As filed with the U.S. Securities and Exchange Commission on May 15, 2024

Registration No. 333-276436

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

____________________

AMENDMENT NO. 1
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

––––––––––––––––––––

Zhengye Biotechnology Holding Limited
(Exact name of registrant as specified in its charter)

____________________

No.1 Lianmeng Road, Jilin Economic & Technical Development Zone
Jilin City, Jilin Province, China
+86-0432-63047008

Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
(212) 947-7200
(Name, address, including zip code, and telephone number, including area code, of agent for service)

____________________

With a Copy to:

____________________

Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

[•] Ordinary Shares

Zhengye Biotechnology Holding Limited

This is an initial public offering on a firm commitment basis of our ordinary shares, par value $0.0001 per share (“Ordinary Shares”). Prior to this offering, there has been no public market for our Ordinary Shares. We expect the initial public offering price to be in the range of $[ ] to $[ ] per Ordinary Share. The offering is being made on a “firm commitment” basis by the underwriters. See “Underwriting.” We submitted our application to list our Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”). At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq.

Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 16 to read about factors you should consider before buying our Ordinary Shares.

Unless otherwise stated, as used in this prospectus and in the context of describing our operations and consolidated financial information, “we,” “us,” “our,” the “Company,” “our Company,” or “Zhengye Cayman” refers to Zhengye Biotechnology Holding Limited, an exempted company limited by shares incorporated in Cayman Islands, when describing Zhengye Cayman’s consolidated financial information for the six months ended June 30, 2023 and the fiscal years ended December 31, 2022 and 2021, also includes Zhengye Cayman’s subsidiaries, including subsidiaries in China; “VVAX Skyline” refers to VVAX Skyline Holdings Limited, a British Virgin Islands corporation, which is wholly owned by Zhengye Cayman; “Peg Biotechnology” refers to Peg Biotechnology (HK) Holding Limited, a Hong Kong corporation, which is wholly owned by VVAX Skyline; “Windsor Holdings” refers to Windsor Holdings Co., Ltd., a British Virgin Islands corporation, which is wholly owned by VVAX Skyline; and “Jilin Zhengye” or the “operating entity” refers to Jilin Zhengye Biological Products Co., Ltd., a limited liability company organized under the laws of the PRC, which is held 58.6890% by Hainan Senhan Biotechnology Co., Ltd. (“Hainan Senhan”), 25.1524% by Windsor Holdings, 15.2439% by Jilin Economic and Technological Development Zone Economic and Technological Development General Corporation, 0.9146% by Jilin Jinqiao Investment Co., Ltd., and 0.0001% by Yufeng Liu.

Zhengye Cayman is a holding company incorporated in the Cayman Islands and not a Chinese or Hong Kong operating company. As a holding company with no material operations of its own, Zhengye Cayman conducts its operations through its principal subsidiary incorporated in China. See “Risk Factors — Risks Relating to Doing Business in China — Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in the operating entity’s operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.” The Ordinary Shares offered in this prospectus are shares of the Cayman Islands holding company instead of shares of the operating entity in China. Holders of our Ordinary Shares do not directly own any equity interests in our subsidiaries, including the equity interests in our principal subsidiary based in China, but will instead own shares of a Cayman Islands holding company.

Being based in and having the majority of the Company’s operations in China, we cannot assure that the future economic, political, and legal environment in China will remain unchanged. These changes may subject us to legal and operational risks, and could cause the value of such securities to significantly decline or become worthless. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As of the date of this prospectus, neither we nor the operating entity have been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction. The Cybersecurity Review Measures became effective on February 15, 2022. As confirmed by our PRC counsel, Guantao Law Firm Hangzhou Office (“Guantao”), we do not expect to become subject to cybersecurity review by the CAC for this offering, given that: (i) the data the operating entity handles in its business operations, either by its nature or in scale, do not trigger significant concerns over PRC national security; and (ii) neither we nor the operating entity have processed, or anticipate to process in the foreseeable future, personal information of more than one million users or persons. Based on the above and the information currently available, we believe the impact of the CAC’s increasing oversight over data security on the operating entity’s business is immaterial as of the date of this prospectus. However, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory authorities may adopt new laws, regulations, rules, or detailed implementation and interpretation in relation to, or in addition to the Cybersecurity Review Measures. While we intend to closely monitor the

evolving laws and regulations in this area and take all reasonable measures to mitigate compliance risks, we cannot guarantee that the operating entity’s business and operations will not be adversely affected by the potential impact of the Cybersecurity Review Measures or other laws and regulations related to privacy, data protection, and information security. If the operating entity is subject to cybersecurity review and network data security review in the future, the operating entity must apply for a review conducted by the Cybersecurity Review Office of the PRC, which ranges from 30 to 90 working days. During such review, the operating entity may be required to suspend its operations or experience other disruptions to its operations. Cybersecurity review and network data security review could materially and adversely affect our business, financial conditions, and results of operations, which could cause the value of our securities to significantly decline or in extreme cases, become worthless. If the Office of Cybersecurity Review determines that our or the operating entity’s business or operations involve national security during its review, we and the operating entity may probably be banned from accepting foreign investments or listing on a Unites States or other foreign exchange. Furthermore, according to the Anti-Monopoly Law of the People’s Republic of China (the “Anti-Monopoly Law”), which took effect on August 1, 2008, where the concentration of business operators reaches the filing threshold stipulated by the State Council of the People’s Republic of China (the “State Council”), business operators shall file a declaration with the State Administration for Market Regulation (the “SAMR”), and no concentration shall be implemented until the SAMR clears the anti-monopoly filing. We currently are not subject to the Anti-Monopoly Law because we don’t reach the filing threshold stipulated by the State Council. If we will be found to be subject to the Anti-Monopoly Law, we will be required to file a declaration with the SAMR, and no concentration shall be implemented until the SAMR clears the anti-monopoly filing, which ranges from 30 to 150 days. During such reviews, we may be required to suspend the operations or experience other disruptions to the operation, which will also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations. If the SAMR determines that our or the operating entity’s business or operations involve national security, we and the operating entity may probably be banned from accepting foreign investments or listing on a Unites States or other foreign exchange. We believe that, based on the advice of Guantao, as of the date of this prospectus, neither we nor the operating entity are subject to the Cybersecurity Review Measures or the Anti-Monopoly Law, because we and the operating entity fall below the review threshold stipulated by the CAC and the filing threshold stipulated by the State Council, and therefore, these laws do not have adverse impact on our ability to accept foreign investments or list on a Unites States or other foreign exchange. However, there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations and future PRC laws and regulations, and there can be no assurance that the relevant government agencies will take a view that is contrary to, or otherwise different from, the conclusions stated above. If the relevant government agencies take a view that is contrary to, or otherwise different from, the foregoing conclusions, it could have a material adverse effect on the PRC subsidiaries’ business, operating results and reputation, as well as the trading price of our Ordinary Shares and the Company’s ability to accept foreign investments or list on a U.S. or other foreign exchange. See “Risk Factors — Risks Relating to Doing Business in China — Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering” and “Risk Factors — Risks Relating to Doing Business in China — Uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice, could limit the legal protection available to you and us.”

On February 17, 2023, the China Securities Regulatory Commission (“CSRC”) promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the “Overseas Listing Trial Measures”) and relevant five guidelines, which became effective on March 31, 2023. 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 fulfill the filing procedures with the CSRC and report relevant information. Based on the foregoing, our PRC counsel is of the view that we are required to complete the filing procedures with the CSRC in connection with the offering and listing. Any failure by us to comply with such filing requirements may result in orders to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. We have filed with the CSRC the filing documents and completed the filing on January 8, 2024. Given the current PRC regulatory environment, we cannot guarantee whether we will be required to obtain approvals from the PRC government to offer securities to foreign investors in the future, and whether we would be able to obtain such approvals. If we are unable to obtain such approvals if required in the future, or inadvertently conclude that such approvals are not required then the value of our ordinary shares may depreciate significantly or become worthless.

On February 24, 2023, the CSRC promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Administration Provisions”), which also became effective on March 31, 2023. According to the Confidentiality and Archives Administration Provisions, domestic companies that seek overseas offering and listing (either in direct or indirect means) and the securities companies and securities service (either incorporated domestically or overseas) providers that undertake relevant businesses shall institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations. They shall not leak any state secret and working secret of government agencies, or harm national security and public interest. Therefore, a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that

contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level. The above-mentioned documents and materials that, if leaked, will be detrimental to national security or public interest, therefore, the domestic company shall strictly fulfill relevant procedures stipulated by applicable regulations. Furthermore, a domestic company that provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers and overseas regulators and individuals shall fulfill due procedures in compliance with applicable regulations. Working papers produced in Chinese mainland by securities companies and securities service providers in the process of undertaking businesses related to overseas offering and listing by domestic companies shall be retained in Chinese mainland. Where such documents need to be transferred or transmitted to outside Chinese mainland, relevant approval procedures stipulated by regulations shall be followed. We believe that this offering does not involve leaking any state secret and working secret of government agencies, or harming national security and public interest. However, we may be required to perform additional procedures in connection with the provision of accounting archives in accordance with the Confidentiality and Archives Administration Provisions. The specific requirements of the relevant procedures are currently unclear and we cannot be certain whether we will be able to perform the relevant procedures.

As of the date of this prospectus, except for the Supplementary Material Request issued by the CSRC regarding our planned overseas listing on September 26, 2023, to which we responded by submitting supplementary materials on October 16, 2023, we and the operating entity have not received any inquiry, notice, warning, or sanctions regarding our planned overseas listing from the CSRC or any other PRC governmental authorities. Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. It is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our subsidiaries and the operating entity, our ability to accept foreign investments, and our listing on an U.S. exchange. The Standing Committee of the National People’s Congress (the “SCNPC”) or PRC regulatory authorities may in the future promulgate laws, regulations, or implementing rules that require us, or our subsidiaries, or the operating entity to obtain regulatory approval from Chinese authorities before listing in the U.S. If we do not receive or maintain the approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our Ordinary Shares, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

The same legal and operational risks associated with operations in mainland China also apply to operations in Hong Kong. Hong Kong was established as a special administrative region of the PRC in accordance with Article 31 of the Constitution of the PRC. The Basic Law of the Hong Kong Special Administrative Region of the PRC (the “Basic Law”) was adopted and promulgated on April 4, 1990 and became effective on July 1, 1997, when the PRC resumed the exercise of sovereignty over Hong Kong. Pursuant to the Basic Law, Hong Kong is authorized by the National People’s Congress of the PRC to exercise a high degree of autonomy and enjoy executive, legislative, and independent judicial power, under the principle of “one country, two systems,” and the PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to national defense, foreign affairs, and other matters that are not within the scope of autonomy). However, there is no assurance that there will not be any changes in the economic, political, and legal environment in Hong Kong in the future. Due to the fact that the PRC legal system and changes may be subject to change or update in the future, the Basic Law may be revised in the future and thus we may face the same legal and operational risks associated with operating in the PRC. If there is a significant change to current political arrangements between mainland China and Hong Kong, or if the applicable laws, regulations, or interpretations change, our Hong Kong subsidiary, Peg Biotechnology, may become subject to PRC laws or authorities. As a result, our Hong Kong subsidiary could incur material costs to ensure compliance, be subject to fines, experience devaluation of securities or delisting, no longer conduct offerings to foreign investors, and no longer be permitted to continue their current business operations.

In addition, our Ordinary Shares may be prohibited from trading on a national exchange under the Holding Foreign Companies Accountable Act, or the “HFCA Act,” if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable to inspect our auditors for three consecutive years beginning in 2022. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China or in Hong Kong, a Special Administration Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. Our auditor, WWC, P.C. (“WWC”), is headquartered in San Mateo, California, and has been inspected by the PCAOB on a regular basis, with the last inspection in 2021. The PCAOB currently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021, which determinations were vacated on December 15, 2022. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares and trading in our Ordinary Shares could be prohibited. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), and on December 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was

signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC (the “MOF”), and the PCAOB signed a Statement of Protocol (the “Protocol”) governing inspections and investigations of accounting firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the U.S. Securities and Exchange Commission (the “SEC”), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. See “Risk Factors — Risks Relating to Doing Business in the PRC — Recent joint statement by the SEC and the PCAOB, rule changed by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offerings.”

As of the date of this prospectus, except for a loan from the operating entity to Hainan Senhan on October 10, 2023, with a principal amount of RMB100,000, no cash transfer or transfer of other assets has occurred among the Company and any of its subsidiaries. See “Prospectus Summary — Asset Transfers Between the Company and its Subsidiaries,” “Prospectus Summary — Dividends or Distributions Made to the Company and U.S. Investors and Tax Consequences,” and our audited consolidated financial statements for the years ended December 31, 2023 and 2022.

During the fiscal years ended December 31, 2023 and 2022, dividends and distributions made by the operating entity to its original shareholders amounted to RMB51.8 million and RMB21.4 million, respectively. On April 28, 2023, the shareholders of the operating entity passed the resolution of the dividend plan for 2022, with the dividend amount of RMB55.1 million, and the dividend has been distributed in April 2024. Except as disclosed, we intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. See “Prospectus Summary — Dividends or Distributions Made to the Company and U.S. Investors and Tax Consequences.”

We are an “emerging growth company” as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 13 of this prospectus for more information.

Following the completion of this offering, our director, chairman of the board of directors and largest shareholder, Mr. Zhenfa Han, will beneficially own approximately [•]% of the aggregate voting power of our issued and outstanding Ordinary Shares. As such, we may be deemed a “controlled company” under Nasdaq Marketplace Rules 5615(c). However, even if we are deemed a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq Listing Rules. See “Risk Factors” and “Management — Controlled Company.”

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(1)      We have agreed to pay Kingswood Capital Partners, LLC, the representative of the underwriters (the “Representative”), a fee equal to 7% of the gross proceeds of the offering. See “Underwriting” starting on page 149 of this prospectus for more information regarding our arrangements with the underwriters.

The underwriters expect to deliver the Ordinary Shares against payment on or about [•], 2024.

Neither the U.S. Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Prospectus dated [•], 2024

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Ordinary Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. For the avoidance of doubt, no offer or invitation to subscribe for Ordinary Shares is made to the public in the Cayman Islands. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

Neither we nor the underwriters have taken any action to permit a public offering of the Ordinary Shares outside the United States or to permit the possession or distribution of this prospectus or any filed free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Ordinary Shares and the distribution of this prospectus or any filed free-writing prospectus outside the United States.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

•        “BVI” are to the British Virgin Islands;

•        “China” or the “PRC” are to the People’s Republic of China, excluding Taiwan for the purposes of this prospectus only;

•        “GMP” are to Good Manufacturing Practice;

•        “GSP” are to Good Supplying Practice;

•        “HKD” or “HK$” are to the legal currency of Hong Kong;

•        “Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China;

•        “ODI filings” are to the formalities and filings of overseas direct investment of Chinese enterprises, including but not limited to fulfilling the filing, approval or registration procedures in the development and reform authorities, the competent commercial authorities, and foreign exchange administration authorities and competent banks authorized by such authorities;

•        “Renminbi” or “RMB” are to the legal currency of China;

•        “shares,” “Shares,” or “Ordinary Shares” are to the ordinary shares of Zhengye Cayman, par value $0.0001 per share; and

•        “$,” “USD,” “US$,” or “U.S. dollars” are to the legal currency of the United States.

Our business is conducted by the operating entity in China using RMB. Our consolidated financial statements are presented in U.S. dollars. In this prospectus, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in U.S. dollars. These dollar references are based on the exchange rate of RMB to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars). With respect to amounts not recorded in our consolidated financial statements included elsewhere in this prospectus, the conversion of RMB into U.S. dollars is based on 0.1408 for the fiscal years ended December 31, 2023 and 2022.

RISK FACTORS

An investment in our Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Ordinary Shares, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations, or cash flow could be materially and adversely affected, which could cause the trading price of our Ordinary Shares to decline, resulting in a loss of all or part of your investment. The risks described below and discussed in other parts of this prospectus are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in our Ordinary Shares if you can bear the risk of loss of your entire investment.

Risks Relating to Doing Business in the PRC

Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on the operating entity’s business and operations.

All of the operating entity’s assets and our operations are currently located in China. Accordingly, the operating entity’s business, financial condition, results of operations, and prospects may be influenced to a significant degree by political, economic, and social conditions in China generally. The developing countries’ economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, including the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, the Chinese economy and industrial policies still have significant differences compared to those of developed countries.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any potential adverse changes in the future in economic conditions in China, in the policies of the Chinese government, or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect the operating entity’s business and operating results, reduce demand for its products, and weaken its competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on the operating entity. For example, the operating entity’s financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations.

Furthermore, our Company, the operating entity, and our investors may face uncertainty about future actions by the government of China that could significantly affect the operating entity’s financial performance and operations. As of the date of this prospectus, neither our Company nor the operating entity has received or was denied permission from Chinese authorities to list on U.S. exchanges. However, there is no guarantee that our Company or the operating entity will receive or not be denied permission from Chinese authorities to list on U.S. exchanges in the future.

There may be updates in the interpretation and enforcement of PRC laws and regulations and the policies, rules, and regulations in China may be updated constantly, which could limit the legal protection available to you and us.

The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The legislation over the past three decades has significantly increased the protection afforded to various forms of foreign or private-sector investment in China. Hainan Senhan and the operating entity are subject to various PRC laws and regulations generally applicable to companies in China. Since these laws and regulations are relatively new and the PRC legal system continues to evolve, however, the interpretations of many laws, regulations, and rules are subject to ongoing updates, and enforcement of these laws, regulations, and rules involve uncertainties.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have certain discretion in interpreting and implementing statutory and contractual terms, it is difficult for us to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy in the PRC legal system. Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property), and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

You may incur increased costs in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in this prospectus based on foreign laws, compared to the costs associated with domestic litigation. It may also be more difficult for you or overseas regulators to conduct investigations or collect evidence within China compared to domestic litigation.

As a company incorporated under the laws of the Cayman Islands, we conduct substantially most of our operations in China and substantially most of our assets are located in China. In addition, except for one director, Mrs. Wenhua Sun, who is a resident of the U.S., the rest of our directors and all of our senior executive officers reside within China for a significant portion of the time and are PRC nationals. As a result, it may be more difficult for you to effect service of process upon those persons inside mainland China compared to domestic litigation. It may be difficult for you to enforce judgements obtained in U.S. courts based on civil liability provisions of the U.S. federal securities laws against us and our officers and directors who do not currently reside in the U.S. or have substantial assets in the U.S. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the U.S. or any state.

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

It may also be more difficult for you or overseas regulators to conduct investigations or collect evidence within China compared to domestic litigation. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with counterparts of another country or region to monitor and oversee cross border securities activities, such regulatory cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the State Council and the competent departments of the State Council. Pursuant to the Overseas Listing Trial Measures, if an overseas securities regulatory authority investigates and collects evidence on domestic enterprises’ overseas listing, as well as related activities, and requests assistance from the CSRC according to the cross-border supervision and management cooperation mechanism, the CSRC may provide necessary assistance in accordance with the law. When domestic enterprises and individuals provide relevant documents and materials as required by the investigation and evidence collection of the overseas securities regulatory authorities, they should do so with the consent of the CSRC and the relevant competent departments of the State Council. While detailed interpretation of or implementing rules under Article 177 and the Overseas Listing Trial Measures have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

New legal policies may be introduced in the industry where the operating entity operates in the future. We do not rule out the possibility that future industry policies could adversely affect the operating entity’s business operations, which could result in a material change in the operations of the operating entity and/or the value of our Ordinary Shares.

The Chinese industry policies have significant impact on the conduct of the operating entity, which could result in a material change in the operations of the operating entity and/or the value of our Ordinary Shares.

The Chinese government has recently published new policies that significantly affected certain industries, such as education and internet, we cannot rule out the possibility that it will in the future release regulations or policies regarding the veterinary vaccine industry that could adversely affect the business, financial condition, and results of operations of the operating entity. Furthermore, if China adopts more stringent standards with respect to certain areas such as corporate social responsibilities, the operating entity may incur increased compliance costs or become subject to additional restrictions in its operations. Certain areas of the law, including intellectual property rights and confidentiality protections, in China may also not be as effective as in the developed countries. In addition, we cannot predict the effects of future developments in the PRC legal system on their business operations of the operating entity, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors, including you.

The PRC government possesses the authority to exercise macroeconomic control over every aspect of the national economy, including regulating the overseas listings of Chinese companies, in order to foster its economic growth and protect national security. Such macroeconomic control may cause us to make material changes to the operations of the operating entity, may affect our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.

The PRC government possesses the authority to exercise macroeconomic control over every aspect of the national economy, in order to foster its economic growth, including taxation, environmental regulations, land use rights, foreign investment limitations, and other matters. The central or local governments of China may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts for the operating entity to ensure its compliance with such regulations or interpretations. As such, the operating entity may be subject to various government and regulatory interference in the provinces in which it operates in China. It could be subject to administrative measures by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. It may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

Furthermore, it is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be later denied or rescinded. Although we believe our Company and the operating entity are currently not required to obtain permission from any Chinese authorities and have not received any notice of denial of permission to list on the U.S. exchange as of the date of this prospectus, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.

Accordingly, governmental macroeconomic control and administrative measures in the future, may cause us to make material changes to the operations of the operating entity, may affect our ability to offer or continue to offer securities to investors, and/or may cause the value of such securities to significantly decline or be worthless.

Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.

On December 28, 2021, 13 governmental departments of the PRC, including the CAC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provide that, in addition to CIIO that intend to purchase Internet products and services, net platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures require that an online platform operator which possesses the personal information of at least one million users must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries.

On November 14, 2021, the CAC published the Security Administration Draft. The Security Administration Draft provides that data processors shall apply for a cybersecurity review under certain circumstances, such as mergers, restructurings, and divisions of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest which affects or may affect the national security, overseas listings of data processors that process personal data for more than one million individuals, Hong Kong listings of data processors that affect or may affect national security, and other data processing activities that affect or may affect the national security. The deadline for public comments on the Security Administration Draft was December 13, 2021. As of the date of this prospectus, the Security Administration Draft has not been enacted.

As of the date of this prospectus, neither we nor the operating entity have received any notice from any authorities identifying our PRC subsidiaries as CIIOs or requiring us or the operating entity to go through cybersecurity review or network data security review by the CAC. As confirmed by our PRC counsel, Guantao, neither the operations of the operating entity, nor our listing are expected to be affected, and that we and the operating entity are not subject to cybersecurity review by the CAC under the Cybersecurity Review Measures, nor will any such entity be subject to the Security Administration Draft, if it is enacted as proposed, given that neither we nor the operating entity is a CIIO or online platform operator with personal information of more than one million users. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect to take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that the operating entity will not be subject to cybersecurity review and network data security review in the future. During such reviews, the operating entity may be required to suspend its operations or experience other disruptions to its operations. Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations.

The Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us and the operating entity to additional compliance requirements in the future.

Recently, 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, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. On February 17, 2023, the CSRC promulgated the Overseas Listing Trial Measures and relevant five guidelines, which became effective on March 31, 2023. 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 fulfill the filing procedure with the CSRC and report relevant information Among other provisions, if a domestic enterprise intends to indirectly offer and list securities in an overseas market, the record-filing obligation is with a major operating entity incorporated in the PRC and such filing obligation shall be completed within three working days after the overseas listing application is submitted. We are required to complete the filing procedures with the CSRC in connection with the offering and listing. Moreover, we could be subject to the filing requirement for future share offerings, major changes in our company, and other scenarios as required under the Overseas Listing Trial Measures. See “Regulations — Regulations Relating to Overseas Listings.” The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirements in the future. As the Opinions and the Overseas Listing Trial Measures were recently issued, their official guidance and interpretation and remain unclear in several respects at this time. Therefore, we cannot assure you that we and the operating entity will remain fully compliant with all new regulatory requirements of the Opinions or the Overseas Listing Trial Measures or any future implementation rules on a timely basis, or at all.

Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offerings.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a “Restrictive Market,” (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditor. On October 4, 2021, the SEC approved Nasdaq’s revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act. On December 18, 2020, the HFCA Act was signed into law.

On March 24, 2021, the SEC announced the adoption of interim final amendments to implement the submission and disclosure requirements of the HFCA Act. In the announcement, the SEC clarifies that before any issuer will have to comply with the interim final amendments, the SEC must implement a process for identifying covered issuers. The announcement also states that the SEC staff is actively assessing how best to implement the other requirements of the HFCA Act, including the identification process and the trading prohibition requirements.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the board of directors of a company is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. For example, on December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions.

On December 16, 2021, the PCAOB issued a report on its determinations that the Board is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. The Board made these determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCA Act.

Our auditor, WWC, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor, WWC, is headquartered in San Mateo, California, and has been inspected by the PCAOB on a regular basis, with the last inspection in 2021. The PCAOB currently has access to inspect the working papers of our auditor and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. However, the recent developments would add uncertainties to our offering and we cannot assure you whether the national securities exchange we apply to for listing or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditors’ audit procedures

and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit. In addition, the HFCA Act, which requires that the PCAOB be permitted to inspect an issuer’s public accounting firm within three years, may result in the delisting of our Company or prohibition of trading in our Ordinary Shares in the future if the PCAOB is unable to inspect our accounting firm at such future time.

On June 22, 2021, the U.S. Senate passed the AHFCAA, and on December 29, 2022, legislation entitled the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading.

On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol governing inspections and investigations of accounting firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination.

To the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong due to regulation of the ability of our Company, our subsidiaries, or the operating entity by the PRC government to transfer cash or assets.

Relevant PRC laws and regulations permit the companies in the PRC to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, each of the companies in the PRC are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. The companies in the PRC are also required to further set aside a portion of their after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at their discretion. These reserves are not distributable as cash dividends. Furthermore, in order for us to pay dividends to our shareholders, we will rely on receipt of funds from our Hong Kong subsidiary. Peg Biotechnology will rely on payments made from the operating entity to Hainan Senhan. If Jilin Zhengye incurs debt on its own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Our cash dividends, if any, will be paid in U.S. dollars. If we are considered a tax resident enterprise of the PRC for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax. See “— Risks Relating to Doing Business in the PRC — Under the PRC Enterprise Income Tax Law, we may be classified as a PRC ‘resident enterprise’ for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.”

The PRC government also imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The majority of our PRC subsidiaries’ income is received in RMB and shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange (“SAFE”) as long as certain procedural requirements are met. Approval from appropriate government authorities is required if RMB is converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders.

As of the date of this prospectus, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into, and out of Hong Kong (including funds from Hong Kong to mainland China), except for the transfer of funds involving money laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. There is no assurance the PRC government will not intervene in or impose restrictions on our ability to transfer cash or assets.

As a result of the above, to the extent cash or assets in the business are in the PRC/Hong Kong or a PRC/Hong Kong entity, such funds or assets may not be available to fund operations or for other use outside of the PRC/Hong Kong, due to interventions in or the imposition of restrictions and limitations on the ability of our Company, our subsidiaries, or the operating entity by the competent government to the transfer of cash or assets.

Increases in labor costs in the PRC may adversely affect the operating entity’s business and profitability.

China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage level for the operating entity’s employees has also increased in recent years. We expect that their labor costs, including wages and employee benefits, will continue to increase. Unless the operating entity is able to pass on these increased labor costs to their customers by increasing prices for their products or services, their profitability and results of operations may be materially and adversely affected.

In addition, the operating entity has been subject to stricter regulatory requirements in terms of entering into labor contracts with their employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance to designated government agencies for the benefit of their employees. Pursuant to the PRC Labor Contract Law, or the “Labor Contract Law,” that became effective in January 2008 and its amendments that became effective in July 2013 and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation, and unilaterally terminating labor contracts. In the event that the operating entity decides to terminate some of their employees or otherwise change their employment or labor practices, the Labor Contract Law and its implementation rules may limit their ability to effect those changes in a desirable or cost-effective manner, which could adversely affect their business and results of operations.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that the operating entity’s employment practices do not and will not violate labor-related laws and regulations in China, which may subject the operating entity to labor disputes or government investigations. If the operating entity is deemed to have violated relevant labor laws and regulations, they could be required to provide additional compensation to their employees and their business, and, in such case, our financial condition, and results of operations could be materially and adversely affected.

PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or the PRC subsidiaries to liability or penalties, limit our ability to inject capital into the PRC subsidiaries, limit the PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

On July 4, 2014, SAFE issued the Circular on Issues Concerning Foreign Exchange Control over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or “SAFE Circular 37.” According to SAFE Circular 37, prior registration with the local SAFE branch is required for PRC residents, (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose), in connection with their direct or indirect contribution of domestic assets or interests to offshore special purpose vehicles, or “SPVs.” SAFE Circular 37 further requires amendments to the SAFE registrations in the event of any changes with respect to the basic information of the offshore SPV, such as change of a PRC individual shareholder, name, and operation term, or any significant changes with respect to the offshore SPV, such as an increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. In February 2015, SAFE promulgated a Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or “SAFE Circular 13,”

effective in June 2015. Under SAFE Circular 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

In addition to SAFE Circular 37 and SAFE Circular 13, our ability to conduct foreign exchange activities in China may be subject to the interpretation and enforcement of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE in January 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”). Under the Individual Foreign Exchange Rules, any PRC individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with SAFE provisions, the failure of which may subject such PRC individual to warnings, fines, or other liabilities.

The Company has used its best efforts to request PRC residents who the Company knows hold direct or indirect interest in the Company to make the necessary applications, filings, and registrations as required under SAFE Circular 37. As of the date of this prospectus, our current shareholder who is subject to SAFE Circular 37 or SAFE Circular 13 have completed the initial registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37.

Furthermore, according to the Administrative Measures on Overseas Investments adopted by the Ministry of Commerce (the “MOFCOM”) and the Measures for the Administration of Overseas Investment of Enterprises (the “Enterprise Overseas Investment Measures”) adopted by the National Development and Reform Commission (the “NDRC”), a PRC enterprise that intends to make overseas investments is required to obtain approvals from provincial commerce authorities and NDRC’s local branches or to make filings with such authorities, depending on the type and the region of their investments. As confirmed by our PRC counsel, our PRC enterprise shareholders are required to file with such provincial commerce authorities and NDRC’s local branches. In addition, according to the SAFE Circular 13 adopted by SAFE, our PRC enterprise shareholders are obliged to register with qualified banks when they make overseas investments or financings. Generally, for an overseas direct investment, the fillings with the qualified bank at the request of SAFE, the fillings with the provincial commerce authorities, and the filling with the NDRC or its local branches are collectively referred to as the “ODI fillings.” Pursuant to the aforementioned laws and regulations, if a PRC enterprise makes such overseas direct investments without obtaining all of the ODI filings, the relevant approval or filing authority has the authority to take corrective measures, such as ordering such enterprise to suspend or cease the implementation of the projects, issuing warnings, or imposing other penalties.

As of the date of this prospectus, the Company believes that its current shareholders who are subject to the Administrative Measures on Overseas Investments, Enterprise Overseas Investment Measures, and other related laws and regulations have completed the ODI filings as required by the aforementioned regulations.

Under relevant laws and regulations regarding the ODI fillings, following the submission or approval of filings with the MOFCOM or provincial commerce authorities, the filing entity is required to file for modifications with the MOFCOM or the provincial commerce authorities that processed its original filing or approval, should there be any changes to the overseas direct investments provided in initial filing materials or the original certificates of overseas investments of enterprises. Likewise, for an overseas direct investment project that has been approved and filed with the NDRC, the investor shall file an application for modifications to the relevant authority in advance of certain circumstances, such as changes to the number of investors, project activities, or project scale.

Although it is our understanding that all of our current PRC enterprise shareholders who are subject to the Administrative Measures on Overseas Investments, Enterprise Overseas Investment Measures, and other related laws and regulations have completed the required the ODI filings, we have no control over whether any of our future beneficial owners would complete such ODI filings. Furthermore, we cannot guarantee that all of our enterprise shareholders will renew their ODI fillings on a timely basis when required by law, and we cannot assure you that our shareholders’ applications for renewal will be approved. Thus, we cannot provide any assurance that our current or future PRC resident beneficial owners, including PRC residents and enterprises, will comply with our request to make or obtain any applicable registrations or filings, or continue to comply with all registration and filing procedures set forth in the ODI filings. Such failure or inability of our PRC resident beneficial owners to comply with the ODI filings may subject us or our PRC resident beneficial owners to fines and legal sanctions, restrict our cross-border investment activities, limit our PRC subsidiaries’ ability to distribute dividends to or obtain foreign-exchange- dominated loans from us, or prevent us from making distributions or pay dividends, which will materially and adversely affect our business operations and our ability to distribute profits to you.

PRC administrative measures of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or limit us to use the proceeds of offshore offerings to make loans or additional capital contributions to the PRC subsidiaries, which could materially and adversely affect their liquidity and their ability to fund and expand their business.

We are an offshore holding company conducting our operations in China through PRC subsidiaries, to which we can make loans and make additional capital contributions. Most of these loans or contributions are subject to PRC regulations and approvals or registration. For example, any loans to the PRC subsidiaries, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registrations. Furthermore, loans made by us to the PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE, or filed with SAFE in its information system. Pursuant to relevant PRC regulations, we may provide loans to the operating entity up to the larger amount of (i) the balance between the registered total investment amount and registered capital of these entities, or (ii) twice the amount of the net assets of these entities calculated in accordance with the Circular on Full-Coverage Macro-Prudent Management of Cross-Border Financing, or the “PBOC Circular 9.” Moreover, any medium or long-term loan to be provided by us to the PRC subsidiaries, or other domestic PRC entities must also be filed and registered with the National Development and Reform Commission (the “NDRC”). We may also decide to finance the PRC subsidiaries by means of capital contributions. These capital contributions are subject to registration with the State Administration for Market Regulation (the “SAMR”) or its local branch, reporting of foreign investment information with the Ministry of Commerce of the PRC (the “MOFCOM”), or registration with other governmental authorities in China.

On March 30, 2015, SAFE issued the Notice of the State Administration of Foreign Exchange on Reforming the Administrative Approach Regarding the Settlement of the Foreign Exchange Capital of Foreign-invested Enterprises, or “SAFE Circular 19,” which took effect and replaced previous regulations effective on June 1, 2015, and was amended on December 30, 2019. Pursuant to SAFE Circular 19, up to 100% of foreign currency capital of a foreign-invested enterprise may be converted into RMB capital according to the actual operation, and within the business scope, of the enterprise at its will. Although SAFE Circular 19 allows for the use of RMB converted from the foreign currency-denominated capital for equity investments in the PRC, the restrictions continue to apply as to foreign-invested enterprises’ use of the converted RMB for purposes beyond their business scope, for entrusted loans or for inter-company RMB loans. On June 9, 2016, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or “SAFE Circular 16,” effective on June 9, 2016, which reiterates some rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-affiliated enterprises. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from our offshore offerings, to the PRC subsidiaries, which may adversely affect our liquidity and our ability to fund and expand our business in China. On October 23, 2019, SAFE issued the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, or “SAFE Circular 28,” which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. Non-investment foreign-funded enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise without violation to prevailing Special Administrative Measures for Access of Foreign Investments (2021 Edition), or the Negative List (2021),” and the authenticity and compliance with the regulations of domestic investment projects. However, since SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent banks will carry it out in practice.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, including SAFE Circular 19, SAFE Circular 16, and other relevant rules and regulations, we cannot assure you that we will be able to complete the necessary registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans or capital contributions to the PRC subsidiaries. As a result, uncertainties exist as to our ability to provide prompt financial support to the PRC subsidiaries when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we received or expect to receive from our offshore offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect the PRC subsidiaries’ business, including their liquidity and their ability to fund and expand their business.

Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.

Our business is conducted in the PRC through the operating entity, and its books and records are maintained in RMB. The financial statements that we file with the SEC and provide to our shareholders are presented in U.S. dollars. Changes in the exchange rates between the RMB and U.S. dollar affect the value of the PRC subsidiaries’ assets and results of operations, when presented in U.S. dollars. The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenue, and financial condition. Further, our Ordinary Shares offered in the U.S. are offered in U.S. dollars, we need to convert the net proceeds we receive into RMB in order to use the funds for the PRC subsidiaries’ business. Changes in the conversion rate among the U.S. dollar and the RMB will affect the amount of proceeds we will have available for the PRC subsidiaries’ business.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.

Under the PRC Enterprise Income Tax Law (the “EIT Law”), which became effective in January 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances, and properties of an enterprise. In April 2009, the State Administration of Taxation (the “SAT”) issued the Circular on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the Actual Standards of Organizational Management, or “SAT Circular 82,” which was amended in December 2017. SAT Circular 82 specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision-making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. In addition to SAT Circular 82, the SAT issued the Measures for the Administration of Enterprise Income Tax of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises (for Trial Implementation), or “SAT Bulletin 45,” which took effect in September 2011 and was amended in April 2015, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such “Chinese-controlled offshore incorporated resident enterprises.” SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups, or by PRC or foreign individuals.

If the PRC tax authorities determine that the actual management organ of Zhengye Cayman is within the territory of China, Zhengye Cayman may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Finally, dividends payable by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our shares. Although up to the date of this prospectus, Zhengye Cayman has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law, we cannot assure you that it will not be deemed to be a resident enterprise in the future.

We may be required to comply with tax laws and regulations with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

In February 2015, SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or “SAT Circular 7.” SAT Circular 7 provides comprehensive guidelines relating to indirect transfers of PRC taxable assets (including equity interests and real properties of a PRC resident enterprise) by a non-resident enterprise. In addition, in October 2017, SAT issued an Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or “SAT Circular 37,” effective in December 2017, which, among others, amended certain provisions in SAT Circular 7 and further clarify the tax payable declaration obligation by non-resident enterprise. Indirect transfer of equity interest and/or real properties in a PRC resident enterprise by their non-PRC holding companies are subject to SAT Circular 7 and SAT Circular 37.

SAT Circular 7 provides clear criteria for an assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. As stipulated in SAT Circular 7, indirect transfers of PRC taxable assets are considered as reasonable commercial purposes if the shareholding structure of both transaction parties falls within the following situations: (i) the transferor directly or indirectly owns 80% or above equity interest of the transferee, or vice versa; (ii) the transferor and the transferee are both 80% or above directly or indirectly owned by the same party; and (iii) the percentages in bullet points (i) and (ii) shall be 100% if over 50% the share value of a foreign enterprise is directly or indirectly derived from PRC real properties. Furthermore, SAT Circular 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. Where a non-resident enterprise transfers PRC taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority and the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding, or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

According to SAT Circular 37, where the non-resident enterprise fails to declare the tax payable pursuant to Article 39 of the EIT Law, the tax authority may order it to pay the tax due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified by the tax authority. If the non-resident enterprise, however, voluntarily declares and pays the tax payable before the tax authority orders it to do so within required time limits, it shall be deemed that such enterprise has paid the tax in time.

We face uncertainties as to the reporting and assessment of reasonable commercial purposes and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries, and investments. In the event of being assessed as having no reasonable commercial purposes in an indirect transfer transaction, we may be subject to filing obligations or taxed if we are a transferor in such transactions, and may be subject to withholding obligations (to be specific, a 10% withholding tax for the transfer of equity interests) if we are a

transferee in such transactions, under SAT Circular 7 and SAT Circular 37. For transfer of shares by investors who are non-PRC resident enterprises, the PRC subsidiaries may be requested to assist in the filing under the SAT circulars. As a result, we may be required to expend valuable resources to comply with the SAT circulars or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that we should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

The PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.

We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from the PRC subsidiaries to satisfy our liquidity requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If the 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 distributions to us.

Current PRC regulations permit the 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, the PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. The PRC subsidiaries may also allocate a portion of their respective 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. These limitation on the ability of the PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments, or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Governmental administrative measures of currency conversion may affect the value of your investment and our payment of dividends.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially most of our revenue in RMB. Under our current corporate structure, Zhengye Cayman may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, the PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from or registration with appropriate government authorities is, however, required where the RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demand, we may not be able to pay dividends in foreign currencies to our shareholders.

According to the EIT Law, the PRC subsidiaries are required to comply with tax laws and regulations with respect to the withholding tax liabilities, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.

Under the EIT Law and its implementation rules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to the Double Tax Avoidance Arrangement, a withholding tax rate of 10% may be lowered to 5% if the enterprise in mainland China is at least 25% held by a Hong Kong enterprise for at least 12 consecutive months prior to distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other conditions and requirements under the Double Tax Avoidance Arrangement and other applicable PRC laws.

However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, or the “SAT Circular 81,” which became effective on February 20, 2009, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to Circular on Several Issues regarding the “Beneficial Owner” in Tax Treaties, which became effective as of April 1, 2018, when determining an applicant’s status as the “beneficial owner” regarding tax treatments in connection with dividends, interests, or royalties in the tax treaties, several factors will be taken into account. Such factors include whether the business operated by the applicant constitutes actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax, grant tax exemption on relevant incomes, or levy tax at an extremely low rate. This circular further requires any applicant who intends to be proved of being the “beneficial owner” to file relevant documents with the relevant tax authorities. Hainan Senhan is wholly owned by Peg Biotechnology. However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by Hainan Senhan to our Hong Kong subsidiary, Peg Biotechnology, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received.

If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation.

U.S. public companies that have substantially most of their operations in China have been the subject of intense scrutiny, criticism, and negative publicity by investors, financial commentators, and regulatory agencies, such as the SEC. Much of the scrutiny, criticism, and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism, and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, have become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism, and negative publicity will have on us, our business, and the price of our Ordinary Shares. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company. This situation will be costly and time-consuming and could distract our management from developing our business. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our Ordinary Shares.

The approval of the CSRC may be required in connection with this offering under the PRC law.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the “M&A Rules,” adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an overseas SPV formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals to obtain the approval of the CSRC, prior to the listing and trading of such SPV’s securities on an overseas stock exchange. In September 2006, the CSRC published a notice on its official website specifying documents and materials required to be submitted to it by an SPV seeking the CSRC approval of its overseas listings.

Our PRC legal counsel, Guantao, has advised us, based on their understanding of the current PRC law, rules, and regulations, that the CSRC’s approval is not required for the listing and trading of our Ordinary Shares on the Nasdaq Capital Market in the context of this offering, given that (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings under this prospectus are subject to the M&A Rule; and (ii) we established the PRC subsidiaries by means of direct investment rather than by merger with or acquisition of PRC domestic companies as defined in the M&A Rules.

Our PRC legal counsel, however, has further advised us that there may be updates as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC governmental agencies, including the CSRC, would reach the

same conclusion as we have. If it is determined that the CSRC approval is required for our offerings in the U.S., we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for our offerings in the U.S. These sanctions may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions on the repatriation of the proceeds from our offerings in the U.S. into the PRC, restrictions on or prohibition of the payments or remittance of dividends by the PRC subsidiaries, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation, and prospects, as well as the trading price of our Ordinary Shares. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt our offerings in the U.S. before the settlement and delivery of the Ordinary Shares that we are offering.

Recently, 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 Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirement in the future. As of the date of this prospectus, we have not received any or been denied of any permission from the PRC authorities to list on U.S. stock exchanges. As these opinions were recently issued, official guidance and interpretation of the opinions remain unclear in several respects at this time. Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all. We face the possibility of updates to relevant laws and regulatory measures in the future that could significantly affect the operating entity’s financial performance.

Furthermore, on February 17, 2023, the CSRC promulgated the Overseas Listing Trial Measures and relevant five guidelines, which became effective on March 31, 2023. 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 fulfill the filing procedure with the CSRC and report relevant information. Based on the foregoing, our PRC counsel is of the view that we are required to complete the filing procedures with the CSRC in connection with the offering and listing. There is no assurance that we can complete such filing in a timely manner or even at all. Any failure by us to comply with such filing requirements may result in orders to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. We have filed with the CSRC the filing documents and completed the filing on January 8, 2024. Given the current PRC regulatory environment, it is uncertain whether we will be required to obtain approvals from the PRC government to offer securities to foreign investors in the future, and whether we would be able to obtain such approvals. Any failure on our part to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or become worthless. On December 27, 2021, the MOFCOM and the NDRC promulgated the Special Administrative Measures for Access of Foreign Investment (2021 Edition), or the Negative List (2021). The Negative List (2021) stipulates that if a domestic enterprise engaged in business in the prohibited investment field issues shares abroad and is listed for trading, it shall be examined and approved by the relevant competent authorities of the state. According to a press release issued by the NDRC in relation to the Negative List (2021), the above provisions are only applicable to the direct overseas listing of domestic enterprises engaged in the prohibited investment field. Besides, we focus our business on the research, development, manufacturing and sales of veterinary vaccines, which is not listed as a prohibited or restricted field under the Negative List (2021). However, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we should obtain such approvals for this offering and any follow-on offering, we may be unable to obtain such approvals which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the settlement and delivery of the Ordinary Shares that we are offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of the Ordinary Shares we are offering, you would be doing so at the risk that the settlement and delivery may not occur. Any uncertainties or negative publicity regarding such approval requirements could have a material adverse effect on our ability to complete this offering or any follow-on offering of our securities or the market for and market price of our Ordinary Shares.

The M&A Rules and certain other PRC regulations establish significant regulatory approvals and review requirements for certain acquisitions of Chinese companies by foreign investors, which may require us to comply with the corresponding legal procedures to pursue growth through acquisitions in China.

The M&A Rules and recently adopted PRC regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could require foreign investors to comply with relevant regulatory approval procedures for the merger and acquisition activities. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers or acquisitions that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to MOFCOM when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the “Prior Notification Rules,” issued by the State Council in August 2008 is triggered. In addition, the Provisions of the Ministry of Commerce on the Implementation of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Security Review Rules”) issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and the Security Review Rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions. It is clear that the operating entity’s business would not be deemed to be in an industry that raises “national defense and security” or “national security” concerns. MOFCOM or other government agencies, however, may publish explanations in the future determining that the PRC subsidiaries’ business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. The PRC subsidiaries’ ability to expand their business or maintain or expand their market share through future acquisitions would as such be materially and adversely affected.

Risks Relating to Our Business and Industry

The operating entity operates in a highly-competitive market and its failure to compete effectively could adversely affect its results of operations.

The veterinary vaccine industry in China is highly-competitive and rapidly evolving, with many new companies joining the competition in recent years and few leading companies. The operating entity competes or plans to compete with manufacturers of veterinary vaccines. See “Business — Competition.” Some of its competitors and potential competitors have greater product development capabilities and financial, scientific, marketing, and human resources than we do. Technological competition from biopharmaceutical companies and biotechnology companies is intense and is expected to increase. Other companies have developed technologies that could be the basis for competitive products. Some of these products have an entirely different approach or means of accomplishing the desired curative effect than products we are developing. Alternative products may be developed that are more effective, work faster, and are less costly than our products. Competitors may succeed in developing products earlier than us, obtaining approvals and clearances for such products more rapidly than the operating entity, or developing products that are more effective than its. In addition, other forms of treatment may be competitive with its products. Over time, its technology or products may become obsolete or uncompetitive.

Perceived adverse effects on human health linked to the consumption of food derived from animals that utilize the operating entity’s products could cause a decline in the sales of such products.

The operating entity’s livestock business depends heavily on a healthy and growing livestock industry. If the public perceives a risk to human health from the consumption of the food-producing animals that utilize the operating entity’s products, there may be a decline in the production of such food products and, in return, demand for the operating entity’s products. For example, livestock producers may experience decreased demand for their products or reputational

harm as a result of evolving consumer views of animal rights, nutrition and health-related or other concerns. Any reputational harm to the livestock industry may also extend to companies in related industries, including the operating entity and thus, our company. Adverse consumer views related to the use of one or more of the operating entity’s products in livestock also may result in a decrease in the use of such products and could have a material adverse effect on both the operating entity’s and our operating results and financial condition.

Increased regulation relating to the raising, processing or consumption of food-producing animals could reduce demand for the operating entity’s livestock products.

Companies in the livestock industries are subject to extensive and increasingly stringent regulations. If livestock producers are adversely affected by new regulations or changes to existing regulations, they may reduce herd sizes or become less profitable and, as a result, they may reduce their use of the operating entity’s products, which may materially adversely affect both the operating entity’s and our operating results and financial condition. Furthermore, adverse regulations related, directly or indirectly, to the use of one or more of the operating entity’s products may injure livestock producers’ market position. More stringent regulation of the livestock industry or the operating entity’s products could have a material adverse effect on both the operating entity’s and our operating results and financial condition.

The operating entity’s business is subject to risk based on customer exposure to rising costs and reduced customer income.

Feed, fuel and transportation and other key costs for livestock producers may increase or animal protein prices or sales may decrease. Either of these trends could cause deterioration in the financial condition of the operating entity’s livestock product customers, potentially inhibiting their ability to purchase the operating entity’s products or pay it for products delivered. The operating entity’s livestock product customers may offset rising costs by reducing spending on the operating entity’s products, including by switching to lower-cost alternatives to the operating entity’s products, which could have a material adverse effect on both the operating entity’s and our operating results and financial condition.

The operating entity may not successfully acquire and integrate other businesses, license rights to technologies or products, form and manage alliances or divest businesses.

The operating entity may pursue acquisitions, technology licensing arrangements, strategic alliances or divestitures of some of its businesses as part of the business strategy. The operating entity may not complete these transactions in a timely manner, on a cost-effective basis or at all. In addition, it may be subject to regulatory constraints or limitations or other unforeseen factors that prevent it from realizing the expected benefits. Even if it is successful in making an acquisition, the products and technologies that are acquired may not be successful or may require significantly greater resources and investments than originally anticipated. It may be unable to integrate acquisitions successfully into its existing business, and it may be unable to achieve expected gross margin improvements or efficiencies. It also could incur or assume significant debt and unknown or contingent liabilities. Its reported results of operations could be negatively affected by acquisition or disposition-related charges, amortization of expenses related to intangibles and charges for impairment of long-term assets. It may be subject to litigation in connection with, or as a result of, acquisitions, dispositions, licenses or other alliances, including claims from terminated employees, customers or third parties, and it may be liable for future or existing litigation and claims related to the acquired business, disposition, license or other alliance because either it is not indemnified for such claims or the indemnification is insufficient. These effects could cause it to incur significant expenses and could materially adversely affect both its and our operating results and financial condition.

The operating entity’s research and development, acquisition and licensing efforts may fail to generate new products and brand life-cycle developments.

Our future success depends on both the existing product portfolio and the pipeline of new products, including new products that the operating entity may develop and products that it is able to obtain through license or acquisition. The operating entity commits substantial effort, funds and other resources to research and development, both through its own dedicated resources and through collaborations with third parties.

The operating entity may be unable to determine with accuracy when or whether any of its products now under development will be approved or launched, or it may be unable to develop, license or otherwise acquire product candidates or products. In addition, it cannot predict whether any products, once launched, will be commercially successful or will achieve sales and revenue that are consistent with its expectations. Furthermore, the timing and cost of its research and development may increase, making the research and development less predictable. For example, changes in regulations applicable to animal health industry may make it more time-consuming and/or costly to research, test and develop products.

The operating entity expects to enter into collaboration or licensing arrangements with third parties to provide it with access to certain technology for purposes of its business. Such agreements are typically complex and require time to negotiate and implement. If it enters into these arrangements, it may not be able to maintain these relationships or establish new ones in the future on acceptable terms or at all. In addition, any collaboration that it enters into may not be successful, and the success may depend on the efforts and actions of its collaborators, which it may not be able to control. If it is unable to access to certain technology to conduct research and development on cost-effective terms, its ability to develop new products could be limited. As a result, both the operating entity’s and our operating results and financial condition could be materially and adversely affected.

Advances in veterinary medical practices and animal health technologies could negatively affect the market for the operating entity’s products.

The market for the operating entity’s products could be impacted negatively by the introduction and/or broad market acceptance of newly-developed or alternative products that address the diseases and conditions for which it sells products, including “green” or “holistic” health products or specially bred disease-resistant animals. In addition, technological breakthroughs by others may obviate the operating entity’s technology and reduce or eliminate the market for the operating entity’s products. Introduction or acceptance of such products or technologies could materially adversely affect both the operating entity’s and our operating results and financial condition.

The operating entity’s research and development relies on evaluations in animals.

As a veterinary vaccines business, the evaluation of the operating entity existing and new products in animals is required to register its products. Animal testing in certain industries has been the subject of controversy and adverse publicity. Some organizations and individuals have attempted to ban animal testing or encourage the adoption of additional regulations applicable to animal testing. To the extent that the activities of such organizations and individuals are successful, the operating entity’s research and development, and by extension its and our operating results and financial condition, could be materially adversely affected. In addition, negative publicity about the operating entity or the veterinary vaccines industry could harm the operating entity’s reputation.

Manufacturing problems may cause product launch delays, inventory shortages, recalls or unanticipated costs.

Minor deviations in the manufacturing processes, such as temperature excursions or improper package sealing, could result in delays, inventory shortages, unanticipated costs, product recalls, product liability and/or regulatory action. In addition, a number of factors could cause production interruptions, including:

•        the failure of the operating entity or any of its vendors or suppliers to comply with applicable regulations and quality assurance guidelines;

•        construction delays;

•        equipment malfunctions;

•        shortages of materials;

•        labor problems;

•        natural disasters;

•        power outages;

•        terrorist activities;

•        changes in manufacturing production sites and limits to manufacturing capacity due to regulatory requirements, changes in types of products produced, shipping distributions or physical limitations; and

•        the outbreak of any highly contagious diseases near the production sites.

These interruptions could result in launch delays, inventory shortages, recalls, unanticipated costs or issues with the operating entity’s agreements under which it supplies third parties, which may adversely affect both the operating entity’s and our operating results.

The operating entity may fail to detect or cure defects of its products.

Despite the quality control management system, the operating entity cannot eliminate the risks of errors, defects, or failures. The operating entity may fail to detect or cure defects as a result of a number of factors, many of which are outside its control, including:

•        technical or mechanical malfunctions in the production process;

•        human error or malfeasance by quality control personnel;

•        tampering by third parties; and

•        defective raw materials or equipment.

Failure to detect quality defects in the products could result in animal illness, customer dissatisfaction, or other problems that could harm the operating entity’s reputation and business, expose it to liability, and adversely affect its revenue and profitability. Relevant PRC laws and regulations were formulated to strengthen the administration of rules pertaining to product quality, as well as to clarify the rules on product liability, protect consumers and maintain social and economic order. Products offered for sale in China must meet the relevant quality and safety standards. Violations of state or industrial standards for health, safety and any other related violations may result in civil liabilities and penalties, such as compensation for damages, fines, suspension, or shutdown of business, as well as confiscation of products illegally produced for sale and the sales proceeds of such products. As a result, it could materially adversely affect both the operating entity’s and our operating results and financial condition.

The misuse or off-label use of the operating entity’s products may harm the operating entity’s reputation or result in financial or other damages.

The operating entity’s products have been approved for use under specific circumstances for the treatment of certain diseases and conditions in specific species. There may be increased risk of product liability if veterinarians, livestock producers, pet owners or others attempt to use the products off-label, including the use of the products in species for which they have not been approved. Furthermore, the use of the operating entity’s products for indications other than those indications for which its products have been approved may not be effective, which could harm the operating entity’s reputation and lead to an increased risk of litigation. If the operating entity is deemed by a governmental or regulatory agency to have engaged in the promotion of any of its products for off-label use, such agency could request that it modifies its training or promotional materials and practices and it could be subject to significant fines and penalties, and the imposition of these sanctions could also affect its reputation and position within the industry. Any of these events could materially adversely affect both the operating entity’s and our operating results and financial condition.

We derive a significant portion of our revenue from swine vaccines and any reduction in demand of swine vaccines could have an adverse effect on our business, financial condition, results of operations, cash flows, and prospects.

We derive a significant portion of our revenue from the sale of swine vaccines. For the fiscal years ended December 31, 2023 and 2022, our revenue from the sale of swine vaccines amounted to approximately US$26.6 and US$33.2 million, or approximately 89.3% and 90.5% of our revenue, respectively. For details on the swine vaccines sold by our Company, please see the section entitled “Business — Products”. Consequently, any reduction in demand of swine vaccines could have an adverse effect on our business, financial condition, results of operations, cash flows and prospects.

Animal health products are subject to unanticipated safety or efficacy concerns, which may harm the operating entity’s reputation.

Unanticipated safety or efficacy concerns can arise with respect to animal health products, whether or not scientifically or clinically supported, leading to product recalls, withdrawals or suspended or declining sales, as well as product liability, and other claims. In addition, the operating entity depends on positive perceptions of the safety and quality of its products, and animal health products generally, by its customers, veterinarians and end-users, and such concerns may harm its reputation. These concerns and the related harm to its reputation could materially adversely affect the operating entity’s and our operating results and financial condition, regardless of whether such reports are accurate.

Our historical growth rates and performance may not be sustainable or indicative of our future growth and financial results. We cannot guarantee that we will be able to maintain the growth rate we have experienced to date.

We have grown rapidly over the last few years. Our revenue increased from RMB214.1 million ($30.2 million) in the fiscal year ended December 31, 2021 to RMB260.3 million ($36.7 million) in the fiscal year ended December 31, 2022. Our revenue decreased to RMB211.7 million ($29.8 million) for the fiscal year ended December 31, 2023. However, our historical performance may not be indicative of our future growth or financial results. We cannot assure you that we will be able to grow at the same rate as we did in the past, or avoid any decline in the future. Our growth may slow or become negative, and revenue may decline for a number of possible reasons, some of which are beyond our control, including decreasing consumer spending, increasing competition, declining growth of our overall market or industry, the emergence of alternative business models and changes in rules, regulations, government policies, or general economic conditions. It is difficult to evaluate our prospects, as we may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may be exposed. If our growth rate declines, our business, financial condition and results of operations may be materially and adversely affected.

COVID-19 Affects our Results of Operations.

The COVID-19 pandemic has resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus. In January 2020, the Chinese governments issued a series of policies to prevent the spread of COVID-19. In March 2022, a new wave of COVID-19 outbreak hit Jilin Province, particularly Changchun City and Jilin City. The resulting closure measures lasted for around two months and significantly impacted the social and industrial activities of Jilin City where the operating entity is situated. Particularly, the area where the operating entity operates was classified as a high-risk zone. As a result, the operating entity’s operational performance was affected.

For the fiscal years ended December 31, 2022 and 2021, the Company and the operating entity did not experience a significant negative impact of COVID-19 on their operations, capital, and financial position. Our revenue reached approximately RMB260.3 million for the fiscal year ended December 31, 2022, representing an increase of approximately RMB46.2 million or 21.6% from approximately RMB214.1 million for the fiscal year ended December 31, 2021. For the fiscal year ended December 31, 2023, our revenue reached approximately RMB211.7 million ($29.8 million), representing a decrease of approximately RMB48.6 million or 18.7%.

In December 2022, the COVID-19 restriction policies in China were gradually loosened and lifted, both locally and nationally. Starting from January 2023, among other changes, China no longer conducts nucleic acid tests and centralized quarantine for all inbound travelers, and measures to control the number of international passenger flights will be lifted.

The extent of the impact of COVID-19 on the Company’s future financial results will be dependent on future developments such as the length and severity of the pandemic, the potential resurgence of the pandemic, future government actions in response to the pandemic and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity and results of operations if the current situation continues.

The operating entity’s business is subject to inherent risks relating to product liability.

At present, the veterinary vaccines produced by the operating entity cover animals such as pigs, chickens, ducks, cattle, sheep, dogs. The quality of the veterinary vaccines is directly related to the prevention effect of animal epidemics. If the operating entity’s vaccine products do not meet the quality standard, it will not only fail to achieve the immune effect and cause disease transmission but also may produce serious immune side effects, leading to the death of animals and causing economic losses to farmers, which will adversely affect its brand, reputation, and market influence of the enterprise, and the operating entity will have to pay a certain fee.

In addition, the operating entity may be held liable if any product we develop, or any product which is made using our technologies, causes injury or is found unsuitable during product testing, manufacturing, marketing, sale, or use. These risks are inherent in the development of veterinary vaccines and bio-pharmaceutical products. The operating entity currently does not have sufficient product liability insurance. If it cannot obtain sufficient insurance coverage at an acceptable cost or otherwise protect against potential product liability claims, the commercialization of products that it develops may be prevented or inhibited. If the operating entity is sued for any injury caused by its products, its liability could exceed its total assets, which could materially harm its business, financial condition and results of operations.

The operating entity’s business will be materially and adversely affected if its collaborative partners, licensees and other third parties over whom the operating entity is very dependent fail to perform as expected.

Due to the complexity of the process of developing bio-pharmaceuticals, the operating entity’s core business depends on arrangements with bio-pharmaceutical institutes, corporate and academic collaborators, licensors, licensees and others for the research, development, clinical testing, technology rights, manufacturing, marketing and commercialization of our products. The operating entity has various research collaborations and outsource other business functions. The operating entity’s license agreements could obligate it to diligently bring potential products to market, make substantial milestone payments and royalties and incur the costs of filing and prosecuting patent applications. There are no assurances that the operating entity will be able to establish or maintain collaborations that are important to its business on favorable terms, or at all. The operating entity could enter into collaborative arrangements for the development of particular products that may lead to its relinquishing some or all rights to the related technology or products. A number of risks arise from the operating entity’s dependence on collaborative agreements with third parties. Product development and commercialization efforts could be adversely affected if any collaborative partner (i) terminates or suspends its agreement or arrangement with the operating entity; (ii) causes delays; (iii) fails to timely develop or manufacture in adequate quantities a substance needed in order to conduct clinical trials; (iv) fails to adequately perform clinical trials; (v) determines not to develop, manufacture or commercialize a product to which it has rights; or (vi) otherwise fails to meet its contractual obligations. In addition, the operating entity’s collaborative partners could pursue other technologies or develop alternative products that could compete with the products the operating entity is developing.

The operating entity’s business requires a number of permits and licenses. We cannot assure you that the operating entity can maintain all required licenses, permits and certifications to carry on its business at all times.

Before the operating entity’s products can be profitable, they must be produced in commercial quantities in a cost-effective manufacturing process that complies with regulatory requirements, such as China’s GMP, production and quality control regulations. If the operating entity cannot arrange for or maintain commercial-scale manufacturing on acceptable terms, or if there are delays or difficulties in the manufacturing process, the operating entity may not be able to conduct clinical trials, obtain regulatory approval or meet demand for its products.

The operating entity has obtained certificates, permits, and licenses required for the operation of a bio-pharmaceutical enterprise and the manufacturing of veterinary vaccines in the PRC. However, we cannot assure you that the operating entity can maintain all the other required licenses, permits and certifications to carry on its business at all times, and in the past from time to time the operating entity may have not been in compliance with all such required licenses, permits and certifications. Moreover, these licenses, permits and certifications are subject to periodic renewal and/or reassessment by the relevant PRC governmental authorities and the standards of such renewal or reassessment may change from time to time. The operating entity intends to apply for the renewal of these licenses, permits and certifications when required by then applicable laws and regulations. Any failure by the operating entity to obtain and maintain all licenses, permits and certifications necessary to carry on its business at any time could have a material

adverse effect on its business, financial condition and results of operations. In addition, any inability to renew these licenses, permits and certifications could severely disrupt the operating entity’s business and prevent it from continuing to carry on its business. Any changes in the standards used by governmental authorities in considering whether to renew or reassess the operating entity’s business licenses, permits and certifications, as well as any enactment of new regulations that may restrict the conduct of its business, may also decrease its revenue and/or increase its costs and materially reduce its profitability and prospects. Furthermore, if the interpretation or implementation of existing laws and regulations changes or if new regulations come into effect requiring the operating entity to obtain any additional licenses, permits or certifications that were previously not required to operate its existing businesses, we cannot assure you that the operating entity will successfully obtain such licenses, permits or certifications.

The operating entity’s ability to generate more revenue would be adversely affected if it needs more clinical trials or take more time to complete its clinical trials than it has planned.

Clinical trials vary in design by factors including dosage, end points, length, and controls. The operating entity may need to conduct a series of trials to demonstrate the safety and efficacy of its products. The results of these trials may not demonstrate safety or efficacy sufficiently for regulatory authorities to approve its products. Further, the actual schedules for the operating entity’s clinical trials could vary dramatically from the forecasted schedules due to factors including changes in trial design, conflicts with the schedules of participating clinicians and clinical institutions, and changes affecting product supplies for clinical trials. Delays in or failure to commence or complete any planned clinical trials could delay the ultimate timelines for the operating entity’s product releases. Such delays could reduce investors’ confidence in the operating entity’s ability to develop products, likely causing the price of our Ordinary Shares to decrease.

If we cannot retain, attract, and motivate key personnel, we may be unable to effectively implement our business plan.

Our success depends in large part upon our ability to retain, attract, and motivate highly skilled management, research and development, marketing, and sales personnel. The loss of and failure to replace key technical management and personnel could adversely affect multiple development efforts. Recruitment and retention of senior management and skilled technical, sales and other personnel is very competitive, and we may not be successful in either attracting or retaining such personnel. We may lose key personnel to other high technology companies, and many larger companies with significantly greater resources than us may aggressively recruit key personnel. As part of our strategy to attract and retain key personnel, we may offer equity compensation through grants of share options, restricted share awards or restricted share units. Potential employees, however, may not perceive our equity incentives as attractive enough. In addition, due to the intense competition for qualified employees, we may be required to, and have had to, increase the level of compensation paid to existing and new employees, which could materially increase our operating expenses.

If the operating entity is unable to obtain the regulatory approvals or clearances that are necessary to commercialize its products, we will have less revenue than expected.

China and other countries impose significant statutory and regulatory obligations upon the manufacture and sale of bio-pharmaceutical products. Each regulatory authority typically has a lengthy approval process in which it examines pre-clinical and clinical data and the facilities in which the product is manufactured. Regulatory submissions must meet complex criteria to demonstrate the safety and efficacy of the ultimate products. Addressing these criteria requires considerable data collection, verification and analysis. We may spend time and money preparing regulatory submissions or applications without assurances as to whether they will be approved on a timely basis or at all.

The operating entity’s product candidates, some of which are currently in the early stages of development, will require significant additional development and pre-clinical and clinical testing prior to their commercialization. These steps and the process of obtaining required approvals and clearances can be costly and time-consuming. If the operating entity’s potential products are not successfully developed, cannot be proven to be safe and effective through clinical trials, or do not receive applicable regulatory approvals and clearances, or if there are delays in the process, (i) the commercialization of the operating entity’s products could be adversely affected; (ii) any competitive advantages of the products could be diminished; and (iii) revenue or collaborative milestones from the products could be reduced or delayed.

Governmental and regulatory authorities may approve a product candidate for fewer indications or narrower circumstances than requested or may condition approval on the performance of post-marketing studies for a product candidate. Even if a product receives regulatory approval and clearance, it may later exhibit adverse side effects that limit or prevent its widespread use or that force us to withdraw the product from the market. Any marketed product and its manufacturer, including the operating entity, will continue to be subject to strict regulation after approval. Results of post-marketing programs may limit or expand the further marketing of products. Unforeseen problems with an approved product or any violation of regulations could result in restrictions on the product, including its withdrawal from the market and possible civil actions.

In manufacturing the operating entity’s products, the operating entity are required to comply with applicable GMP regulations, which include requirements relating to quality control and quality assurance, as well as the maintenance of records and documentation. If the operating entity cannot comply with regulatory requirements, including applicable GMP requirements, the operating entity may not be allowed to develop or market the product candidates. If the operating entity or its manufacturers fail to comply with applicable regulatory requirements at any stage during the regulatory process, the operating entity may be subject to sanctions, including fines, product recalls or seizures, injunctions, refusal of regulatory agencies to review pending market approval applications or supplements to approve applications, total or partial suspension of production, civil penalties, withdrawals of previously approved marketing applications and criminal prosecution.

The operating entity sources its raw materials used for manufacturing from a limited number of suppliers. If it loses one or more of the suppliers, its operation may be disrupted, and both the operating entity’s and our results of operations may be adversely and materially impacted.

For the fiscal year ended December 31, 2023, there was no supplier accounted above 10% of the Company’s total purchases. For the fiscal year ended December 31, 2022, two of the operating entity’s suppliers accounted for 25.3% and 12.9% of the total purchases, respectively. For the year ended December 31, 2021, three of the operating entity’s suppliers accounted for 20.5%, 13.0% and 10.1% of the total purchases, respectively. If the operating entity loses suppliers and is unable to swiftly engage new suppliers, its operations may be disrupted or suspended, and it may not be able to deliver products to its customers on time. The operating entity may also have to pay a higher price to source from a different supplier on short notice. While the operating entity is actively searching for and negotiating with new suppliers, there is no guarantee that it will be able to locate appropriate new suppliers or supplier merger targets in its desired timeline. As such, both the operating entity’s and our results of operations may be adversely and materially impacted.

High customer concentration exposes the operating entity to all of the risks faced by its major customer and may subject it to significant fluctuations or declines in revenue, which may have a material adverse impact on the operating entity’s business, and its and our financial condition and results of operations.

For the fiscal year ended December 31, 2023, two customers, Muyuan Foods Co., Ltd. (“MYF”) and Shuangbaotai (Group) Corporation Limited, account for more than 10.0% of the Company’s total revenue, accounting for 52.1% and 14.95% of total revenue, respectively. For the fiscal years ended December 31, 2022 and 2021, MYF is the only customer that accounts for more than 10.0% of the Company’s total revenue, accounting for 74.5% and 55.6% of total revenue, respectively. Although the operating entity continually seeks to diversify its customer base, we cannot assure you that the proportion of the revenue contribution from these customers to the operating entity’s total revenue will decrease in the near future. Dependence on these customers will expose the operating entity to the risks of substantial losses. Specifically, any one of the following events, among others, may cause material fluctuations or declines in the operating entity’s revenue and have a material and adverse effect on the operating entity’s business, and both its and our financial condition, and results of operations:

•        an overall decline in the business of these customers;

•        the decision by these customers to switch to the operating entity’s competitors;

•        the reduction in the prices of the operating entity’s products agreed by these customers; or

•        the failure or inability of any of these customers to make timely payment for the operating entity’s products.

If the operating entity fails to maintain relationships with these customers, and if it is unable to find replacement customers on commercially desirable terms or in a timely manner or at all, the operating entity business, both its and our financial condition and results of operations may be materially and adversely affected.

Fluctuations in market conditions and dynamics of demand and supply could have a material adverse effect on our business, financial condition, and results of operations.

Market volatility can lead to rapid changes in product pricing, availability of raw materials, and customer demand which could adversely impact our profitability. Additionally, unforeseen shifts in market preferences or the entry of new competitors could alter the supply and demand balance, affecting our sales and market share. Our business, financial condition, and results of operations could be materially and adversely affected by variations in market conditions as well as fluctuations in the demand and supply of our products.

Damage to our brand image could have a material adverse effect on our growth strategy and our business, financial condition, results of operations and prospects.

Maintaining and enhancing our brand is critical to expanding our base of customers. Our ability to maintain and enhance our brand depends largely on our ability to maintain customer confidence in our product and service offerings, including by providing after-sales services and technical guidance to customers. If customers do not have a satisfactory experience with our products or services, our customers may seek out alternatives from our competitors and may not return to us in the future, or at all.

In addition, unfavorable publicity regarding, for example, our practices relating to privacy and data protection, product quality, delivery problems, competitive pressures, litigation or regulatory activity, could seriously harm our reputation. Such negative publicity also could have an adverse effect on the size, engagement, and loyalty of our customer base and result in decreased total revenue which could adversely affect our business, financial condition and results of operations. Customer complaints or negative publicity about our marketplace, products, delivery times, company practices, employees, customer data handling and security practices or customer support, especially on social media websites and in our marketplace, could rapidly and severely diminish our customers’ confidence in us and result in harm to our brands.

If the operating entity cannot successfully protect its intellectual property and exclusive rights, our brand and business would suffer.

The operating entity relies on a combination of trademark, copyright, domain name and trade secret protection laws in China, as well as confidentiality procedures and contractual provisions, to protect its intellectual property rights and other exclusive rights. The operating entity also enters into agreements containing confidentiality obligations with its employees and any third parties who may access its proprietary technology and information, and the operating entity rigorously controls access to its proprietary technology and information.

Nevertheless, we cannot guarantee that the operating entity can successfully protect its intellectual property and exclusive rights from unauthorized usage by third parties or breach of confidentiality obligations by its counterparties. For example, there could be other competitors imitating or copying the operating entity’s self-developed products without the operating entity’s prior consent, which may harm its reputation and operations. Furthermore, a third-party may take advantage of the “first-to-file” trademark registration system in China to register the operating entity’s brands in bad faith, which will cause the operating entity to incur additional costs for legal actions. Moreover, confidentiality obligations may be breached by counterparties, and there may not be adequate remedies available to the operating entity for any such breach. Accordingly, the operating entity may not be able to effectively protect its intellectual property rights and exclusive rights or to enforce its contractual rights in China or elsewhere. Moreover, although the operating entity sells its products outside of the PRC, it does not have any intellectual property protection in those foreign countries. Failure to protect its intellectual properties in these countries could have a material adverse effect on both our and the operating entity’s business, financial condition and results of operations.

In addition, policing any unauthorized use of the operating entity’s intellectual property and exclusive rights is difficult, time-consuming and costly. The precaution steps the operating entity has taken for protecting our rights may be inadequate. In the event that the operating entity resorts to litigation to enforce its intellectual property rights and exclusive rights, such litigation could result in substantial costs and a diversion of the operating entity’s managerial and financial resources. We can provide no assurance that the operating entity will prevail in such litigation or that the operating entity would be able to halt any unauthorized use of its intellectual property and exclusive rights. In addition, the operating entity’s trade secrets may be leaked to, or be independently discovered by, its competitors. Any failure in protecting or enforcing the operating entity’s intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

The operating entity may be accused of infringing, misappropriating or otherwise violating the intellectual property rights of third parties.

We cannot assure you that the operating entity’s product design, offerings, or technologies do not or will not infringe upon copyrights or other intellectual property rights (including, but not limited to, trademarks, patents and know-how) held by third parties. For example, the design of third-party products and the operating entity’s products may be similar and result in intellectual property disputes. Nor can we assure you that the operating entity’s use of software or any other intellectual properties in business and operation will not be alleged by any third party as infringement resulting from lack of licenses. If any third-party infringement claims are brought against the operating entity, the operating entity may be forced to divert management’s time and other resources from its business and operations to defend against these claims. The operating entity may also be prohibited from using such intellectual property or relevant content. As a result, the operating entity may incur licensing or usage fees, develop alternatives of its own, or even need to pay damages, legal fees and other costs. Even if such assertions against the operating entity are unsuccessful, they may cause the operating entity to lose existing and future business and incur reputational harm and substantial legal fees. As a result, our reputation may be harmed and our business and financial performance may be materially and adversely affected.

We are subject to legal and regulatory proceedings from time to time in the ordinary course of our business.

We have not been subject to any material allegations or complaints in the past, but we may be involved in legal and other disputes in the ordinary courses of our business, including allegations against us for potential infringement of third-party copyrights or other intellectual property rights, as well as customer complaints in relation to our refund policy, the quality of our services, and other dissatisfaction. We might also be involved in governmental investigations for content posted on our websites or other aspect of our business operation in the future. Any claims against us, with or without merit, could be time-consuming and costly to defend or litigate, divert our management’s attention and resources or harm our brand equity. If a lawsuit or governmental proceeding against us is successful, we may be required to pay substantial damages or fines. We may also lose, or be limited in, the rights to offer some of our products and services or be required to make changes to our content offerings or business model. As a result, the scope of our content, product and service offerings could be reduced, which could adversely affect our ability to attract new customers, harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

Moreover, becoming a public company will raise our public profile, which may result in increased litigation as well as increased public awareness of any such litigation. There is substantial uncertainty regarding the scope and application of many of the laws and regulations to which we are subject, which increases the risk that we will be subject to claims alleging violations of those laws and regulations. In the future, we may also be accused of having, or be found to have, infringed, misappropriated or otherwise violated third-party intellectual property rights.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

We are facilitating overseas business development. The U.S. Foreign Corrupt Practices Act and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. Practices in the local business communities of many countries outside the United States have a level of government corruption that is greater than that found in the developed world. Our policies mandate compliance with these anti-bribery laws and we have established policies and procedures designed to monitor compliance with these anti-bribery law requirements; however, we cannot assure you that our policies and procedures will protect us from all potential reckless or criminal acts committed by individual employees or agents. If we are found to be liable for anti-bribery law violations, we could suffer from criminal or civil penalties or other sanctions that could have a material adverse effect on our business.

Risks Relating to this Offering and the Trading Market

There has been no public market for our Ordinary Shares prior to this offering, and you may not be able to resell our Ordinary Shares at or above the price you pay for them, or at all.

Prior to this offering, there has not been a public market for our Ordinary Shares. We submitted our application for the listing of our Ordinary Shares on the Nasdaq Capital Market. At this time, Nasdaq has not yet approved our application to list our Ordinary Shares. An active public market for our Ordinary Shares, however, may not develop or be sustained after the offering, in which case the market price and liquidity of our Ordinary Shares will be materially and adversely affected.

The initial public offering price for our Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.

The initial public offering price for our Ordinary Shares will be determined by negotiations between us and the underwriters and may not bear a direct relationship to our earnings, book value, or any other indicia of value. We cannot assure you that the market price of our Ordinary Shares will not decline significantly below the initial public offering price. The financial markets in the United States and other countries have experienced significant price and volume fluctuations in the last few years. Volatility in the price of our Ordinary Shares may be caused by factors outside of our control and may be unrelated or disproportionate to changes in our results of operations.

You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares purchased.

The initial public offering price of our Ordinary Shares is substantially higher than the net tangible book value per share of our Ordinary Shares. Consequently, when you purchase our Ordinary Shares in the offering, upon completion of the offering you will incur immediate dilution of $[•] per share, assuming an initial public offering price of $[•]. See “Dilution.” In addition, you may experience further dilution to the extent that additional Ordinary Shares are issued upon exercise of outstanding options we may grant from time to time.

If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Ordinary Shares may be materially and adversely affected.

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. The material weakness identified relates to (i) the lack of formal internal control policies and internal independent supervision functions to establish formal risk assessment process and internal control framework over financing reporting; (ii) the lack of accounting staff and resources with appropriate knowledge of generally accepted U.S. GAAP and SEC reporting and compliance requirements to design and implement formal period-end financial reporting policies and procedures to address complex U.S. GAAP technical accounting issue in accordance with U.S. GAAP and the SEC requirements.

Following the identification of the material weaknesses and control deficiencies, we have taken the following remedial measures: (i) hiring additional qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP accounting and SEC reporting; and (ii) organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements. As of the date of this prospectus, we have hired one Certified Internal Auditor of the Institute of Internal Auditors and one Certified Management Accountant of the Institute of Certified Management Accountants USA. We also plan to adopt additional measures to improve our internal control over financial reporting, including, among others, creating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed, and updated, on a regular basis, to the latest U.S. GAAP accounting standards, and establishing an audit committee and strengthening corporate governance.

However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our second annual report after becoming a public company. In addition, once we cease to be an “emerging growth company,” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified, if it is not satisfied with our internal controls or the level

at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.

We will incur substantial increased costs as a result of being a public company.

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

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

We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

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

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

Substantial future sales of our Ordinary Shares or the anticipation of future sales of our Ordinary Shares in the public market could cause the price of our Ordinary Shares to decline.

Sales of substantial amounts of our Ordinary Shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our Ordinary Shares to decline. An aggregate of [•] Ordinary Shares are outstanding before the consummation of this offering. An aggregate of [•] Ordinary Shares will be outstanding immediately after the consummation of this offering. Sales of these shares into the market could cause the market price of our Ordinary Shares to decline.

We do not intend to pay dividends in the foreseeable future.

During the fiscal years ended December 31, 2023 and 2022, dividends and distributions made by the operating entity to its original shareholders amounted to RMB51.8 million and RMB21.4 million, respectively. On April 28, 2023, the shareholders’ meeting of the operating entity passed the resolution of the dividend plan for 2022, with the dividend amount of RMB55.1 million, and the dividend has been distributed in April  2024.

Except as disclosed above, we currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline.

Any trading market for our Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Ordinary Shares and the trading volume to decline.

The market price of our Ordinary Shares 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 initial public offering price.

The initial public offering price for our Ordinary Shares will be determined through negotiations between the underwriters and us and may vary from the market price of our Ordinary Shares following our initial public offering. If you purchase our Ordinary Shares in our initial public offering, you may not be able to resell those shares at or above the initial public offering price. We cannot assure you that the initial public offering price of our Ordinary Shares, or the market price following our initial public offering, will equal or exceed prices in privately negotiated transactions of our shares that have occurred from time to time prior to our initial public offering. The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

•        actual or anticipated fluctuations in our revenue and other operating results;

•        the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

•        actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors;

•        announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

•        price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

•        lawsuits threatened or filed against us; and

•        other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

The price of our Ordinary Shares could be subject to rapid and substantial volatility. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with a relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades, and large spreads in bid and ask prices. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence the price of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional Ordinary Shares or other of our securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

Our management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance our results of operations or the price of our Ordinary Shares.

We anticipate that we will use the net proceeds from this offering to acquire vaccine production companies and conduct research and development (“R&D”) projects. Our management will have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of our Ordinary Shares.

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.

We expect to qualify as a foreign private issuer upon the completion of this offering. As a foreign private issuer, we will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we will not be required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently expect to qualify as a foreign private issuer immediately following the completion of this offering, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of our Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors.

If we cannot continue to satisfy the listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

We plan to apply to have our Ordinary Shares listed on the Nasdaq Capital Market upon consummation of this offering. It is a condition to the closing of this offering that our Ordinary Shares qualify for listing on a national securities exchange. Following this offering, in order to maintain our listing on the Nasdaq Capital Market, we will be required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.

If the Nasdaq Capital Market subsequently delists our securities from trading, we could face significant consequences, including:

•        a limited availability for market quotations for our securities;

•        reduced liquidity with respect to our securities;

•        a determination that our Ordinary Shares are a “penny stock,” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares;

•        limited amount of news and analyst coverage; and

•        a decreased ability to issue additional securities or obtain additional financing in the future.

Anti-takeover provisions in our articles of association may discourage, delay, or prevent a change in control.

Some provisions of our post-offering articles of association, which will become effective upon the completion of this offering, may discourage, delay, or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, provisions that authorize our board of directors to issue shares with preferred, deferred, or other special rights or restrictions without any further vote or action by our shareholders.

Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares.

For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. Further, we elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile. See “Implications of Our Being an Emerging Growth Company.”

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

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and by the common law of the Cayman Islands. The rights of shareholders to take action

ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated under the laws of the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. The Cayman Islands, however, has a less developed body of securities laws as compared to the United States and provides significantly less protection for investors than the United States. Additionally, Cayman Islands companies may not have standing to sue in the Federal courts of the United States.

Substantially all of our assets are located in China. In addition, except for one director, Mrs. Wenhua Sun, who is a resident of the U.S., the rest of our directors and all of our officers are nationals or residents of the PRC and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

Conyers Dill & Pearman (“Conyers”), our counsel with respect to the laws of the Cayman Islands, Guantao, our counsel with respect to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Conyers has further advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States, the courts of the Cayman Islands would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the federal or state courts of the United States against us under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an in personam judgment for non-monetary relief, and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from United States courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

Guantao has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. There are no treaties or other forms of reciprocity between China and the United States for the mutual recognition and enforcement of court judgments. Guantao has further advised us that under PRC law, PRC courts will not enforce a foreign judgment against us or our officers and directors if the court decides that such judgment violates the basic principles of PRC law or national sovereignty, security or public interest, thus making the recognition and enforcement of a U.S. court judgment in China difficult.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of [•] Ordinary Shares in this offering will be approximately $[•], after deducting the underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us, based on the assumed initial public offering price of $[•] per Ordinary Share, the midpoint of the estimated price range set forth on the cover page of this prospectus.

A US$1.0 increase (decrease) in the assumed initial public offering price of US$[•] per Ordinary Share would increase (decrease) the net proceeds to us from this offering by US$[•] million, or by US$[•] million assuming the number of Ordinary Shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.

We plan to use the net proceeds we receive from this offering for the following purposes:

•        approximately 50%, or RMB30.1 million, or US$4.2 million, for acquiring vaccine production companies; and

•        approximately 50%, or RMB29.9 million, or US$4.2 million, for conducting R&D projects.

With regard to the Company’s intention to use 50% of the net proceeds to conduct R&D projects, please see below table which shows the types of R&D projects the operating entity plans to conduct and pertinent details.

With the net proceeds from the offering, the Company expects to complete all R&D projects in the above table, including completing the clinical trials and receive Registration Certificates of New Veterinary Drugs for the above 5 vaccines.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering, including to the R&D of mRNA vaccines and production capacity expansion. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

In using the proceeds of this offering, we are permitted under PRC laws and regulations to utilize the proceeds from this offering to fund our PRC subsidiaries by making loans or additional capital contributions, subject to applicable government registration and approval requirements. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See “Risk Factors — Risks Relating to Doing Business in the PRC — PRC administrative measures of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or limit us to use the proceeds of offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

DIVIDEND POLICY

During the fiscal years ended December 31, 2023 and 2022, dividends and distributions made by the operating entity to its original shareholders amounted to RMB51.8 million and RMB21.4 million, respectively. On April 28, 2023, the shareholders of the operating entity passed the resolution of the dividend plan for 2022, with the dividend amount of RMB55.1 million, and the dividend has been distributed in April 2024.

We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the PFIC rules, the gross amount of distributions we make to investors with respect to our Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of profit and/or share premium, provided that in no circumstances may a dividend be paid out of share premium if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business.

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our PRC subsidiary and from the operating entity to our PRC subsidiary. Dividends distributed by our subsidiaries in certain jurisdictions, such as in China, are subject to local taxes. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us.

Current PRC regulations permit Hainan Senhan, to pay dividends to Peg Biotechnology only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, Hainan Senhan is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital.

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. For instance, SAFE Circular 3 issued on January 26, 2017, provides that banks shall, when dealing with dividend remittance transactions from a domestic enterprise to its offshore shareholders of more than $50,000, review the relevant board resolutions, original tax filing form, and audited financial statements of such domestic enterprise based on the principle of genuine transaction. Furthermore, if our PRC subsidiaries incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or the PRC subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Ordinary Shares.

Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. Peg Biotechnology may be considered a non-resident enterprise for tax purposes, so that any dividends Hainan Senhan pays to Peg Biotechnology may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. See “Material Income Tax Consideration — Enterprise Taxation in Mainland China.”

In order for us to pay dividends to our shareholders, we will rely on payments from our Hong Kong subsidiary, Peg Biotechnology. Peg Biotechnology will rely on payments made from Hainan Senhan. Hainan Senhan relies on payments made from Jilin Zhengye. If the 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 distributions to us.

Pursuant to the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC resident enterprise. The 5% withholding tax rate, however, does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong resident enterprise must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (b) the Hong Kong resident enterprise must have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. In current practice, a Hong Kong resident enterprise must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to any dividends paid by Hainan Senhan to its immediate holding company, Peg Biotechnology. As of the date of this prospectus, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Peg Biotechnology intends to apply for the tax resident certificate if and when Hainan Senhan plans to declare and pay dividends to Peg Biotechnology. See “Risk Factors — Risks Relating to Doing Business in the PRC — According to the EIT Law, the PRC subsidiaries are required to comply with tax laws and regulations with respect to the withholding tax liabilities, and dividends payable by the PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.”

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2023:

•        on an actual basis; and

•        on an as adjusted basis to reflect the issuance and sale of the Ordinary Shares by us in this offering at the assumed initial public offering price of $[•] per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting the estimated discounts, non-accountable expense allowance, and estimated offering expenses payable by us.

You should read this capitalization table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes appearing elsewhere in this prospectus.

____________

(1)      Reflects the sale of Ordinary Shares in this offering at an assumed initial public offering price of $[•] per share, and after deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us. The as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us. We estimate that such net proceeds will be approximately $[•].

A $1.00 increase (decrease) in the assumed initial public offering price of $[•] per Ordinary Share would increase (decrease) each of additional paid-in capital, total shareholders’ equity and total capitalization by $[•] million, assuming the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated expenses payable by us.

DILUTION

If you invest in our Ordinary Shares, your ownership interest will be diluted to the extent of the difference between the initial public offering price per Ordinary Share and our net tangible book value per Ordinary Share after this offering. Dilution results from the fact that the initial public offering price per Ordinary Share is substantially in excess of the net tangible book value per Ordinary Share attributable to the existing shareholders for our presently outstanding Ordinary Shares.

Our net tangible book value as of December 31, 2023, was $44.3 million, or $3.88 per Ordinary Share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as adjusted for the offering) from the initial public offering price per Ordinary Share and after deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us.

After giving effect to our sale of [•] Ordinary Shares offered in this offering based on the initial public offering price of $[•] per Ordinary Share after deduction of the estimated underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us, our as adjusted net tangible book value as of December 31, 2023, would have been $[•], or $[•] per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of $[•] per Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of $[•] per Ordinary Share to investors purchasing Ordinary Shares in this offering. The as adjusted information discussed above is illustrative only.

The following table illustrates such dilution:

The as adjusted net tangible book value per Ordinary Share after the offering would be $[•], the increase in net tangible book value per Ordinary Share to existing shareholders would be $[•], and the immediate dilution in net tangible book value per Ordinary Share to new investors in this offering would be $[•].

The following tables summarize, on an as adjusted basis as of December 31, 2023, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares purchased from us, the total consideration paid and the average price per Ordinary Share before deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us.

The as adjusted information as discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our Ordinary Shares and other terms of this offering determined at the pricing.

CORPORATE HISTORY AND STRUCTURE

Our Corporate History

On May 18, 2004, Jilin Zhengye was established as a limited liability company organized under the laws of the PRC.

In connection with this offering, we have undertaken a reorganization of our corporate structure (the “Reorganization”) in the following steps:

•        On March 24, 2023, Zhengye Cayman was incorporated as an exempted company with limited liability in the Cayman Islands;

•        On April 3, 2023, VVAX Skyline was incorporated in the BVI as a company with limited liability; it is a wholly owned subsidiary of Zhengye Cayman;

•        On April 28, 2023, Peg Biotechnology was incorporated in Hong Kong with as a company limited liability; it is a wholly owned subsidiary of VVAX Skyline;

•        On May 18, 2023, we repurchased 100% of the equity interests from our original shareholders and issued 10,000,000 Ordinary Shares to Securingium Holding Limited;

•        On May 22, 2023, Hainan Senhan was incorporated in the PRC with limited liability; it is a wholly owned subsidiary of Peg Biotechnology;

•        On May 22, 2023 and June 20, 2023, Hainan Senhan acquired an aggregate of 58.689% of the equity interests in Jilin Zhengye from its original shareholders;

•        On May 30, 2023, VVAX Skyline acquired 100% of the equity interests in Windsor Holdings from its original shareholders; and

•        On June 21, 2023, we issued 570,830 Ordinary Shares to VVAX Holdings Limited, 569,688 Ordinary Shares to Vanguards Skyline Holdings Limited, 259,465 Ordinary Shares to TLjinmao Limited, and 16,611 Ordinary Shares to XZjinyuan Limited.

Consequently, Zhengye Cayman, through a restructuring which is accounted for as a reorganization of entities under common control, became the ultimate holding company of all other entities mentioned above.

On March 20, 2024, VVAX Holdings Limited transferred 399,581 Ordinary Shares to Visuccess Holding Limited, leaving VVAX Holdings Limited with 171,249 Ordinary Shares.

As a holding company, Zhengye Cayman has no material operations of its own and conducts its operations through Jilin Zhengye. See “Risk Factors — Risks Relating to Doing Business in China — Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in the operating entity’s operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.”

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our combined financial statements and consolidated financial statements and the related notes included in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

OVERVIEW

We, through the operating entity, focus on the research, development, manufacturing and sales of veterinary vaccines, with an emphasis on vaccines for livestock. For nearly 20 years, the operating entity has been committed to enhancing the health of animals. The operating entity markets a diverse range of vaccines, including vaccines for swine, cattle, goats, sheep, poultry, and dogs. The operating entity’s products are available in 29 provincial regions across China and are exported overseas to Vietnam, Pakistan, and Egypt.

FACTORS AFFECTING RESULTS OF OPERATIONS

Our results of operations and financial condition are affected by the general factors driving veterinary vaccine market. We have benefited from the China’s overall economic growth, increased number of large-scale farms, and national policies of animal epidemic detection and prevention in China, which has been attracting breeders’ attention and promoting compulsory immunization to raise breeders’ full awareness of the risk of animal epidemics and the necessity of immunization.

While our business is influenced by these general factors, we believe our results of operations are also directly affected by certain company specific factors, including the following major factors:

The operating entity’s ability to develop high-demand products and expand its business beyond vaccines for livestock by entering into the household animals vaccines industry.

The operating entity intends to develop high-demand products, for example, Subunit Vaccine of Porcine Circovirus Type 2 (Recombinant Baculovirus Strain OKM), which the operating entity has received a Registration Certificate of New Veterinary Drugs for Subunit Vaccine of Porcine Circovirus Type 2 (Recombinant Baculovirus Strain OKM) on September 26, 2021. In addition to developing high demand products, the operating entity also intends to expand its business by developing and manufacturing vaccines for companion animals. As of the date of this prospectus, the operating entity has completed clinical trials for Feline Panleukopenia, FCV, Feline Viral Rhinotracheitis Triple Inactivated Vaccine and Canine Distemper-Parvovirus Vaccine, Inactivated, and its application for Registration Certificate of New Veterinary Drugs for Feline Panleukopenia, FCV, Feline Viral Rhinotracheitis Triple Inactivated Vaccine has been received by the Ministry of Agriculture and Rural Affairs of the PRC on August 9, 2023.

The operating entity’s ability to expand its sales and distribution network.

The operating entity intends to expand its sales and distribution network to enter new geographic markets, gain more market share in existing markets and access a broader range of customers. It will continue leveraging its local resources to quickly enter new markets, while also minimizing requirements for capital outlay.

The operating entity’s ability to continue to upgrade its technological capabilities

The operating entity believes that its success greatly depends on its ability to attract, incentivize and retain talented professionals. With a view to maintaining and improving its competitive advantage in the market, it plans to implement a series of initiatives to attract additional and retain mid- to high-level personnel, including formulating a market-oriented employee compensation structure and implementing a standardized multilevel performance review mechanism.

The operating entity’s ability to maintain its product quality

Relevant PRC laws and regulations were formulated to strengthen the administration of rules pertaining to product quality, as well as to clarify the rules on product liability, consumer protection and maintaining social and economic order. Products offered for sale in China must meet the relevant quality and safety standards. Violations of national or

industrial standards for health, safety and any other related violations may result in civil liabilities and penalties, such as compensation for damages, fines, suspension, or shutdown of business, as well as confiscation of products illegally produced for sale and the sales proceeds of such products.

The operating entity has always strictly followed the requirements of the GMP documents of the Ministry of Agriculture and Rural Affairs, adhering to the business philosophy of “creating products with technology, shaping future with quality.” In terms of production process, strict quality control is carried out from raw material entry to product delivery, and quality improvement is achieved through refined management. In terms of personnel, regular training is provided to personnel from departments related to procurement, production, inspection, logistics, and other production processes, designed to ensure the stability of the operating entity’s product quality.

KEY COMPONENTS OF RESULTS OF OPERATIONS

Net Revenues

We derived revenues from (i) swine vaccines, (ii) poultry vaccines and (iii) other vaccines. The following table sets forth a breakdown of our revenues both in absolute amounts and as a percentage of our total revenues for the years indicated.

As our revenues are generated from different distribution channels, the following table sets forth a breakdown of our revenues from different distribution channels for the years ended December 31, 2022 and 2023:

Cost of Revenues

Costs of revenues consist primarily of inventory cost and shipping and handling cost of providing these services or goods. The following table sets forth a breakdown of our cost of revenues by nature both in absolute amounts and as a percentage of our total cost of revenues for the years indicated.

Operating Expenses

Our operating expenses consist of sales and marketing expenses, research and development expenses, general and administrative expenses, allowance for credit losses and impairment for inventory and intangible asset.

Sales and marketing expenses

Sales and marketing expenses consist primarily of advertising expenses, salaries and other compensation-related expenses to sales and marketing personnel and warranty expenses. We expense all advertising costs as incurred and classify these costs under sales and marketing expenses.

Research and development expenses

Research and development costs are expensed as incurred. These costs primarily consist of payroll and related expenses for personnel engaged in research and development activities.

General and administrative expenses

General and administrative expenses consist primarily of salaries, bonuses and benefits for employees involved in general corporate functions and those not specifically dedicated to research and development activities, depreciation and amortization of fixed assets which are not used in research and development activities, legal and other professional services fees, rental and other general corporate related expenses.

Allowance for credit losses

The Company considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Company’s customer collection trends. The allowance for credit losses and corresponding receivables were written off when they are determined to be uncollectible.

Impairment

If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets.

TAXATION

Cayman Islands

Under current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to their shareholders, no withholding tax will be imposed.

Hong Kong

Our subsidiary in Hong Kong is subject to a two-tiered profits tax rate regime. The first HKD$2 million of assessable profits earned by a company is subject to be taxed at a profits tax rate of 8.25%, while the remaining profits will continue to be taxed at the profits tax rate of 16.5%. Under the Hong Kong tax law, our subsidiary in Hong Kong is exempted from income tax on its foreign derived income and there are no withholding taxes in Hong Kong on remittance of dividends.

China

Effective from January 1, 2008, the PRC’s statutory Enterprise Income Tax (“EIT”) rate is 25%. If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Risk Factors — Risks Relating to Doing Business in the PRC — Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.”

RESULTS OF OPERATIONS

The following table sets forth a summary of our consolidated results of operations for the years indicated, both in absolute amounts and as a percentage of our total revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Translations of balances in the consolidated balance sheets, consolidated statements of income and comprehensive income, and consolidated statements of cash flows from RMB into US$ as of and for the years ended December 31, 2022 and 2023 are solely for the convenience of the readers, and they were calculated at the rate of US$1.00 to RMB7.0999.

Year ended December 31, 2023 compared to year ended December 31, 2022

Net Revenues

Our revenue decreased by RMB48.6 million (US$6.8 million) or 18.7% from RMB260.3 million (US$36.7 million) for the year ended December 31, 2022 to RMB211.7 million (US$29.8 million) for the year ended December 31, 2023, primarily due to the veterinary vaccine market adjustments and the reduced sales of swine vaccines following the Company’s strategic realignment of sales practices aimed at diversifying the customer base and reducing concentration risk.

Our revenue from sales to the operating entity’s largest customer dropped from RMB193.9 million (US$27.3 million) for the year ended December 31, 2022 by RMB83.6 million (US$11.8 million) to RMB110.3 million (US$15.5 million) for the year ended December 31, 2023. Despite the reduction in revenue from sales to our largest customer, our total revenue decreased by only RMB48.6 million (US$6.8 million), indicating a lesser overall impact on our revenue, due to increased sales to our second largest customer. As of December 31, 2022, this customer accounted for 75.0% of our total accounts receivable, which was then reduced to 53.2% by December 31, 2023. The Company adjusted its sales approach to mitigate risks associated with dependency on a single customer, despite the potential negative effect on our revenue.

Revenue from sales of swine vaccines.    Our revenue from sales of swine vaccines dropped from RMB235.6 million (US$33.2 million) for the year ended December 31, 2022 to RMB188.9 million (US$26.6 million) for the year ended December 31, 2023. Revenue from sales of swine vaccines decreased as a result of the control of sales to the operating entity’s largest customers.

Revenue from sales of poultry vaccines.    Our revenue from sales of poultry vaccines dropped from RMB16.4 million (US$2.3 million) for the year ended December 31, 2022 to RMB15.4 million (US$2.2 million) for the year ended December 31, 2023. There was no significant change in revenue from sales of poultry vaccines and the difference was caused by normal demand fluctuation.

Revenue from sales of other vaccines.    Our revenue from sales of other vaccines dropped from RMB8.3 million (US$1.2 million) for the year ended December 31, 2022 to RMB7.3 million (US$1.0 million) for the year ended December 31, 2023. There was no significant change in revenue from sales of other vaccines and the difference was caused by normal demand fluctuation.

Cost of Revenues

Our cost of revenues decreased by 23.4% from RMB106.8 million (US$15.0 million) for the year ended December 31, 2022 to RMB81.8 million (US$11.5 million) for the year ended December 31, 2023, which was largely in line with the decrease in net revenues due to decreased subscription of the operating entity’s products.

Gross Profit

As a result of the foregoing, our gross profit decreased from RMB153.5 million (US$21.6 million) for the year ended December 31, 2022 to RMB129.9 million (US$18.3 million) for the year ended December 31, 2023. Our gross profit margin increased from 59.0% for the year ended December 31, 2022 to 61.4% for the year ended December 31, 2023, mainly because of the effect of our cost control and sales of our new products with higher profitability.

Operating expenses

Our total operating expenses decreased from RMB87.7 million (US$12.4 million) for the year ended December 31, 2022 to RMB84.9 million (US$12.0 million) for the year ended December 31, 2023, reflecting the decrease in our general and administrative expenses, research and development expenses and allowance for credit losses, and increases in our sales and marketing expenses and impairment for inventory and intangible asset, which were primarily attributable to the increase in our obsolete inventory.

Sales and marketing expenses. Our sales and marketing expenses increased from RMB34.6 million (US$4.9 million) for the year ended December 31, 2022 to RMB40.7 million (US$5.7 million) for the year ended December 31, 2023. The increase of sales and marketing expenses mainly resulted from increase in travel expenses, conference expenses, and marketing promotion expenses, partially offset by a decrease in payroll for sales staffs and technology service expenses.

General and administrative expenses. Our general and administrative expenses decreased from RMB29.0 million (US$4.1 million) for the year ended December 31, 2022 to RMB25.9 million (US$3.6 million) for the year ended December 31, 2023. The decrease in general and administrative expenses mainly resulted from decrease in depreciation and amortization and loss of obsolete inventories, partially offset by increase in payrolls for administrative staffs.

Research and development expenses. Our research and development expenses decreased from RMB13.4 million (US$1.9 million) for the year ended December 31, 2022 to RMB11.9 million (US$1.7 million) for the year ended December 31, 2023. The decrease in research and development expenses mainly resulted from a decrease in research and development material expenses and other expenses.

The following table sets forth a summary of our total spending for each research and development project subsidized by the Government of Jilin Province, the PRC, for the years ended December 31, 2023 and 2022.

The increase of research and development expenses for project subsidized by the Government of Jilin Province, the PRC, was mainly due to the fact that most of our projects are in the new research and development stage which incurred more expenses.

Allowance for credit losses. Our allowance for credit losses were RMB9.7 million (US$1.4 million) for the year ended December 31, 2022 and a reversion of RMB3.7 million (US$0.5 million) was recognized for the year ended December 31, 2023.

Operating income

Our operating income was RMB45.0 million (US$6.3 million) for the year ended December 31, 2023, compared to an operating income of RMB65.8 million (US$9.3 million) for the year ended December 31, 2022.

Net income

As a result of the foregoing, we incurred a net income of RMB37.5 million (US$5.3 million) for the year ended December 31, 2023, compared to a net income of RMB55.7 million (US$7.8 million) for the year ended December 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth a summary of our cash flows for the years presented:

As of the date of this prospectus, we have financed our operating and investing activities primarily through cash generated from operating and financing activities. As of December 31, 2022 and 2023, our cash were RMB9.7 million (US$1.4 million) and RMB15.1 million (US$2.1 million), respectively. Our cash primarily consists of bank deposits. As of December 31, 2022 and 2023, our restricted cash were nil and RMB12.1 million (US$1.7 million), respectively. Restricted cash mainly consists of bank time deposits, which are defined as time deposits with original maturities longer than three months but less than one year, or long-term bank deposits with maturity dates within one year.

We believe that our current cash and expected cash provided by operating and financing activities will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for the next twelve months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we identify and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions.

All of our revenues have been, and we expect that they are likely to continue to be, in the form of Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC subsidiaries are required to set aside at least 10% of their after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their registered capital. These reserves are not distributable as cash dividends.

As a Cayman Islands exempted company and offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions, subject to the approval, filings or registration of government authorities and limits on the amount of capital contributions and loans. This may delay us from using the proceeds from this offering to make loans or capital contributions to our PRC subsidiaries. We expect to invest substantially all of the proceeds from this offering in our PRC operations for general corporate purposes within the business scopes of our PRC subsidiaries.

Operating Activities

Net cash generated from operating activities was RMB48.2 million (US$6.8 million) in 2023. The difference between our net cash provided by operating activities and our net income of RMB37.5 million (US$5.3 million) was due to the combined effects of adjustments for non-cash items and changes in working capital. Adjustments for non-cash items primarily included depreciation and amortization of RMB23.9 million (US$3.4 million), as compared to RMB18.8 million (US$2.6 million) in 2022, for we had more property, plant and equipment in 2023 than 2022, a reversion of allowance for credit losses of RMB3.7 million (US$0.5 million), as compared to a recognition of allowance for credit losses of RMB9.7 million (US$1.3 million) in 2022, because we have collected cash from the client’s bank debts and commercial notes which were recognized as allowance for credit losses in 2022, and impairment for inventory and intangible assets of RMB10.0 million (US$1.4 million), as compared to RMB1.0 million (US$0.1 million) in 2022, for the increase in our obsolete inventory. Changes in working capital mainly resulted from a decrease in note receivables of RMB8.3 million (US$1.2 million), as compared to RMB22.7 million (US$3.2 million) in 2022, for we cashed our banker’s acceptance bill collected in 2022, and a decrease in accounts receivable of RMB31.0 million (US$4.4 million), as compared to RMB25.0 million (US$3.5 million) in 2022, for we cashed our accounts receivable collected in 2022, and a decrease in accounts payable of RMB35.6 million (US$5.0 million), as compared to RMB9.7 million (US$1.4 million) in 2022, because we have paid accounts payables for our projects, equipment and materials with was due in 2023.

Investing Activities

Net cash used in investing activities was RMB11.8 million (US$1.7 million) in 2023, which represented payments for purchases of short-term investments of RMB1.2 million (US$0.2 million), purchase of property and equipment of RMB7.4 million (US$1.0 million) and purchases of intangible assets of RMB4.2 million (US$0.6 million), offset by proceeds from disposal of property, plant and equipment of RMB1.0 million (US$0.1 million).

Net cash used in investing activities was RMB27.3 million (US$3.8 million) in 2022, which represented payments for purchases of property and equipment.

Financing Activities

Net cash used by financing activities was RMB19.0 million (US$2.7 million) in 2023, which represented proceeds from loans of RMB79.9 million (US$11.2 million), repayment of loans of RMB54.9 million (US$7.7 million) and dividend payment to shareholders of RMB39.5 million (US$5.6 million).

Net cash provided by financing activities was RMB13.5 million (US$1.9 million) in 2022, which represented proceeds from loans of RMB99.9 million (US$14.1 million), partially offset by repayment of loans of RMB65.0 million (US$9.2 million) and dividend payment to shareholders of RMB21.4 million (US$3.0 million).

MATERIAL CASH REQUIREMENTS

Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include our capital expenditures, operating lease commitments and working capital requirements.

Our capital expenditures are primarily incurred for purchases of intangible assets, property, plant and equipment, purchases of short-term investments, and prepayment for purchase of intangible assets. We made capital expenditures of RMB27.3 million (US$3.8 million) in 2022 and RMB11.8 million (US$1.7 million) in 2023, respectively. The decrease of capital expenditures was mainly because the Animal Medicine Production Quality Management Standards (Revised in 2020) renovation project was finished in January 2023. Our capital expenditures have been primarily funded by cash generated from the operating entity’s operations. We expect to continue to make capital expenditures to support the expected growth of our business. We also expect that cash generated from the operating entity’s operation activities and financing activities will meet our capital expenditure needs in the foreseeable future.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

From July 21, 2005, RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between RMB and the U.S. dollar in the future. To the extent that we need to convert the U.S. dollar into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, if we decide to convert RMB into the U.S. dollar for the purpose of making payments for dividends on ordinary shares, strategic acquisitions or investments or other business purposes, appreciation of the U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to us. In addition, a significant depreciation of RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings or losses.

Political, social and economic risks

The Company has substantial operations in China through its PRC subsidiary, Jilin Zhengye. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1 of our consolidated financial statements, this may not be indicative of future results.

The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to regional wars, geopolitical tensions, natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could potentially and significantly disrupt the Company’s operations.

Impact of COVID-19

The Company’s operations may be further affected by the resurgence of COVID-19 pandemic. A resurgence could potentially cause temporary closure of the Company’s factory, limited support from its employees due to quarantine, reduce the Company’s capability to execute customer contract and collect customer payments, or disrupt the Company’s supply chain, and the continued uncertainties associated with the COVID-19 pandemic may further negatively impact the Company’s future revenue growth and cash flows.

The Company enters into contract with their customers to provide veterinary vaccines, mainly vaccines for livestock. All of the Company’s contracts have single performance obligation as the promise is to transfer the goods to customers, and there are no other separately identifiable promises in the contracts. The Company recognizes revenue when it transfers its goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company accounts for the revenue generated from sales of its products to its customers on a gross basis, because the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods. The Company’s revenue is recognized at a point in time when the control has been transferred, usually when the customer accepts the goods.

The Company offers their distributors with sales rebate. According to the items in the contract, the Company pays certain sales rebate, in the form of products with equivalent value, to distributor once the distributor purchases stipulated amount products from the Company. Sales rebate is considered as variable consideration. The Company estimates annual expected revenue of each individual distributor with reference to their historical results. The sales rebate reduces revenues recognized. At the end of each reporting period, the Company updates the estimated revenue to represent faithfully the circumstances present at the end of the reporting period.

Apart from the sales rebate, the Company’s products are sold with no right of return and the Company does not provide other credits or sales incentives to customers. Revenue is reported net of value added tax (“VAT”), business tax and surcharges collected on behalf of tax authorities in respect of product sales.

Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenue and expenses during the reported period in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s consolidated financial statements mainly include, but are not limited to, allowance for credit losses, standalone selling price of each distinct performance obligation in revenue recognition, depreciable lives of property, equipment and software, assessment for impairment of long-lived assets, inventory valuation for excess and obsolete inventories, lower of cost and net realizable value of inventories and valuation of deferred tax assets.

Management bases the estimates on historical experience and on various other assumptions as discussed elsewhere to the consolidated financial statements that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. On an ongoing basis, management evaluates its estimates based on information that is currently available. Changes in circumstances, facts and experience may cause the Company to revise its estimates. Changes in estimates are recorded in the period in which they become known. Actual results could materially differ from these estimates.

Notes receivable, net

Notes receivable, generally due within twelve months and with specific payment terms and definitive due dates, are comprised of the bank acceptance notes issued by some customers to pay certain outstanding receivable balances to the Company. Bank acceptance notes do not bear interest.

Accounts receivable and allowance for credit losses

Accounts receivable are stated at the historical carrying amount net of allowance for expected credit losses.

The Company adopted ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on January 1, 2021 using a modified retrospective approach. The Company also adopted this guidance to notes receivable, advance to suppliers, other receivables and long-term prepayments. To estimate expected credit losses, the Company has identified the relevant risk characteristics of its customers and the related receivables. The Company considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Company’s customer collection trends. The allowance for credit losses and corresponding receivables were written off when they are determined to be uncollectible.

INDUSTRY

All the information and data presented in this section have been derived from the industry report of Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. (“Frost & Sullivan”) commissioned by us in March 2023 entitled China’s Veterinary Vaccine Market Independent Market Research (the “Frost & Sullivan Report”), unless otherwise noted. Frost & Sullivan has advised us that the statistical and graphical information contained herein is drawn from its database and other sources. The following discussion contains projections for future growth, which may not occur at the rates that are projected or at all.

OVERVIEW OF CHINA’S VETERINARY VACCINE MARKET

Classification of Veterinary Vaccine

According to the product type, veterinary vaccine can be divided into live vaccine and inactivated vaccine.

Live Vaccine:    Live vaccine is a live microbial preparation made from bacteria or virus pathogenic microorganisms, which can reduce toxicity under artificial cultivation, but still retain the immunogenicity and reproduction ability of pathogenic microorganisms or screen some non-toxic and micro-virus pathogens from the outside. Common live vaccines include classical swine fever rabbit attenuated vaccine, chicken pox live vaccine, sheep small ruminant disease live vaccine. Most live vaccines are freeze-dried by vacuum drying, which can prolong their storage time and maintain their potency.

Inactivated Vaccine:    Inactivated vaccine is made of bacteria/virus culture, toxic tissue or cell culture, inactivated by chemical inactivator or heated to inactivate microorganisms and maintain immunogenicity, and then added with appropriate preservatives or immune adjuvants. Inactivated vaccines generally need adjuvants. Based on different adjuvants, inactivated vaccines can be divided into oily adjuvants vaccine (including oil in water, water in oil, and multiple water in oil in water), aluminum adjuvant vaccine (with longer action time), and propolis adjuvant vaccine (propolis increases immune effect).

Research Process of Veterinary Vaccine

Source: WHO, Frost & Sullivan Analysis

Market Size of Veterinary Vaccine in China

The market size of the China veterinary vaccine market increased from USD1.9 billion in 2018 to USD2.5 billion in 2022 at a compound annual growth rate (“CAGR”) of 6.6% and is expected to further increase to USD3.2 billion in 2026 with a CAGR of 6.5%.

Historical and Forecasted Market Size of Veterinary Vaccine in China, 2018-2026E

Source: China Veterinary Drug Association, Literature Review, and Frost & Sullivan Analysis

Growth Drivers and Future Trends of China’s Veterinary Vaccine Market

Increased number of large-scale farms

In recent years, the livestock and poultry breeding has been increasing in scale. For example, the percentage of large-scale pig farms with an annual output of more than 500 pigs reached 70% in 2020. The risk of loss from disease caused by the large breeding density of large breeding enterprises is greater, and their average epidemic prevention cost is higher than that of retail investors, so the large-scale farms are more sensitive to the quality and cost-effectiveness of vaccines.

Immunization awareness and E-commercialization

Local governments have been attracting breeders’ attention and promoting compulsory immunization to raise breeders’ full awareness of the risk of animal epidemics and the necessity of immunization. At the same time, veterinary drug trading has gradually achieved e-commercialization. Some farmers began to use e-commerce platforms to purchase veterinary vaccines and exchange veterinary vaccine information.

Animal epidemics prevalence in some regions

In recent years, there have been many outbreaks of foot-and-mouth disease of type O, foot-and-mouth disease of type A, poultry H5 subtype highly pathogenic avian influenza, poultry H7N9 influenza, small ruminant disease, and other diseases in China. In 2021, a total of seven outbreaks of H5 subtype highly pathogenic avian influenza, which were sporadic and wide-ranging, were reported in China. The prevalence of animal epidemics results in a great demand for veterinary vaccines.

National policies of animal epidemic detection and prevention

China has promulgated a series of favorable epidemic detection and prevention policies in recent years.

For example, in 2021 the Chinese government amended the Animal Epidemic Prevention Law of the PRC. Prevention is the basis for preventing and controlling animal diseases and is an important measure to effectively reduce production costs and improve the economic benefits of animal husbandry. In the amended law, three new measures have been added in the prevention of animal diseases: improving the compulsory immunization system, improving the epidemic monitoring and early warning system, and establishing a regionalized management system for animal diseases. The law stipulates that companies and individuals who raise animals should fulfill their obligations of compulsory immunization against animal diseases and must properly conduct compulsory immunization. Compulsory immunization is closely related to the use of veterinary vaccines.

Second, in 2022, the Ministry of Agriculture and Rural Affairs issued the National Plan for the Prevention and Control of Zoonoses among Animals (2022-2030), which pointed out that zoonotic diseases among animals need to be prevented and controlled from the source, with the participation of multiple parties under the leadership of the government. Key tasks include (i) strengthening scientific and technological support for disease prevention and control technology; (ii) accelerating the introduction, research and development, registration and application of new vaccines and rapid diagnosis and differential diagnostic technology products; and (iii) improving the establishment of a repository for zoonotic pathogens between animals and humans, and a standard substance library for vaccines and diagnostic products.

In addition, the key tasks in the 14th Five-Year Plan for National Animal Husbandry and Veterinary Industry Development Plan issued by the Ministry of Agriculture and Rural Affairs also includes strengthening the prevention and control of animal diseases and ensuring the efficient and safe supply of breeding inputs. It requires to strictly control the production and use of veterinary drugs, promote the transformation and upgrading of the veterinary drug industry, improve vaccine production technology, and support the development of raw pharmaceutical materials and formulations specifically for animals, safe and efficient polyvalent combined vaccines, new labeled vaccines, and veterinary diagnostic products.

Entry Barriers and Success Factors of China’s Veterinary Vaccine Market

Market access barriers

Given the need for vaccine upgrading, first-mover advantage is one of market access barriers. The product iteration speed of first-mover enterprises is faster than that of latecomers, so the leading enterprises can keep maintaining competitive advantages and a high profit margin through continuous upgrading of new products. Vaccine production capacity is another market access barrier. Vaccine developers with large-scale production capacity can obtain vaccines suitable for different animals, as well as vaccines with different serotype coverage and antigen composition, by adjusting production steps and parameters, which is difficult for new entrants to achieve in a short period of time.

Sales channel barrier

The supply of vaccines required by China’s compulsory immunization against animal diseases system has gradually shifted from governmental procurement to the market supply, with the goal of completely eliminating the channels of governmental procurement by 2025. Since domestic veterinary vaccines are mainly sold in agricultural and pastoral areas and the terminals are scattered, there is a demand for the distribution channel capacity. Enterprises with excellent sales ability have formed a multi-channel layout of direct sales and distribution, and a sales team with wide coverage is conducive to improving market rate and achieving rapid expansion.

R&D technology & talent barriers

Veterinary vaccine is a product with a long R&D and production cycle. There must be a large amount of R&D investment to improve market competitiveness, so it is difficult for enterprises with insufficient funds to enter the industry. Besides, long-established companies have relatively sufficient technical personnel for veterinary vaccine production and after-sales technical services. New entrants cannot obtain sufficient human resources in the market, and the acquisition of talents mainly relies on the company’s internal training.

Analysis of Domestic Top Players’ Product Portfolio

In 2022, according to Frost & Sullivan’s analysis, among domestic veterinary vaccine companies, the operating entity, Jilin Zhengye Biological Products Co., Ltd. (“ZYBIO”) has the most comprehensive product portfolio.

Source: Company Websites, Public Information, Prospectus, and Frost & Sullivan Analysis

Ranking of Revenue of China’s Veterinary Vaccine Companies

In 2022, ZYBIO generated revenue of RMB260.3 million.

Source: Company Websites, Company Annual Report, and Frost & Sullivan Analysis

Ranking of Annual Growth Rate of China’s Veterinary Vaccine Revenue

In 2022, the annual growth rate of ZYBIO’s veterinary vaccine revenue reached 21.4%.

Source: Company Websites, Company Annual Report, and Frost & Sullivan Analysis

Overview of China’s Porcine Vaccine Market

Overview of the Porcine Market

Pork is the most important source of animal protein for Chinese people and has long been dominant in China’s national meat consumption. Porcine can be divided into two main groups, breeding porcine and commercial porcine. In 2021, from the supply side of porcine consumption market, China’s pork production was 53 million tons, accounting for 44.09% of global pork production, ranking first in the world. From the demand side of porcine consumption market, China’s pork consumption accounts for about 46% of the world’s pork consumption and per capita pork consumption is about twice as much as the world’s per capita pork consumption.

Market Size of Porcine Vaccine in China

The market size of the China porcine vaccine market increased from USD0.84 billion in 2018 to USD1.20 billion in 2022 at a CAGR of 9.4%, and is expected to further increase to USD1.45 billion in 2026 with a CAGR of 4.9%. In the short term, the outbreak of African Swine Fever had a negative impact on the animal husbandry industry, causing a decline in the number of live pigs and demand for porcine vaccines. In the long run, African Swine Fever has accelerated the withdrawal of small and medium-sized breeders from the market, and the concentration of the pig farming industry has further enhanced. The great demand for epidemic prevention from large-scale farms will bring long-term benefits to the veterinary vaccine market.

Historical and Forecasted Market Size of Porcine Vaccine in China, 2018-2026E

Source: China Veterinary Drug Association, Literature Review, and Frost & Sullivan Analysis

Ranking of China’s Poultry Vaccine Revenue

In 2022, ZYBIO generated revenue of RMB16.4 million from the sales of poultry vaccines.

Source: Company Websites, Company Annual Report, and Frost & Sullivan Analysis

Overview of China’s Bovine and Ovine Vaccines Market

Overview of the Bovine and Ovine market

Bovine is a species with high environmental adaptation ability. Cowhide, sheepskin, wool, and other materials can be processed to make garments, leather purses, etc. In China, ovine is mostly kept as goats and sheep. Sheep meat is nutrient-dense and popular in China. Due to unique dietary habits, there is a considerable dependence on sheep meat, particularly in the northwestern minor ethnic group communities.

Market Size of Bovine and Ovine Vaccine in China

The market size of the China bovine and ovine vaccine market dropped from USD0.37 billion in 2018 to USD0.29 billion in 2022 at a CAGR of -5.7% and is expected to increase to USD0.39 billion in 2026 with a CAGR of 7.8%.

Historical and Forecasted Market Size of Bovine and Ovine Vaccine in China, 2018-2026E

Source: China Veterinary Drug Association, Literature Review, and Frost & Sullivan Analysis

BUSINESS

Our Mission

Our mission is to become a world-leading manufacturer of veterinary vaccines and to provide reliable veterinary vaccines to the world.

Overview

We, through the operating entity, focus on the research, development, manufacturing and sales of veterinary vaccines, with an emphasis on vaccines for livestock. For nearly 20 years, the operating entity has been committed to enhancing the health of animals. The operating entity markets a diverse range of vaccines, including vaccines for swine, cattle, goats, sheep, poultry, and dogs. The operating entity’s products are available in 29 provincial regions across China and are exported overseas to Vietnam, Pakistan and Egypt.

Competitive Strengths

•        Diversified products.    The operating entity currently owns 44 veterinary vaccines in its product portfolio, which cover major veterinary vaccines for livestock, including monovalent vaccine, polyvalent vaccine, combined vaccine and combined and polyvalent vaccine. In addition to its focus on livestock vaccines, the operating entity is also developing vaccines for household animals. For example, as of the date of this prospectus, the operating entity has secured governmental approval for the sale of Rabies Vaccine, Inactivated (Strain Flury LEP), which is designed to treat dogs.

•        High production quality.    The operating entity has built three veterinary vaccine production floors, including 13 vaccine production lines, one quality examination center, and one animal facility for vaccine development, all operating in accordance with Good Manufacturing Practices for Veterinary Drugs issued by the Ministry of Agriculture and Rural Affairs of the PRC. Moreover, the operating entity has established a comprehensive quality management system, which complies with both Good Manufacturing Practices for Veterinary Drugs and the standards of ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018. Through its quality management system, the operating entity oversees all production procedures, such as packaging, storage, shipping, equipment usage, raw materials examination, and environment detection.

•        Strong research and development capabilities.    The operating entity has 49 employees working in the R&D department, many of which have over a decade of experience working in the veterinary vaccine industry. Additionally, the operating entity owns one research center, which collectively has helped the operating entity develop dozens of vaccines and inventions and utility models. In addition to independent R&D, the operating entity has also maintained long-term cooperative relationships with a number of universities and institutions in the PRC, such as China Agricultural University, Nanjing Agricultural University, Jilin University, and Shanghai Veterinary Research Institute of Chinese Academy of Agricultural Sciences. Through these cooperations, the operating entity capitalizes on fundamental research from institutes to develop and manufacture new products. For example, the Swine Transmissible Gastroenteritis, Porcine Epidemic Diarrhea and Porcine Rotavirus (G5 type) Vaccine, live (Strain huadu+Strain CV777+Strain NX), developed by both the operating entity and the Harbin Veterinary Research Institute, and owned by the Harbin Veterinary Research Institute, for which the operating entity agreed to make a payment of RMB56 million and to pay 5% of its annual revenue from the sale of this vaccine every year, has already been launched and is available for purchase; the Duck Tembusu Viral Disease Vaccine, Live (Strain FX2010-180P), developed by both the operating entity and Shanghai Veterinary Research Institute, and owned by the Shanghai Veterinary Research Institute, for which the operating entity agreed to make a payment of RMB6 million and to pay 5% of its annual revenue from the sale of this vaccine every year, has been launched; and Reassortant Newcastle Disease Virus and Avian Influenza Virus (H9 Subtype) Vaccine, Inactivated (Strain aSG10+Strain G), developed by both the operating entity and China Agricultural University, jointly owned by the China Agricultural University and the China Institute of Veterinary Drug Control, for which the operating entity agreed to pay RMB6 million, has also been launched. See “— Research and Development” for key terms of cooperative research agreements. As of the date of this prospectus, the operating entity has paid RMB4,285,181, RMB6,597,616, RMB500,000, RMB816,200, and RMB3,200,000, to Shanghai Veterinary Research Institute, Harbin Veterinary Research Institute, Jilin University, China Agricultural University, and Nanjing Agricultural University, respectively.

•        Extensive distribution channels.    The operating entity maintains a wide distribution network which allows it to sell its products both domestically and internationally. For the fiscal years ended December 31, 2023 and 2022, it had approximately 210 and 195, and 2 and 2 exporting distributors, respectively. With the help of the domestic distributors, the Company through its operating entities is able to sell its products in 29 provincial level administrative regions of China. Through the exporting distributors, the operating entity sells its products in foreign countries, including Vietnam, Pakistan, and Egypt. Please refer to “— Distribution Network.”

•        Experienced management team and employees.    The operating entity has an experienced management team. Multiple officers have animal disease control and prevention and managerial experience in the animal product industry. For example, the chief manager of the operating entity, Songlin Song, graduated from China Agricultural University, and vice managers Wei Lian and Yuyou He, both graduated from Jilin Agricultural University. Moreover, Songlin Song is an advisor of the master programs in Jilin University College of Veterinary Medicine, Chinese Academy of Agricultural Sciences, and a guest professor of at Jilin Medical University. Wei Lian is an advisor of the master programs in Jilin University College of Veterinary Medicine and Chinese Academy of Agricultural Sciences. In addition to their academic background, the management team also has a deep understanding of both the industry and the operating entity. Yuyou He started working in the operating entity in 1984, and currently serves as the deputy manager and director of technology. Wei Lian started his career in the operating entity as well in 2005. He used to serve as the manager of the department of quality control and assistant general manager, and he has been the deputy general manager of the operating entity since 2021. Songlin Song has worked in the industry since 1998 and he has been the director and general manager of the operating entity since 2018. There are 27 employees holding master or doctoral degrees in majors including veterinary medicine, veterinary pharmacy, veterinary public health, microbiology, animal husbandry, and pharmaceutical engineering.

Growth Strategies

Develop high-demand products and expand the operating entity’s business by entering into household animals vaccines industry.    According to the section of The Market Demand Expectation of Veterinary Vaccines in the Frost & Sullivan Report, which lists certain high-demand vaccines, the operating entity intends to develop these high-demand products listed in the report, for example, Subunit Vaccine of Porcine Circovirus Type 2 (Recombinant Baculovirus Strain OKM), which is used to prevent Post-weaning Multisystemic Wasting Syndrome, Porcine Dermatitis and Nephropathy Syndrome, granulomatous enteritis, Porcine Respiratory Disease Complex, reproductive disorders in sows, and congenital tremors in piglets, etc., caused by Porcine Circovirus Type 2 (PCV2) infection, Swine Pseudorabies Vaccine, Inactivated (Strain JS-2012-△gI/gE), which is used to prevent pseudorabies in pigs caused by the infection of pseudorabies virus, and Combined Heat-resistant Protective Agent Live Vaccine against Newcastle disease and Infectious bronchitis (Strain LaSota+Stain SZ160), which is used to prevent avian respiratory diseases caused by infections of Newcastle disease virus and infectious bronchitis virus, among which the operating entity has received a Registration Certificate of New Veterinary Drugs and an Approval Number for Veterinary Biological Products for Subunit Vaccine of Porcine Circovirus Type 2 (Recombinant Baculovirus Strain OKM) issued by the Ministry of Agriculture and Rural Affairs of the PRC on September 26, 2021 and November 23, 2022, respectively, a Registration Certificate of New Veterinary Drugs and an Approval Number for Veterinary Biological Products for Swine Pseudorabies Vaccine, Inactivated (Strain JS-2012-△gI/gE) issued by the Ministry of Agriculture and Rural Affairs of the PRC on November 7, 2022 and January 13, 2023, respectively, and a Registration Certificate of New Veterinary Drugs for Subunit Vaccine of Porcine Circovirus Type 2 (Strain Recombinant Baculovirus OKM) issued by the Ministry of Agriculture and Rural Affairs of the PRC on December 28, 2022, and it expects to receive the certificate for Combined Heat-resistant Protective Agent Live Vaccine against Newcastle Disease and Infectious Bronchitis (Strain LaSota+Stain SZ160) and Porcine Circovirus Type 2 Baculovirus Vector and Mycoplasma Pneumoniae Combined Inactivated Vaccine (ZSTU01 Strain +MH03 Strain), which is used to prevent diseases caused by Porcine Circovirus infection and Mycoplasmal pneumonia of swine, within two years. As of the date of this prospectus, with regard to the vaccines described above in this paragraph, Subunit Vaccine of Porcine Circovirus Type 2 (Recombinant Baculovirus Strain OKM) and Swine Pseudorabies Vaccine, Inactivated (Strain JS-2012-△gI/gE) are approved for sale. In addition to develop products in great demand, the operating entity also intends to expand its business by developing and manufacturing vaccines for companion animals. As of the date of this prospectus, the operating entity has completed clinical trials for Feline Panleukopenia, FCV, Feline Viral Rhinotracheitis Triple Inactivated Vaccine, which is used to prevent the three most common infectious diseases in cats caused by feline panleukopenia, FCV, and

feline viral rhinotracheitis, and Canine Distemper-Parvovirus Vaccine, Inactivated, which is used to prevent canine distemper and parvovirus. In addition, the operating entity’s application for Registration Certificate of New Veterinary Drugs for Feline Panleukopenia, FCV, Feline Viral Rhinotracheitis Triple Inactivated Vaccine has been received by the Ministry of Agriculture and Rural Affairs of the PRC on August 9, 2023. The Company also intends to develop Canine Four-combination Live Vaccine, which is used to prevent diseases caused by canine distemper virus, canine parvovirus, adenovirus type II, and canine influenza virus. As of the date of this prospectus, with regard to the vaccines described in this paragraph, clinical trials for all vaccines are completed except for the Canine Four-combination Live Vaccine which has not yet undergone a clinical trial. See “Use of Proceeds.”

Expand the operating entity’s sales and distribution network.    The operating entity intends to expand its sales and distribution network to enter new geographic markets, including countries in south-east Asia, such as Thailand and Philippines, and cities with developed animal husbandry in China, such as Gongzhuling City, Gaomi City, and Xuanwei City, further gaining market share in existing markets and accessing a broader range of customers. It will continue leveraging its local resources to quickly enter new markets, while also minimizing requirements for capital outlay.

Enhance the operating entity’s ability to attract, incentivize and retain talented professionals.    The operating entity believes its success greatly depends on its ability to attract, incentivize and retain talented professionals. With a view to maintaining and improving its competitive advantage in the market, it plans to implement a series of initiatives to attract additional and retain mid- to high-level personnel, including formulating a market-oriented employee compensation structure and implementing a standardized multilevel performance review mechanism.

Increase the investment in production lines.    In order to increase the manufacturing capacity to address the growing needs of the market, the operating entity intends to invest RMB151.5 million from the net proceeds of this offering to demolish two obsolete animal facilities and one garage, and construct a new factory, equipped with supporting facilities such as sewage treatment system and water purification system, within two years. The estimated annual production capacity of the new factory includes 88 million Pseudorabies Live Vaccines, 2.3 million Canine Four-combination Live Vaccine, 4 million (8 million milliliter) Rabies Inactivated Vaccines, 35 million milliliter Combined Inactivated Vaccine Against Porcine Circovirus and Mycoplasma Hyopneumoniae (Porcine circovirus), 2 million (4 million milliliter) Feline Triple Inactivated Vaccines, and 40 million milliliter Swine Pseudorabies Inactive Vaccine (Porcine circovirus).

Increase R&D investment.    The operating entity intends to increase its R&D investment in developing more veterinary vaccines. The operating entity intends to invest approximately RMB90.1 million from the net proceeds of this offering in developing multiple veterinary vaccines, including Feline Rhinotracheitis, Feline Rhinoconjunctivitis and Feline Panleukopenia Triple Inactivated vaccine (Strain JK+Strain FM+Strain CY), Inactivated Bovine Akabane Disease Vaccine, Gene-deleted Live Vaccine of Contagious Ecthyma Virus, Novel Duck Reovirus Live Vaccine, and Highly Pathogenic Porcine Reproductive and Respiratory Syndrome Genetically Engineered Live Vaccine (Strain rHN-NP49). Please see “Use of Proceeds” for more details about these vaccines’ R&D projects.

Revenue Model

The operating entity generates revenue through manufacturing and sales of veterinary vaccines under its own brand. For the fiscal years ended December 31, 2023 and 2022, we recognized RMB211.7 million (US$29.8 million) and RMB260.3 million (US$36.7 million) in revenue, respectively. The operating entity sells veterinary vaccines, both domestically and internationally. For the fiscal years ended December 31, 2023 and 2022, the revenue of domestic sales was RMB209.9 million (US$29.6 million) and RMB259.5 million (US$36.6 million), accounting for 99.2% and 99.7%, respectively, of our revenue, and the revenue of international sales was RMB1.7 million (US$0.2 million) and RMB0.8 million (US$0.1 million), accounting for 0.8% and 0.3% respectively, of our revenue.

Products

As of the date of this prospectus, the operating entity has a total of 44 veterinary vaccines in its product portfolio, 43 of which are sold domestically and six of which are sold internationally. Newcastle disease virus (La Sota strain), and Avian influenza virus (H9 subtype HL strain) Vaccine, Inactivated is currently sold in Pakistan, Newcastle Disease Vaccine, Live (La Sota strain) is currently sold in Egypt and Vietnam, Newcastle Disease Vaccine, Live (Strain Clone 30) is currently sold in Egypt, Newcastle Disease Vaccine, Inactivated is currently sold in Egypt and Pakistan,

Infectious Bursal Disease Vaccine, Live (Strain B87) is currently sold in Vietnam, and Newcastle Disease, Infectious Bronchitis and Avian Influenza (H9 Subtype) Vaccine, Inactivated (Strain La Sota+Strain M41+Strain SY) is currently sold in Vietnam.

The 44 products and their indications for the fiscal year ended December 31, 2023 were as follows:

In addition to focus on livestock vaccines, the operating entity is also preparing to enter into the market of household animal vaccines. The operating entity has received an Approval Number for Veterinary Biological Products for its Rabies Vaccine, Inactivated (Strain Flury LEP) on April 13, 2020 and the vaccine is expected to be launched and available to purchase in the end of 2024.

Besides, it has completed clinical trials for Feline Panleukopenia, FCV, Feline Viral Rhinotracheitis Triple Inactivated Vaccine and its application for a Registration Certificate of New Veterinary Drugs for this vaccine has been received by the Ministry of Agriculture and Rural Affairs of the PRC on August 9, 2023, and the application materials have been submitted to the Ministry of Agriculture and Rural Affairs Veterinary Drug Evaluation Center (“Evaluation Center”). The vaccine is currently undergoing a technical review at the Evaluation Center, which will be completed within 120 working days after the Evaluation Center’s receipt of the application materials. As of the date of this prospectus, the operating entity is supplementing experiments and related documents in response to the initial review feedback.

The operating entity has completed clinical trials for Feline Infectious Rhinotracheitis, Infectious Rhinoconjunctivitis and Panleukopenia Triple Vaccine, Inactivated in October 2023, and it submitted an application for Registration Certificate of New Veterinary Drugs in April 2024.

Moreover, the operating entity is researching about Feline Infectious Peritonitis Subunit Vaccine and Feline Leukemia and Feline Immunodeficiency Disease Duplex mRNA Vaccine. As of the date of this prospectus, the operating entity is still evaluating these two vaccines R&D projects, and none of the vaccines has started a clinical trial. As of the date of this prospectus, regarding these two projects, the operating entity has conducted preliminary safety assessments by administering the antigens to a limited number of animals. This early-stage evaluation monitors potential abnormalities at the injection site as well as local and systemic reactions.

Along with conventional vaccines, the operating entity also started exploring mRNA vaccines. The mRNA vaccine is a type of nucleic acid vaccine, which introduces mRNA fragments that encode antigen proteins into the human body for direct translation and the formation of corresponding antigen proteins. This process induces a specific immune response in the body, achieving the effect of preventive immunity. The mRNA vaccine is the third generation of vaccines developed based on the first-generation attenuated or inactivated vaccines and the second-generation subunit vaccines. The mRNA vaccines have several significant advantages, including high efficacy, rapid development capabilities, low production cost and greater safety. The mRNA vaccines can simulate the natural infection process of viruses to activate the immune system, potentially eliciting a stronger immune response. In addition, multiple

mRNAs can be packaged in the same vaccine, increasing the vaccine’s applicability. Furthermore, the discovery and production of mRNA vaccines are faster compared to protein vaccines, allowing for quicker responses to emerging epidemic infections. Different mRNA vaccines can use the same production processes and facilities, decreasing manufacturing cost. Compared with subunit vaccines, inactivated virus vaccines, attenuated live virus vaccines, and DNA-based vaccines, mRNA vaccines use partial genetic sequences of the virus, instead of the virus itself, thereby avoiding potential risks of infection or insertion mutations. By constructing mRNA onto carrier molecules, it can be quickly taken up and expressed in the cytoplasm, thus achieving effective intracellular delivery. The operating entity places its focus on feline infectious peritonitis, feline immunodeficiency disease, porcine epizootic diarrhea, porcine reproductive and respiratory disorder syndrome, and it is conducting animal experiments to assess the immunity effectiveness of newly developed mRNA vaccines.

The operating entity is currently conducting animal experiments for its mRNA vaccines targeting Feline Infectious Peritonitis, Feline Immunodeficiency Virus, Porcine Epidemic Diarrhea, and Porcine Reproductive and Respiratory Syndrome. Each experiment involves two animals. By administering the vaccines to animals through intramuscular injection, the researchers observe for any abnormalities, both locally at the injection site and systemically throughout the body. The operating entity adheres to the fundamental principles of animal welfare and ethics during the animal experimentation process. Throughout the experimentation, once the results are known, the earlier stages where animals exhibit signs of pain and distress are promptly chosen as the endpoints of the experiment. Euthanasia is employed as a humane method to end the life of the animals, minimizing or eliminating any fear or pain to the greatest extent possible, allowing animals to pass away peacefully and swiftly. Subsequently, the animals are processed and disposed of as solid waste, following established procedures and regulations.

Regulatory Approvals for the Company’s Products

The operating entity has received a broad range of regulatory approvals for its products. The following chart sets forth a summary of the licenses and permissions obtained by the operating entity as of the date of this prospectus:

____________

Note:

(1)      A Certificate of Good Manufacturing Practices for Animal Drugs attests that the manufacturer complies with the Veterinary Drug Production Quality Management Norms, and it is a required certificate for manufacturer to produce and market its veterinary products.

(2)      A Veterinary Drug Production Permit assures the manufacturer’s ability to produce veterinary drugs.

(3)      A Veterinary Drug Operation Permit allows the manufacturer to sell veterinary drugs.

(4)      A Use License of Experimental Animals permits the license holder to use experimental animals to conduct experiments.

(5)      A Registration Certificate of New Veterinary Drugs verifies that this veterinary drug product has undergone all the necessary tests and evaluations to ensure its safety, efficacy, and quality, and it can be used for animals under the stipulated uses and dosages. It is a required certificate for a company before receiving an Approval Number for Veterinary Biological Products for a vaccine and commencing manufacturing such vaccine. See “Regulations — Regulations Related to Veterinary Drugs Production and Operation”

As of the date of this prospectus, the operating entity is granted approval by Egypt to sell its Newcastle Disease Vaccine, Live (Strain Clone 30), Infectious Coryza Vaccine, Inactivated, Newcastle Disease Vaccine, Live (LaSota strain), Newcastle Disease Vaccine, Inactivated, and Newcastle Disease and Egg Drop Syndrome Vaccine, Inactivated.

As of the date of this prospectus, the operating entity is granted approval by Pakistan to sell its Combined Newcastle Disease & Egg Drop Syndrome Vaccine, Inactivated, Combined Newcastle Disease & Infectious Bronchitis Vaccine, Live, Newcastle Disease Vaccine, Inactivated, and New Castle Disease Virus (La Sota Strain) and Avian influenza virus (H9 subtype, HL strain, H9N2) Vaccine, Inactivated.

As of the date of this prospectus, the operating entity is granted approval by Vietnam to sell its Avian Pox Vaccine, Live, Newcastle Disease Vaccine, Live (LaSota strain), Newcastle Disease Vaccine, Inactivated, Newcastle Disease, Infectious Bronchitis and Avian Influenza (H9 subtype) Vaccine, Inactivated (Strain La Sota + Strain M41 + Strain SY), and Infectious Bursal Disease Vaccine, Live (Strain B87).

Customers

The operating entity has two types of customers, (i) direct-end user customers, including livestock farmers and local governments; and (ii) distributors that distribute the operating entity’s products to end-user customers, including domestic distributors and exporting distributors (See “— Sales and Distribution-Distribution Network”). The operating entity sources its customers through multiple channels, including (i) attending industry exhibitions/expos, and (ii) directly contacting potential distributor customers and direct-end customers. For the fiscal years ended December 31, 2023 and 2022, the operating entity had a total of 290 and 274 customers, of which 79 and 77 were direct end-user customers, and 211 and 197 were distributor customers, respectively. For the fiscal years ended December 31, 2023 and 2022, the revenue generated from direct-end user customers amounted to RMB162.0 million ($22.8 million) and RMB212.4 million ($29.9 million), respectively. For the fiscal years ended December 31, 2023 and 2022, the revenue generated from distributor customers amounted to RMB49.7 million ($7.0 million) and RMB47.9 million ($6.8 million), respectively. For the fiscal year ended December 31, 2023, two customers, MYF and Shuangbaotai (Group) Corporation Limited, account for more than 10% of the Company’s total revenue, accounting for 52.1% and 15.0% of total revenue, respectively. For the fiscal year ended December 31, 2022, MYF is the only customer that accounts for more than 10% of the Company’s total revenue, accounting for 74.5% of total revenue. See “Risk Factors — Risks Relating to Our Business and Industry — High customer concentration exposes the operating entity to all of the risks faced by its major customer and may subject it to significant fluctuations or declines in revenue, which may have a material adverse impact on the operating entity’s business, and its and our financial condition and results of operations.”

The operating entity has long-term written sales agreements, ranging from one to three years, with its direct-end user customers who are livestock farmers (for the description of direct-end user customers who are local governments, see “— Sales and Distribution-Government Tender and Procurement”). The key terms of these sales agreements (including those agreements with top customers) include:

•        the product’s name, type, quantity, and price;

•        quality standard — vaccines qualifications, including business license, veterinary vaccines production and operation licenses, and inspection report;

•        delivery time, method and payment terms;

•        breach of contract terms, including remedies, such as refunds and return of products (for example, customers are entitled to refunds and may return the product if the wrong product is delivered or the product does not meet agreed upon quality standards);

•        shipping costs, which are typically borne by the seller; and

•        dispute solutions, including bringing a lawsuit at the local court where the direct-end user customers are located, if negotiations are unsuccessful.

In the course of dealing with overseas customers, the operating entity has maintained stable business relationships; however, such business relationships are not memorialized in any long-term agreements, but are rather provided for in short-form order sheets. In respect of their international sales, the risk of loss is borne by the customers upon delivery of the products. See “— Sales and Distribution — Distribution Network.”

The operating entity faces an inherent risk of liability claims or complaints from customers. When the products are found to be defective, they are required to recall the products according to usage of trade. When customers file product liability claims against the operating entity, conflict of laws and product liability laws of the countries or regions where they are located are applicable. Jurisdiction is determined by the sales agreements, and laws of the countries or regions where the customers are located will determine the issue if the sales agreements are absent of jurisdiction selection clauses.

As of the date of this prospectus, the operating entity is not aware of any warnings, investigations, prosecutions, disputes, claims or other proceedings in respect of veterinary vaccines it manufactures or distributes overseas, nor has it been penalized or can foresee any penalties to be made by any overseas jurisdiction with respect to veterinary vaccines safety.

Suppliers

The operating entity sources its suppliers through multiple channels: (i) referral by companies in the same industry, (ii) marketing by suppliers’ salespersons, and (iii) direct contact with suppliers through public channel, for example, suppliers’ websites.

The operating entity’s suppliers are those providing raw materials for the manufacturing of the products. The raw and auxiliary materials include serum, culture medium, adjuvant, hatching egg, and experimental animal (primarily consisting of rats and chicken, which are mainly used in early-stage R&D and efficacy examination of vaccines. See “— Products”). All of which are purchased from certified and qualified suppliers in China. The operating entity’s supply was affected during the COVID-19 pandemic because of two reasons: (i) lockdown resulted from the pandemic stopped suppliers’ production or postponed their deliveries of raw materials; and (ii) the raw materials of the operating entity’s products are similar to those of COVID-19 vaccines, therefore, the price of raw materials surged due to the mass production of COVID-19 vaccines. As of the date of this prospectus, the operating entity’s supply is not affected by the conflict between Russia and Ukraine.

For the fiscal year ended December 31, 2023, no supplier accounts for more than 10% of the operating entity’s total supplies purchased. For the fiscal year ended December 31, 2022, two suppliers, Xinxiang Jiexin Biotechnology Co., Ltd. and Henan Shuocheng Biotechnology Co., Ltd., account for more than 10% of the operating entity’s total supplies purchased, accounting for 25.3% and 12.9%, respectively.

As of the date of this prospectus, the operating entity has a total of 65 suppliers. Although the operating entity can utilize any supplier it determines, we believe that it has established healthy and stable relationships with its significant suppliers through years of cooperation. There are no minimum purchase requirements with any of the suppliers, including with the above significant ones. Each supplier order is typically governed by a brief purchase-order based purchase agreement. The key terms of the supplier purchase agreements (including those agreements with the significant suppliers) include:

•        the product’s name, type, quantity, and price;

•        quality terms which are typically expressed with reference to national or industry standards;

•        delivery time, method and payment terms. Shipping costs are the responsibility of the supplier; and

•        breach of contract terms, including refund and return of products, compensatory damages. If the supplier cannot deliver the product within the time agreed, or if the products do not meet the stated quality standard, the supplier must compensate the operating entity for losses caused, including treble damages if the products are defective or counterfeit. In the event the operating entity cannot timely pay, liquidated damages are due to the supplier.

R&D

The operating entity invests in R&D, aiming to develop new products and improve its existing products to accommodate the market needs. The R&D expenses totaled approximately RMB11.9 million ($1.7 million) and RMB13.4 million ($1.9 million) for the fiscal years ended December 31, 2023 and 2022, respectively. R&D expenses mainly consist of applicable personnel, sample manufacturing and materials expenses. As of the date of this prospectus, the operating entity has a total of 48 employees in the R&D department. Below is a list of some employees in the R&D department.

The operating entity currently has one R&D center, which was established in 2006 and located at No. 1 Lianmeng Road, Jilin Economic & Technical Development Zone, Jilin Province, China. As of the date of this prospectus, the R&D center has developed 40 patents, and helped the operating entity receive 14 Registration Certificates of New Veterinary Drugs.

In addition to independent R&D, the operating entity also cooperates with universities and research institutions on multiple projects.

Due to the long development cycle, large investment, and high risk associated with veterinary vaccines, the early-stage research for new products is mainly conducted within universities and research institutes. Manufacturers acquire new veterinary drug production technologies through technology transfer or cooperative R&D with universities or research institutes, and then mass-produce and commercialize the veterinary vaccines. In the process of cooperative R&D, universities and research institutes are mainly responsible for early-stage basic research. The operating entity, in addition to participating in basic research, is primarily responsible for pilot study and industrialization research. The operating entity has established relationships with veterinary research institutes and universities such as Harbin Veterinary Research Institute, Shanghai Veterinary Research Institute, China Agricultural University, Jilin University, and Nanjing Agricultural University, working on research cooperation and technology introduction. The associated costs incurred in the cooperation are funded by the operating entity’s revenue.

The key terms of cooperative research agreements with universities and research institutions include:

•        name of the research, project objective, research methodology, research location, and term of agreement;

•        division of responsibilities and payment terms. Normally it is the operating entity’s responsibility to provide research funds and research institutions’ responsibility to conduct research;

•        intellectual property ownership, right of first refusal, and exclusive right of production. The operating entity is normally entitled to the right of first refusal and the exclusive right of production regarding the vaccine or technology that is intended to be developed under the agreement; and

•        dispute solutions, including bringing a lawsuit at the local court, if negotiations are unsuccessful.

For example, in 2008, the operating entity entered into a strategic cooperation framework agreement with Shanghai Veterinary Research Institute, pursuant to which the operating entity agreed to pay RMB3 million each year, from September 2008 to September 2018, to Shanghai Veterinary Research Institute for the R&D of veterinary vaccines (the “Strategic Cooperation Framework Agreement”). The Strategic Cooperation Framework Agreement was in effect from September 9, 2008, until September 8, 2018. Under the terms of this agreement, should the operating entity fail to make timely payments, the Shanghai Veterinary Research Institute reserves the right to terminate the agreement without refunding any payments already made by the operating entity. Apart from that, should the contract be terminated due to a breach by either party, neither party will be subject to significant liabilities resulting from the breach.

On April 3, 2018, as the Strategic Cooperation Framework Agreement was about to expire, both parties signed a memorandum (the “Memorandum”) and made subsequent plans for vaccines that had been approved to commence clinical trials but had not obtained Registration Certificate of New Veterinary Drugs, including Duck Tembusu Viral Disease Vaccine, Live (Strain FX2010-180P). In September 2019, pursuant to the Strategic Cooperation Framework Agreement and the memorandum, Shanghai Veterinary Research Institute transferred Duck Tembusu Viral Disease Vaccine, Live (Strain FX2010-180P) to the operating entity for commercialization. In return, after the operating entity receives an Approval Number for Veterinary Biological Products and commences producing this vaccine, the operating entity would remit 5% of the vaccine’s five-year sales revenue as consideration. Neither the Strategic Cooperation Framework Agreement nor the Memorandum addresses or includes provisions for the cross-licensing of intellectual property rights. The Memorandum does not extend the duration of the Strategic Cooperation Framework Agreement, nor does it contain any provisions regarding its own duration or termination. As of December 31, 2023, the total aggregate amount of the shared revenue paid by the operating entity in this project reached RMB1,370,443 (US$193,023). The Company recognized the 5% of the sales revenue as cost of revenue since the cost was directly related to the revenue.

Moreover, the operating entity is also licensed to use vaccine production technologies and related intellectual properties owned by others to manufacture vaccines through technology licensing agreements.

For example, the operating entity entered into a technology licensing agreement with Harbin Veterinary Research Institute on April 5, 2012, pursuant to which Harbin Veterinary Research Institute permitted the operating entity to use the seed virus and production technology of Swine Transmissible Gastroenteritis, Porcine Epidemic Diarrhea and Porcine Rotavirus (G5 type) Vaccine, Live (Strain huadu+Strain CV777+Strain NX) to manufacture the vaccine. As of December 31, 2023, the total aggregate amount that has been paid by the operating entity pursuant to this agreement reach RMB56,000,000 (US$7,887,435). The vaccine has been launched in July 2016. The operating entity recognized it as intangible asset, and amortized it over the useful life of the licensed technology. Set forth below are the materials terms of the technology licensing contract:

•        Description of the technology:    the Swine Transmissible Gastroenteritis, Porcine Epidemic Diarrhea and Porcine Rotavirus (G5 type) Vaccine, live (Strain huadu+Strain CV777+Strain NX) is used to prevent infection of porcine infectious gastroenteritis virus, porcine epidemic diarrhea virus, and porcine rotavirus (G5 type). The weak virus Huadu strain, weak virus CV777 strain, and NX strain are all cultivated by Harbin Veterinary Research Institute. The total immune protection rate of the vaccine is over 85%. The immune duration is 6 months. It is stored below -20 degree Celsius and has a validity period of 24 months.

•        Performance:    (i) Both parties jointly apply for a Registration Certificate of New Veterinary Drugs for the Swine Transmissible Gastroenteritis, Porcine Epidemic Diarrhea and Porcine Rotavirus (G5 type) Vaccine, live (Strain huadu+Strain CV777+Strain NX). The operating entity is only entitled to use the certificate, and it has no right to transfer the certificate; and (2) Within 30 days of obtaining the Registration Certificate of New Veterinary Drugs, Harbin Veterinary Research Institute shall furnish the seed virus and production process of the vaccine to the operating entity.

•        Scope of usage of the technology:    Harbin Veterinary Research Institute shall exclusively own the technical achievements and their derived intellectual property rights. The operating entity shall be only entitled to use the technology to produce and sell the vaccines, and it shall not transfer the virus seed and production technology to a third party, nor shall it use the technology for the R&D or technical improvement of other new products or collaborate with a third party in production of the vaccine.

•        Contract duration:    April 5, 2012 to April 5, 2032. If the operating entity wishes to continue using the technology to produce vaccines after the expiration of this agreement, it shall obtain the consent of Harbin Veterinary Research Institute and comply with the payment term of this agreement. Harbin Veterinary Research Institute shall agree to renew the agreement, unless prevented by an event of force majeure.

•        Infringement Indemnity:    Harbin Veterinary Research Institute shall guarantee that this technology does not infringe on the legitimate rights of any third party. If a third party accuses the operating entity of infringement and the operating entity is ordered to pay compensation, Harbin Veterinary Research Institute shall cover the loss. Harbin Veterinary Research Institute shall not be liable if a third party maliciously infringes on the technology outlined in this agreement.

•        Confidentiality:    the seed virus and production process of the vaccine, and all information and data exchanged between the parties during the contract term are subject to strict confidentiality obligations. Should a party violate these confidentiality obligations, it will be liable to pay liquidated damages amounting to RMB10 million to the non-breaching party. Additionally, if the operating entity breaches its confidentiality obligations, it will not only be required to pay the stipulated liquidated damages but will also forfeit any right to reclaim paid royalties and must compensate Harbin Veterinary Research Institute for any economic losses arising from the disclosure of confidential information.

•        Subsequent Improvement:    the operating entity is not entitled to use the technology of this agreement for subsequent improvement. Harbin Veterinary Research Institute shall be entitled to make subsequent improvements to the technology of this agreement. The new technological achievements with substantive or creative technological progress resulting from the technology of this agreement shall belong to Harbin Veterinary Research Institute.

•        Payment terms:    the operating entity is obligated to pay Harbin Veterinary Research Institute royalties totaling RMB56 million, plus 5% of the vaccine’s annual sales revenue, commencing from the first day of production of the vaccine. The operating entity has already paid Harbin Veterinary Research Institute an initial amount of RMB2 million. The remaining RMB 54 million is to be paid in installments. For the first installment, due by December 10, 2014, the operating entity is to pay Harbin Veterinary Research Institute royalties amounting to RMB21.6 million. For the second installment, due by October 20, 2015, the operating entity is to pay Harbin Veterinary Research Institute royalties amounting to RMB16.2 million. For the third installment, due by October 20, 2016, the operating entity is to pay Harbin Veterinary Research Institute royalties amounting to RMB16.2 million. Starting from the date of production of the vaccine, the operating entity is obligated to pay Harbin Veterinary Research Institute a lump sum of 5% of the sales revenue by December 10 each year.

•        Liabilities of the operating entity:    (i) if the operating entity fails to comply with the provision of confidentiality and scope of usage of the technology, it is obligated to pay Harbin Veterinary Research Institute liquidated damages of RMB10 million, and must compensate Harbin Veterinary Research Institute for any economic losses arising from the disclosure of confidential information; and (ii) if the operating entity fails to pay its royalties in full and on time, it is obligated to pay Harbin Veterinary Research Institute liquidated damages of RMB10 million and compensate for any incurred losses.

•        Liabilities of the Harbin Veterinary Research Institute:    if Harbin Veterinary Research Institute fails to comply with the agreed-upon provisions regarding performance, it is obligated to pay the operating entity liquidated damages of RMB 10 million and to refund all royalties previously paid by the operating entity.

•        Termination:    this agreement may be terminated if (i) there is an occurrence of an event of force majeure; or (ii) both parties agree to terminate this agreement.

•        Dispute resolution:    Any disputes incurred in connection with the performance of the contract shall be resolved through negotiation and mediation. If negotiation and mediation fail, the disputes shall be submitted to Harbin Arbitration Commission for arbitration.

Additionally, the operating entity entered into a technology licensing agreement with China Agricultural University and China Institute of Veterinary Drug Control on July 16, 2018, pursuant to which the operating entity is permitted to use the seed virus and production technology of Reassortant Newcastle Disease Virus and Avian Influenza Virus (H9 Subtype) Vaccine, Inactivated (Strain aSG10+ Strain G). The vaccine has been launched in January 2020. As of October 31, 2023, the total aggregate amount that has been paid by the operating entity pursuant to this agreement reach RMB6,000,000 (US$827,438). The operating entity recognized it as intangible assets, and amortized it over the useful life of the licensed technology. Set forth below are the materials terms of the technology licensing contract:

•        Description of the technology:    the Reassortant Newcastle Disease Virus and Avian Influenza Virus (H9 Subtype) Vaccine, Inactivated (Strain aSG10+ Strain G) is used to prevent Newcastle disease and H9 subtype avian influenza. The main content of this technical secret is the production process, production and testing of recombinant Newcastle disease virus and avian influenza (H9 subtype) inactivated vaccine, as well as related formulas. According to this agreement, the operating entity has the access to production technology of the vaccine, seed virus for production and testing, and related formula.

•        Performance:    After obtaining the Registration Certificate of New Veterinary Drugs and within 15 days since the operating entity fully pays the royalties, China Agricultural University and China Institute of Veterinary Drug Control shall furnish to the operating entity (i) attenuated strains of virus; (ii) manufacturing and inspection procedures; (iii) quality standards and user guidebook; and (iv) quality standards and testing techniques for raw and auxiliary materials.

•        Scope of usage of the technology:    the operating entity shall be only entitled to use the technology to produce and sell the vaccines under the supervision of the other two parties.

•        Infringement Indemnity:    China Agricultural University and China Institute of Veterinary Drug Control shall ensure that this technology does not violate the legitimate rights of any third party. Should a third party accuse the operating entity of infringement, both entities are obligated to assist the operating entity in defending its rights.

•        Contract duration:    July 16, 2018 to July 15, 2038.

•        Confidentiality:    the seed virus and production process of the vaccine, and all information and data exchanged among the parties during the contract term are subject to strict confidentiality obligations. Should the operating entity violate these confidentiality obligations, it will be liable to pay liquidated damages amounting to RMB18 million to the non-breaching parties. Additionally, it will also forfeit any right to reclaim paid royalties and the non-breaching parties can terminate the agreement. Should the other two parties breach these confidentiality obligations, the operating entity is entitled to seek compensation for any direct economic losses incurred, up to the total amount of royalties actually paid.

•        Technical service and supervision:    China Agricultural University shall provide on-site technical guidance and training to the operating entity, and China Institute of Veterinary Drug Control shall provide technical consultation. The operating entity is obligated to furnish China Agricultural University and China Institute of Veterinary Drug Control with all necessary conditions for utilizing the licensed technology, including trial production and technical training. The operating entity shall also cover associated costs, encompassing living and transportation expenses for technical supervisors and consultants.

•        Subsequent Improvement:    should the operating entity intend to make subsequent improvements to the technology stipulated in this agreement, it must seek approval from the other two parties. The operating entity is prohibited from utilizing the technology for the R&D of any other new products.

•        Payment terms:    the operating entity is obligated to pay royalties in installments, totaling RMB6 million, with RMB3.3 million to be paid to China Agricultural University, and the remaining RMB2.7 million to China Institute of Veterinary Drug Control. Within twenty working days after the effective date of this contract, the operating entity shall pay RMB2 million in royalties; RMB1.1 million to China Agricultural University, and the remaining RMB0.9 million to China Institute of Veterinary Drug Control. Within twenty working days after obtaining the Registration Certificate of New Veterinary Drugs, the operating entity shall pay an additional RMB4 million in royalties; RMB2.2 million to China Agricultural University, and the remaining RMB1.8 million to China Institute of Veterinary Drug Control. If the technical outcomes of this project fail to secure a Registration Certificate of New Veterinary Drugs, China Agricultural University and China Institute of Veterinary Drug Control shall refund all payments received from the operating entity, without interest, and shall not bear any further liabilities.

•        Termination and modification:    (i) if a party cannot perform its obligations due to an event of force majeure, it will be exempted from liability for breach of contract, provided that it promptly informs the other two parties and submits a certificate proving inability to perform within thirty days; (ii) should a party be unable to fulfill its contractual obligations due to alterations in veterinary drug laws, regulations, or policies, it will be exempted from breach of contract liability, provided that it promptly informs the other two parties and supplies proof of inability to fulfill the contract within thirty days; and (iii) if this contract cannot be executed owing to factors like the production conditions of the operating entity, the entity may propose modifications to the contract but must compensate the other two parties for any losses incurred.

•        Liabilities of the operating entity:    (i) if the operating entity fails to fully pay its royalties on time, it will incur a breach of contract. If the payment is overdue by no more than one month, the operating entity is obligated to pay the owed royalties and an additional late fee of 0.5% of the payable amount for each day of delay to the other parties. Should the payment be overdue by more than one month, the other two parties may, following negotiations, notify the operating entity of the contract’s termination. Any royalties previously paid by the operating entity are non-refundable; (ii) if the operating entity breaches the confidentiality provisions, it must pay the other two parties liquidated damages of RMB 18 million; (iii) should the operating entity violate any other provisions of this contract, it will incur liability for breach of contract and must compensate the other two parties with liquidated damages of RMB 18 million, in addition to ceasing the infringing acts immediately.

•        Liabilities of China Agricultural University and China Institute of Veterinary Drug Control:    if either of the two parties violates the confidentiality provisions, it shall incur liability for breach of contract. The operating entity reserves the right to require the violating party to compensate for all resulting economic losses, up to the amount of the royalties paid by the operating entity at that time.

•        Dispute resolution:    Any disputes incurred in connection with the performance of the contract shall be resolved through negotiation and mediation. If negotiation and mediation fail, the disputes shall be submitted to Beijing Arbitration Commission for arbitration.

The operating entity conducts research projects solely or cooperatively with third-party local universities. The associated costs incurred in these projects are solely funded by the operating entity. For certain research projects eligible for government subsidies, the operating entity receives subsidies from the government of Jilin Province, PRC, which the operating entity records as other income, government subsidies, in the consolidated statements of income and comprehensive income. Set forth below is a list of these research projects.

For the project of the Development and Efficacy Evaluation of the Porcine Hemagglutinating Encephalomyelitis Virus DNA Vaccine, the operating entity entered into a cooperative research agreement with Jilin University on September 17, 2020. According to the agreement, Jilin University is responsible for designing and manufacturing the DNA vaccines against the porcine hemagglutinating encephalomyelitis virus and will test the vaccine for safety, immunogenicity, and efficacy. The operating entity is obligated to provide locations for animal testing, undertake the daily standardized breeding and management of the experimental animals, assist Jilin University with vaccination and sample collection, and ensure the harmless treatment of experimental animals. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. The operating entity solely offered supplementary assistance and therefore, did not incur any direct costs.

For the project of the Key Technique Study for the Development of the Live Gene-deletion-attenuated Vaccine against Ovine and Caprine Ecthyma (Orf), the operating entity entered into a cooperation agreement of joint research project with Jilin University on September 18, 2020. According to the agreement, Jilin University is tasked with rescuing, identifying, and purifying attenuated vaccine strains that lack the main virulence genes of ORFV. They will screen for candidate vaccine strains for Orf, assess the biological safety and immune protection effects of these strains, and undertake laboratory research, including immunity optimization studies. The operating entity will refine the cell culture and freezing processes for candidate vaccines, furnish sites for animal testing, and enforce standard procedures for the breeding and management of experimental animals. It is also responsible for aiding Jilin University in vaccination and sample collection and ensuring the harmless treatment of experimental animals. Upon approval of their application, Jilin University is entitled to receive 90% of the government funding, while the operating entity is allocated the remaining 10%. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. As of December 31, 2023, RMB1,410,887 were incurred as costs in this project, which included raw materials purchase costs, employees’ salaries, electricity and gas costs, and depreciation expenses.

For the project of the Development and Efficacy Evaluation of Jilin-region-specific High Efficiency Inactivated PED Vaccine, the operating entity entered into a cooperation agreement of joint research project with Jilin Agricultural Science and Technology University on September 19, 2020. According to the agreement, Jilin Agricultural Science and Technology University is responsible for designing and implementing the project, overseeing the control and isolation of PEDV in the Jilin region, and initiating laboratory research into the development of a PED cocktail inactivated vaccine. The operating entity is tasked with conducting evaluations of immune effects and pilot studies pertaining to the project, and supplying the necessary experimental resources for executing animal experiments. The parties collectively submit an application for government scientific research funding in the amount of RMB500,000, provided by the Jilin Provincial Department of Science and Technology, with Jilin Agricultural Science and Technology University consenting to contribute an additional RMB300,000 towards the project. Once the government funding from the Jilin Provincial Department of Science and Technology is received, 80% will be allocated to Jilin Agricultural Science and Technology University, and 20% will be allocated to the operating entity. The theoretical outcomes, including papers and monographs, developed independently by either party through their individual research, as well as the applied technical outcomes such as patents and the property rights of any resulting products, shall be respectively owned by the respective originating party. The ownership of scientific and technological outcomes from the project is collectively owned by both parties. Both parties may collectively apply for the registration of new veterinary drugs and evenly allocate intellectual property rights as well as the benefits derived from the conversion of scientific and technological achievements. The agreement does not address or include provisions for the cross-licensing of intellectual property

rights. The operating entity shall have priority in the manufacturing of products developed from the research. The project was completed in July 2020. As of July 31, 2020, RMB1,888,709 were incurred as costs in this project, which included raw materials purchase costs, employees’ salaries, electricity and gas costs, and depreciation expenses.

For the project of Establishing the OFTu Immortalized Cell Line and its Application in Developing Ovine and Caprine Poxvirus Vaccine, the operating entity entered into a cooperative research agreement with Jilin University on October 14, 2021. According to the agreement, Jilin University is assigned to construct an immortalized cell line of sheep nasal concha osseous tissue cells (OFTu) and is responsible for evaluating the proliferation capability of the OFTu cell line. Jilin University will also carry out chromosomal karyotype analysis and assess the potential tumorigenic capability of the OFTu cell line, along with evaluating the amplification capacity of sheep-derived poxvirus within the OFTu cell line. The operating entity is responsible for optimizing the large-scale cultivation and inheritance processes of the OFTu cell line and will provide assistance to Jilin University in conducting amplification tests on the smallpox virus vaccine strain within the OFTu cell line. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the project of the Development of ASFV-PRV Nucleic Acid rapid Co-test Kit and its Application in the Quarantine of Cold-chain Pork, the operating entity entered into a cooperative research agreement with Health Commission of Jilin Province and Jilin University on October 14, 2021. According to the agreement, Jilin University is tasked with establishing a multiplex fluorescence quantitative PCR test method to identify ASFV, PRV wild-type strains, and vaccine strains. It is also responsible to acquire an ASFV-PRV nucleic acid synchronous rapid detection kit and formulate a food safety quarantine report focusing on ASFV and PRV in cold-chain pork within Jilin Province. Health Commission of Jilin Province is responsible for supplying a P3 biosafety laboratory suitable for virus nucleic acid extraction and PCR amplification. It will assist Jilin University in sample collection and ensure the harmless treatment of all experimental materials. The operating entity will assemble the test kits and spearhead the marketing promotion. It will also assist Jilin University in collecting samples and conducting food safety quarantine against ASFV and PRV of cold-chain pork in Jilin Province. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the project of the Development of Fish Enteritis Gene-deletion-attenuated Live Vaccine, the operating entity entered into a cooperative research agreement with Jilin Agricultural University on October 9, 2021. According to the agreement, Jilin Agricultural University, as the host for the research project, is mandated to report, implement, and summarize the project, it is also responsible for a research project called “Construction and Immune Effect Evaluation of Live Attenuated Vaccine Strains Caused by Bacterial Enteritis Gene Deletion in Fish, and Screening of Frozen Protective Agents for Live Attenuated Vaccine Strains Caused by Bacterial Enteritis Gene Deletion in Fish”. The operating entity, on the other hand, is entrusted with the responsibility to optimize the processes pertaining to the attenuated live vaccine developed due to gene deletion causing bacterial enteritis in fish, as part of the aforementioned project. Upon receipt of the project funding, Jilin Agricultural University is to allocate RMB50,000 to the operating entity. Additionally, the operating entity is committed to contributing RMB250,000 towards the research project. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. Should any disputes arise from the execution of this contract between the parties, the parties should endeavor to resolve them through negotiation and mediation. In instances where a resolution cannot be attained through negotiation and mediation, the aggrieved party has the right to initiate legal proceedings in the competent People’s Court in accordance with applicable laws. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the project of the Development of Ovine and Caprine Contagious Pustular Virus mRNA Vaccine Based on Lipid Nanoparticle Technology, the operating entity entered into a cooperative research agreement with Jilin University on September 13, 2022. According to the agreement, Jilin University is tasked with orchestrating the comprehensive design of the project. Its responsibilities include screening for the principal immunogenic proteins of the sheep infectious pus virus and conducting the antigen sequence design. It will also be creating mRNA preparations and developing mRNA lipid nanoparticles. Additionally, it will assess the safety and efficacy of the vaccine particles, ensuring thorough evaluation and compliance with relevant guidelines. The operating entity will refine the preparation, purification, and other pertinent processes related to the sheep infectious pus virus mRNA vaccine stock solution. It will supply sites for animal testing and oversee the daily standardized breeding and management of the experimental animals. Furthermore, it will assist Jilin University with vaccination procedures and sample collection and ensure the harmless treatment and ethical management of all experimental animals involved. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the project of the Development of Combined VSV-SVV Nucleic Acid Rapid Test Kit and its Application in the Quarantine of Cold-chain Pork, the operating entity entered into a cooperative research agreement with Jilin University and Health Commission of Jilin Province on September 9, 2022. According to the agreement, Jilin University is responsible for leading the comprehensive design of the experimental project. It will develop a dual fluorescence quantitative PCR nucleic acid test method for the detection of Vesicular Stomatitis Virus (VSV) and Seneca Valley Virus (SVV). It will also assemble a combined VSV-SVV nucleic acid rapid test kit, assess its practical applications, and author a food safety quarantine report detailing the presence of VSV and SVV in cold-chain pork within Jilin Province. Health Commission of Jilin Province is tasked with supplying a P3 biosafety laboratory suitable for virus nucleic acid extraction and PCR amplification. It will support Jilin University in collecting samples and ensure the safe and harmless treatment of experimental materials. The operating entity will assemble the test kits and lead the marketing promotions. Additionally, it will aid Jilin University in collecting samples and conducting food safety quarantines against VSV and SVV in cold-chain pork within Jilin Province. Additionally, the operating entity is committed to contributing RMB260,000 towards the research project. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the project of the Study of Rapid Visual Nucleic Acid Test of Various SARS-CoV-2 Mutants, the operating entity entered into a cooperative research agreement with Jilin University on September 16, 2022. According to the agreement, Jilin University is entrusted with designing the project and is responsible for preparing probes labeled with organic luminescent materials. Its duties also include optimizing the conditions for isothermal amplification and assessing both the sensitivity and the applicability of the SARS-CoV-2 rapid nucleic acid visualization detection method on clinical samples. The operating entity is assigned to conduct comparative analyses on the complete gene sequences of multiple SARS-CoV-2 variants. They will design the necessary primers and probes and are responsible for evaluating the specificity of the SARS-CoV-2 rapid nucleic acid visualization detection method. The operating entity will invest RMB260,000 as R&D expenses for the project. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the project of the Development of Animal Microecological Vaccine for the Biological Control of African Swine Fever, the operating entity entered into a cooperative research agreement with Jilin Agricultural University on September 13, 2022. According to the agreement, Jilin Agricultural University is assigned to handle the tasks related to the application, execution, and summarization of the project. Its responsibilities encompass the identification of strains and the development of a composite lactobacillus vaccine. It is also responsible for conducting a biosafety intermediate test and generating the corresponding biosafety intermediate test report to ensure the safety and compliance of the developed products. Meanwhile, the operating entity is responsible for undertaking the product inspection to ensure that the final output meets the required standards and specifications. Upon approval of the project funding, Jilin Agricultural University is allocated 90% of the government-provided funds, with the remaining 10% being designated to the operating entity. Throughout the duration of the research project, ownership of research outcomes and associated intellectual property rights originating from the research conducted by either party shall be vested in the party that conducts the research. Nonetheless, Jilin Agricultural University is granted the right to utilize the operating entity’s project information for non-commercial endeavors, such as the creation of government meeting presentations, reports, documents, and references to statistical data, etc. During the period of project execution, intellectual property rights will be mutually shared by both parties. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. As of December 31, 2023, RMB1,659,224 were incurred as costs in this project, which included raw materials purchase costs, employees’ salaries, electricity and gas costs, and depreciation expenses.

For the project of the Development and Application of Rapid Visual Test Technology for Key Viral Diseases in Goslings, the operating entity entered into a cooperative research agreement with Jilin Agricultural University and Jilin Provincial Center for Animal Disease Prevention and Control on September 13, 2022. According to the agreement, Jilin Agricultural University has been designated as the project host and is thereby responsible for the tasks of project application, implementation, and summarization. Within the scope of the project, Jilin Agricultural University will undertake the research focused on “the development of fluorescence quantitative PCR and visualization detection methods for prevalent viral diseases in goslings”. The operating entity is assigned the responsibility of marketing promotion for the developed detection methods. Jilin Provincial Center for Animal Disease Prevention and Control is entrusted with the tasks related to quality and standard inspection of the detection methods. Once the project funding is secured, Jilin Agricultural University is obligated to allocate an amount of RMB50,000 to the operating entity. Given that the project funding is dispersed in installments, Jilin Agricultural University shall ensure the transfer of the allocated amount to the operating entity within 30 days following the receipt of each installment. The operating entity is committed to

contributing RMB250,000 towards the research project, representing 30.1% of the overall project budget. None of the parties shall, without the prior consent of the others, disclose to any third party the contents of this agreement or any related technical information or materials. The obligation to maintain confidentiality will be enforced for a period of three years from the date of the agreement. Should any disputes arise from the execution of this contract between the parties, the parties should endeavor to resolve them through negotiation and mediation. In instances where a resolution cannot be attained through negotiation and mediation, the aggrieved party has the right to initiate legal proceedings in the competent People’s Court in accordance with applicable laws. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the project of the Development and Application of Fluorescent ERA Rapid Thermostatic Diagnostic Technology for Key Viral Diarrhea Diseases in Pigs, the operating entity entered into a cooperative research agreement with Jilin Academy of Agricultural Sciences on September 19, 2022. According to the agreement, Jilin Academy of Agricultural Sciences is mandated to investigate conventional diagnostic markers for identical pathogens and specific markers for distinct pathogens, and to fabricate uniform and stable nucleic acid reference materials. This includes the design of primers and exo probes for pathogen diagnostic markers, optimization of primers, reaction systems, and conditions, and the assessment of specificity, sensitivity, stability, and accuracy. It is tasked with establishing a fluorescence ERA constant temperature detection method, enabling on-site rapid detection within 15-20 minutes. Furthermore, it will conduct background investigations on four types of porcine viral diarrhea pathogens prevalent in Jilin Province, finalize the prototype production of rapid diagnostic reagents, and facilitate the dissemination of grassroots technology. The operating entity, on the other hand, is obligated to grant access to the Jilin Province Animal Vaccine Engineering Research Center and is responsible for assembling a research and development team to standardize a constant temperature testing methodology. Additionally, it will provide existing vaccine strains and samples procured from pig farms situated in Jilin Province. The parties mutually acknowledge and agree that the ownership of the Fluorescent ERA Rapid Thermostatic Diagnostic Technology for Key Viral Diarrhea Diseases in Pigs, developed within the scope of this project, shall be vested solely in Jilin Academy of Agricultural Sciences. Consequently, any economic benefits derived from this technology will accrue to Jilin Academy of Agricultural Sciences. Additionally, all innovations, products, patents, and other intellectual property generated during the research phase of this project are to be the exclusive property of Jilin Academy of Agricultural Sciences. However, it is agreed that Jilin Academy of Agricultural Sciences shall, with priority, transfer any such advancements to the operating entity. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. The parties concur to jointly apply for governmental scientific and technological research funding amounting to RMB500,000 for the project. In addition, the operating entity commits to contributing RMB250,000 to the project. Upon successful acquisition of the government funding, it is planned that 80% of such funds will be allocated to Jilin Academy of Agricultural Sciences, and the remaining 20% will be assigned to the operating entity. As of December 31, 2023, RMB1,130,075 were incurred as costs in this project, which included raw materials purchase costs, employees’ salaries, electricity and gas costs, and depreciation expenses.

For the project of the Preparation Process Study of Immunoglobulin Y against Rotavirus Disease in Herbivorous Animals and its Prophylactic Application, the operating entity entered into a cooperative research agreement with Jilin Institute of Animal Husbandry and Veterinary Medicine on September 20, 2022. According to the agreement, Jilin Institute of Animal Husbandry and Veterinary Medicine, serving as the project leader, will organize and execute the research by undertaking the following tasks: (i) conduct comprehensive molecular genetic analyses on rotavirus isolates obtained from varied hosts to identify the optimal antigenic epitopes; (ii) develop a multi-antigen epitope tandem expression vector, utilizing a rod-shaped virus multi-gene expression system, to facilitate the preparation of specific antigens; and (iii) refine the immunization regimen, augment the production efficiency of IgY antibodies, and perform comparative studies on the biological activity of antibodies yielded by various purification methodologies. The operating entity will act as a supporting member for the project, focusing on refining the production processes such as IgY drying and coating. It will also assess the clinical effectiveness of the products in preventing and controlling disease and will lead demonstrations and promotional activities on breeding farms. The project has a budget of RMB800,000, with 70% being sourced from the Jilin Provincial Science and Technology Innovation Research Funding and the remaining 30% contributed by the operating entity. The approved funds will be split at a 4:1 ratio, with Jilin Institute of Animal Husbandry and Veterinary Medicine receiving four times the amount allocated to the operating entity. Jilin Institute of Animal Husbandry and Veterinary Medicine holds ownership of the “Preparation Process Study of Immunoglobulin Y against Rotavirus Disease in Herbivorous Animals and its Prophylactic Application,” including all economic benefits, new technologies, products, patents, and other achievements derived from it. However, the operating entity retains the right of authorship for any patented achievements from the project. The agreement does not address or include provisions for the cross-licensing of intellectual property rights. The parties concur that should force majeure or technical risks

arise during the execution of this agreement, hindering its continuation, prompt notification is required to mitigate losses and discuss alterations or termination of the agreement mutually. Any party can modify or terminate this agreement by providing a written notice to the other, 60 working days in advance. Following the planned task schedule, the operating entity has not initiated its activities, resulting in no incurred expenses as of the date of this prospectus.

For the above projects, since the further costs involved cannot be measured reliably, the outcome or result under the research is not for sure, and the future economic benefits are uncertain, therefore, the operating entity recognized the costs incurred during the research as research and development expenses.

The operating entity expects that the R&D expenses will increase significantly in the future, as it continues to develop new products, enhance its existing products and technologies, and perform activities related to obtaining additional regulatory approval.

As of the date of this prospectus, the operating entity has 40 registered patents in mainland China. See “— Intellectual Property.” Faced with the ever-changing market demands, it continues to invest in acquiring new patents and technologies that are tailored to the market’s fast changing requirements.

Sales and Distribution

As of the date of this prospectus, the operating entity has a sales team of 62 employees. The operating entity provides its sales team with regular training and internally developed systems to assist them in quickly becoming proficient and productive sales personnel. The employment agreements with the sales team members include, contract period (fixed time or indefinite duration), job description, occupational hazard protection, termination provisions, and compliance with the Labor Law of the People’s Republic of China and the Labor Contract Law of the People’s Republic of China in all material aspects. The compensation package for the sales team includes vacation, social insurance, fixed base salaries and commissions based on the revenue or collection they achieve.

With the efforts of the sales team, the operating entity markets and sells its products through three main channels: (i) through its direct sales channel, (ii) through its distribution network, and (iii) through government tender and procurement, which account for 75.4%, 23.4%, and 1.2%, respectively, for the fiscal year ended December 31, 2023, and 79.6%, 18.4%, and 2.0%, respectively, for the fiscal year ended December 31, 2022.

Direct Sales Channel

The operating entity sells its products through its direct sales channel mainly by participating tender and procurement of major breeding companies and directly contracting with breeders.

Distribution Network

The operating entity’s domestic distributors cover 29 provincial-level administrative regions of the PRC for the resale of the operating company’s products in the Chinese market. Domestic distributors market and distribute the products in the regions where they are located.

The operating entity’s exporting distributors are local distributors in their respective countries. Through the efforts of these exporting distributors, the operating entity is able to sell its products overseas. The operating entity secures its exporting distributors mainly through Alibaba.com. The operating entity pays an annual fee to Alibaba.com. In return, Alibaba.com provides the operating entity with an online store on Alibaba.com where it can promote its products. Exporting distributors can find the operating entity and send inquiry emails by searching for product information at Alibaba.com.

The operating entity has either long-term written agreements, the term of which is normally one year, or brief purchase order-based sales agreements with its distributors, based on the demand of its distributor customers. The key terms of the distributor purchase agreements include:

•        the product’s name, type, quantity, and price;

•        qualifications, including business license, veterinary vaccines production and operation licenses, and inspection report. (The absence of any of these qualifications will result in termination of the agreements);

•        delivery method and payment terms: shipping costs are typically borne by the operating entity and payment shall be made before delivery;

Below is a list of the operating entity’s major competitors.

Although there can be no assurance that the operating entity will be able to continue to compete successfully in the future, we believe that the operating entity can compete successfully with these companies by offering products of better quality at comparable prices.

Intellectual Property

The operating entity’s business is dependent on a combination of trademarks, patents, domain names, and other proprietary rights in order to protect the operating entity’s intellectual property rights. As of the date of this prospectus, the operating entity has eight registered trademarks, 40 registered patents, three domain names and six registered copyrights in China. Set forth below is a detailed description of the operating entity’s registered intellectual properties.

Patent