Park Ha Biological Technology (BYAH) Registration Filing summary

Company overview and business model

• Operates as a Cayman Islands holding company with all business activities conducted through subsidiaries in China, specializing in skincare and cosmetic products under a proprietary brand and a franchise model.

• Revenue streams include direct product sales and franchise fees, with a network of directly operated and franchise stores across multiple Chinese provinces.

• Franchise system is divided into three tiers: regional stores, skin management centers, and single stores, each with distinct annual fees and incentives.

• R&D is conducted in-house and in partnership with Jiangnan University, focusing on new product development and proprietary formulations.

Financial performance and metrics

• FY2023 revenue was $2.46M, up 28% from FY2022, driven by a 93% increase in franchise fees; net income rose to $852K from $191K.

• For the six months ended April 30, 2024, revenue declined 38% year-over-year to $853K, with net income dropping 90% to $49K, mainly due to a reduction in franchisees and franchise fees.

• Gross profit margin for FY2023 was 87%, with franchise fees accounting for 74% of revenue; product sales to franchisees and non-franchisees made up the remainder.

• Cash balance as of April 30, 2024 was $932K, with working capital supported by operating cash flows and shareholder contributions.

Use of proceeds and capital allocation

• 50% of IPO proceeds will be used to expand directly owned stores in China, 20% for acquiring product patents, and 30% for acquiring ingredient suppliers to reduce production costs.

• No dividends are expected in the foreseeable future; earnings will be retained to support business growth.