Advanced Biomed (ADVB) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We are an early stage cancer diagnostics company with a limited operating history, which may make it difficult to evaluate our current business and predict our future performance
2. 02We may be unable to develop and commercialize our early cancer detection devices, chips or immunochromogenic kits on a timely basis, or at all
3. 03If we fail to keep up with industry and technology developments in a timely and cost-effective manner, we may be unable to compete effectively and our business and prospects could suffer
4. 04If our products or services do not perform as expected, our operating results, reputation and business could suffer
5. 05If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or achieve and sustain profitability
6. 06Our future success depends on our ability to promote our brand and protect our reputation. If we are unable to effectively promote our brand, our business may be adversely affected
7. 07Failure to attract and retain our senior management and other key employees could adversely affect our business
8. 08If we experience difficulties in recruiting subjects for clinical trials, our clinical development activities may be delayed or otherwise adversely affected
9. 09If we do not launch new products in a timely manner, our products may become obsolete and our results of operations may suffer
10. 10As of the date of this Report, we have not conducted any clinical trials for our products. Uncertainties or failures in clinical trials of our product candidates could materially and adversely affect our business operations
11. 11We have contracts with third parties for the future manufacturing, supply and registration applications of certain of our products, which supply could become limited or interrupted or may not be of satisfactory quality and quantity
12. 12We may be adversely affected by uncertainties and changes in China’s regulations on the cancer screening industry, and the lack of necessary approvals, licenses, registrations or filings in relation to our business may adversely affect our business, results of operations and prospects material adverse effects
13. 13If our existing and new products fail to meet the quality standards required by applicable laws, our business and reputation could be damaged, and our revenue and profitability could be materially and adversely affected
14. 14In addition to the Chinese market, we are planning to expand to North American and European markets. We cannot give any assurance that any of our products will receive regulatory approval in North America or Europe, which is necessary before they can be commercialized
15. 15Failure to obtain the broad market acceptance or maintain a good reputation necessary for our current products and any future products could materially and adversely affect our results of operations and profitability
16. 16China maintains a National Medical Insurance Program that can reimburse certain residents in urban cities and rural areas for, among other things, fees associated with diagnostic and treatment devices and diagnostic tests covered by such Program through the basic medical insurance scheme
17. 17We have relatively limited experience in product promotion and sales. There is no assurance that we will be able to successfully commercialize our products and, as a result, our revenue and profitability could be materially and adversely affected
18. 18The market size of existing and future products has not been precisely established and may be lower than our estimates, and we may not fully grasp the target population of our products
19. 19Delays in the completion and obtaining regulatory approvals of our manufacturing facilities, or damage, destruction or interruption of production at such facilities may delay our development plans or commercialization efforts
20. 20The manufacturing and testing process of our products is complex and subject to strict quality control. If we or any of our suppliers or logistics partners experience manufacturing, logistics or quality problems, including as a result of natural disasters, our business may be damaged
21. 21Our information technology systems store and process a variety of sensitive data, including our proprietary business information, as well as patients’ personal data such as health information and personally identifiable information
22. 22If we are unable to effectively protect our intellectual property, our business and competitive position would be harmed
23. 23We may be subject to intellectual property infringement or misappropriation claims by third parties, which may force us to incur substantial legal expenses and, if determined adversely against us, could disrupt our business
24. 24We may be subject to litigation and other claims and legal proceedings, and may not always be successful in defending ourselves against these claims or proceedings

Risks Relating to Our Financial Prospects and Need for Additional Capital

1. 25We have recorded negative cash flows from operating activities historically and may have a current liabilities position in the future
2. 26We require substantial funding for our operations. If we cannot raise sufficient additional capital on acceptable terms, our business, financial condition and prospects may be adversely affected
3. 27If our available cash balances are insufficient to satisfy our liquidity requirements, in particular, for the development and commercialization of our products, we may seek to obtain further funding through public or private equity offerings, debt financings or other sources
4. 28Raising additional capital may lead to dilution of shareholdings by our existing stockholders, restrict our operations, and may further result in fair value loss adversely affecting our financial results
5. 29We have only a limited accounting personnel and have corrected an error in application of the accounting principle for business combinations accounted for an acquisition of an entity during the year ended June 30, 2022

Risks Related to Doing Business in Taiwan

1. 30Advanced Biomed Taiwan does not currently own any trademark or patent
2. 31We face economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension between Taiwan and China that could negatively affect our business and hence the value of your investment
3. 32Advanced Biomed Taiwan is subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy its liquidity requirements
4. 33Advanced Biomed Taiwan is subject to foreign exchange control imposed by Taiwan authorities, which may affect the paying dividends, repatriating the interest or making other payments to us
5. 34Advanced Biomed Taiwan will collaborate and share its R&D efforts with us and our Shanghai subsidiary and is subject to Taiwan regulations on investment or technical cooperation in China. It may affect its technical cooperation with the Shanghai subsidiary and more seriously its acquisition by Advanced Biomed
6. 35Taiwanese investors holding more than 10% of Advanced Biomed Common Stock will be subject to Taiwan regulations on investment or technical cooperation in China for its investment or technical cooperation in China
7. 36The imposition of foreign exchange restrictions in Taiwan may have an adverse effect on foreign investors’ abilities to acquire securities of a Taiwan company, including the shares of our subsidiaries in Taiwan, or to repatriate the interest, dividends or sale proceeds from those securities
8. 37Our operations are subject to the effects of a rising rate of inflation
9. 38You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in Taiwan against us

Risks Related to Doing Business in China

1. 39A downturn in China or global economy, and economic and political policies of the PRC could materially and adversely affect our business
2. 40Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon our ability to operate profitably in the Mainland China and Hong Kong
3. 41On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the People’s Republic of China, or the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021
4. 42Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and the Company
5. 43You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in PRC against us
6. 44Non-compliance with the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and our results of operations
7. 45Changes in the PRC’s economic, political or social conditions or government policies could have a material adverse effect on our businesses and operations in Mainland China and Hong Kong
8. 46Our Shanghai subsidiary is subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements in the future
9. 47PRC regulation on loans to, and direct investment in, PRC entities by offshore holding companies and governmental control in currency conversion may delay or prevent us from making loans to or making additional capital contributions to our Shanghai subsidiary
10. 48The Chinese government may exert more control over Hong Kong business or impose new laws or regulations on business activities in Hong Kong
11. 49On December 15, 2022, the PCAOB announced in the 2022 Determination its determination that the PCAOB was able to secure complete access to inspect and investigate accounting firms headquartered in Mainland China and Hong Kong, and the PCAOB Board voted to vacate previous determinations to the contrary
12. 50The M&A Rules and certain PRC regulations may make it more difficult for us to pursue growth through acquisitions
13. 51Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future
14. 52It may be difficult for overseas stockholders and/or regulators to conduct investigations or collect evidence within the PRC
15. 53Regulation and censorship of information disseminated over the Internet in the PRC may adversely affect our business, and we may be liable for content that is displayed on our website
16. 54Additional factors outside of our control related to doing business in the Mainland China and Hong Kong could negatively affect our business
17. 55Because of a variety of rules applicable to our operations in the PRC and the regulations on foreign investments as well as the applicable tax law, we may be subject to limitations on our ability to declare and pay dividends to our stockholders

Risks Related to Nevada Corporate Laws

1. 56Nevada law and our charter documents provide our directors and officers with broad protection from liability, which could reduce stockholder rights
2. 57We indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase our operating costs
3. 58Provisions in our articles of incorporation, our bylaws, and Nevada law might discourage, delay or prevent a change in control of our Company or changes in our management and, therefore, depress the trading price of our Common Stock
4. 59Nevada’s anti-takeover statutes could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders

Risks Related to our Common Stock

1. 60Our Common Stock may not develop an active trading market and the price and trading volume of our shares may fluctuate significantly
2. 61We do not anticipate paying cash dividends on our Common Stock in the foreseeable future
3. 62Our Chairman Dr. Yi Lu owns a substantial portion of our outstanding shares of Common Stock and could significantly influence the outcome of our corporate matters
4. 63The price of our Common Stock may be volatile or may decline regardless of our operating performance, and stockholders may not be able to resell their shares

Risks Related to the ELOC Agreement

1. 64It is not possible to predict the actual number of shares of our Common Stock, if any, we will sell under the ELOC Agreement, or the actual gross proceeds resulting from those sales or the dilution to you from those sales. Further, we may not have access to the full amount available under the ELOC Agreement
2. 65Investors who buy shares of Common Stock from the Selling Stockholder at different times will likely pay different prices
3. 66Future resales and/or issuances of shares of Common Stock, or the perception that such sales may occur, may cause the market price of our shares to drop significantly
4. 67We may use proceeds from sales of our Common Stock made pursuant to the ELOC Agreement in ways with which you may not agree or in ways which may not yield a significant return
5. 68You will experience dilution if we issue additional equity securities in future financing transactions
6. 69Nasdaq may apply additional and more stringent criteria for our continued listing because we had a small Initial Public Offering and insiders hold a large portion of our listed securities
7. 70If we cannot continue to satisfy the listing requirements and other rules of Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them
8. 71The market price of our Common Stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price
9. 72The purchase price of our Common Stock in the Resale Offering could be higher or lower than the IPO
10. 73Shares eligible for future sale may adversely affect the market price of our Common Stock, as the future sale of a substantial amount of outstanding Common Stock in the public marketplace could reduce the price of our Common Stock
11. 74We will incur additional costs as a result of becoming a public company, which could negatively impact our net income and liquidity
12. 75The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies