the Board may prescribe.
2.2 Directors
(a) Appointment, retirement and removal
At any time or from time to time, the Board shall have the power to appoint any person
as a Director either to fill a casual vacancy on the Board or as an additional Director to the
existing Board subject to any maximum number of Directors, if any, as may be determined by
the members in general meeting. Any Director so appointed to fill a casual vacancy shall hold
office only until the first annual general meeting of the Company after their appointment and
be subject to re-election at such meeting. Any Director so appointed as an addition to the
existing Board shall hold office only until the first annual general meeting of the Company
after their appointment and be eligible for re-election at such meeting. Any Director so
appointed by the Board shall not be taken into account in determining the Directors or the
number of Directors who are to retire by rotation at an annual general meeting.
At each annual general meeting, one third of the Directors for the time being shall retire
from office by rotation. However, if the number of Directors is not a multiple of three, then the
number nearest to but not less than one third shall be the number of retiring Directors. The
Directors to retire in each year shall be those who have been in office longest since their last
re-election or appointment but, as between persons who became or were last re-elected
Directors on the same day, those to retire shall (unless they otherwise agree among themselves)
be determined by lot.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-5 –


--- page 636 ---
No person, other than a retiring Director, shall, unless recommended by the Board for
election, be eligible for election to the office of Director at any general meeting, unless notice
in writing of the intention to propose that person for election as a Director and notice in writing
by that person of their willingness to be elected has been lodged at the head office or at the
registration office of the Company. The period for lodgement of such notices shall commence
no earlier than the day after despatch of the notice of the relevant meeting and end no later than
seven days before the date of such meeting and the minimum length of the period during which
such notices may be lodged must be at least seven days.
A Director is not required to hold any shares in the Company by way of qualification nor
is there any specified upper or lower age limit for Directors either for accession to or retirement
from the Board.
A Director may be removed by an ordinary resolution of the Company before the
expiration of their term of office (but without prejudice to any claim which such Director may
have for damages for any breach of any contract between them and the Company) and the
Company may by ordinary resolution appoint another in their place. Any Director so appointed
shall be subject to the “retirement by rotation” provisions. The number of Directors shall not
be less than two.
The office of a Director shall be vacated if they:
(i) resign;
(ii) die;
(iii) are declared to be of unsound mind and the Board resolves that their office be
vacated;
(iv) become bankrupt or has a receiving order made against them or suspends payment
or compounds with their creditors generally;
(v) are prohibited from being or ceases to be a director by operation of law;
(vi) without special leave, is absent from meetings of the Board for six consecutive
months, and the Board resolves that their office is vacated;
(vii) have been required by the stock exchange of the Relevant Territory (as defined in
the Articles) to cease to be a Director; or
(viii) are removed from office by the requisite majority of the Directors or otherwise
pursuant to the Articles.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-6 –


--- page 637 ---
From time to time the Board may appoint one or more of its body to be managing director,
joint managing director or deputy managing director or to hold any other employment or
executive office with the Company for such period and upon such terms as the Board may
determine, and the Board may revoke or terminate any of such appointments. The Board may
also delegate any of its powers to committees consisting of such Director(s) or other person(s)
as the Board thinks fit, and from time to time it may also revoke such delegation or revoke the
appointment of and discharge any such committees either wholly or in part, and either as to
persons or purposes, but every committee so formed shall, in the exercise of the powers so
delegated, conform to any regulations that may from time to time be imposed upon it by the
Board.
(b) Power to allot and issue shares and warrants
Subject to the provisions of the Companies Act, the Memorandum and Articles and
without prejudice to any special rights conferred on the holders of any shares or class of shares,
any share may be issued with or have attached to it such rights, or such restrictions, whether
with regard to dividend, voting, return of capital or otherwise, as the Company may by ordinary
resolution determine (or, in the absence of any such determination or so far as the same may
not make specific provision, as the Board may determine). Any share may be issued on terms
that, upon the happening of a specified event or upon a given date and either at the option of
the Company or the holder of the share, it is liable to be redeemed.
The Board may issue warrants to subscribe for any class of shares or other securities of
the Company on such terms as it may from time to time determine.
Where warrants are issued to bearer, no certificate in respect of such warrants shall be
issued to replace one that has been lost unless the Board is satisfied beyond reasonable doubt
that the original certificate has been destroyed and the Company has received an indemnity in
such form as the Board thinks fit with regard to the issue of any such replacement certificate.
Subject to the provisions of the Companies Act, the Articles and, where applicable, the
rules of any stock exchange of the Relevant Territory (as defined in the Articles) and without
prejudice to any special rights or restrictions for the time being attached to any shares or any
class of shares, all unissued shares in the Company shall be at the disposal of the Board, which
may offer, allot, grant options over or otherwise dispose of them to such persons, at such times,
for such consideration and on such terms and conditions as it in its absolute discretion thinks
fit, but so that no shares shall be issued at a discount.
Neither the Company nor the Board shall be obliged, when making or granting any
allotment of, offer of, option over or disposal of shares, to make, or make available, any such
allotment, offer, option or shares to members or others whose registered addresses are in any
particular territory or territories where, in the absence of a registration statement or other
special formalities, this is or may, in the opinion of the Board, be unlawful or impracticable.
However, no member affected as a result of the foregoing shall be, or be deemed to be, a
separate class of members for any purpose whatsoever.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-7 –


--- page 638 ---
(c) Power to dispose of the assets of the Company or any of its subsidiaries
While there are no specific provisions in the Articles relating to the disposal of the assets
of the Company or any of its subsidiaries, the Board may exercise all powers and do all acts
and things which may be exercised or done or approved by the Company and which are not
required by the Articles or the Companies Act to be exercised or done by the Company in
general meeting, but if such power or act is regulated by the Company in general meeting, such
regulation shall not invalidate any prior act of the Board which would have been valid if such
regulation had not been made.
(d) Borrowing powers
The Board may exercise all the powers of the Company to raise or borrow money, to
mortgage or charge all or any part of the undertaking, property and uncalled capital of the
Company and, subject to the Companies Act, to issue debentures, debenture stock, bonds and
other securities of the Company, whether outright or as collateral security for any debt, liability
or obligation of the Company or of any third party.
(e) Remuneration
The Directors shall be entitled to receive, as ordinary remuneration for their services,
such sums as shall from time to time be determined by the Board or the Company in general
meeting, as the case may be, such sum (unless otherwise directed by the resolution by which
it is determined) to be divided among the Directors in such proportions and in such manner as
they may agree or, failing agreement, either equally or, in the case of any Director holding
office for only a portion of the period in respect of which the remuneration is payable, pro rata.
The Directors shall also be entitled to be repaid all expenses reasonably incurred by them in
attending any Board meetings, committee meetings or general meetings or otherwise in
connection with the discharge of their duties as Directors. Such remuneration shall be in
addition to any other remuneration to which a Director who holds any salaried employment or
office in the Company may be entitled by reason of such employment or office.
Any Director who, at the request of the Company, performs services which in the opinion
of the Board go beyond the ordinary duties of a Director may be paid such special or extra
remuneration as the Board may determine, in addition to or in substitution for any ordinary
remuneration as a Director. An executive Director appointed to be a managing director, joint
managing director, deputy managing director or other executive officer shall receive such
remuneration and such other benefits and allowances as the Board may from time to time
decide. Such remuneration shall be in addition to their ordinary remuneration as a Director.
The Board may establish, either on its own or jointly in concurrence or agreement with
subsidiaries of the Company or companies with which the Company is associated in business,
or may make contributions out of the Company’s monies to, any schemes or funds for
providing pensions, sickness or compassionate allowances, life assurance or other benefits for
employees (which expression as used in this and the following paragraph shall include any
Director or former Director who may hold or have held any executive office or any office of
profit with the Company or any of its subsidiaries) and former employees of the Company and
their dependents or any class or classes of such persons.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-8 –


--- page 639 ---
The Board may also pay, enter into agreements to pay or make grants of revocable or
irrevocable, whether or not subject to any terms or conditions, pensions or other benefits to
employees and former employees and their dependents, or to any of such persons, including
pensions or benefits additional to those, if any, to which such employees or former employees
or their dependents are or may become entitled under any such scheme or fund as mentioned
above. Such pension or benefit may, if deemed desirable by the Board, be granted to an
employee either before and in anticipation of, or upon or at any time after, their actual
retirement.
(f) Compensation or payments for loss of office
Payments to any present Director or past Director of any sum by way of compensation for
loss of office or as consideration for or in connection with their retirement from office (not
being a payment to which the Director is contractually or statutorily entitled) must be approved
by the Company in general meeting.
(g) Loans and provision of security for loans to Directors
The Company shall not directly or indirectly make a loan to a Director or a director of
any holding company of the Company or any of their respective close associates, enter into any
guarantee or provide any security in connection with a loan made by any person to a Director
or a director of any holding company of the Company or any of their respective close
associates, or, if any one or more of the Directors hold(s) (jointly or severally or directly or
indirectly) a controlling interest in another company, make a loan to that other company or
enter into any guarantee or provide any security in connection with a loan made by any person
to that other company.
(h) Disclosure of interest in contracts with the Company or any of its subsidiaries
With the exception of the office of auditor of the Company, a Director may hold any other
office or place of profit with the Company in conjunction with their office of Director for such
period and upon such terms as the Board may determine, and may be paid such extra
remuneration for that other office or place of profit, in whatever form, in addition to any
remuneration provided for by or pursuant to any other Articles. A Director may be or become
a director, officer or member of any other company in which the Company may be interested,
and shall not be liable to account to the Company or the members for any remuneration or other
benefits received by them as a director, officer or member of such other company. The Board
may also cause the voting power conferred by the shares in any other company held or owned
by the Company to be exercised in such manner in all respects as it thinks fit, including the
exercise in favour of any resolution appointing the Directors or any of them to be directors or
officers of such other company.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-9 –


--- page 640 ---
No Director or intended Director shall be disqualified by their office from contracting
with the Company, nor shall any such contract or any other contract or arrangement in which
any Director is in any way interested be liable to be avoided, nor shall any Director so
contracting or being so interested be liable to account to the Company for any profit realised
by any such contract or arrangement by reason only of such Director holding that office or the
fiduciary relationship established by it. A Director who is, in any way, materially interested in
a contract or arrangement or proposed contract or arrangement with the Company shall declare
the nature of their interest at the earliest meeting of the Board at which they may practically
do so.
There is no power to freeze or otherwise impair any of the rights attaching to any share
by reason that the person or persons who are interested directly or indirectly in that share have
failed to disclose their interests to the Company.
A Director shall not vote or be counted in the quorum on any resolution of the Board in
respect of any contract or arrangement or proposal in which they or any of their close
associate(s) has/have a material interest, and if they shall do so their vote shall not be counted
nor shall they be counted in the quorum for that resolution, but this prohibition shall not apply
to any of the following matters:
(i) the giving of any security or indemnity to the Director or their close associate(s) in
respect of money lent or obligations incurred or undertaken by any of them at the
request of or for the benefit of the Company or any of its subsidiaries;
(ii) the giving of any security or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiaries for which the Director or their
close associate(s) have themselves assumed responsibility in whole or in part
whether alone or jointly under a guarantee or indemnity or by the giving of security;
(iii) any proposal concerning an offer of shares, debentures or other securities of or by
the Company or any other company which the Company may promote or be
interested in for subscription or purchase, where the Director or their close
associate(s) is/are or is/are to be interested as a participant in the underwriting or
sub-underwriting of the offer;
(iv) any proposal or arrangement concerning the benefit of employees of the Company
or any of its subsidiaries, including the adoption, modification or operation of either:
(A) any employees’ share scheme or any share incentive or share option scheme
under which the Director or their close associate(s) may benefit; or
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(B) any of a pension fund or retirement, death or disability benefits scheme which
relates to Directors, their close associates and employees of the Company or
any of its subsidiaries and does not provide in respect of any Director or their
close associate(s) any privilege or advantage not generally accorded to the
class of persons to which such scheme or fund relates; and
(v) any contract or arrangement in which the Director or their close associate(s) is/are
interested in the same manner as other holders of shares, debentures or other
securities of the Company by virtue only of his/their interest in those shares,
debentures or other securities.
2.3 Proceedings of the Board
The Board may meet anywhere in the world for the despatch of business and may adjourn
and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall be
determined by a majority of votes. In the case of an equality of votes, the chairman of the
meeting shall have a second or casting vote.
2.4 Alterations to the constitutional documents and the Company’s name
To the extent that the same is permissible under the Companies Act and subject to the
Articles, the Memorandum and Articles of the Company may only be altered or amended, and
the name of the Company may only be changed, with the sanction of a special resolution of the
Company.
2.5 Meetings of Member
(a) Special and ordinary resolutions
A special resolution of the Company must be passed by a majority of not less than
three-fourths of the votes cast by such members as, being entitled so to do, vote in person or
by proxy or, in the case of members which are corporations, by their duly authorised
representatives or, where proxies are allowed, by proxy at a general meeting of which notice
specifying the intention to propose the resolution as a special resolution has been duly given.
Under the Companies Act, a copy of any special resolution must be forwarded to the
Registrar of Companies in the Cayman Islands (the “ Registrar of Companies ”) within 15 days
of being passed.
An “ordinary resolution,” by contrast, is a resolution passed by a simple majority of the
votes of such members of the Company as, being entitled to do so, vote in person or, in the case
of members which are corporations, by their duly authorised representatives or, where proxies
are allowed, by proxy at a general meeting of which notice has been duly given.
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A resolution in writing signed by or on behalf of all members shall be treated as an
ordinary resolution duly passed at a general meeting of the Company duly convened and held,
and where relevant as a special resolution so passed.
(b) V oting rights and right to demand a poll
Subject to any special rights, restrictions or privileges as to voting for the time being
attached to any class or classes of shares at any general meeting:
(i) on a poll every member present in person or by proxy or, in the case of a member
being a corporation, by its duly authorised representative shall have one vote for
every share which is fully paid or credited as fully paid registered in their name in
the register of members of the Company but so that no amount paid up or credited
as paid up on a share in advance of calls or instalments is treated for this purpose
as paid up on the share; and
(ii) on a show of hands every member who is present in person (or, in the case of a
member being a corporation, by its duly authorised representative) or by proxy shall
have one vote. Where more than one proxy is appointed by a member which is a
Clearing House (as defined in the Articles) or its nominee(s), each such proxy shall
have one vote on a show of hands.
Members shall have the right to:
(i) speak at general meetings of the Company; and
(ii) vote at a general meeting except where a member is required, by the Listing Rules,
to abstain from voting to approve the matter under consideration.
On a poll, a member entitled to more than one vote need not use all their votes or cast
all the votes used in the same way.
At any general meeting a resolution put to the vote of the meeting is to be decided by poll
save that the chairman of the meeting may, pursuant to the Listing Rules, allow a resolution
to be voted on by a show of hands. Where a show of hands is allowed, before or on the
declaration of the result of the show of hands, a poll may be demanded by (in each case by
members present in person or by proxy or by a duly authorised corporate representative):
(i) at least two members;
(ii) any member or members representing not less than one-tenth of the total voting
rights, on a one vote per share basis, of all the members having the right to vote at
the meeting; or
(iii) a member or members holding shares in the Company conferring a right to vote at
the meeting on which an aggregate sum has been paid equal to not less than
one-tenth of the total sum paid up on all the shares conferring that right.
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Should a Clearing House or its nominee(s) be a member of the Company, such person or
persons may be authorised as it thinks fit to act as its representative(s) at any meeting of the
Company, at any meeting of any class of members, or at any meeting of the creditors of the
Company provided that, if more than one person is so authorised, the authorisation shall
specify the number and class of shares in respect of which each such person is so authorised.
A person authorised in accordance with this provision shall be deemed to have been duly
authorised without further evidence of the facts and be entitled to exercise the same rights and
powers on behalf of the Clearing House or its nominee(s) as if such person were an individual
member including the right to speak and vote.
Where the Company has knowledge that any member is, under the Listing Rules, required
to abstain from voting on any particular resolution or restricted to voting only for or only
against any particular resolution, any votes cast by or on behalf of such member in
contravention of such requirement or restriction shall not be counted.
(c) Annual general meetings
In each financial year during the period commencing from the date on which any of the
securities of the Company first become listed on the Hong Kong Stock Exchange to and
including the date immediately before the day on which none of such securities are so listed
(and so that if at any time listing of any such securities is suspended for any reason whatsoever
and for any length of time, they shall nevertheless be treated, for the purpose of this definition,
as listed), the Company shall hold a general meeting as its annual general meeting in addition
to any other meeting in that year and shall specify the meeting as such in the notice calling it.
Such meeting must be held within six months after the end of the Company’s financial year,
at such time and place as may be determined by the Board.
(d) Notices of meetings and business to be conducted
An annual general meeting of the Company shall be called by at least 21 days’ notice in
writing, and any other general meeting of the Company shall be called by at least 14 days’
notice in writing. The notice shall be exclusive of the day on which it is served or deemed to
be served and of the day for which it is given, and must specify the time, place and agenda of
the meeting and particulars of the resolution(s) to be considered at that meeting and, in the case
of special business, the general nature of that business.
Except where otherwise expressly stated, any notice or document to be given or issued
under the Articles (including any corporate communications within the meaning ascribed
thereto under the Listing Rules) shall be in writing, and may be served by the Company on any
member personally, or by post to such member’s registered address or by any other means
authorised in writing by the member concerned or (other than a share certificate) by
advertisement in the newspapers. Any member whose registered address is outside Hong Kong
may notify the Company in writing of an address in Hong Kong which shall be deemed to be
their registered address for this purpose. Subject to the Companies Act and the Listing Rules,
a notice or document may also be served or delivered by the Company to any member by
electronic means or by publishing it on the Company’s and the Stock Exchange’s websites
without the need for any additional consent of the member.
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Although a meeting of the Company may be called by shorter notice than as specified
above, such meeting may be deemed to have been duly called if it can be demonstrated to the
Stock Exchange that reasonable written notice can be given in less time, and it is so agreed:
(i) in the case of an annual general meeting, by all members of the Company entitled
to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members having a
right to attend and vote at the meeting holding not less than 95% of the total voting
rights in the Company.
All business transacted at an extraordinary general meeting shall be deemed special
business. All business shall also be deemed special business where it is transacted at an annual
general meeting, with the exception of certain routine matters which shall be deemed ordinary
business.
Extraordinary general meetings shall also be convened on the requisition of one or more
members holding at the date of deposit of the requisition, not less than one tenth of the paid
up capital of the Company having the right of voting at general meetings, on a one vote per
share basis in the share capital of the Company. The requisitionist(s) may add resolutions to the
agenda of a general meeting so requisitioned.
(e) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is present when
the meeting proceeds to business, and continues to be present until the conclusion of the
meeting.
The quorum for a general meeting shall be two members present in person (or in the case
of a member being a corporation, by its duly authorised representative) or by proxy and entitled
to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to
sanction the modification of class rights the necessary quorum shall be two persons holding or
representing by proxy not less than one-third in nominal value of the issued shares of that class.
(f) Proxies
Any member of the Company entitled to attend and vote at a meeting of the Company is
entitled to appoint another person as their proxy to attend and vote instead of them. A member
who is the holder of two or more shares may appoint more than one proxy to represent them
and vote on their behalf at a general meeting of the Company or at a class meeting. A proxy
need not be a member of the Company and shall be entitled to exercise the same powers on
behalf of a member who is an individual and for whom they act as proxy as such member could
exercise. In addition, a proxy shall be entitled to exercise the same powers on behalf of a
member which is a corporation and for which they act as proxy as such member could exercise
if it were an individual member. On a poll or on a show of hands, votes may be given either
personally (or, in the case of a member being a corporation, by its duly authorised
representative) or by proxy.
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The instrument appointing a proxy shall be in writing under the hand of the appointor or
of their attorney duly authorised in writing, or if the appointor is a corporation, either under
seal or under the hand of a duly authorised officer or attorney. Every instrument of proxy,
whether for a specified meeting or otherwise, shall be in such form as the Board may from time
to time approve, provided that it shall not preclude the use of the two-way form. Any form
issued to a member for appointing a proxy to attend and vote at an extraordinary general
meeting or at an annual general meeting at which any business is to be transacted shall be such
as to enable the member, according to their intentions, to instruct the proxy to vote in favour
of or against (or, in default of instructions, to exercise their discretion in respect of) each
resolution dealing with any such business.
2.6 Accounts and audit
The Board shall cause proper books of account to be kept of the sums of money received
and expended by the Company, and of the assets and liabilities of the Company and of all other
matters required by the Companies Act (which include all sales and purchases of goods by the
company) necessary to give a true and fair view of the state of the Company’s affairs and to
show and explain its transactions.
The books of accounts of the Company shall be kept at the head office of the Company
or at such other place or places as the Board decides and shall always be open to inspection
by any Director. No member (other than a Director) shall have any right to inspect any account,
book or document of the Company except as conferred by the Companies Act or ordered by a
court of competent jurisdiction or authorised by the Board or the Company in general meeting.
The Board shall from time to time cause to be prepared and laid before the Company at
its annual general meeting balance sheets and profit and loss accounts (including every
document required by law to be annexed thereto), together with a copy of the Directors’ report
and a copy of the auditors’ report, not less than 21 days before the date of the annual general
meeting. Copies of these documents shall be sent to every person entitled to receive notices of
general meetings of the Company under the provisions of the First A&R Articles together with
the notice of annual general meeting, not less than 21 days before the date of the meeting.
Subject to the rules of the stock exchange of the Relevant Territory (as defined in the First
A&R Articles), the Company may send summarised financial statements to shareholders who
have, in accordance with the rules of the stock exchange of the Relevant Territory, consented
and elected to receive summarised financial statements instead of the full financial statements.
The summarised financial statements must be accompanied by any other documents as may be
required under the rules of the stock exchange of the Relevant Territory, and must be sent to
those shareholders that have consented and elected to receive the summarised financial
statements not less than 21 days before the general meeting.
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The Company shall appoint auditor(s) to hold office until the conclusion of the next
annual general meeting on such terms and with such duties as may be agreed with the Board.
The auditors’ remuneration shall be fixed by the Company in general meeting or by another
body independent of the Board.
The members may, at any general meeting convened and held in accordance with the First
A&R Articles, remove the auditors by ordinary resolution at any time before the expiration of
the term of office and shall, by ordinary resolution, at that meeting appoint new auditors in its
place for the remainder of the term. A body that is independent of the board may also remove
the auditors by a simple majority vote before the expiration of the term of office and shall by
a simple majority vote appoint new auditors in its place for the remainder of the term.
The auditors shall audit the financial statements of the Company in accordance with
generally accepted accounting principles of Hong Kong, the International Accounting
Standards or such other standards as may be permitted by the Stock Exchange.
2.7 Dividends and other methods of distribution
The Company in general meeting may declare dividends in any currency to be paid to the
members but no dividend shall be declared in excess of the amount recommended by the Board.
Except in so far as the rights attaching to, or the terms of issue of, any share may
otherwise provide:
(a) all dividends shall be declared and paid according to the amounts paid up on the
shares in respect of which the dividend is paid, although no amount paid up on a
share in advance of calls shall for this purpose be treated as paid up on the share;
(b) all dividends shall be apportioned and paid pro rata in accordance with the amount
paid up on the shares during any portion(s) of the period in respect of which the
dividend is paid; and
(c) the Board may deduct from any dividend or other monies payable to any member all
sums of money (if any) presently payable by them to the Company on account of
calls, instalments or otherwise.
Where the Board or the Company in general meeting has resolved that a dividend
should be paid or declared, the Board may resolve:
(i) that such dividend be satisfied wholly or in part in the form of an allotment of
shares credited as fully paid up, provided that the members entitled to such
dividend will be entitled to elect to receive such dividend (or part thereof) in
cash in lieu of such allotment; or
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(ii) that the members entitled to such dividend will be entitled to elect to receive
an allotment of shares credited as fully paid up in lieu of the whole or such part
of the dividend as the Board may think fit.
Upon the recommendation of the Board, the Company may by ordinary resolution in
respect of any one particular dividend of the Company determine that it may be satisfied
wholly in the form of an allotment of shares credited as fully paid up without offering any right
to members to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, bonus or other sum payable in cash to the holder of shares may be paid by
cheque or warrant sent through the post. Every such cheque or warrant shall be made payable
to the order of the person to whom it is sent and shall be sent at the holder’s or joint holders’
risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute
a good discharge to the Company. Any one of two or more joint holders may give effectual
receipts for any dividends or other monies payable or property distributable in respect of the
shares held by such joint holders.
Whenever the Board or the Company in general meeting has resolved that a dividend be
paid or declared, the Board may further resolve that such dividend be satisfied wholly or in part
by the distribution of specific assets of any kind.
The Board may, if it thinks fit, receive from any member willing to advance the same, and
either in money or money’s worth, all or any part of the money uncalled and unpaid or
instalments payable upon any shares held by him, and in respect of all or any of the monies
so advanced may pay interest at such rate (if any) not exceeding 20% per annum, as the Board
may decide, but a payment in advance of a call shall not entitle the member to receive any
dividend or to exercise any other rights or privileges as a member in respect of the share or the
due portion of the shares upon which payment has been advanced by such member before it is
called up.
All dividends, bonuses or other distributions unclaimed for one year after having been
declared may be invested or otherwise used by the Board for the benefit of the Company until
claimed and the Company shall not be constituted a trustee in respect thereof. All dividends,
bonuses or other distributions unclaimed for six years after having been declared may be
forfeited by the Board and, upon such forfeiture, shall revert to the Company.
No dividend or other monies payable by the Company on or in respect of any share shall
bear interest against the Company.
The Company may exercise the power to cease sending cheques for dividend entitlements
or dividend warrants by post if such cheques or warrants remain uncashed on two consecutive
occasions or after the first occasion on which such a cheque or warrant is returned undelivered.
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2.8 Inspection of corporate records
For so long as any part of the share capital of the Company is listed on the Stock
Exchange, any member may inspect any register of members of the Company maintained in
Hong Kong (except when the register of members is closed) without charge and require the
provision to them of copies or extracts of such register in all respects as if the Company were
incorporated under and were subject to the Hong Kong Companies Ordinance.
2.9 Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles concerning the rights of minority members in
relation to fraud or oppression. However, certain remedies may be available to members of the
Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.
2.10 Procedures on liquidation
A resolution that the Company be wound up by the court or be wound up voluntarily shall
be a special resolution. The board shall have no authority to present a winding up petition on
behalf of the Company without the sanction of a resolution passed by the Company in general
meeting.
Subject to any special rights, privileges or restrictions as to the distribution of available
surplus assets on liquidation for the time being attached to any class or classes of shares:
(a) if the Company is wound up and the assets available for distribution among the
members of the Company are more than sufficient to repay the whole of the capital
paid up at the commencement of the winding up, then the excess shall be distributed
pari passu among such members in proportion to the amount paid up on the shares
held by them respectively; and
(b) if the Company is wound up and the assets available for distribution among the
members as such are insufficient to repay the whole of the paid-up capital, such
assets shall be distributed so that, as nearly as may be, the losses shall be borne by
the members in proportion to the capital paid up on the shares held by them,
respectively.
If the Company is wound up (whether the liquidation is voluntary or compelled by the
court), the liquidator may, with the sanction of a special resolution and any other sanction
required by the Companies Act, divide among the members in specie or kind the whole or any
part of the assets of the Company, whether the assets consist of property of one kind or
different kinds, and the liquidator may, for such purpose, set such value as they deem fair upon
any one or more class or classes of property to be so divided and may determine how such
division shall be carried out as between the members or different classes of members and the
members within each class. The liquidator may, with the like sanction, vest any part of the
assets in trustees upon such trusts for the benefit of members as the liquidator thinks fit, but
so that no member shall be compelled to accept any shares or other property upon which there
is a liability.
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2.11 Subscription rights reserve
Provided that it is not prohibited by and is otherwise in compliance with the Companies
Act, if warrants to subscribe for shares have been issued by the Company and the Company
does any act or engages in any transaction which would result in the subscription price of such
warrants being reduced below the par value of the shares to be issued on the exercise of such
warrants, a subscription rights reserve shall be established and applied in paying up the
difference between the subscription price and the par value of such shares.
3 CAYMAN ISLANDS COMPANY LA W
The Company was incorporated in the Cayman Islands as an exempted company on 25
April 2023 subject to the Companies Act. Certain provisions of Cayman Islands company law
are set out below but this section does not purport to contain all applicable qualifications and
exceptions or to be a complete review of all aspects of the Cayman Islands law and taxation,
which may differ from equivalent provisions in jurisdictions with which interested parties may
be more familiar.
3.1 Company operations
An exempted company such as the Company must conduct its operations mainly outside
the Cayman Islands. An exempted company is also required to file an annual return each year
with the Registrar of Companies and pay a fee which is based on the amount of its authorised
share capital.
3.2 Share capital
Under the Companies Act, a Cayman Islands company may issue ordinary, preference or
redeemable shares or any combination thereof. Where a company issues shares at a premium,
whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums
on those shares shall be transferred to an account, to be called the “share premium account.”
At the option of a company, these provisions may not apply to premiums on shares of that
company allotted pursuant to any arrangements in consideration of the acquisition or
cancellation of shares in any other company and issued at a premium. The share premium
account may be applied by the company subject to the provisions, if any, of its memorandum
and articles of association, in such manner as the company may from time to time determine
including, but without limitation, the following:
(a) paying distributions or dividends to members;
(b) paying up unissued shares of the company to be issued to members as fully paid
bonus shares;
(c) any manner provided in Section 37 of the Companies Act;
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(d) writing-off the preliminary expenses of the company; and
(e) writing-off the expenses of, or the commission paid or discount allowed on, any
issue of shares or debentures of the company.
Notwithstanding the foregoing, no distribution or dividend may be paid to members out
of the share premium account unless, immediately following the date on which the distribution
or dividend is proposed to be paid, the company will be able to pay its debts as they fall due
in the ordinary course of business.
Subject to confirmation by the court, a company limited by shares or a company limited
by guarantee and having a share capital may, if authorised to do so by its articles of association,
by special resolution reduce its share capital in any way.
3.3 Financial assistance to purchase shares of a company or its holding company
There are no statutory prohibitions in the Cayman Islands on the granting of financial
assistance by a company to another person for the purchase of, or subscription for, its own, its
holding company’s or a subsidiary’s shares. Therefore, a company may provide financial
assistance provided the directors of the company, when proposing to grant such financial
assistance, discharge their duties of care and act in good faith, for a proper purpose and in the
interests of the company. Such assistance should be on an arm’s-length basis.
3.4 Purchase of shares and warrants by a company and its subsidiaries
A company limited by shares or a company limited by guarantee and having a share
capital may, if so authorised by its articles of association, issue shares which are to be
redeemed or are liable to be redeemed at the option of the company or a member and, for the
avoidance of doubt, it shall be lawful for the rights attaching to any shares to be varied, subject
to the provisions of the company’s articles of association, so as to provide that such shares are
to be or are liable to be so redeemed. In addition, such a company may, if authorised to do so
by its articles of association, purchase its own shares, including any redeemable shares; an
ordinary resolution of the company approving the manner and terms of the purchase will be
required if the articles of association do not authorise the manner and terms of such purchase.
A company may not redeem or purchase its shares unless they are fully paid. Furthermore, a
company may not redeem or purchase any of its shares if, as a result of the redemption or
purchase, there would no longer be any issued shares of the company other than shares held
as treasury shares. In addition, a payment out of capital by a company for the redemption or
purchase of its own shares is not lawful unless, immediately following the date on which the
payment is proposed to be made, the company shall be able to pay its debts as they fall due
in the ordinary course of business.
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Shares that have been purchased or redeemed by a company or surrendered to the
company shall not be treated as cancelled but shall be classified as treasury shares if held in
compliance with the requirements of Section 37A(1) of the Companies Act. Any such shares
shall continue to be classified as treasury shares until such shares are either cancelled or
transferred pursuant to the Companies Act.
A Cayman Islands company may be able to purchase its own warrants subject to and in
accordance with the terms and conditions of the relevant warrant instrument or certificate. Thus
there is no requirement under Cayman Islands law that a company’s memorandum or articles
of association contain a specific provision enabling such purchases. The directors of a company
may under the general power contained in its memorandum of association be able to buy, sell
and deal in personal property of all kinds.
A subsidiary may hold shares in its holding company and, in certain circumstances, may
acquire such shares.
3.5 Dividends and distributions
Subject to a solvency test, as prescribed in the Companies Act, and the provisions, if any,
of the company’s memorandum and articles of association, a company may pay dividends and
distributions out of its share premium account. In addition, based upon English case law which
is likely to be persuasive in the Cayman Islands, dividends may be paid out of profits.
For so long as a company holds treasury shares, no dividend may be declared or paid, and
no other distribution (whether in cash or otherwise) of the company’s assets (including any
distribution of assets to members on a winding up) may be made, in respect of a treasury share.
3.6 Protection of minorities and shareholders’ suits
It can be expected that the Cayman Islands courts will ordinarily follow English case law
precedents (particularly the rule in the case of Foss v. Harbottle and the exceptions to that rule)
which permit a minority member to commence a representative action against or derivative
actions in the name of a company to challenge acts which are ultra vires, illegal, fraudulent
(and performed by those in control of the company) against the minority, or represent an
irregularity in the passing of a resolution which requires a qualified (or special) majority which
has not been obtained.
Where a company (not being a bank) is one which has a share capital divided into shares,
the court may, on the application of members holding not less than one-fifth of the shares of
the company in issue, appoint an inspector to examine the affairs of the company and, at the
direction of the court, to report on such affairs. In addition, any member of a company may
petition the court, which may make a winding up order if the court is of the opinion that it is
just and equitable that the company should be wound up.
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In general, claims against a company by its members must be based on the general laws
of contract or tort applicable in the Cayman Islands or be based on potential violation of their
individual rights as members as established by a company’s memorandum and articles of
association.
3.7 Disposal of assets
There are no specific restrictions on the power of directors to dispose of assets of a
company, however, the directors are expected to exercise certain duties of care, diligence and
skill to the standard that a reasonably prudent person would exercise in comparable
circumstances, in addition to fiduciary duties to act in good faith, for proper purpose and in the
best interests of the company under English common law (which the Cayman Islands’ courts
will ordinarily follow).
3.8 Accounting and auditing requirements
A company must cause proper records of accounts to be kept with respect to:
(a) all sums of money received and expended by it;
(b) all sales and purchases of goods by it; and
(c) its assets and liabilities.
Proper books of account shall not be deemed to be kept if there are not kept such books
as are necessary to give a true and fair view of the state of the company’s affairs and to explain
its transactions.
If a company keeps its books of account at any place other than at its registered office or
any other place within the Cayman Islands, it shall, upon service of an order or notice by the
Tax Information Authority pursuant to the Tax Information Authority Act (as amended) of the
Cayman Islands (the “ TIA Act ”), make available, in electronic form or any other medium, at
its registered office copies of its books of account, or any part or parts thereof, as are specified
in such order or notice.
3.9 Exchange control
There are no exchange control regulations or currency restrictions in effect in the Cayman
Islands.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-22 –


--- page 653 ---
3.10 Taxation
The Cayman Islands currently levy no taxes on individuals or corporations based upon
profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax
or estate duty. There are no other taxes likely to be material to the Company levied by the
Government of the Cayman Islands save for certain stamp duties which may be applicable,
from time to time, on certain instruments.
3.11 Stamp duty on transfers
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands
companies save for those which hold interests in land in the Cayman Islands.
3.12 Loans to directors
There is no express provision prohibiting the making of loans by a company to any of its
directors. However, the company’s articles of association may provide for the prohibition of
such loans under specific circumstances.
3.13 Inspection of corporate records
The members of a company have no general right to inspect or obtain copies of the
register of members or corporate records of the company. They will, however, have such rights
as may be set out in the company’s articles of association.
3.14 Register of members
A Cayman Islands exempted company may maintain its principal register of members and
any branch registers in any country or territory, whether within or outside the Cayman Islands,
as the company may determine from time to time. There is no requirement for an exempted
company to make any returns of members to the Registrar of Companies. The names and
addresses of the members are, accordingly, not a matter of public record and are not available
for public inspection. However, an exempted company shall make available at its registered
office, in electronic form or any other medium, such register of members, including any branch
register of member, as may be required of it upon service of an order or notice by the Tax
Information Authority pursuant to the TIA Act.
3.15 Register of Directors and officers
Pursuant to the Companies Act, the Company is required to maintain at its registered
office a register of directors, alternate directors and officers which is not available for
inspection by the public. A copy of such register must be filed with the Registrar of Companies
and any change must be notified to the Registrar of Companies within 30 days of any change
in such directors or officers, including a change of the name of such directors or officers.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-23 –


--- page 654 ---
3.16 Winding up
A Cayman Islands company may be wound up by:
(a) an order of the court;
(b) voluntarily by its members; or
(c) under the supervision of the court.
The court has authority to order winding up in a number of specified circumstances
including where, in the opinion of the court, it is just and equitable that such company be so
wound up.
A voluntary winding up of a company (other than a limited duration company, for which
specific rules apply) occurs where the company resolves by special resolution that it be wound
up voluntarily or where the company in general meeting resolves that it be wound up
voluntarily because it is unable to pay its debt as they fall due. In the case of a voluntary
winding up, the company is obliged to cease to carry on its business from the commencement
of its winding up except so far as it may be beneficial for its winding up. Upon appointment
of a voluntary liquidator, all the powers of the directors cease, except so far as the company
in general meeting or the liquidator sanctions their continuance.
In the case of a members’ voluntary winding up of a company, one or more liquidators
are appointed for the purpose of winding up the affairs of the company and distributing its
assets.
As soon as the affairs of a company are fully wound up, the liquidator must make a report
and an account of the winding up, showing how the winding up has been conducted and the
property of the company disposed of, and call a general meeting of the company for the
purposes of laying before it the account and giving an explanation of that account.
When a resolution has been passed by a company to wind up voluntarily, the liquidator
or any contributory or creditor may apply to the court for an order for the continuation of the
winding up under the supervision of the court, on the grounds that:
(a) the company is or is likely to become insolvent; or
(b) the supervision of the court will facilitate a more effective, economic or expeditious
liquidation of the company in the interests of the contributories and creditors.
A supervision order takes effect for all purposes as if it was an order that the company
be wound up by the court except that a commenced voluntary winding up and the prior actions
of the voluntary liquidator shall be valid and binding upon the company and its official
liquidator.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-24 –


--- page 655 ---
For the purpose of conducting the proceedings in winding up a company and assisting the
court, one or more persons may be appointed to be called an official liquidator(s).The court
may appoint to such office such person or persons, either provisionally or otherwise, as it
thinks fit, and if more than one person is appointed to such office, the court shall declare
whether any act required or authorised to be done by the official liquidator is to be done by all
or any one or more of such persons. The court may also determine whether any and what
security is to be given by an official liquidator on their appointment; if no official liquidator
is appointed, or during any vacancy in such office, all the property of the company shall be in
the custody of the court.
3.17 Reconstructions
Reconstructions and amalgamations may be approved by a majority in number
representing 75% in value of the members or creditors, depending on the circumstances, as are
present at a meeting called for such purpose and thereafter sanctioned by the courts. Whilst a
dissenting member has the right to express to the court their view that the transaction for which
approval is being sought would not provide the members with a fair value for their shares, the
courts are unlikely to disapprove the transaction on that ground alone in the absence of
evidence of fraud or bad faith on behalf of management, and if the transaction were approved
and consummated the dissenting member would have no rights comparable to the appraisal
rights (i.e. the right to receive payment in cash for the judicially determined value of their
shares) ordinarily available, for example, to dissenting members of a United States corporation.
3.18 Take-overs
Where an offer is made by a company for the shares of another company and, within four
months of the offer, the holders of not less than 90% of the shares which are the subject of the
offer accept, the offeror may, at any time within two months after the expiration of that
four-month period, by notice require the dissenting members to transfer their shares on the
terms of the offer. A dissenting member may apply to the Cayman Islands’ courts within one
month of the notice objecting to the transfer. The burden is on the dissenting member to show
that the court should exercise its discretion, which it will be unlikely to do unless there is
evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares
who have accepted the offer as a means of unfairly forcing out minority members.
3.19 Indemnification
Cayman Islands law does not limit the extent to which a company’s articles of association
may provide for indemnification of officers and directors, save to the extent any such provision
may be held by the court to be contrary to public policy, for example, where a provision
purports to provide indemnification against the consequences of committing a crime.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-25 –


--- page 656 ---
3.20 Scheme of arrangement
Following amendments to the Companies Act that became effective on 31 August 2022,
the majority-in-number “headcount test” in relation to the approval of members’ schemes of
arrangement has been abolished. Section 86(2A) of the Companies Act provides that, if 75%
in value of the members (or class of members) of a Cayman Islands company agree to any
compromise or arrangement, such compromise or arrangement shall, if sanctioned by the
Court, be binding on all members (or class of members) of such company and on the company
itself. Where a Cayman Islands company is in the course of being wound up, such compromise
or arrangement would be binding on the liquidator and contributories of the company. In
contrast, section 86(2) of the Companies Act continues to require (a) approval by a majority
in number representing 75% in value and (b) the sanction of the court, in relation to any
compromise or arrangement between a company and its creditors (or any class of them).
3.21 General
Walkers (Hong Kong), the Company’s legal advisers on Cayman Islands law, have sent
to the Company a letter of advice summarising aspects of Cayman Islands company law. This
letter, together with a copy of the Companies Act, is available for inspection as referred to in
“Documents Delivered to the Registrar of Companies and Available on Display” in
Appendix V . Any person wishing to have a detailed summary of Cayman Islands company law
or advice on the differences between it and the laws of any jurisdiction with which that person
is more familiar is recommended to seek independent legal advice.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN COMPANIES ACT
– III-26 –


--- page 657 ---
FURTHER INFORMATION ABOUT OUR COMPANY
Incorporation of our Company
Our Company was incorporated as an exempted company with limited liability in the
Cayman Islands on April 25, 2023. Accordingly, our corporate structure and Articles of
Association are subject to the relevant laws of the Cayman Islands. A summary of certain
aspects of the Cayman Islands company law and a summary of certain provisions of our
Articles of Associations are set out in the section headed “Appendix III – Summary of the
Constitution of our Company and Cayman Companies Act.”
Our registered place of business in Hong Kong is at 5/F, Manulife Place, 348 Kwun Tong
Road, Kowloon, Hong Kong. We were registered as a non-Hong Kong Company under Part 16
of the Companies Ordinance on July 26, 2023. Ms. Cheung Y uet Fan and Ms. Sham Ying Man
of 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong have been appointed as
our authorized representatives for the acceptance of service of process and notices in Hong
Kong.
Changes in Share Capital of Our Company
Save as disclosed in the sections headed and “History, Reorganization and Corporate
Structure – Reorganization.” there has been no other alteration in the share capital of our
Company during the two years immediately preceding the date of this Prospectus.
Changes in the Share Capital of Our Subsidiaries
A summary of the corporate information and the particulars of our subsidiaries are set out
in Note 37 to the Accountant’s Report set out in Appendix I.
The following sets out the changes in the share capital of our subsidiaries within the two
years immediately preceding the date of this Prospectus:
 On February 15, 2023, the registered capital of Zhejiang BrainAurora Medical
Technology Co., Ltd. (ʮ̡) was increased to
RMB14.891074 million and; on June 15, 2023, its registered capital was further
increased to RMB16.545663 million.
 On March 10, 2023, Beijing Wanxiang Aurora Technology Co., Ltd. (฽Έ
ʮ̡) was established as a limited liability company in the PRC with an
initial registered capital of RMB1 million.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1–


--- page 658 ---
 On April 18, 2023, Beijing Yihui Technology Co. Ltd. (ʮ̡) was
established as a limited company (Sino-Foreign Equity Joint V enture) in the PRC
with an initial registered capital of RMB1 million. On June 13, 2023, its registered
capital was increased to RMB51 million, and was further increased to
RMB51.126398 million on August 3, 2023.
 On May 22, 2023, Sichuan Huiyu Aurora Medical Technology Co., Ltd. ( ̬ʇᅆᚑ
ʮ̡) was established as a limited liability company in the PRC
with an initial registered capital of RMB1 million.
 On June 16, 2023, Zhejiang Zhiling Ruidong Medical Technology Co., Ltd. ( एϪ౽
ʮ̡) was established as a limited liability company in the PRC
with an initial registered capital of RMB100 million.
 On September 12, 2023, Beijing Hongze Technology Development Co., Ltd. ( ̏ԯ
ʮ̡) increased its registered capital from RMB1 million to
RMB1.4286 million.
 On October 17, 2023, Shenzhen BrainAurora Medical Technology Co., Ltd. ( ଉέ໘
ʮ̡) was established as a limited liability company in the PRC
with an initial registered capital of RMB1 million.
 On November 15, 2023, Sichuan BrainAurora Medical Technology Co., Ltd. ( ̬ʇ
ʮ̡) was established as a limited liability company in the
PRC with an initial registered capital of RMB100 million.
 On January 12, 2024, Luzhou BrainAurora Medical Technology Co., Ltd. ( ᖐψ໘ਗ
ʮ̡) was established as a limited liability company in the PRC
with an initial registered capital of RMB1 million.
 On July 26, 2024, BrainAurora (Hebei) ( ໘ਗ฽Έ(̏)ʮ̡) was
established as a limited liability company in the PRC with an initial registered
capital of RMB3 million.
 On August 8, 2024, BrainAurora Jiangsu (ʮ̡) was
established as a limited liability company in the PRC with an initial registered
capital of RMB36.5 million.
Save as disclosed above, there has been no alteration in the share capital of any
subsidiaries within the two years immediately preceding the date of this Prospectus.
Save for the subsidiaries mentioned in the Accountant’s report set out in Appendix I, our
Company has no other subsidiaries.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2–


--- page 659 ---
Corporate Reorganization
The companies comprising our Group underwent the Reorganization in preparation for
the listing of our Shares on the Stock Exchange. See ‘‘History, Reorganization and Corporate
Structure — Reorganization’’ for information relating to the Reorganization.
Resolutions of our Shareholders
Written resolutions of our Shareholders were passed on December 24, 2024, pursuant to
which, among others:
(a) the Memorandum and Articles of Association were approved and adopted, and will
come into effect upon Listing;
(b) conditional on (i) the Listing Committee granting the listing of, and permission to
deal in, the Shares in issue and to be issued as mentioned in this Prospectus; and
(ii) the obligations of the Underwriters under the Underwriting Agreements
becoming unconditional and the Underwriting Agreements not being terminated in
accordance with the terms therein or otherwise:
 the Share Subdivision and the re-designation and re-classification of each
authorised issued and unissued Preferred Share into an ordinary Share on a
one-to-one basis were approved;
 upon completion of the Share Subdivision, all the authorised issued and
unissued Preferred Shares be re-designated and re-classified as ordinary
Shares, having the rights and restrictions as set out in the Memorandum and the
Articles;
 the Global Offering and the Over-allotment Option were approved and our
Directors were authorized to effect the same, and to allot and issue the Offer
Shares pursuant to the Global Offering and the Over-allotment Option;
 the grant of the Over-allotment Option by our Company to the International
Underwriters to allot and issue up to 15% of the Offer Shares initially available
under the Global Offering to cover, among other things, the over-allocations in
the International Offering was approved; and
 the proposed Listing was approved, and our Directors were authorized to
implement such Listing;
(c) a general unconditional mandate was granted to our Directors to allot, issue and deal
with Shares or sell and/or transfer Shares out of treasury that are held as treasury
shares, and to make or grant offers, agreements, or options which might require such
Shares to be allotted and issued or dealt with at any time subject to the requirement
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3–


--- page 660 ---
that the aggregate nominal value of the Shares so allotted and issued or agreed
conditionally or unconditionally to be allotted and issued, shall not exceed 20% of
the number of the Shares in issue (excluding any treasury shares) immediately
following completion of the Share Subdivision and the Global Offering.
This mandate does not cover Shares to be allotted, issued, or dealt with under a
rights issue or scrip dividend scheme or similar arrangements (including the sale
and/or transfer of any Shares out of treasury and are held as treasury shares), or a
specific authority granted by our Shareholders, or upon the exercise of the
Over-allotment Option. This general mandate to issue Shares will remain in effect
until:
 the conclusion of the next annual general meeting of our Company;
 the expiration of the period within which the next annual general meeting of
our Company is required to be held under any applicable laws or the Articles
of Association; or
 it is varied or revoked by an ordinary resolution of our Shareholders at a
general meeting of our Company;
whichever is the earliest;
(d) a general unconditional mandate was granted to our Directors to exercise all power
of our Company to repurchase Shares with an aggregate nominal value of not more
than 10% of the number of the Shares in issue immediately following completion of
the Share Subdivision and the Global Offering (excluding any treasury shares and
any Shares which may be allotted and issued upon the exercise of the Over-allotment
Option).
This mandate only relates to repurchase made on the Stock Exchange or on any other
stock exchange on which the Shares may be listed (and which is recognized by the
SFC and the Stock Exchange for this purpose) and made in accordance with all
applicable laws and regulations and the requirements of the Listing Rules. This
general mandate to repurchase Shares will remain in effect until:
 the conclusion of the next annual general meeting of our Company;
 the expiration of the period within which the next annual general meeting of
our Company is required to be held under any applicable laws or the Articles
of Association; or
 it is varied or revoked by an ordinary resolution of our Shareholders at a
general meeting of our Company;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4–


--- page 661 ---
whichever is the earliest;
 the general unconditional mandate as mentioned in paragraph (d) above would
be extended by the addition thereto the aggregate number of Shares purchased
pursuant to the mandate to repurchase Shares referred to in paragraph (e) above
(up to 10% of the aggregate number of Shares in issue immediately following
completion of the Share Subdivision and the Global Offering, excluding any
treasury shares and any Shares which may fall to be allotted and issued
pursuant to the exercise of the Over-allotment Option).
Restrictions on Repurchase of Our Own Securities
This section sets out information required by the Stock Exchange to be included in this
Prospectus concerning the repurchase by us of our own Shares. Our Directors confirm that
neither the explanatory statement of the repurchase mandate nor the proposed share repurchase
has any unusual features.
Provisions of the Listing Rules
The Company is empowered by its Articles of Association to repurchase its Shares. Any
shares to be repurchased will be canceled or kept as treasury shares if allowed by the Articles
of Association and applicable laws and regulations. The Listing Rules permit companies with
a primary listing on the Stock Exchange to repurchase their own Shares on the Stock Exchange
subject to certain restrictions, the more important of which are summarized below:
(a) Shareholders’ Approval. All proposed repurchase of Shares (which must be fully
paid up in the case of shares) by a company with a primary listing on the Stock
Exchange must be approved in advance by an ordinary resolution of the
shareholders, either by way of general mandate or by specific approval of a
particular transaction.
(b) Source of Funds. Repurchases must be funded out of funds legally available for the
purpose in accordance with the constitutive documents of a listed company, the laws
of the jurisdiction in which the listed company is incorporated or otherwise
established. A listed company may not repurchase its own securities on the Stock
Exchange for a consideration other than cash or for settlement otherwise than in
accordance with the trading rules of the Stock Exchange from time to time. Subject
to the foregoing, any repurchases by a listed company may be made out of the funds
which would otherwise be available for dividend or distribution or out of the
proceeds of a new issue of shares made for the purpose of the repurchase. Any
amount of premium payable on the purchase over the par value of the shares to be
repurchased must be out of the funds which would otherwise be available for
dividend or distribution or from sums standing to the credit of our share premium
account.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5–


--- page 662 ---
Reasons for Repurchase
Our Directors believe that it is in the best interest of us and our Shareholders for our
Directors to have general authority from the Shareholders to enable us to repurchase Shares in
the market. Such repurchases may, depending on market conditions and funding arrangements
at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share
and will only be made where our Directors believe that such repurchases will benefit us and
our Shareholders.
Following a repurchase of Shares, the Company may cancel any repurchased Shares
and/or hold them as treasury shares subject to, among others, market conditions and its capital
management needs at the relevant time of the repurchases, which may change due to evolving
circumstances.
Funding of Repurchases
In repurchasing securities, we may only apply funds legally available for such purpose in
accordance with the Memorandum of Association and Articles of Association, the Companies
Act or other applicable laws of Cayman Islands and the Listing Rules. On the basis of our
current financial condition as disclosed in this Prospectus and taking into account our current
working capital position, our Directors consider that, if the Repurchase Mandate were to be
exercised in full, it might have a material adverse effect on our working capital and/or our
gearing position as compared with the position disclosed in this Prospectus. However, our
Directors do not propose to exercise the repurchase mandate to such an extent as would, in the
circumstances, have a material adverse effect on our working capital requirements or the
gearing levels which in the opinion of our Directors are from time to time appropriate for us.
Status of repurchased Shares
Subject to the Articles of Association, the Listing Rules and any other applicable laws and
regulations, the Shares repurchased by the Company will be canceled or kept as treasury
shares.
The Company did not hold any treasury shares as of the Latest Practicable Date and will
not hold any treasury shares upon Listing.
Interim measures
For any treasury shares of the Company deposited with CCASS pending resale on the
Stock Exchange, the Company shall, upon approval by the Board, implement the below interim
measures which include (without limitation):
(i) procuring its broker not to give any instructions to HKSCC to vote at general
meetings for the treasury shares deposited with CCASS;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 6–


--- page 663 ---
(ii) in the case of dividends or distributions (if any and where applicable), withdrawing
the treasury shares from CCASS, and either re-register them in its own name as
treasury shares or cancel them, in each case before the relevant record date for the
dividend or distributions; or
(iii) taking any other measures to ensure that it will not exercise any Shareholders’ rights
or receive any entitlements which would otherwise be suspended under the
applicable laws if those Shares were registered in its own name as treasury shares.
General
Exercise in full of the current repurchase mandate, on the basis of 1,266,278,000 Shares
in issue after completion of the Share Subdivision and the Global Offering (without taking into
account of the Shares which may be allotted and issued pursuant to the exercise of the
Over-allotment Option and excludes any treasury shares), could accordingly result in up to
126,627,800 Shares being repurchased by us during the period prior to:
(a) the conclusion of our next annual general meeting;
(b) the expiration of the period within which the next annual general meeting of our
Company is required by any applicable law or the Articles of Association to be held;
or
(c) the date on which the repurchase mandate is varied or revoked by an ordinary
resolution of our Shareholders in general meeting,
whichever is the earliest.
None of our Directors nor, to the best of their knowledge having made all reasonable
enquiries, any of their close associates (as defined in the Listing Rules) currently intends to sell
any Shares to us or our subsidiaries. Our Directors have undertaken with the Stock Exchange
that, so far as the same may be applicable, they will exercise the repurchase mandate in
accordance with the Listing Rules, the Memorandum of Association and Articles of
Association, the Companies Act or any other applicable laws of the Cayman Islands.
If, as a result of a repurchase of our Shares pursuant to the repurchase mandate, a
Shareholder’s proportionate interest in our voting rights is increased, such increase will be
treated as an acquisition for the purpose of the Takeovers Code. Accordingly, a Shareholder or
a group of Shareholders acting in concert could obtain or consolidate control of us and become
obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code. Save as
aforesaid, our Directors are not aware of any consequences which would arise under the
Takeovers Code as a consequence of any repurchases pursuant to the repurchase mandate.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 7–


--- page 664 ---
No core connected person, as defined in the Listing Rules, has notified us that he/she or
it has a present intention to sell his/her or its Shares to us, or has undertaken not to do so, if
the repurchase mandate is exercised.
FURTHER INFORMATION ABOUT OUR BUSINESS
Summary of Material Contracts
We have entered into the following contracts (not being contracts entered into in the
ordinary course of business) within the two years immediately preceding the date of this
Prospectus that are or may be material:
(a) the shareholders’ agreement dated August 4, 2023 entered into among our Company,
Northern Light Strategic Fund IV L.P ., Northern Light V enture Fund IV L.P .,
Northern Light Partners Fund IV L.P ., Crusky Limited, Healthblooming Limited,
Integriness Limited, Anji Shundian Limited, Ambertech Limited, Jenny Wang
Limited, China Frontier Capital Holding Limited (ʮ̡),
Beijing Pegasus Travel Star Enterprise Management Co., Ltd. (Άุ
ʮ̡), Shenzhen Fengrui Dingxing Equity Investment Fund Partnership
(Limited Partnership) (ΥྫΆุ(Υྫ)), Guangwei
HUANG ( රΈਃ), CICC Healthcare Investment Fund, L.P ., ZTan Limited, Wispirits
Limited, Wiseforward Limited, Neurobright Limited, BrainAurora Limited,
BrainAurora (HK) Medical Technology Limited, Zhejiang Zhiling Ruidong Medical
Technology Co., Ltd (ʮ̡), Zhejiang Naodong Jiguang
Medical Technology Co., Ltd (ʮ̡), Beijing
Zhijingling Technology Co., Ltd. (ʮ̡) and Changsha
Zhijingling Education Technology Co., Ltd. (ʮ̡),
pursuant to which relevant shareholders’ rights were agreed among the parties;
(b) the cornerstone investment agreement dated October 8, 2024 entered into among our
Company, Tasly (International) Healthcare Investment&Development Company
Limited ( ˂ɻɢ(਷ყ)ʮ̡), China International Capital
Corporation Hong Kong Securities Limited (ʮ̡) and
SPDB International Capital Limited (ʮ̡), pursuant to which
Tasly (International) Healthcare Investment&Development Company Limited ( ˂ɻ
ɢ(਷ყ)ʮ̡) agreed to subscribe for Shares at the Offer
Price in the aggregate amount of Hong Kong dollar equivalent of US$10,000,000
(excluding brokerage, SFC transaction levy, AFRC transaction levy and the Hong
Kong Stock Exchange trading fee payable);
(c) the cornerstone investment agreement dated October 8, 2024 entered into among our
Company, Tasly (Hong Kong) Pharmaceutical Investment Limited ( ˂ɻɢ(ಥ)ᔼ
ʮ̡), China International Capital Corporation Hong Kong Securities
Limited (ʮ̡) and SPDB International Capital Limited
(ʮ̡), pursuant to which Tasly (Hong Kong) Pharmaceutical
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 8–


--- page 665 ---
Investment Limited ( ˂ɻɢ(ಥ)ʮ̡) agreed to subscribe for
Shares at the Offer Price in the aggregate amount of Hong Kong dollar equivalent
of US$5,000,000 (excluding brokerage, SFC transaction levy, AFRC transaction
levy and the Hong Kong Stock Exchange trading fee payable);
(d) the amended and reinstated cornerstone investment agreement dated December 23,
2024 entered into among our Company, Suzhou Ceyuan Fuhai Enterprise
Management Partnership (Limited Partnership) ( ᘽψഄ๕ҧऎΆุ၍ଣΥྫΆุ
(Υྫ)), China International Capital Corporation Hong Kong Securities Limited
(ʮ̡) and SPDB International Capital Limited ( ऌვ਷
ʮ̡), pursuant to which Suzhou Ceyuan Fuhai Enterprise Management
Partnership (Limited Partnership) ( ᘽψഄ๕ҧऎΆุ၍ଣΥྫΆุ(Υྫ))
agreed to subscribe for Shares at the Offer Price in the aggregate amount of Hong
Kong dollar equivalent of US$29,500,000 (including brokerage, SFC transaction
levy, AFRC transaction levy and the Hong Kong Stock Exchange trading fee
payable);
(e) the cornerstone investment agreement dated December 23, 2024 entered into among
our Company, Huang Guangwei ( රΈਃ), China International Capital Corporation
Hong Kong Securities Limited (ʮ̡) and SPDB
International Capital Limited (ʮ̡), pursuant to which Huang
Guangwei ( රΈਃ) agreed to subscribe for Shares at the Offer Price in the aggregate
amount of Hong Kong dollar equivalent of US$4,000,000 (excluding brokerage,
SFC transaction levy, AFRC transaction levy and the Hong Kong Stock Exchange
trading fee payable); and
(f) the Hong Kong Underwriting Agreement.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 9–


--- page 666 ---
Intellectual Property Rights
Trademarks
As of the Latest Practicable Date, we had registered the following trademarks which we
consider to be or may be material to our business:
No. Trademark Owner
Place of
Registration Class
Registration
Number Expiry Date
1.
 Beijing
Zhijingling
PRC 42 57581592 January 27, 2032
2.
 Beijing
Zhijingling
PRC 42 57592012 February 6, 2032
3.
 Beijing
Zhijingling
PRC 10 57576481 January 27, 2032
4.
 Beijing
Zhijingling
PRC 44 57590136 January 20, 2032
5.
 Beijing
Zhijingling
PRC 9 57577316 January 27, 2032
6.
 Beijing
Zhijingling
PRC 41 57572439 January 27, 2032
7.
 Beijing
Zhijingling
PRC 9 19378082 April 27, 2027
8.
 Beijing
Zhijingling
PRC 16 19378080 April 27, 2027
9.
 Beijing
Zhijingling
PRC 45 19378074 April 27, 2027
10.
 Beijing
Zhijingling
PRC 38 19378078 April 27, 2027
11.
 Beijing
Zhijingling
PRC 5 19378083 April 27, 2027
12.
 Beijing
Zhijingling
PRC 10 19378081 April 27, 2027
13.
 Beijing
Zhijingling
PRC 42 19378076 April 27, 2027
14.
 Beijing
Zhijingling
PRC 41 19378077 April 27, 2027
15.
 Beijing
Zhijingling
PRC 35 19378079 April 27, 2027
16.
 Beijing
Zhijingling
PRC 44 19378075 April 27, 2027
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 667 ---
No. Trademark Owner
Place of
Registration Class
Registration
Number Expiry Date
17.
 Beijing
Zhijingling
PRC 44 19378068 April 27, 2027
18.
 Beijing
Zhijingling
PRC 10 19378072 April 27, 2027
19.
 Beijing
Zhijingling
PRC 38 19378069 April 27, 2027
20.
 Beijing
Zhijingling
PRC 5 19378073 April 27, 2027
21.
 Beijing
Zhijingling
PRC 16 19378071 April 27, 2027
22.
 Beijing
Zhijingling
PRC 45 19378067 April 27, 2027
23.
 Beijing
Zhijingling
PRC 35 19378070 April 27, 2027
24.
 Beijing
Zhijingling
PRC 42 13754030 April 13, 2035
25.
 Beijing
Zhijingling
PRC 9 13753870 March 6, 2035
26.
 Beijing
Zhijingling
PRC 41 13753947 April 13, 2035
27.
 BrainAurora
Zhejiang
PRC 44 61293076 June 13, 2032
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 1–


--- page 668 ---
No. Trademark Owner
Place of
Registration Class
Registration
Number Expiry Date
28.
 BrainAurora
Zhejiang
PRC 9, 10, 35, 41,
42, 44
56556043 December 13, 2031
29.
 BrainAurora
Zhejiang
PRC 10 61293098 June 20, 2032
30.
 BrainAurora
Zhejiang
PRC 42 61308956 June 20, 2032
31.
 Beijing
Zhijingling
PRC 35 57594363 January 20, 2032
32.
 BrainAurora
Zhejiang
PRC 41 68768543 September 6, 2033
33.
 BrainAurora
Zhejiang
PRC 41 68772796 September 13, 2033
34. (A)
(B)
BrainAurora
Zhejiang
Hong Kong 5, 9, 10, 35,
42
306285312 July 2, 2033
35. (A)
(B)
BrainAurora
Zhejiang
Hong Kong 5, 9, 10, 35,
42
306285321 July 2, 2033
36. (A)
(B)
BrainAurora
Zhejiang
Hong Kong 5, 9, 10, 35,
42
306285330 July 2, 2033
37.
 BrainAurora
Zhejiang
PRC 41 68768543 September 6, 2033
38.
 BrainAurora
Zhejiang
PRC 9 68771690 January 13, 2034
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-12 –


--- page 669 ---
Patents
For material patents and patent applications of our Group as of the Latest Practicable
Date, please refer to the paragraph headed “Business — Intellectual Property” for more details.
Domain Name
As of the Latest Practicable Date, we had registered the following internet domain names
which we consider to be or may be material to our business:
No. Domain Name Registered Owner
1. 66nao.cn Beijing Zhijingling
2. 66nao.com BrainAurora Zhejiang
Save as aforesaid, as of the Latest Practicable Date, there were no other trade or service
marks, patents, intellectual or industrial property rights which were material in relation to our
business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-13 –


--- page 670 ---
FURTHER INFORMATION ABOUT OUR DIRECTORS, CHIEF EXECUTIVES AND
SUBSTANTIAL SHAREHOLDERS
1. Interests and short positions of the Directors and chief executive of the Company in
the Shares, underlying Shares and debentures of our Company and our associated
corporations
The following table sets out the interests and short positions of our Directors and chief
executive of our Company as at the Latest Practicable Date and immediately following
completion of the Share Subdivision and the Global Offering (without taking into account the
Shares which may be allotted and issued pursuant to the exercise of the Over-allotment Option)
in our Shares, underlying Shares or debentures of our Company or any of our associated
corporations (within the meaning of Part XV of the SFO) which will have to be notified to us
and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interests and short positions in which they are taken or deemed to have under such provisions
of the SFO), or which will be required, pursuant to section 352 of the SFO, to be entered in
the register referred to therein, or which will be required to be notified to us and the Stock
Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed
Issuers contained in the Listing Rules, once our Shares are listed:
Interest in our Company
Name Position Nature of Interest
Number of
underlying
Shares Held
as of the date
of this
Prospectus (5)
Approximately
percentage of
shareholding as
of the date of this
Prospectus
Number of
underlying
Shares Held
upon Completion
of the Share
Subdivision and the
Global Offering (5)
Approximately
percentage of
shareholding
upon Completion
of the Share
Subdivision and the
Global Offering
(%)
Mr. Tan (1) Executive Director,
chairman of the Board,
and chief strategy officer
of the Company
Interest in controlled
corporation
275,468(L) 25.38 275,468,000(L) 21.75
Interest held through
voting powers
entrusted by other
persons
99,104(L) 9.13 99,104,000(L) 7.83
Beneficial owner 27,129(L) 2.50 27,129,000(L) 2.14
Dr. Wang
(2) Executive Director, CEO
and chief research
officer of the Company
Interest in controlled
corporation
183,955(L) 16.95 183,955,000(L) 14.53
Beneficial owner 26,946(L) 2.48 26,946,000(L) 2.13
Mr. Deng Feng
(3) Non-executive Director Interest in controlled
corporation
126,854(L) 11.69 126,854,000(L) 10.02
Ms. Li Mingqiu (4) Non-executive Director Interest in controlled
corporation
123,527(L) 11.38 123,527,000(L) 9.76
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-14 –


--- page 671 ---
Notes:
1. As at the date of this Prospectus, Mr. Tan is interested in (i) 275,468 Shares held by ZTan Limited, his
controlled corporation, and (ii) a total of 99,104 Shares held by Healthblooming Limited through voting
powers entrusted by Healthblooming Limited. See section headed “Substantial Shareholders” for details.
As of the date of this Prospectus, Mr. Tan was granted 27,129 Awarded Shares (to be adjusted to 27,129,000
Shares pursuant to Share Subdivision) under the Pre-IPO Share Award Scheme. See “— Pre-IPO Share Award
Scheme” below for details.
2. As at the date of this Prospectus, Dr. Wang is interested in a total of 183,955 Shares (to be adjusted to
183,955,000 Shares pursuant to the Share Subdivision) held by Wispirits Limited, Wiseforward Limited and
Neurobright Limited, his controlled corporations. See section headed “Substantial Shareholders” for details.
As of the date of this Prospectus, Dr. Wang was granted Awards to acquire 26,946 Shares (to be adjusted to
26,946,000 Shares pursuant to Share Subdivision) under the Pre-IPO Share Award Scheme. See “— Pre-IPO
Share Award Scheme” below for details.
3. As at the Latest Practicable Date, Mr. Deng Feng is interested in 126,854 Shares (to be adjusted to 126,854,000
Shares pursuant to the Share Subdivision) held by Northern Light Strategic Fund IV L.P ., Northern Light
V enture Fund IV L.P . and Northern Light Partners Fund IV L.P .. See section headed “Substantial Shareholders”
for details.
4. As at the Latest Practicable Date, Ms. Li Mingqiu is interested in 123,527 Shares (to be adjusted to
123,527,000 Shares pursuant to the Share Subdivision) held by Crusky Limited. See section headed
“Substantial Shareholders” for details.
5. The letter ‘‘L’’ denotes the person’s long position in the Shares.
Interest in associated corporations
Name Nature of Interest
Associated
corporations
Amount of
registered
capital/shares
held
Approximate
percentage of
interest in the
associated
corporation
(%)
Mr. Tan Beneficial owner Beijing Yihui
Technology Co.
Ltd. (Ҧ
ʮ̡)( “ Beijing
Yihui ”)
RMB385,936
registered capital
0.76
Dr. Wang Beneficial owner Beijing Yihui RMB142,712
registered capital
0.28
Interest in controlled
corporation
Beijing Yihui RMB98,021
registered
capital
(1)
0.19
Ms. Li Mingqiu Interest in controlled
corporation
Beijing Yihui RMB161,653
registered
capital (2)
0.32
Notes:
1. Shuhui LP and Zhipan LP are limited partnerships whose general partner is Liuhui Biotech, which is wholly
owned by Dr. Wang. Therefore, Dr. Wang is deemed to be interested in RMB39,782 and RMB58,239 registered
capital of Beijing Yihui held by Shuhui LP and Zhipan LP respectively.
2. Tianjin Tianjian Medical Technology Co. Ltd. (ʮ̡)( “ Tianjin Tianjian ”) is wholly
owned by Ms. Li Mingqiu. Therefore, Ms. Li Mingqiu is deemed to be interested in RMB161,653 registered
capital of Beijing Yihui held by Tianjin Tianjian.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-15 –


--- page 672 ---
2. Interests of the substantial shareholders in the Shares of our Company and our
associated corporations
Interest in our Company
Save as disclosed in the section headed “Substantial Shareholders,” immediately
following the completion of the Share Subdivision and the Global Offering and without taking
into account any Shares which may be allotted and issued pursuant to the exercise of the
Over-allotment Option, our Directors are not aware of any other person (not being a Director
or chief executive of our Company) who will have an interest or short position in the Shares
or the underlying Shares which would fall to be disclosed to us and the Stock Exchange under
the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly,
interested in 10% or more of the issued voting shares of our Company.
Interest in Members of our Group
The following table sets out the interests and short positions of the persons who will,
immediately following completion of the Global Offering, directly or indirectly be interested
in 10% or more of the nominal value of any class of share capital carrying rights to vote in all
circumstances at general meetings of any other member of our Group.
Name Nature of Interest
Name of member
of our Group
Amount of
registered
capital held
Approximate
percentage of
interest in the
member of our
Group
(RMB) (%)
Shenyang Y ouyang Future
Technology Co., Ltd. ( ᓨජᎴජ͊
ʮ̡)(1)
Beneficial owner Brain Aurora Medical
Technology
(Liaoning) Co., Ltd.
(Ҧ
(፱ྐྵ)ʮ̡)
(“BrainAurora
Liaoning ”)
(1)
150,000 15
Wang Ningning ( ˮྐྵྐྵ)(1) Interest in controlled
corporation
BrainAurora
Liaoning (1)
150,000 15
Zhang Zhiwei ( ੵқਃ)(2) Beneficial owner Brain Aurora Medical
Technology (Shaanxi)
Co., Ltd. ( ໘ਗ฽Έ
Ҧ(৯Г)ࠢ
ʮ̡)
(2)
200,000 20
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


--- page 673 ---
Name Nature of Interest
Name of member
of our Group
Amount of
registered
capital held
Approximate
percentage of
interest in the
member of our
Group
(RMB) (%)
Beijing Ruian Enzhuo
Biotechnology Co., Ltd. ( ̏ԯ๿
ʮ̡)(3)
Beneficial owner Beijing Wanxiang
Aurora Technology
Co., Ltd.(฽
ʮ
̡)(“Wanxiang
Aurora ”)
(3)
300,000 30
Beijing Fanhai Wanxiang
Technology Co., Ltd. (ऎຬ
ʮ̡)(3)
Interest in controlled
corporation
Wanxiang Aurora (3) 300,000 30
Li Deming ( ҽᅃΤ)(3) Interest in controlled
corporation
Wanxiang Aurora (3) 300,000 30
Chengdu Kerui Dite Enterprise
Management Co., Ltd. ( ϓேд๿
ʮ̡)(4)
Beneficial owner Sichuan Huiyu Aurora
Medical Technology
Co., Ltd. ( ̬ʇᅆᚑ
ʮ
̡)( “ Sichuan
Huiyu ”)
(4)
200,000 20
Cao Jiaxuan (܁࢕4) Interest in controlled
corporation
Sichuan Huiyu (4) 200,000 20
Wang Xiumin ( ˮӸઽ)(4) Interest in controlled
corporation
Sichuan Huiyu (4) 200,000 20
Beijing Anyi Huidong Medical
Technology Co., Ltd. ( ̏ԯτᔼි
ʮ̡)(5)
Beneficial owner Hongze Technology (5) 428,600 30
Shoudu Huizhi Medical Technology
Outcome Transformation Academy
(Ӻ
৫)
(5)
Interest in controlled
corporation
Hongze Technology (5) 428,600 30
Notes:
1. As of the date of this Prospectus, BrainAurora Liaoning is owned as to (i) 85% by Beijing Zhijingling, an
indirectly wholly-owned subsidiary of the Company, and (ii) 15% by Shenyang Y ouyang Future Technology
Co., Ltd. (ʮ̡), which is controlled by Wang Ningning ( ˮྐྵྐྵ). To the best
knowledge of our Directors, each of Shenyang Y ouyang Future Technology Co., Ltd. and Wang Ningning is
an Independent Third Party and not a connected person at the subsidiary level, taking into account that
BrainAurora Liaoning is an insignificant subsidiary for the purpose of Rule 14A.09 of the Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-17 –


--- page 674 ---
2. As of the date of this Prospectus, BrainAurora Shaanxi is owned as to (i) 80% by Beijing Zhijingling, an
indirectly wholly-owned subsidiary of the Company, and (ii) 20% by Zhang Zhiwei ( ੵқਃ). To the best
knowledge of our Directors, Zhang Zhiwei is an Independent Third Party, and not a connected person at the
subsidiary level, taking into account that BrainAurora Shaanxi is an insignificant subsidiary for the purpose
of Rule 14A.09 of the Listing Rules.
3. As of the date of this Prospectus, Wanxiang Aurora is owned as to (i) 70% by Beijing Zhijingling, an indirectly
wholly-owned subsidiary of the Company, and (ii) 30% by Beijing Ruian Enzhuo Biotechnology Co., Ltd. ( ̏
ʮ̡), which is wholly owned by Beijing Fanhai Wanxiang Technology Co., Ltd. ( ̏
ʮ̡), and thus in turn controlled by Li Deming ( ҽᅃΤ). To the best knowledge of our
Directors, each of Beijing Ruian Enzhuo Biotechnology Co., Ltd. and Li Deming is an Independent Third
Party, and not a connected person at the subsidiary level, taking into account that Wanxiang Aurora is an
insignificant subsidiary for the purpose of Rule 14A.09 of the Listing Rules.
4. Sichuan Huiyu is a limited liability company established in the PRC on May 22, 2023. As of the date of this
Prospectus, it is owned as to (i) 80% by Beijing Zhijingling, an indirectly wholly-owned subsidiary of the
Company, and (ii) 20% by Chengdu Kerui Dite Enterprise Management Co., Ltd. (तΆุ၍ଣϞ
ʮ̡), a company owned as to 50% and 50% by Cao Jiaxuan (܁࢕and Wang Xiumin ( ˮӸઽ)
respectively. To the best knowledge of our Directors, each of Chengdu Kerui Dite Enterprise Management Co.,
Ltd., Cao Jiaxuan and Wang Xiumin is an Independent Third Party, taking consideration that Sichuan Huiyu
is an insignificant subsidiary for purpose of Rule 14A.09 of the Listing Rules.
5. As of the date of this Prospectus, Hongze Technology is owned as to approximately (i) 70% by Beijing
Zhijingling, an indirectly wholly-owned subsidiary of the Company, and (ii) 30% by Beijing Anyi Huidong
Medical Technology Co., Ltd. (ʮ̡), which is wholly owned by Shoudu Huizhi
Medical Technology Outcome Transformation Academy (Ӻ৫), a social institute
under the authority of Beijing Municipal Health Commission, a PRC government body. To the best knowledge
of our Directors, Shoudu Huizhi Medical Technology Outcome Transformation Academy and its ultimate
beneficial owner is an Independent Third Party, and not a connected person at the subsidiary level, taking into
account that Hongze Technology is an insignificant subsidiary for the purpose of Rule 14A.09 of the Listing
Rules.
3. Directors’ Service Contracts and Letters of Appointment
Each of Mr. Tan and Dr. Wang, being our executive Directors, has entered into a service
contract with us for an initial term of three years commencing from the Listing Date, which
may be terminated by not less than 30 days’ notice in writing served by either the executive
Director or our Company.
Each of Mr. Deng Feng, Mr. Li Sirui and Ms. Li Mingqiu, been our non-executive
Directors, has entered into a service contract with us for an initial term of three years
commencing from the Listing Date, which may be terminated by not less than 30 days’ notice
in writing served by either the executive Director or our Company.
Each of Mr. Lam Yiu Por, Dr. Duan Tao and Mr. Li Y uezhong, being our independent
non-executive Directors, has entered into a letter of appointment with us for an initial term of
three years commencing from the Listing Date, which may be terminated by not less than 30
days’ notice in writing served by either the independent non-executive Director or our
Company.
Save as disclosed above, none of our Directors has entered, or has proposed to enter, a
service contract with any member of our Group (other than contracts expiring or determinable
by the employer within one year without the payment of compensation (other than statutory
compensation)).
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-18 –


--- page 675 ---
4. Director’s Remuneration
Save as disclosed in “Directors and Senior Management” and “Appendix I – Accountants’
Report – Notes to The Historical Financial Information – 12. Directors’, and Chief Executive’s
Emoluments” for the three financial years ended December 31, 2023, and the six months ended
June 30, 2024, none of our Directors received other remunerations or benefits in kind from us.
5. Disclaimers
Save as disclosed in this Prospectus:
(a) there are no existing or proposed service contracts (excluding contracts expiring or
determinable by the employer within one year without payment of compensation
(other than statutory compensation)) between the Directors and any member of the
Group;
(b) none of the Directors or the experts named in the section headed “– Other
Information – Qualifications and Consents of Experts” below has any direct or
indirect interest in the promotion of, or in any assets which have been, within the
two years immediately preceding the date of this Prospectus, acquired or disposed
of by or leased to any member of the Group, or are proposed to be acquired or
disposed of by or leased to any member of the Group;
(c) no commissions, discounts, brokerages or other special terms have been granted in
connection with the issue or sale of any Shares in or debentures of the Company
within the two years ended on the date of this Prospectus;
(d) none of the Directors is materially interested in any contract or arrangement
subsisting at the date of this Prospectus which is significant in relation to the
business of the Group taken as a whole;
(e) taking no account of any Shares which may be allotted and issued pursuant to the
exercise of the Over-allotment Option, so far as is known to any Director or chief
executive of the Company, no other person (other than a Director or chief executive
of the Company) will, immediately following completion of the Share Subdivision
and the Global Offering, have interests or short positions in the Shares and
underlying Shares which would fall to be disclosed to the Company and the Stock
Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or (not
being a member of the Group), be interested, directly or indirectly, in 10% or more
of the nominal value of any class of share capital carrying rights to vote in all
circumstances at general meetings of any member of the Group; and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-19 –


--- page 676 ---
(f) none of the Directors or chief executive of the Company has any interests or short
positions in the Shares, underlying shares or debentures of the Company or its
associated corporations (within the meaning of Part XV of the SFO) which will have
to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and
8 of Part XV of the SFO (including interests and short positions which he is taken
or deemed to have under such provisions of the SFO) or which will be required,
pursuant to section 352 of the SFO, to be entered into the register referred to therein,
or will be required, pursuant to the Model Code for Securities Transaction by
Directors of Listed Issuers, to be notified to the Company and the Stock Exchange
once the Shares are listed thereon.
PRE-IPO SHARE A W ARD SCHEME
As of the date of this Prospectus, awards granted under the Pre-IPO Share Award Scheme
(the “ Award(s) ”) representing 85,166 Shares (to be adjusted to 85,166,000 pursuant to the
Share Subdivision) under the Pre-IPO Share Award Scheme have been granted. Accordingly,
85,166 Shares (to be adjusted to 85,166,000 pursuant to the Share Subdivision) were allotted
and issued to Wisdomspirit Holding Limited to hold on behalf of the specified participants. All
Awarded Shares available for grant have been granted to specific individuals under the Pre-IPO
Share Award Scheme, and no further grant will be made under the Pre-IPO Share Award
Scheme after the Listing. Pursuant to Rule 17.02(1)(b) of the Listing Rules, the Pre-IPO Share
Award Scheme does not need to be approved by the Shareholders after Listing. In addition,
given the Pre-IPO Share Award Scheme will not involve the grant of new Shares or Awards
over new Shares after Listing and given all material terms of the Pre-IPO Share Award Scheme
have been clearly set out in this Prospectus, the Awards granted to specified participants before
Listing as set out above may continue to be valid after Listing (subject to the Stock Exchange
granting approval for Listing of the Shares in respect of such Awards).
The following is a summary of the principle terms of the Pre-IPO Share Award Scheme,
which was adopted by the Company and took effect on July 30, 2023 (the “ Adoption Date ”).
(a) Purpose
The specific objectives of the Pre-IPO Share Award Scheme aims to (i) recognise and
reward the contributions of certain eligible employees of the Group; and (ii) incentivize them
for their future contribution to the continual operation and development of the Company.
(b) Eligibility
Any individual(s) being an employee (including without limitation any executive
director) (other than any employee(s) who is resident in a place where the grant of the Awards
and/or the vesting and transfer of the Awards pursuant to the terms of the Pre-IPO Share Award
Scheme is not permitted under the laws or regulations of such place or where in the view of
the Board, compliance with applicable laws or regulations in such place makes it necessary or
expedient to exclude such employee (the “ Excluded Employee ”)) of any member of the Group
at any time during the trust period.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-20 –


--- page 677 ---
(c) Duration
Subject to any early termination as may be determined by the Board, the Pre-IPO Share
Award Scheme shall be valid and effective for a term of ten (10) years commencing on the
Adoption Date.
(d) Maximum number of Shares
Under the Pre-IPO Share Award Scheme, the maximum number of Awards that may be
granted under the Pre-IPO Share Award Scheme in aggregate (excluding the Awards that have
lapsed or been cancelled in accordance with the rules of the Pre-IPO Share Award Scheme)
shall be 85,166 Shares (to be adjusted to 85,166,000 pursuant to the Share Subdivision), held
or to be held by Wisdomspirit Holding Limited (the “ HoldCo ”) for the purpose of the Pre-IPO
Share Award Scheme representing 6.73% of the total share capital of the Company upon the
completion of the Share Subdivision and the Global Offering, assuming the Over-allotment
Option is not exercised.
(e) Administration
The Pre-IPO Share Award Scheme shall be subject to the administration of the Board in
accordance with the rules of the Pre-IPO Share Award Scheme. The Board will make all
determination in relation to the Pre-IPO Share Award Scheme. The Board may delegate the
authority to administer this Pre-IPO Share Award Scheme to any committee thereof or any third
party duly appointed thereby, including without limitation third party service providers and
professional trustees (collectively, the “ Authorized Administrators ”). Any decision of the
Board with respect to any matter arising under the Pre-IPO Share Award Scheme (including the
interpretation of any provision) shall be final and binding on all parties.
(f) Price
Subject to the provisions of the Pre-IPO Share Award Scheme, the Board may, from time
to time, at its absolute discretion select any employee (other than any Excluded Employee) for
participation in the Pre-IPO Share Award Scheme as a selected employee (the “ Selected
Employee ”), and grant such number of Awards to any Selected Employee at a consideration as
the Board may determine from time to time and in such number and on and subject to such
terms and conditions as it may in its absolute discretion determine.
(g) Vesting
Unless the Board determines otherwise, the Awards shall be vested according to the
following schedule (the “ Vesting Schedule ”):
(i) 30% of such Awards shall be vested on the date of the first anniversary of the
Listing;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-21 –


--- page 678 ---
(ii) 30% of such Awards shall be vested on the date of the second anniversary of the
Listing; and
(iii) 40% of such Awards shall be vested on the date of the third anniversary of the
Listing.
Upon the vesting of the Awards, (i) the Board may decide at its absolute discretion to send
the Selected Employees (with a copy to the Trident Trust Company (HK) Limited (the
“Trustee ”)), within a reasonable time, a vesting notice (the “ Vesting Notice ”) together with
such prescribed transfer documents which require the Selected Employee to execute to effect
the vesting and transfer of the Awards and, if applicable, the cash or non-cash income,
dividends or distributions and/or the sale proceeds of non-cash and non-scrip distributions in
respect of those the Shares underlying the Awards, as the case may be, subject to the Selected
Employees paying all tax, stamp duty, levies and charges applicable to such transfer to the
Trustee or as the Trustee directs and complying with all the applicable laws and regulations.
The Selected Employees shall be responsible for conducting all necessary filings, registration
or other administrative proceedings as required by applicable laws, rules or regulations,
including but not limited to foreign exchange registration, for their obtaining of the Awards;
(ii) upon receipt of the V esting Notice, the Selected Employee (or his legal representative or
lawful successor, as the case may be) is required to return to the Board the reply slip attached
to the V esting Notice to confirm the securities account details, together with the relevant duly
signed transfer documents. In the event that the Board does not receive the reply slip and the
transfer form from the Selected Employee within the period stipulated in the V esting Notice,
the Awards which would have otherwise vested in such Selected Employee shall be
automatically forfeited and remain as part of the trust fund and be held by the Trustee or
HoldCo. The Trustee may, under the Board’s instructions re-allocate or procure the HoldCo to
re-allocate such Shares underlying the Awards granted to other Selected Employees, or in case
no other Selected Employees can be identified, reallocate such Shares underlying the Awards
granted to any other person designated by the Company; and (iii) subject to the receipt by the
Trustee of (a) the reply slip to the V esting Notice and transfer documents prescribed by the
Trustee and duly signed by the Selected Employee within the period stipulated in the V esting
Notice, (b) a confirmation from the Board that all vesting conditions having been fulfilled, and
(c) certified copies of the identification documents of the Selected Employee and/or the special
purpose vehicle wholly owned by the Employee(s) established for the purpose of holding the
Awards (the “ SPV”) at least ten (10) business days prior to the V esting Date, the Trustee shall
or procure the HoldCo to transfer the relevant Awards to the relevant Selected Employee or the
SPV as designated by the Selected Employee as soon as practicable on or after the V esting Date
and in any event not later than ten (10) business days after the V esting Date.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-22 –


--- page 679 ---
The Board may at its discretion, with or without further conditions, grant additional
Shares out of the trust fund (including but not limited to the cash or non-cash income,
dividends or distributions and/or the cash income or net proceeds of sale of non-cash and
non-scrip distribution) declared by the Company or derived from such Shares underlying the
Awards granted during the period from the grant date to the V esting Date to a Selected
Employee upon the vesting of any Awards. In such case the Board shall deliver a grant notice
to the Selected Employee and the Trustee specifying the number of additional Shares and cash
amount to be granted to the Selected Employee. The Trustee shall or shall procure the HoldCo
to transfer the specified number of additional Shares, together with the Shares underlying the
Awards granted, to the Selected Employee or the SPV as designated by the Selected Employee
on the V esting Date.
The Board and/or the Authorised Administrator have absolute discretion in determining
whether the vesting conditions applicable to a Selected Employee are satisfied. The vesting
conditions include but not limited to: (i) the Selected Employee shall remain an employee of
the Group on the relevant vesting dates; (ii) there shall be no occurrence of any triggering
events for the surrender of the Awards; and (iii) the Selected Employee and his associate(s)
shall not be employed by or operate or invest in any entity, during the period from the grant
date to the relevant V esting Dates, the business of which competes with the core business of
the Group.
(h) Disqualification of Selected Employee
In the event that prior to or on the V esting Date, a Selected Employee is found to be an
Excluded Employee or is deemed to cease to be an Employee, the relevant grant made to such
Selected Employee shall automatically lapse forthwith and the relevant Awards shall not vest
on the relevant V esting Date but shall remain part of the trust fund and be held by the Trustee
or the HoldCo.
Unless the Board determines otherwise, the unvested Awards will be deemed to have been
surrendered by a Selected Employee upon the occurrence of any of the following events: (i)
termination of employment with or without any cause; (ii) unsatisfactory performance leading
to demotion; (iii) failure to meet performance appraisal rating for the previous year according
to the performance appraisal rating policy of the Company (as amended from time to time); (iv)
no renewal of the employment contract upon the expiration; or (v) any other event to be
determined by the Board.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-23 –


--- page 680 ---
(i) Voting Rights
A Selected Employee shall not have the voting rights or any interest or rights (including
the right to receive dividends or other distributions) in respect of the Awards prior to the
V esting Date. The Trustee shall not exercise the voting rights in respect of any Shares held by
it under the Trust.
(j) Awards Granted
As of the date of this Prospectus, our Company had granted Awards under the Pre-IPO
Share Award Scheme to 46 grantees (including Directors, members of the senior management,
and other grantees of our Group), to subscribe for an aggregate of 85,166 Shares (to be adjusted
to 85,166,000 pursuant to the Share Subdivision), representing approximately 6.73% in the
total number of Shares in issue immediately after completion of the Share Subdivision and the
Global Offering (assuming the Over-allotment option is not exercised). Among the Awards
granted, two of our Directors, who are also members of our senior management (Mr. Tan and
Dr. Wang) were granted Awards to subscribe for 54,075 Shares (to be adjusted to 54,075,000
pursuant to the Share Subdivision), three other members of senior management (Mr. Cai
Longjun, Mr. Wang Junjie and Mr. Lai Zhiyuan, who are not connected persons of the
Company) were granted Awards to subscribe for 15,163 Shares (to be adjusted to
15,163,000 pursuant to the Share Subdivision), and 41 other employees of our Group who are
not Directors, members of senior management or connected persons of the Company were
granted Awards to subscribe for 15,928 Shares (to be adjusted to 15,928,000 pursuant to the
Share Subdivision). As of the date of this Prospectus, no Awards have been vested.
There will be no further dilution effect to the shareholding of our Shareholders upon full
vesting of all Awards upon completion of the Share Subdivision and the Global Offering,
because all Shares underlying the Awards granted have been issued to Wisdomspirit Holding
Limited to hold on behalf and for the benefit of the specified grantees thereunder. See “History,
Reorganization and Corporate Structure — Pre-IPO Share Award Scheme” for details.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-24 –


--- page 681 ---
Below is a full list of the grantees of the Awards under the Pre-IPO Share Award Scheme:
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Directors
Tan Zheng
(ᗈ፾)
1801, Unit 2,
18th Floor,
Building 6, No. 3,
Wangjing East
Garden, Chaoyang
District, Beijing,
China
Chairman of the
Board, executive
Director,
and chief strategy
officer
July 31, 2023 Note 2 27,129 27,129,000 2.14%
Wang Xiaoyi
(׋)
304, 3/F,
Building 7,
Sunny View,
No. 23 Huangsi
Street, Xicheng
District, Beijing,
China
Executive Director,
CEO and chief
research officer
July 31, 2023 Note 2 26,946 26,946,000 2.13%
Subtotal of
Directors – – – – 54,075 54,075,000 4.27%
Members of Senior Management (excluding Mr. Tan and Dr. Wang)
Cai Longjun
(ࠏ)
402, Gate 1,
No. 12 Building,
Zhongli,
Baiwanzhuang,
Xicheng District,
Beijing, China
Chief technology
officer and chief
operating officer
July 31, 2023 Note 2 12,631 12,631,000 1.00%
Wang Junjie
(௫)
1-3-804, No. 1
Courtyard,
Tianying Road,
Chaoyang District,
Beijing, China
CFO July 31, 2023 Note 2 1,266 1,266,000 0.10%
Lai Zhiyuan
(Ⴣ)
2004, Building 1,
Huishi Xinyuan,
Guangcai Road,
Fengtai District,
Beijing, China
Vice president of
market and
operation
July 31, 2023 Note 2 1,266 1,266,000 0.10%
Subtotal of
Members
of Senior
Management
(excluding
Mr. Tan
and Dr.
Wang) – – – – 15,163 15,163,000 1.20%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-25 –


--- page 682 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
41 Other Employees
Li Tianyou
(ҽ˂С)
Room 704, Unit 2,
Block 8, Duying
Neighborhood,
Sunshine Jubao
Villa, No. 88
Xuanwu Avenue
(Xuanwu Lake
Street), Xuanwu
District, Nanjing,
Jiangsu Province,
China
Head of Operations
(Divinity/
Cardiology)
July 31, 2023 Note 2 1,266 1,266,000 0.10%
Y ang
Xuewen
(เኪ˖)
Room 1802,
Unit 1, Building 1,
Jinwei Jiayuan,
No. 158 Wuling
Road, Qingyuan
Street, Tianxin
District, Changsha
City, Hunan
Province, China
Head of Changsha
Zhijingling
July 31, 2023 Note 2 1,085 1,085,000 0.09%
Ma Xiaohui
(৵ʃ̓)
502, Unit 2,
Building 14,
Jinhuiyuan Sanli,
Daxing District,
Beijing, China
Head of Children’s
Programs
July 31, 2023 Note 2 940 940,000 0.07%
Liu
Chenyang
(ᄎોජ)
1601, 16/F,
Building 5,
Runfeng Xinshang,
Tiantongyuan
South Street,
Changping District,
Beijing, China
Head of Elderly
Products
July 31, 2023 Note 2 723 723,000 0.06%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-26 –


--- page 683 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Zhang Kun
(ੵտ)
2402, Unit 2,
Building 6,
Luxin Home,
Dongxiaokou
Town, Changping
District,
Beijing, China
Chief Safety
Officer
July 31, 2023 Note 2 723 723,000 0.06%
Shen Yi ( ӏ
ɓ)
1106, Building 419,
Wangjing Xiyuan
4, Wangjing Street,
Chaoyang District,
Beijing, China
Algorithm Director July 31, 2023 Note 2 652 652,000 0.05%
Guan Song
(၍෽)
Room 202, 2/F,
Unit 1, Building 1,
Guanjingyuan,
Dongsheng
District, Haidian
District, Beijing,
China
Product Designer July 31, 2023 Note 2 543 543,000 0.04%
Liu Y anling
(ޛ)
1108, Building 3,
Urban Wangjing
Community,
Zhongguancun
Street, Haidian
District,
Beijing, China
Head of
Administration
July 31, 2023 Note 2 543 543,000 0.04%
Qing Li ( ॢ
ᘆ)
501, 5/F, Unit 7,
Building 8,
Baosheng Beili,
Haidian District,
Beijing, China
Head of Children’s
Cognitive
July 31, 2023 Note 2 543 543,000 0.04%
Bian Zhiming
(׼)
Block E 105,
Urban Y outh
Community,
Qinghe Street,
Haidian District,
Beijing, China
Head of Geriatric
Research
July 31, 2023 Note 2 543 543,000 0.04%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-27 –


--- page 684 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Zhang
Maowen
(ၲ)
701, Unit 2,
Building 4,
Meilifang,
Chaoyang District,
Beijing, China
Senior Finance
Manager
July 31, 2023 Note 2 543 543,000 0.04%
Ma Zhujiang
(৵मϪ)
No. 9, Unit 1,
Building 19,
Y ongle East
District, Babaoshan
Street, Shijingshan
District,
Beijing, China
Head of Research July 31, 2023 Note 2 543 543,000 0.04%
Tong Shuang
(ᠬᕐ)
Room 302, Unit 1,
Building 1, No. 9
Courtyard, South
Tiancun Mountain
Road, Tiancun
Street, Haidian
District,
Beijing, China
Technical Director July 31, 2023 Note 2 543 543,000 0.04%
Y e Y ongcong
(ᑋ)
1404, Unit 2,
Building 1, No. 6
Courtyard, Sanhuan
Xincheng, Xincun
Street, Fengtai
District,
Beijing, China
Head of Center
Stage
July 31, 2023 Note 2 543 543,000 0.04%
Du Xin ( Ӂ
㒥)
1305, Building 2,
Xibahe Beili,
Chaoyang District,
Beijing, China
Art Director July 31, 2023 Note 2 543 543,000 0.04%
Qi Y ujuan
(ࢇ)
2002, Building 20,
Y uhui Xili, Datun
Street, Chaoyang
District,
Beijing, China
Project Manager July 31, 2023 Note 2 543 543,000 0.04%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-28 –


--- page 685 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Huang
Jianxing
(ጳ)
Unit 402, Unit 5,
Building No. 7,
Chaoyang New
City 3, Dongba,
Chaoyang District,
Beijing, China
Planning Director July 31, 2023 Note 2 543 543,000 0.04%
Dong Ming
(׼)
Room 503,
Building 210,
Jijingqinyuan
Community,
No. 214, Nanhu
Xiyuan Jia,
Wangjing Street,
Chaoyang District,
Beijing, China
Data Director July 31, 2023 Note 2 543 543,000 0.04%
Zhou Bing
(մΏ)
Room 303, No. 55
Building,
Tiantongdongyuan
1, Tiantongyuan
South Street,
Changping District,
Beijing, China
Front-end Manager July 31, 2023 Note 2 543 543,000 0.04%
Wang Y unxia
(ˮථᒳ)
Room 1403, 14th
Floor, Building 33,
Tianzeyuan,
Chunhua Street,
Jiangning District,
Nanjing, Jiangsu
Province,
China
Data Analyst July 31, 2023 Note 2 362 362,000 0.03%
Pan
Xingliang
(ڥ)
No. 231 House,
Hebei Xinying,
Xiaojiahe,
Malianwa Street,
Haidian District,
Beijing, China
Cognitive Center
Construction
Leader
July 31, 2023 Note 2 362 362,000 0.03%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-29 –


--- page 686 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Dong Xiao
(໨ወ)
301, Unit 1,
Building 15, Fuxi
Home, Haidian
District,
Beijing, China
Operations Manager July 31, 2023 Note 2 181 181,000 0.01%
Luo Chuan
(ᖯʇ)
1302, Unit 5,
Building 16, No.
85, West
Jiancaicheng
Road, Haidian
District,
Beijing, China
Android Team
Leader
July 31, 2023 Note 2 181 181,000 0.01%
Li Guohua
(ҽ਷ശ)
602, Unit 2,
Building 26,
Baigezhuang
Xincun East Area,
Beiqijia Town,
Changping District,
Beijing, China
Test Manager July 31, 2023 Note 2 181 181,000 0.01%
Zhang Feng
(ੵไ)
Room 3-302,
Building 207,
Xiangliuyuan
Community,
Gaomidian Street,
Daxing District,
Beijing, China
Medical Device
Registration
Director
July 31, 2023 Note 2 181 181,000 0.01%
Sun Y uewen
(˖)
1404, Unit 1,
Building 6,
Xinlongcheng
Community,
Huilongguan
Street, Changping
District,
Beijing, China
Medical Program
Managers
July 31, 2023 Note 2 181 181,000 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-30 –


--- page 687 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Li Y aoyu
(ҽᘴρ)
501, Unit 4,
Building 24, No. 3,
Caoqiao Xinyuan,
Huaxiang Street,
Fengtai District,
Beijing, China
Head of Internal
Audit
July 31, 2023 Note 2 181 181,000 0.01%
Gao Wei ( ৷
ਃ)
Room 441, 4/F,
Unit 4, Building
27, JiaY unY uan 3rd
District,
Tiantongyuan
South Street,
Changping District,
Beijing, China
Backend Team
Leader
July 31, 2023 Note 2 181 181,000 0.01%
Liu Chuan
(ᄎʇ)
No.24, Taoyuan,
Taoyuan Village,
Zhaohe Town,
Fangcheng County,
Henan Province,
China
Senior Algorithm
Engineer
July 31, 2023 Note 2 181 181,000 0.01%
Li Hai ( ҽऎ) Room 806, Unit 1,
Building B, South
2nd District,
Hongfuyuan,
Zhenggezhuang
Village, Beiqijia
Town, Changping
District,
Beijing, China
Development
Engineer
July 31, 2023 Note 2 109 109,000 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-31 –


--- page 688 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Li Qingsong
(ؒڡ)
702, Unit 2,
Building 19,
Qingxiu
Shangcheng, No.25
Jingxing Street,
Nanshao Town,
Changping District,
Beijing, China
Development
Manager
July 31, 2023 Note 2 109 109,000 0.01%
Wei Mingyue
(˜)
Room 301, Unit 4,
North Building,
Jiaoshi Building,
Nanshao Town,
Changping District,
Beijing, China
Test Team Leader July 31, 2023 Note 2 109 109,000 0.01%
Cheng
Zhenzhen
(೻၄၄)
Room 1701, 17/F,
Unit 3, Building 3,
Tangjialing New
City East,
Xibeiwang Town,
Haidian District,
Beijing, China
Human Resource
Manager
July 31, 2023 Note 2 109 109,000 0.01%
Zhang
Baoyue
(ੵᘒ˜)
509, 5/F, Building
7, No. 2 Courtyard,
Haiyue
Wutongyuan,
Xisanqi Street,
Haidian District,
Beijing, China
Language Project
Leader
July 31, 2023 Note 2 109 109,000 0.01%
Li Penghuai
(ᕿ)
Room 301, Unit 6,
Building 11, No. 1,
Longboyuan,
Changping District,
Beijing, China
Data Development
Engineer
July 31, 2023 Note 2 109 109,000 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-32 –


--- page 689 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Zheng Miao
(ቍ↿)
1303, Building 4,
Jianxiangyuan
Community,
College Road
Street, Haidian
District, Beijing,
China
Dyslexia Hosting
R&D
July 31, 2023 Note 2 109 109,000 0.01%
Chang Sijia
(Գ)
A-5-Affliation 101,
Wanhe Dadi Phase
I, Pingdong Street,
Xingyi City,
Guizhou Province,
Guizhou Southbuyi
and Miao
Autonomous
Prefecture,
China
Mental Program
Leader
July 31, 2023 Note 2 109 109,000 0.01%
Tong
Chuantao
(បෂᏹ)
Room 501, Unit 3,
Building 18,
Longhuayuan
Community,
Longzeyuan Street,
Huilongguan Town,
Changping District,
Beijing, China
Project Manager July 31, 2023 Note 2 109 109,000 0.01%
Fan Guoping
(ᅾ਷̻)
803, Unit 2,
Building 4, Y ouyi
Jiayuan, Y ouyi
Road, Haidian
District, Beijing,
China
Development Team
Leader II
July 31, 2023 Note 2 109 109,000 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-33 –


--- page 690 ---
Name Address Position Date of Grant
Vesting
Period
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately before
the completion of the
Share Subdivision
and the Global
Offering
Number of
outstanding Shares
underlying the
Awards granted as of
the date of this
Prospectus and
immediately after the
completion of the
Share Subdivision
and the Global
Offering (1)
Approximately
percentage in
the issued Shares
immediately after
completion of the
Share Subdivision
and the Global
Offering (1)
Li Ruixuan
(ҽ๿⥳)
502, Unit 2, 5th
Floor, Building 13,
Longzeyuan West
District,
Huilongzeyuan
Street, Changping
District, Beijing,
China
Medical Program
Manager
July 31, 2023 Note 2 109 109,000 0.01%
Dai Tian
(Ꮦ଩)
Gaotang Village
Group, Shatang
Village, Ringshui
Township, Y uhu
District, Xiangtan
City, Hunan
Province, China
Head of
Administration
July 31, 2023 Note 2 109 109,000 0.01%
Subtotal of
41 other
employees – – – – 15,928 15,928,000 1.26%
Total – – – – 85,166 85,166,000 6.73%
Notes:
* The considerations paid for grant of the each Awarded Share and upon delivery of each Share upon vesting of
each of the Awarded Share are nil and nil, respectively.
(1) Assuming (i) the Share Subdivision and the Global Offering becomes unconditional and the Offer Shares are
issued pursuant to the Global Offering, and (ii) the Over-allotment option is not exercised.
(2) The Awarded Shares granted shall vest in the following manner:
(i) 30% of such Awarded Shares shall be vested on the date of the first anniversary of the Listing;
(ii) 30% of such Awarded Shares shall be vested on the date of the second anniversary of the Listing; and
(iii) 40% of such Awarded Shares shall be vested on the date of the third anniversary of the Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-34 –


--- page 691 ---
OTHER INFORMATION
Estate Duty
Our Directors have been advised that no material liability for estate duty is likely to
impose on our Company or any of the subsidiaries of the Company.
Litigation
As of the Latest Practicable Date, no member of our Group was involved in any litigation,
arbitration, administrative proceedings or claims of material importance, and, so far as we are
aware, no litigation, arbitration, administrative proceedings or claims of material importance
are pending or threatened against any member of our Group.
Joint Sponsors
Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors set
out in Rule 3A.07 of the Listing Rules.
CICC Healthcare Investment Fund, L.P ., an affiliate of China International Capital
Corporation Hong Kong Securities Limited, held approximately 1.79% of the Company’s
equity interest as of the Latest Practicable Date and will be interested in approximately 1.47%
of the Company’s equity interest immediately upon completion of the Share Subdivision and
the Global Offering (assuming the Over-allotment Option is not exercised). CICC Healthcare
Investment Fund, L.P . is affiliated with China International Capital Corporation Hong Kong
Securities Limited given that (i) China International Capital Corporation Hong Kong Securities
Limited is indirectly wholly owned by China International Capital Corporation Limited; and
(ii) the general manager of CICC Healthcare Investment Fund, L.P ., being CICC Healthcare
Investment Management Limited, is wholly owned by CICC Capital (Cayman) Limited, an
indirect subsidiary of China International Capital Corporation Limited. For more details of
CICC Healthcare Investment Fund, L.P ., see “History, Reorganization and Corporate Structure
– Information about our Pre-IPO Investors – CICC Healthcare”. In addition, the Pre-IPO
Investment made by CICC Healthcare is not related to or a pre-requisite for the engagement
of China International Capital Corporation Hong Kong Securities Limited as one of the Joint
Sponsors for the proposed listing of the Company, and the Joint Sponsors, to their best
knowledge and belief, consider that the Pre-IPO Investment made by the CICC Healthcare has
no actual or perceived influence on the independence of China International Capital
Corporation Hong Kong Securities Limited as a sponsor for the proposed listing of the
Company. Therefore, China International Capital Corporation Hong Kong Securities Limited
confirms that it satisfies the independence criteria applicable to sponsors set out in Rule 3A.07
of the Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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The Joint Sponsors have made an application on our Company’s behalf to the Listing
Committee of the Stock Exchange for the granting of the approval for the listing of, and
permission to deal in, all the Shares in issue and to be issued as mentioned in this Prospectus.
All necessary arrangements have been made for the Shares to be admitted into CCASS.
The Joint Sponsors will receive an aggregate fee of US$1,000,000 for acting as the
sponsors for the Listing.
Preliminary Expenses
As of the Latest Practicable Date, our Company has not incurred any material preliminary
expenses.
No Material Adverse Change
Our Directors confirm that up to the date of this Prospectus, there has been no material
adverse change in our financial, operational or trading positions or prospects since June 30,
2024, being the end of the period reported on as set out in the Accountants’ Report included
in Appendix I to this Prospectus.
Promoter
Our Company has no promoter for the purpose of the Listing. Within the two years
preceding the date of this Prospectus, no cash, securities or other benefit has been paid, allotted
or given or is proposed to be paid, allotted or given to any promoter in connection with the
Global Offering and the related transactions described in this Prospectus.
Taxation of holders of Shares
Hong Kong
The sale, purchase and transfer of Shares registered with our Company’s Hong Kong
branch register of members will be subject to Hong Kong stamp duty, the current rate charged
on each of the purchaser and seller is 0.1% of the consideration or, if higher, the fair value of
the Shares being sold or transferred. Profits from dealings in the Shares arising in or derived
from Hong Kong may also be subject to Hong Kong profits tax.
Cayman Islands
Under the present Cayman Islands law, there is no stamp duty payable in the Cayman
Islands on transfer of Shares save for those which hold interest in land in the Cayman Islands.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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Consultation with professional advisers
Intending holders of the Shares are recommended to consult their professional advisers if
they are in doubt as to the taxation implications of holding or disposing of or dealing in the
Shares. It is emphasized that none of our Company, our Directors or the other parties involved
in the Global Offering can accept responsibility for any tax effect on, or liabilities of, holders
of Shares resulting from their holding or disposal of or dealing in Shares or exercise of any
rights attaching to them.
Qualifications and Consents of Experts
The following are the qualifications of the experts who have given opinions or advice
which are contained in this Prospectus:
Name Qualification
China International Capital
Corporation Hong Kong
Securities Limited
A licensed corporation to conduct Type 1 (dealing
in securities), Type 2 (dealing in futures contracts),
Type 4 (advising on securities), Type 5 (advising
on futures contracts) and Type 6 (advising on
corporate finance) regulated activities under the
SFO
SPDB International Capital
Limited
A licensed corporation to conduct Type 1 (dealing
in securities) and Type 6 (advising on corporate
finance) regulated activities as defined under the
SFO
Commerce & Finance Law Offices Legal advisers to our Company as to PRC law
Walkers (Hong Kong) Legal advisers to our Company as to Cayman
Islands law
Deloitte Touche Tohmatsu Certified Public Accountants under Professional
Accountant Ordinance (Chapter 50 of the Laws of
Hong Kong) and Registered Public Interest Entity
Auditor under Accounting and Financial Reporting
Council Ordinance (Chapter 588 of the Laws of
Hong Kong)
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Industry consultant
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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Each of the experts named above has given and has not withdrawn its consent to the issue
of this Prospectus with the inclusion of its report, letter, summary of valuations, valuation
certificates and/or legal opinion (as the case may be) and references to its name included in the
form and context in which it respectively appears.
Binding Effect
This Prospectus shall have the effect, if any application is made pursuant hereto, of
rendering all persons concerned bound by all the provisions (other than the penal provisions)
of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance so far as applicable.
Bilingual Prospectus
The English language and Chinese language versions of this Prospectus are being
published separately, in reliance upon the exemption provided by section 4 of the Companies
Ordinance (Exemption of Companies and Prospectuses from Compliance with Provisions)
Notice (Chapter 32L of the Laws of Hong Kong). In case of any discrepancies between the
English language version and Chinese language version of this Prospectus, the English
language version shall prevail.
Miscellaneous
Save as disclosed in this Prospectus:
(a) within the two years preceding the date of this Prospectus, no share or loan capital
of the Company or any of its subsidiaries has been issued or has been agreed to be
issued fully or partly paid either for cash or for a consideration other than cash;
(b) no share or loan capital of the Company or any of its subsidiaries is under option or
is agreed conditionally or unconditionally to be put under option;
(c) no founder, management or deferred shares of the Company or any of its subsidiaries
have been issued or have been agreed to be issued;
(d) none of our Directors or experts referred to in the paragraph headed “Other
Information – Qualifications and consents of experts” in this section has any direct
or indirect interest in the promotion of us, or in any assets which have within the two
years immediately preceding the date of this Prospectus been acquired or disposed
of by or leased to any member of our Group, or are proposed to be acquired or
disposed of by or leased to any member of our Group;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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(e) none of our Directors or experts referred to in the paragraph headed “Other
Information – Qualifications and consents of experts” in this section is materially
interested in any contract or arrangement subsisting at the date of this Prospectus
which is significant in relation to the business of our Group taken as a whole;
(f) none of the equity and debt securities of the Company is listed or dealt in on any
stock exchange (other than the Stock Exchange) nor is any listing or permission to
deal being or proposed to be sought;
(g) the Group has no outstanding convertible debt securities or debentures;
(h) within the two years preceding the date of this Prospectus, no commissions,
discounts, brokerages or other special terms have been granted in connection with
the issue or sale of any capital of any member of our Group;
(i) within the two years preceding the date of this Prospectus, no commission has been
paid or is payable (except commissions to sub-underwriters) for subscribing or
agreeing to subscribe, or procuring or agreeing to procure the subscriptions, for any
Shares in our Company;
(j) there is no arrangement under which future dividends are waived or agreed to be
waived; and
(k) there has not been any interruption in the business of the Group which may have or
has had a significant effect on the financial position of the Group in the 12 months
preceding the date of this Prospectus.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to the copy of this document delivered to the Registrar of
Companies in Hong Kong for registration were, among other documents:
(a) the written consents referred to in the section headed “Appendix IV – Statutory and
General Information – Other Information – Qualifications and Consent of Experts”;
and
(b) a copy of each of the material contracts referred to in the section headed “Appendix
IV – Statutory and General Information – Further Information about our Business –
Summary of Material Contracts.”
DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be available on display on the Company’s website
(66nao.cn ) and the Stock Exchange’s website ( https://www.hkexnews.hk ) up to and including
the date which is 14 days from the date of this Prospectus:
(a) the Memorandum and Articles of Association of our Company;
(b) the audited consolidated financial statements of our Company for the three financial
years ended December 31, 2023 and the six months ended June 30, 2024;
(c) the Accountants’ Report from Deloitte Touche Tohmatsu, the text of which is set out
in Appendix I;
(d) the report on the unaudited pro forma financial information from Deloitte Touche
Tohmatsu, the text of which is set out in Appendix II;
(e) the legal opinion issued by Commerce & Finance Law Offices, our PRC Legal
Advisor in respect of general matters and property interests of our Group in the
PRC;
(f) the letter of advice from Walkers (Hong Kong), our legal adviser as to the law of the
Cayman Islands, summarizing certain aspects of the Cayman Companies Act
referred to in Appendix III;
(g) the report issued by Frost & Sullivan, a summary of which is set forth in the section
headed “Industry Overview”;
(h) the material contracts referred to in the section entitled “Appendix IV – Statutory
and general information – Further Information about Our Business – Summary of
Material Contracts”;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
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(i) the written consents referred to in the section entitled “Appendix IV – Statutory and
General Information – Other Information – Qualification and Consents of Experts”;
(j) the service contracts and the letters of appointment with our Directors referred to in
the section headed “Appendix IV – Statutory and general information – Further
Information about our Directors, Chief Executives and Substantial Shareholders – 3.
Director’s Service Contracts and Letters of Appointment”;
(k) the terms of the Pre-IPO Share Award Scheme; and
(l) the Cayman Companies Act.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
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BrainAurora Medical Technology Limited
腦動極光醫療科技有限公司
