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1、2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm1/203F-1/A 1 tm2220498d1_f1a.htm F-1/A As filed with the U.S.Securities and Exchange Commission on July 6,2022.Registrat
2、ion No. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549 AMENDMENT NO.10ToFORM F-1REGISTRATION STATEMENTUNDERTHE SECURITIES ACT OF 1933 INTELLIGENT LIVING APPLICATION GROUP INC.(Exact name of Registrant as specified in its charter)Not Applicable(Translation of Registrant
3、s name into English)Cayman Islands2540Not Applicable(State or other jurisdiction of(Primary Standard Industrial(I.R.S.Employerincorporation or organization)Classification Code Number)Identification number)Unit 2,5/F,Block A,Profit Industrial Building1-15 Kwai Fung Crescent,Kwai ChungNew Territories,
4、Hong KongTel:+(852)2481 7938(Address,including zip code,and telephone number,including area code,of Registrants principal executive offices)Cogency Global Inc.122 East 42nd Street,18th FloorNew York,NY 10168(800)221-0102(Name,address,including zip code,and telephone number,including area code,of age
5、nt for service)Copies to:Jeffrey LiFisherBroyles LLP1200 G Street NW,Suite 800 Washington,D.C.20005Tel:(202)830-5905 Fang Liu,Esq.VCL Law LLP1945 Old Gallows Road,Suite 630Vienna,VA 22182Tel:(703)919-7285 Approximate date of commencement of proposed sale to the public:as soon as practicable after th
6、e effective date of thisregistration statement.If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 underthe Securities Act of 1933,check the following box.x If this Form is filed to register additional securities for an offer
7、ing pursuant to Rule 462(b)under the Securities Act,please checkthe following box and list the Securities Act registration statement number of the earlier effective registration statement for thesame offering.2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a
8、.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm2/203 If this Form is a post-effective amendment filed pursuant to Rule 462(c)under the Securities Act,check the following box and listthe Securities Act registration statement number of the earlier effective re
9、gistration statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(d)under the Securities Act,check the following box and listthe Securities Act registration statement number of the earlier effective registration statement for the same offering.Indicate
10、by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of1933.Emerging growth company x If an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if theregistrant has elected not to
11、 use the extended transition period for complying with any new or revised financial accountingstandards provided pursuant to section 7(a)(2)(B)of the Securities Act.The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting StandardsBoard to its Acc
12、ounting Standards Codification after April 5,2012.The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effectivedate until the Registrant shall file a further amendment which specifically states that this registration statement shallthereaft
13、er become effective in accordance with Section 8(a)of the Securities Act of 1933,as amended,or until theregistration statement shall become effective on such date as the Commission,acting pursuant to said Section 8(a),maydetermine.2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/000110465922
14、077643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm3/203 The information in this preliminary prospectus is not complete and may be changed.We may not sell these securities untilthe registration statement filed with the Securities and Exchan
15、ge Commission is effective.This preliminary prospectus isnot an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offeror sale is not permitted.PRELIMINARY PROSPECTUS(Subject to Completion)Dated Dated July 6,2022 5,060,000 Ordinary
16、Shares INTELLIGENT LIVING APPLICATION GROUP INC.This is the initial public offering of the ordinary shares of Intelligent Living Application Group Inc.,a Cayman Islands company(the“ordinary shares”).We are offering 5,060,000 ordinary shares,par value$0.0001 per share,on a firm commitment basis.Weexp
17、ect the initial public offering price of the ordinary shares to be$5.00 per share.Currently,no public market exists for ourordinary shares.We have been approved to have our ordinary shares listed on the Nasdaq Capital Market(“Nasdaq”)under thesymbol“ILAG.”We will not complete this offering unless we
18、 are so listed.We are an“emerging growth company,”as that term is used in the Jumpstarts Our Business Startups Act of 2012 and willbe subject to reduced public company reporting requirements.Investing in our ordinary shares is highly speculative and involves a significant degree of risk.See“Risk Fac
19、tors”beginning on page 16 of this prospectus for a discussion of information that should be considered before making a decisionto purchase our ordinary shares.We are a Cayman Islands holding company without any operation and our operations are conducted by our wholly ownedsubsidiaries in Hong Kong a
20、nd China and this structure involves unique risks to investors.See“Risk Factors RisksRelated to Doing Business in China Changes in Chinas economic,political or social conditions or government policiescould have a material adverse effect on our business and results of operations;Uncertainties and qui
21、ck change in theinterpretation and enforcement of Chinese laws and regulations with little advance notice could result in a material andnegative impact our business operation,decrease the value of our ordinary shares and limit the legal protections available tous,and Risks Related to Doing Business
22、in Hong Kong The Hong Kong legal system embodies uncertainties which couldnegatively affect our listing on Nasdaq and limit the legal protections available to you and us.”There are legal and operational risks associated with being based in and having all our operations in Hong Kong andChina.The Chin
23、ese government recently took regulatory actions on certain U.S.listed Chinese companies and madestatement that it will exert more oversight and control over offerings and listings by Chinese companies that are conductedoverseas,such as those related to the use of variable interest entities and data
24、security or anti-monopoly concerns.On July6,2021,the General Office of the Communist Party of China Central Committee and the General Office of the StateCouncil jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the
25、 capital market,which,among other things,requires the relevant governmental authorities tostrengthen cross-border oversight of law-enforcement and judicial cooperation,to enhance supervision over China-basedcompanies listed overseas,and to establish and improve the system of extraterritorial applica
26、tion of the PRC securitieslaws.On December 28,2021,Cybersecurity Review Measures was published by Cyberspace Administration of China orthe CAC,National Development and Reform Commission,Ministry of Industry and Information Technology,Ministry ofPublic Security,Ministry of State Security,Ministry of
27、Finance,Ministry of Commerce,Peoples Bank of China,StateAdministration of Radio and Television,China Securities Regulatory Commission,State Secrecy Administration and StateCryptography Administration,became effective on February 15,2022,which provides that,Critical InformationInfrastructure Operator
28、s(“CIIOs”)that purchase internet products and services and Data Processing Operators(“DPOs”)engaging in data processing activities that affect or may affect national security shall be subject to the cybersecurity reviewby the Cybersecurity Review Office.On November 14,2021,CAC published the Administ
29、ration Measures for Cyber DataSecurity(Draft for Public Comments),or the“Cyber Data Security Measure(Draft)”,which requires cyberspace operatorswith personal information of more than 1 million users who want to list abroad to file a cybersecurity review with theOffice of Cybersecurity Review.As of t
30、he date of this prospectus,these new laws and guidelines have not impacted theCompanys ability to conduct its business,accept foreign investments,or list and trade on a U.S.or other foreign exchange.The Company owns 100%equity interest of all its subsidiaries including the manufacturing subsidiary i
31、n China and doesnot have a VIE structure,and it manufactures and sells locksets and believes the new data security or anti-monopoly lawsand regulations in China do not apply to the Company or its subsidiaries.However,any change in foreign investment2022/12/13https:/www.sec.gov/Archives/edgar/data/18
32、14963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm4/203regulations,and other policies in China or related enforcement actions by China government could result in a materialchange in our operations and the value of our ord
33、inary shares and could significantly limit or completely hinder our abilityto offer our ordinary shares to investors or cause the value of our ordinary shares to significantly decline or be worthless.Our manufacturing facility is located in China,and is subject to complex and evolving PRC laws and r
34、egulations.Forexample,we face regulatory risks relating to listings in the U.S.,oversight on cybersecurity and data privacy.Uncertaintiesin the PRC legal system and the interpretation and enforcement of PRC laws and regulations could limit the legalprotection available to you and us,hinder our abili
35、ty to offer or continue to offer our ordinary shares,result in a materialadverse effect on our business operations,and damage our reputation,which might further cause our ordinary shares tosignificantly decline in value or become worthless.Our auditor,Wei,Wei&Co.,LLP,an independent registered public
36、accounting firm headquartered in the United States,was not included in the determinations made by the Public CompanyAccounting Oversight Board(United States),or the PCAOB,on December 16,2021.Our auditor is currently subject toPCAOB inspections and has been inspected by the PCAOB on a regular basis.A
37、lthough we believe that the HoldingForeign Companies Accountable Act and the related regulations do not currently affect us,we cannot assure you that therewill not be any further implementations and interpretations of the Holding Foreign Companies Accountable Act or therelated regulations,which migh
38、t pose regulatory risks to and impose restrictions on us because of our operations inmainland China.See“Risk Factors Risks Related to Doing Business in China.”The Company,we,us,our company,and our are referred to Intelligent Living Application Group Inc.,a holding companyincorporated under the laws
39、of the Cayman Islands,and its subsidiaries.We currently conduct our business throughIntelligent Living Application Group Limited,a holding company incorporated under the laws of the British Virgin Islands(“ILAG BVI”)and its subsidiaries:(i)Kambo Locksets Limited,a company incorporated under the laws
40、 of Hong Kong(“Kambo Locksets”)which is a trading company focusing on marketing and sales of our products in North Americamarket;(ii)Kambo Hardware Limited,a company incorporated under the laws of Hong Kong(“Kambo Hardware”)which mainly sells our products to the markets outside of the North America;
41、(iii)Bamberg(HK)Limited,a companyincorporated under the laws of Hong Kong(“Bamberg”),which mainly markets our products under our own brand“Bamberg”to establish and focus on the internet sales channels,such as A;(iv)Hing Fat Industrial Limited,acompany incorporated under the laws of Hong Kong(“Hing F
42、at”)which is a holding company of Xingfa to manage thedoor lockset manufacturing activities of Xingfa and to conduct research and development;and(v)Dongguan XingfaHardware Products Co.Ltd.(“Xingfa”)a company incorporated under the laws of China,which is the manufacturingfacility for our lockset prod
43、ucts.Our operations are conducted by our subsidiaries in China and Hong Kong which wecontrol through direct equity ownership.We mainly conduct our marketing and sales,research and development and design activities through our wholly ownedsubsidiaries in Hong Kong and manufacturing activities through
44、 our wholly owned subsidiary in China,Dongguan XingfaHardware Products Co.,Limited.As a result,almost all of our sales revenues are received by our Hong Kong subsidiarieswhich make payment to Xingfa for the cost of products and reasonable markups.Transfers of funds among our HongKong subsidiaries or
45、 from our Hong Kong subsidiaries to the holding company are free of restrictions.Remittances offunds from our Hong Kong subsidiaries to Xingfa are subject to review and conversion of HK$or US$to Renminbi Yuan(“RMB”)through Xingfas bank in China,which represents the State Administration of Foreign Ex
46、change(“SAFE”)tomonitor foreign exchange activities.Under the existing PRC foreign exchange regulations,payments of current accountitems,such as profit distributions and trade and service-related foreign exchange transactions,can be made in foreigncurrencies without prior approval from SAFE by compl
47、ying with certain procedural requirements with the banks.Currently,we dont have any intentions to distribute earnings or settle amounts owed to our agreements other than theagreements entered under normal business operation as discussed hereof.Please also refer to“Dividend Policy”on page 47.As of th
48、e date of this prospectus,none of our subsidiaries has made any dividend payment or distribution to the holdingcompany and neither the Company nor any of its subsidiaries has made any dividends or distributions to U.S.investors.The cash transfer among the holding company and its subsidiaries is typi
49、cally transferred through payment forintercompany product sales and services or intercompany loans between holding company and subsidiaries.As of the dateof this prospectus,no cash generated from one subsidiary is used to fund another subsidiarys operations and we do notanticipate any difficulties o
50、r limitations on our ability to transfer cash between subsidiaries,except for the transfer from orto Xingfa,which is subject to review and procedures according to the requirements of the SAFE.Other than discussedabove,we dont have any cash management policies that dictate the amount of such funding
51、among our subsidiaries.Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of thesesecurities or passed upon the accuracy or adequacy of this prospectus.Any representation to the contrary is a criminaloffense.Per Share Total Public offering
52、price$Underwriting discount$Proceeds to us,before expenses$2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm5/203(1)The underwriter will receive compensation in addition
53、 to such discount and commissions as set forth under“Underwriting.”This offering is being conducted on a firm commitment basis.The underwriter is obligated to take and pay for all of the shares ifany such shares are taken.The total underwriting discounts and commissions payable will be$1,897,500 bas
54、ed on an offeringprice of$5.00 per share,and the total proceeds to us,before expenses,will be$23,402,500.If we complete this offering,netproceeds will be delivered to our company on the closing date.The underwriter expects to deliver the ordinary shares against payment as set forth under“Underwritin
55、g”,on or about,2022.The date of this prospectus is,2022 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm6/203 TABLE OF CONTENTS PagePROSPECTUS SUMMARY1RISK FACTORS16SPE
56、CIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS45USE OF PROCEEDS46DIVIDEND POLICY47CAPITALIZATION48DILUTION49EXCHANGE RATE INFORMATION50ENFORCEABILITY OF CIVIL LIABILITIES51CORPORATE HISTORY AND STRUCTURE53SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA58MANAGEMENTS DISCUSSION AND ANALYSIS OF FINA
57、NCIAL CONDITION AND RESULTS OFOPERATIONS60OUR INDUSTRY77OUR BUSINESS80REGULATIONS91MANAGEMENT104PRINCIPAL SHAREHOLDERS113RELATED PARTY TRANSACTIONS114DESCRIPTION OF SHARE CAPITAL114SHARES ELIGIBLE FOR FUTURE SALE122TAXATION123UNDERWRITING130EXPENSES RELATING TO THIS OFFERING139LEGAL MATTERS139EXPERT
58、S139WHERE YOU CAN FIND ADDITIONAL INFORMATION140INDEX TO CONSOLIDATED FINANCIAL STATEMENTSF-1 You should rely only on the information contained in this prospectus or in any related free writing prospectus.We have notauthorized anyone to provide you with information different from that contained in t
59、his prospectus or any free writing prospectus.We are offering to sell,and seeking offers to buy,the ordinary shares only in jurisdictions where offers and sales are permitted.Theinformation contained in this prospectus is current only as of the date of this prospectus,regardless of the time of deliv
60、ery of thisprospectus or of any sale of the ordinary shares.2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm7/203 PROSPECTUS SUMMARY This summary highlights certain inf
61、ormation contained elsewhere in this prospectus.You should read the entire prospectuscarefully,including our financial statements and related notes and the risks described under“Risk Factors”beginning on page 16.We note that our actual results and future events may differ significantly based upon a
62、number of factors.The reader should notput undue reliance on the forward-looking statements in this document,which speak only as of the date on the cover of thisprospectus.All references to“we”,“us”,“our”,“Company”,“Registrant”or similar terms used in this prospectus refer to Intelligent LivingAppli
63、cation Group Inc.,a company incorporated under the laws of the Cayman Islands(“Intelligent Living”or“ILAG”),including its consolidated subsidiaries,unless the context otherwise indicates.We currently conduct our business throughIntelligent Living Application Group Limited,a holding company incorpora
64、ted under the laws of the British Virgin Islands(“ILAGBVI”)and its subsidiaries Dongguan Xingfa Hardware Products Co.Ltd.(“Xingfa”),Kambo Locksets Limited(“KamboLocksets”),Kambo Hardware Limited(“Kambo Hardware”),Bamberg(HK)Limited(“Bamberg”),and Hing Fat IndustrialLimited(“Hing Fat”)our operating e
65、ntities in China and Hong Kong.“PRC”or“China”refers to the Peoples Republic of China,excluding,for the purpose of this prospectus,Taiwan,Hong Kongand Macau.“RMB”or“Renminbi”refers to the legal currency of China and“$”,“US$”,“USD”or“U.S.Dollars”refers to thelegal currency of the United States.Our Mis
66、sion Our mission is to make life safer and smarter by designing and producing affordable,high-quality locksets and smart securitysystems.Our Business Headquartered in Hong Kong,we manufacture and sell high quality mechanical locksets to customers mainly in the United States(US)and Canada and have co
67、ntinued to diversify and refine our product offerings in the past 40 years to meet our customersneeds.We believe our wholly owned subsidiary Xingfa is one of the pioneers of mechanical lockset manufacturing in China.Sinceinception,to cope with our development and increase customer satisfaction in qu
68、ality,we keep investing in self-designedautomated product lines,new craftsmanship and developing new products including smart locks.In order to obtain the confidenceof our customers,Xingfa has obtained the ISO9001quality assurance certificate.Starting in 2000,we offer products that comply with the A
69、merican National Standards Institute(ANSI)Grade 2 and Grade 3standards that are developed by the Builders Hardware Manufacturing Association(BHMA)for ANSI.Our focus in producingmechanical locksets-including locksets for outdoors(such as main entrances and gates)and indoors-has resulted in sustainabl
70、egrowth in our business and raised our competitiveness.To maintain our growth,our products are beyond a simple lockset forsecurity purposes,we offer a wide range of Original Design Manufacturer(“ODM”)door locksets to various customer segmentsfrom“Premium Series”to“Economy-oriented Series”with classi
71、c to contemporary looks,functions and colors.To meet increasing consumer needs for smart locks and smart home products,Hing Fat has been researching and developing smartlocks in the past couple years.Hing Fat has been working on smart locks functions,communication protocols,available designsand have
72、 internally worked out a general solution plan including mechanical and electronic parts but still need to further developthe software related parts for such locks which we need external help.Most of our research and development on smart locks havebeen done internally by our technician and engineers
73、,except that Hing Fat hired outside services for approximately$25,000 in2017.Because of tariff war and outbreak of COVID-19,we havent made further progress on the software for our smart locks tosave more working capital for our core operation.However,once we are able to raise sufficient funds from t
74、his public offering orare able to generate additional cash flows from our ongoing operations,we will acquire new equipment,systems and recruitinformation technology talents to develop software applications for our smart locks.Our wholly owned subsidiary Xingfa is incorporated and operating in mainla
75、nd China.Xingfa has received all permission requiredto obtain from Chinese authorities to operate its current business in China or issue the ordinary shares of the Company to foreigninvestors,including Business license,Customs Registration Certificate,Bank Account Open Permit and Approval regardingE
76、nvironmental Protection.Currently,the Chinese government may intervene or influence our operations in China or this offeringat any time,which could result in a material change in our operations and our ordinary shares could decline in value or becomeworthless.We manufacture and sell mechanical locks
77、ets to our customers mainly in U.S.and Canada and we are not a Critical InformationInfrastructure Operator(“CIIO”)or a Data Processing Operator(“DPO”)as defined in Cybersecurity Review Measures publishedby Cyberspace Administration of China or the CAC,National Development and Reform Commission,Minis
78、try of Industry and2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm8/203Information Technology,Ministry of Public Security,Ministry of State Security,Ministry of Financ
79、e,Ministry of Commerce,Peoples Bank of China,State Administration of Radio and Television,China Securities Regulatory Commission,State SecrecyAdministration and State Cryptography Administration on December 28,2021 and took effect on February 15,2022.We also dontprocess personal data for more than o
80、ne million individuals under Administration Measures for Cyber Data Security(Draft forPublic Comments)published by CAC on November 14,2021.ILAG owns 100%equity interest of all its subsidiaries including themanufacturing subsidiary in China and does not have a VIE structure.Therefore,we are currently
81、 not covered by the permissionand requirements from the China Securities Regulatory Commission(“CSRC”),CAC or any other entity that is required toapprove of the VIEs operations,and we have received all requisite permissions to operate our business in China and no permissionhas been denied.We manufac
82、ture and sell lockset products.As of the date of this prospectus,we(1)are not required to obtain permissions from anyPRC authorities to issue our ordinary shares to foreign investors,(2)are not subject to permission requirements from CSRC,CACor any other entity that is required to approve of our ope
83、rations in China,and(3)have not received or were denied suchpermissions by any PRC authorities.We are headquartered in Hong Kong with our chief executive officer,chief financial officer,chief operating officer and all members of the board of directors based in Hong Kong who are not Chinese citizens
84、and most of ourrevenues and profits are generated by our subsidiaries in Hong Kong.Although we dont believe we are a Chinese domestic entityas defined in the Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies(Draft for PublicComments)published by CSRC on Decemb
85、er 24,2021,it is not certain whether we might be determined as a Chinese entity underMeasures,which will require us to file the offering related documents with CSRC.Also,the General Office of the CentralCommittee of the Communist Party of China and the General Office of the State Council jointly iss
86、ued the“Opinions on SeverelyCracking Down on Illegal Securities Activities According to Law,”or the Opinions,which were made available to the public onJuly 6,2021.The Opinions emphasized the need to strengthen the administration over illegal securities activities,and the need tostrengthen the superv
87、ision over overseas listings by Chinese companies.Given the current PRC regulatory environment,it isuncertain when and whether our PRC subsidiary,will be required to obtain permission from the PRC government in connectionwith our listing on U.S.exchanges in the future,and even when such permission i
88、s obtained,whether it will be denied orrescinded.Our independent registered public accounting firm that issues the audit report included elsewhere in this prospectus,as an auditorof companies that are traded publicly in the United States and a firm registered with the PCAOB,is subject to laws in the
89、 UnitedStates pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professionalstandards.Our auditor is headquartered in New York City,and has been inspected by the PCAOB on a regular basis with the lastinspection in 2020 and is not subject to the det
90、erminations announced by the PCAOB on December 16,2021.However,the recentdevelopments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities wouldapply additional and more stringent criteria to us after considering the effectiveness of our auditors
91、audit procedures and qualitycontrol procedures,adequacy of personnel and training,or sufficiency of resources,geographic reach,or experience as it relates toour audit.If it is later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a positiontaken by an
92、authority in a foreign jurisdiction or any other reasons,the lack of inspection could cause the trading in our securitiesto be prohibited under the Holding Foreign Companies Accountable Act,and as a result Nasdaq may delist our securities.If oursecurities are unable to be listed on another securitie
93、s exchange,such a delisting would substantially impair your ability to sell orpurchase our securities when you wish to do so,and the risk and uncertainty associated with a potential delisting would have anegative impact on the price of our ordinary shares.Further,new laws and regulations or changes
94、in laws and regulations in boththe United States and China could affect our ability to list our ordinary shares on Nasdaq,which could materially impair the marketfor and market price for our securities.Currently,approximately 97.5%of our revenues are from products sold to the US market,and the remai
95、ning products are sold toCanada,Macau and China markets.We build our distribution network by working together with our large and small businesspartners in different geographic areas to sell our products.1 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm
96、https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm9/203 Our current products are mechanical locks.The following images are some of our products,more product information will beillustrated in“Our Products of OUR BUSINESS”:We are not operating in an industry that pro
97、hibits or limits foreign investment and we believe that we are currently not required toobtain any approvals from Chinese government to offer our ordinary shares to foreign investors and list our ordinary shares onNasdaq Stock Market,however,if we inadvertently conclude that such approvals are not r
98、equired,or applicable laws,regulations,or interpretations change in China that require us to obtain such approval,it could significantly limit or completely hinder ourability to offer or continue to offer our securities to investors and cause the value of our securities to significantly decline orbe
99、come worthless.Our Strengths We have four decades of experience in mechanical lockset manufacturing.This gave us the ability to design our own automatedproduction lines to meet our customers needs effectively and efficiently.We are few of manufacturers who is able to finishcomplicated stamping and c
100、asting with few machineries by optimizing production progresses.Up to date of this prospectus,we areoffering 108 basic designs of various locksets in our product catalogue(see“Our Products”for sample images)and we also havemany other designs stored in the library of engineering department of Hing Fa
101、t,all of which enable us to provide our customerswith products of many varieties with different functions,outlooks and colors.We have accumulated extensive design andproduction know-hows of our lock core in the past thirty years.Our experience and expertise in the design of mechanical locksetshelps
102、us expand our product lines and quickly respond to the changes of market trends and demands of our customers.To comply with stringent requirements of U.S.standards,Xingfa has obtained ISO9000 certificate,and its manufacturing facilityhas been reviewed and audited by U.S.customers from time to time f
103、or compliance of social responsibility about labor welfare andsafety,environmental protection and other requirements from such customers.To serve our customers better,Xingfa has equippedwith professional keying machineries which is a very niche service being provided by lockset manufacturers in Chin
104、a and AsiaPacific region.In Asia,we only have a few peer competitors in China and South-east Asia due to high capital expense requirementfor the manufacturing facility and professional know-hows of the products and industry.We have launched internal research in smart locks functions,communication pr
105、otocols,available designs and suppliers ofelectronic parts in the market as a part of our R&D process of smart lock products.Our in-depth knowledge in lockset mechanicsmakes it easier for us to enter into smart locks market by incorporating relevant electronic parts into our locksets after we develo
106、pthe software system.In additional,our long relationship with our customers makes it quicker for us to introduce new productsincluding future smart locks to the market.With our years of operation history,we have built a loyal and experienced work force and manufacturing management,which candrive man
107、ufacturing facility expansion without additional talent.Along with long-term relationships with reputable customers andrecent access to e-commerce channels,we believe we are able to attract customers with our new products.2 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/
108、tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm10/2032022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm11/203 Our
109、 Strategy Our principal objective is to sustain continuous growth in our business and maintain our competitive advantages such that we canbe positioned as a leading provider in the lockset industry.We plan to implement the following strategies and leverage ourstrengths to growth and develop our exis
110、ting lockset business and maintain our reputation:Our insistence in delivering high quality products has hurt our profit margin in light of cut-throat price competition.Weconstantly adjust our procurements based upon our updated production requirements and protocols that are designed toreduce our ma
111、nufacturing costs and overhead,and to improve our profit margin.By designing our own automatedproduction lines and controlling our raw material waste,we have managed to lower our labor cost and cost of rawmaterials.We plan to implement an enterprise resources planning system(“ERP”)to further improve
112、 our manufacturingcontrols and enhance the efficiency of our production processes.We maintain this procurement philosophy to enhance ourprofit margin.Nevertheless,even as we try to save costs,we will also be socially responsible to maintain low turnover oflabor and environmental and worker safety an
113、d health protection.We are currently selling our products in accordance with US standards.In order to expand market segment coverage,wewill conduct trial marketing of our self-branded products in Asia Pacific,especially South-east Asia.Also,we havecommenced direct sales.We believe we can make some m
114、inor alternations for molds to fit the standards of the differentmarkets.To cope with limited production space in Xingfas factory in China and the potential need for relocation of productionfacilities due to the rapid urbanization of China,and to cope with effects of the economic downturn in the wor
115、ld economyand tariff disputes between US and China,we will seek to further develop the markets in south east Asia as well as toincrease sales to Chinese mass consumers such as builders and developers of office buildings,residential housing,apartments and hotels.We will also seek to mitigate the pote
116、ntial risks of production delays by establishing more efficientproduction procedures,such as increasing the level of automation,using new production methods and expandingproduction facilities outside China.3 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.
117、htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm12/203 To cope with cut-throat pricing by domestic manufacturers in China,we seek to maintain high quality,fine craftsmanshipand efficient procurement.We are committed to designing and making affordable high-qual
118、ity locksets.In order to betterachieve customer satisfaction and meet customer demands,Hing Fat will continue to utilize its R&D and design abilitiesto introduce new products and achieve and maintain lean production practices to decrease our products cost and increasecompetitiveness.We will seek to
119、strengthen cooperation plans with our strategic partners and e-commerce channels for further growth.Wewill expand our resources to focus on new product launches with changes in lock designs and materials.Through thestrategic cooperation with regional distribution channels,we aim at expanding our pro
120、duct offerings and enteringuntapped markets.We also plan to establish strategic relationships with local market players and make acquisitions at aglobal level.To meet increasing consumer needs for smart locks and smart home products,we will leverage our four decades ofexperience,customer relationshi
121、p and reputation in the mechanical lockset industry,launch smart locks and smart securityas upcoming product diversification.A smart security system is a security system that can monitor door sensors,remoteCCTV and control door locks from an authorized device using a wireless protocol and a cryptogr
122、aphic key,or eventually,as a part of Internet of Things(IoT),the network of physical objects that feature an IP address for internet connectivity,and the communication that occurs between these objects and other internet-enabled devices and systems,which will alertthe users based upon pre-set condit
123、ions.Summary of Risks Associated with Our Business Our business is subject to a number of risks,including risks that may prevent us from achieving our business objectives or mayadversely affect our business,financial condition,results of operations,cash flows and prospects that you should consider b
124、eforemaking a decision to invest in our ordinary shares,including risks and uncertainties,among others,the following:Risks Related to Our Business The recent global coronavirus COVID-19 outbreak has caused significant disruptions to our business,which we expectwill continue to have material negative
125、 impact on our business,results of operations and financial condition(see page 16of this prospectus).The Chinese governments recent enforcement of“dual control of energy consumption”policy has caused disruptions toXingfa manufacturing and our business and might continue to have negative impact on ou
126、r business,results of operationsand financial condition(see page 16 of this prospectus).We may not be successfully introducing smart lock products that are currently under research and development(see page17 of this prospectus).We incurred net losses for the year ended December 31,2021 and the past
127、two years and may not be able to generatesufficient operating cash flows and working capital to continue as a going concern over the next 12 months.Failure tomanage our liquidity and cash flows may materially and adversely affect our financial condition and results of operations.As a result,we may n
128、eed additional capital,and financing may not be available on terms acceptable to us,or at all(seepage 18 of this prospectus).Fluctuations in the price,availability or quality of raw materials used in our products could cause manufacturing delays,adversely affecting our ability to provide goods to ou
129、r customers or increase costs,any of which could decrease our salesor earnings(see page 19 of this prospectus).Xingfa may experience material disruptions to its manufacturing operations in China that could result in material delays,quality control issues,increased costs and loss of business opportun
130、ities,which may negatively impact our sales andfinancial results(see page 19 of this prospectus).Changes in U.S.trade policies could significantly reduce the volume of export goods into the United States,which maymaterially reduce our profit margin and our sales in the United States(see page 20 of t
131、his prospectus).Environmental regulations impose substantial costs and limitations on our operations and violation of environmentalregulations might subject us to fines,penalties or suspension of production which could have material negative impact onour financial results(see page 26 of this prospec
132、tus).If we fail to implement and maintain an effective system of internal control,we may be unable to accurately report ouroperating results,meet our reporting obligations or prevent fraud(see page 27 of this prospectus).2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2
133、220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm13/203 We do not have any business insurance coverage(see page 27 of this prospectus).See“Risk Factors Risks Related to Our Business”on page 16 for more detailed disclosures on these risks and uncert
134、ainties.4 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm14/203 Risks Related to Doing Business in China Changes in Chinas economic,political or social conditions or g
135、overnment policies could have a material adverse effecton our business and results of operations(see page 28 of this prospectus).Uncertainties and quick change in the interpretation and enforcement of Chinese laws and regulations with little advancenotice could result in a material and negative impa
136、ct on our business operation,decrease the value of our ordinary sharesand limit the legal protections available to us(see page 29 of this prospectus).Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plansmay subject the PRC plan particip
137、ants or us to fines and other legal or administrative sanctions(see page 33 of thisprospectus).If we are classified as a PRC resident enterprise for PRC income tax purposes,such classification could result inunfavorable tax consequences to us and our non-PRC shareholders(see page 34 of this prospect
138、us).Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of ouroperations in China(see page 34 of this prospectus).The Holding Foreign Companies Accountable Act,or the HFCA Act,and the related regulations are evolving quickly.Further impleme
139、ntations and interpretations of or amendments to the HFCA Act or the related regulations,or a PCOABsdetermination of its lack of sufficient access to inspect our auditor,might pose regulatory risks to and impose restrictionson us because of our operations in mainland China.A potential consequence is
140、 that our ordinary shares may be delistedby the exchange.The delisting of our ordinary shares,or the threat of our ordinary shares being delisted,may materiallyand adversely affect the value of your investment.Additionally,the inability of the PCAOB to conduct full inspections ofour auditor deprives
141、 our investors of the benefits of such inspections.(see page 35 of this prospectus).Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC ForeignInvestment Law and how it may impact the viability of our current corporate structure,corporate go
142、vernance,businessoperations and financial results(see page 37 of this prospectus).Any change of regulations and rules by Chinese government,including the limitations on usage of power,additionalenvironmental protection requirements,moving technology in and out of the PRC or restriction on cash trans
143、fer out ofPRC,may intervene or influence our operations in China at any time and any additional control over offerings conductedoverseas and/or foreign investment in issuers with Chinese operations could result in a material change in our businessoperations and/or the value of our ordinary shares an
144、d could significantly limit or completely hinder our ability to offerour ordinary shares to investors and cause the value of such securities to significantly decline or be worthless(see page 37of this prospectus)See“Risk FactorsRisks Related to Doing Business in China”on page 28 for more detailed di
145、sclosures on these risks anduncertainties.Risks Related to Doing Business in Hong Kong It will be difficult to acquire jurisdiction and enforce liabilities against us,our officers,directors and assets based in HongKong and China.(see page 38 of this prospectus).The Hong Kong legal system embodies un
146、certainties which could negatively affect our listing on Nasdaq and limit thelegal protections available to you and us(see page 38 of this prospectus).See“Risk FactorsRisks Related to Doing Business in Hong Kong”on page 38 for more detailed disclosures on these risks anduncertainties.Risks Related t
147、o Our Ordinary Shares and This Offering There has been no previous public market for our shares prior to this offering,and if an active trading market does notdevelop you may not be able to resell our shares at or above the price you paid,or at all(see page 39 of this prospectus).You may face diffic
148、ulties in protecting your interests as a shareholder,as Cayman Islands law provides substantially lessprotection when compared to the laws of the United States and it may be difficult for a shareholder of ours to effectservice of process or to enforce judgements obtained in the United States courts(
149、see page 41 of this prospectus).2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm15/203See“Risk FactorsRisks Related to Our Ordinary Shares and This Offering”on page 39
150、for more detailed disclosures on theserisks and uncertainties.In addition,please see“Risk Factors”beginning on page 16 of this prospectus,and other information included in this prospectus,for a discussion of these and other risks and uncertainties that we face.5 2022/12/13https:/www.sec.gov/Archives
151、/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm16/203 Our Challenges Until 2018,we have maintained a profitable business with steady growth in our revenues and earnings.In 2018,we experiencedthe sudden im
152、pact caused by the tariff war between the US and China that resulted in a decrease in or suspension of orders in late2018 and 2019.To cope with the potential impact of an economic downturn of China and tariff disputes between China and US,we plan to further expand our market in south-east Asia and C
153、hinese wholesales clients such as residential and commercialdevelopers and hotel developers.To expand our market into South-east Asia,we may face intensive competition on price.To get orders from mass scale customerssuch as property developers and hotel/service apartment developers,we must leverage
154、our quality products and professionalkeying services.Our near-term strategy is to continue marketing and selling to wholesale customers as we believe that it is easierand more cost-efficient way to sell our products than to mass amount of small end users.In early 2020,the COVID-19 pandemic caused a
155、sudden halt in economic activities and our Company had to close our office inHong Kong and manufacturing facility in China from late January 2020 until early March 2020.Our office in Hong Kong and ourmanufacturing in China has resumed since mid-March 2020.While it is difficult to estimate the future
156、 financial impact of COVID-19 on the Companys operations,management believes that COVID-19 could have a material impact on the Companys financialresults for the year 2022 and could cause possible impairment of certain assets.In 2021,COVID-19 pandemic continued to negatively impact our operations.Fro
157、m May 21,2021 to Jun 24,2021,Yantian Port inShenzhen was closed for sudden COVID-19 outbreak in the port area.The finished goods delivered by Xingfa to the port for oceanshipment,with sales value amounting approximately US$1.4 million,were delayed and eventually shipped out in August 2021.Inaddition
158、,the supplies of our raw materials were negatively affected by the logistic disruption and their prices went up in 2021.Ourcustomers have also been hampered by congested ports in the U.S.,which in turn have caused delay of shipment,increase ofinventory and disruption of our production schedule.In ad
159、ditional,Chinese governments enforcement of“dual control of energyconsumption”policy to control the total power consumption and efficiency has caused disruptions to Xingfas productionschedule.Also,local government required mandatory COVID-19 tests on our employees of Xingfa factory from time to time
160、 in2021,which has caused certain disruption in our production schedule.All these factors had pushed up Xingfas cost of production.In 2022,there have been outbreaks of the Omicron variant of the COVID-19 in Hong Kong where our headquarters are locatedand other cities in China,including Shenzhen,Shang
161、hai,Guangzhou,Taiyuan,Changchun as well as Dongguan city where Xingfais located,and travel restrictions,mandatory COVID-19 tests,quarantine requirements and/or temporary closure of officebuildings and facilities have been imposed by local governments.Although our operations have not been materially
162、and negativelyimpacted by such outbreaks in Hong Kong and Dongguan in 2022,the government authorities may issue new orders of officeclosure,travel and transportation restrictions in China due to the resurgence of the COVID-19 and outbreak of new variants,whichwill have material negative impact to ou
163、r business and financial conditions.We need additional capital to develop new products,enter into new markets and drive our future growth.However,we havedifficulty obtaining sufficient financing from commercial banks in China and Hong Kong as these traditional commercial banksprefer having real asse
164、ts as collaterals for their loans.We have also studied the capital market of Hong Kong and we believe that itis tough for industrial company to seek for financing in Hong Kong.To meet increasing consumer needs for smart locks and smart home products,Hing Fat has been researching and developing smart
165、locks in the past couple years.Hing Fat has been working on smart locks functions,communication protocols,available designsand have internally worked out a general solution plan including mechanical and electronic parts but still need to further developthe software related parts for such locks which
166、 we need external expertise.Most of our research and development on smart lockshave been done internally by our technician and engineers,except that Hing Fat hired outside services for approximately$25,000in 2017.Because of tariff war and outbreak of COVID-19,we havent made further progress on the s
167、oftware for our smart locks tosave more working capital for our core operation.However,once we are able to raise sufficient funds from this public offering orare able to generate additional cash flows from our ongoing operations,we will acquire new equipment,systems and recruitinformation technology
168、 talents to develop software applications for our smart locks.6 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm17/203 Our Competition We are facing competition from wo
169、rldwide brands such as Kwiksets,Schlage,and other domestic manufacturers in Hong Kongand China.The Company positions its products as affordable high-quality mechanical Grade 2 and Grade 3 locksets.In Asia,thereare only a few manufacturers in China and South-east Asia that are capable of competing wi
170、th us on such products.Mechanical lockset companies have been consolidating in the last decade(see table:Competitive Landscaping,below).Sizablemultinational companies keep expanding by acquiring or merging with other lockset companies.Currently,the major player in theworld is ASSA Abloy AB(ASSA B:ST
171、O),a Swedish conglomerate that sells cover products and services ranging from locks,doors,gates and entrance automation,which owns brands such as Abloy,Yale Mul-T-Lock and Medeco.Other well-known brandsincluding Kwikset by Spectrum Brands(NYSE:SPB),Schlage by Allegion PLC(NYSE:ALLE),Defiant by Home
172、Depot(NYSE:HD),and Delaney Hardware in Cumming,USA.The PRC market is fragmented because various international lockset standardsare all applicable in China.Thus,various brands of locksets all compete in PRC which makes the Chinese lockset market highlycompetitive.COMPETITIVE LANDSCAPING:GLOBAL MECHAN
173、ICAL LOCKS MARKET,BY DEVELOPMENT(20132021)Company Acquisition Expansion ProductLaunch Spectrum Brands,Inc.2 1 1 Allegion PLC 4 1 -ASSA Abloy 6 2 1 DOM Security 2 1 4 Codelocks Inc.-3 3 Serrature Meroni SpA-3 *Source:Market Research Future-Global Mechanical Locks Market Research Report:Forecast to 20
174、25 and Company Websites We mostly compete with manufacturing subsidiaries and factories of those worldwide brands on product quality as well as themanufacturers in China on price.The key for our sustainability is to maintain high quality,fine craftsmanship and procurement ataffordable prices.In addi
175、tional,high capital expense for building a new locket manufacturing facility and our longtime createdreputation set up barriers of entry by new players.Corporate History and Structure For 40 years,we have manufactured and sold high quality mechanical locksets through our subsidiaries in China and Ho
176、ng Kongto customers in the United States and we continue to diversify and refine our product offerings to meet our customers needs.Thepredecessor of Hing Fat commenced our business of selling door locksets in 1981.In 1983,we started a small manufacturingworkshop in China to produce door locksets wit
177、h imported materials to fulfill for our customer orders which becomes our currentmanufacturing subsidiary,Xingfa.Our mission was“dedicated to manufacture high quality lockset products at affordable prices.”Since 2000,we have offered our products with the American National Standards Institute(ANSI)Gr
178、ade 2 and Grade 3 standards,which are developed by Builders Hardware Manufacturing Association(BHMA)for ANSI.Our focus is producing mechanicallocksets,including locksets for outdoor uses,such as main entrances and gates,and indoor uses,to promote sustainable growth inour business and competitiveness
179、 in the market.To continue driving growth,we have designed our products to go beyond a basiclockset for security purposes;we offer a wide range of ODM door locksets to various customer segments from“Premium Series”to“Economy-oriented Series”with classic to contemporary looks,functions and colors.Cur
180、rently,our products are sold mainly inthe US,and some in Canada,Macau and China.7 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm18/203 We sell our products mainly to
181、the US and Canada(“North America”)through one of our Hong Kong incorporated subsidiariesKambo Locksets.Kambo Hardware,another wholly owned subsidiary of the Company,targets and distributes locksets and relatedhardware to countries other than the North America market;and serves our customers in the A
182、sian countries including Thailandand Australia.In 1993,as the laws and regulations for processing with imported materials entity had changed in China,we established our whollyforeign owned entity(WFOE)subsidiary,Dongguan Xingfa Hardware Products Limited(“Xingfa”)located in Shatian County,Dongguan Ci
183、ty,Guangdong Province of PRC.Xingfa is equipped with various types of machines such as die casting machines,furnace,polishing machines and other machines for metal processing in a 17,560 m2 manufacturing facility.Currently,we are notin fully utilizing our capacity as compared to normal economic cond
184、itions in past years.We restructured our corporate organization in 2009 because of changes in local laws in China as mentioned above.OnMarch 23,2009,we incorporated Hing Fat Industrial Limited under Hong Kong law(“Hing Fat”),as the holdingcompany of Xingfa to manage the door lockset manufacturing ac
185、tivities of Xingfa and to conduct research anddevelopment.On March 26,2014,Kambo Locksets Limited(formerly known as Nice Gateway Limited)was incorporated under HongKong law.Kambo Locksets is a trading company focusing on marketing and sales of our products in North Americamarket and became our subsi
186、diary as a result of reorganization.On February 25,2015,Kambo Hardware Limited was incorporated under Hong Kong law.Its primary business is to sellour products to markets outside of the North America.Bamberg(HK)Limited(“Bamberg”)was incorporated on June 24,2016 under Hong Kong law.Through Bamberg,we
187、started marketing our products under our own brand“Bamberg”to establish and focus on internet sales channels,such asA.On July 17,2019,Intelligent Living Application Group Inc.was established as a holding company and it is a CaymanIslands exempted company limited by shares and were incorporated as an
188、 offshore holding company for listing purposesand for further expansion flexibility.Intelligent Living Application Group Inc.owns 100%of the equity interest inIntelligent Living Application Group Limited,which was incorporated on March 19,2014 under the laws of BritishVirgin Islands.On July 17,2019,
189、the Company issued 500,000,000 ordinary shares to its shareholders.On August 14,2019,theseshareholders surrendered an aggregate of 499,990,000 ordinary shares to the Company at no consideration.Thetransaction is considered as a recapitalization prior to the Companys initial public offering.A reorgan
190、ization of the Companys legal entity structure was completed in April 2020.The reorganization involved theincorporation of ILAG in July 2019 and execution of the Share Exchange Agreement between ILAG and ILA BVI inApril 2020(the“Share Exchange Agreement”)whereby ILAG took control of ILA BVI and its
191、wholly ownedsubsidiaries by acquiring all the outstanding shares of ILA BVI with ordinary shares of ILAG.Pursuant to the ShareExchange Agreement,ILAG and ILA BVI exchanged 2,550,000 shares of ILA BVI for 12,990,000 ordinary shares ofILAG.This transaction was treated as a recapitalization of the Comp
192、any and the financial statements give retroactiveeffect to this transaction.On July 16,2021,the Board of Directors and Shareholders of the Company approved the Amended and RestatedMemorandum and Articles of Association of the Company and our authorized share capital currently is$50,000 dividedinto 5
193、00,000,000 shares,comprising of(i)450,000,000 ordinary shares,par value of US$0.0001 each;and(ii)50,000,000preferred shares,par value of US$0.0001 each.Through Intelligent Living Application Group Limited in BVI,we own 100%of the equity interest in Hing Fat,KamboLocksets,Kambo Hardware and Bamberg,a
194、nd through Hing Fat,we own 100%of the equity interest in Xingfa.8 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm19/203 The following diagram illustrates our corporate
195、 structure,including our subsidiaries and consolidated affiliated entities:Intelligent LivingApplicationGroup Inc.(incorporated inCayman Islands)100%Intelligent LivingApplicationGroup Limited(incorporated inBVI)100%100%100%100%100%Kambo HardwareLimited (incorporatedin Hong Kong)Kambo LocksetsLimited
196、(incorporated inHong Kong)Bamberg(HK)Limited(incorporated inHong Kong)Hing Fat IndustrialLimited(incorporatedin Hong Kong)100%(Mainland China)Dongguan XingfaHardware ProductsCo.,Ltd.(incorporated inDongguan,PRC)Transfer of Cash To and From Our Subsidiaries We mainly conduct our marketing and sales,r
197、esearch and development and design activities through our wholly ownedsubsidiaries in Hong Kong and manufacturing activities through our wholly owned subsidiary in China,Dongguan XingfaHardware Products Co.,Limited(“Xingfa”).As a result,almost all of our sales revenues are received by our Hong Kongs
198、ubsidiaries which make payment to Xingfa for the cost of products and reasonable markups.Transfers of funds among our HongKong subsidiaries or from our Hong Kong subsidiaries to the holding company are free of restrictions.Remittances of funds fromour Hong Kong subsidiaries to Xingfa are subject to
199、review and conversion of HK$or US$to Renminbi Yuan(“RMB”)throughXingfas bank in China,which represents the SAFE to monitor foreign exchange activities.Under the existing PRC foreignexchange regulations,payments of current account items,such as profit distributions and trade and service-related forei
200、gnexchange transactions,can be made in foreign currencies without prior approval from SAFE by complying with certain proceduralrequirements with the banks.Currently,we dont have any intentions to distribute earnings or settle amounts owed under ouroperating structure other than the agreements entere
201、d under normal business operation as discussed above.9 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm20/203 Intelligent Living Application Group Inc.(“ILAG”)is incorp
202、orated in Cayman Islands as a holding company with no actualoperations and it currently conducts its business through its subsidiaries in Hong Kong and China.There has been no cash flowsand transfers of other assets between the holding company and its subsidiaries,other than that as of December 31,2
203、021,KabmoLocksets and Intelligent Living Application Group Limited(BVI),both wholly owned subsidiaries of ILAG have paidapproximately$1,190,000 for expenses related to this public offering of ILAG as intercompany loans and not as the dividendpayment or distribution.None of our subsidiaries has made
204、any dividend payment or distribution to our holding company as of thedate this prospectus and they have no plans to make any distribution or dividend payment to the holding company in the nearfuture.Neither the Company nor any of its subsidiaries has made any dividends or distributions to U.S.invest
205、ors as of the date ofthis prospectus.At operational level,Xingfa has sold products with markups to Hing Fat,in the amount of approximately$11.67 million and$10.70 million for the year ended December 31,2021 and 2020.Hing Fat has sold products with markups to Kambo Locksets inthe amount of approximat
206、ely$11.35 million and$10.10 million for the year ended December 31,2021 and 2020.Hing Fat hasmade payment to Xingfa approximately$11.65 million and$10.74 million for the year ended December 31,2021 and 2020.Kambo Locksets has made payment to Hing Fat for approximately$11.72 million and$10.80 million
207、 for the years endedDecember 31,2021 and 2020.All transfers of cash are related to the operations of the subsidiaries in the ordinary course of business.For our Hong Kongsubsidiaries,our subsidiary in British Virgin Islands and the holding company(“Non-PRC Entities”),there is no restrictions onforei
208、gn exchange for such entities and they are able to transfer cash among these entities,across borders and to US investors.Also,there is no restrictions and limitations on the abilities of Non-PRC Entities to distribute earnings from their businesses,includingfrom subsidiaries to the parent company or
209、 from the holding company to the U.S.investors as well as the abilities to settle amountsowed.However,PRC may impose greater restrictions on our Hong Kong subsidiaries abilities to transfer cash out of Hong Kongand to the holding company,which could adversely affect our business,financial condition
210、and results of operations.Regarding cash transfer to and from Xingfa,we are able to have such transfer through banks in China under current account items,such as profit distributions and trade and service-related foreign exchange transactions,which can be made in foreign currencieswithout prior appr
211、oval from SAFE by complying with certain procedural requirements with the banks.However,approval from orregistration with appropriate government authorities is required where RMB is to be converted into foreign currency and remittedout of China to pay capital expenses such as the repayment of loans
212、denominated in foreign currencies.PRC laws and regulationsallow an offshore holding company to provide funding to our wholly owned subsidiary in China only through loans or capitalcontributions,subject to the filing or approval of government authorities and limits on the amount of capital contributi
213、ons andloans.Subject to satisfaction of applicable government registration and approval requirements,we may extend inter-companyloans to our wholly owned subsidiary in China or make additional capital contributions to fund Xingfas capital expenditures orworking capital.For an increase of its registe
214、red capital,Xingfa needs to file such change of registered capital with the MOFCOMor its local counterparts.If the holding company provide funding to Xingfa through loans,the total amount of such loans may notexceed the difference between the entitys total investment as approved by the foreign inves
215、tment authorities and its registeredcapital.Such loans must be registered with SAFE or its local branches.Under PRC law,Xingfa is also required to set aside at least10%of its after-tax profits each year,if any,to fund certain statutory reserve funds until such reserve funds reach 50%of itsregistered
216、 capital.10 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm21/203 Recent Developments A novel strain of coronavirus(COVID-19)was first reported in December 2019,which
217、has spread rapidly to many parts of theworld,including the US.The epidemic has resulted in quarantines,travel restrictions,and the temporary closure of offices andbusiness facilities in mainland China and Hong Kong for the past few months from January to March 2020.In March 2020,theWorld Health Orga
218、nization(“WHO”)declared the COVID-19 as a global pandemic.Given the rapidly expanding nature of theCOVID-19 pandemic,and because all of our manufacturing operations are in China and the majority of our sales are generated bycustomers in the US,both of which have been significantly negatively impacte
219、d by the outbreak,our business,results ofoperations,and financial condition have been and will continue to be adversely affected.The impacts of COVID-19 on our business,financial condition,and results of operations include,but are not limited to,thefollowing:Temporary Closure of Office,Factory and T
220、ravel Restrictions.In compliance with the government health emergencyrules in place and in observation of the Chinese New Year national holiday,we temporarily closed our office andfactory since January 24,2020.Our office staff has worked from home until both our office and factory resumedoperations
221、on March 16,2020.Due to the nature of our business,the closure of our factory had delayed productionand product delivery.Our business and operation was negatively impacted during the first half of 2020,however,ouroverall revenues for 2020 was similar to the same period of 2019 and our overall revenu
222、es for 2021 increased slightlyfrom 2020 as COVID-19 in Hong Kong and China was mostly under control in 2021.In February 2022,there was anoutbreak of Omicron variant in Hong Kong and the government imposed certain restriction and quarantinerequirements,however,our offices remained open and our busine
223、ss was not impacted.The COVID-19 outbreak ismostly under control in Hong Kong now.In March 2022,the government of Dongguan City imposed certainrestrictions and quarantine requirements due to the outbreak of Omicron variant,which caused logistic disruption forraw materials and finished goods for abou
224、t 15 days.However,our Xingfa factory remained open during that period oftime and its production was not significantly impacted although employees in Dongguan were required to be testedand follow the COVID-19 related protocols.Delay in Customer Delivery.Our customers in the US have been and are conti
225、nuously being negatively impacted bythe COVID-19 pandemic and the demand for product delivery has been delayed.We have maintained similar revenuefor 2021 to that for 2020.However,temporary closure of Yantian Port in Shenzhen from May 21,2021 to Jun 24,2021 caused delay of delivery of products to our
226、 customers.Our customers have also been hampered by congestedports in the U.S.due to COVID-19,which in turn have caused delay of shipment,increase of inventory anddisruption of our production schedule.As of the date of this prospectus,we have received customer orders withscheduled deliveries through
227、 August 2022.We believe the negative impact on our business by the COVID-19pandemic has been generally under control and recent outbreaks in China have not materially impacted our businessoperations in Hong Kong and Dongguan.Temporary shortage of labor.Due to the travel restrictions imposed by the l
228、ocal governments,some of our employeeswere not able to get back to work since the Chinese New Year holiday in early 2020.However,the impact of suchshortage is not significant to the Company because customer order deliveries have been delayed due the COVID-19pandemic and our existing employees worked
229、 overtime to mitigate this temporary labor shortage.Since June 2020,asthe COVID-19 pandemic in China has been mostly under control,we have seen supply of labor slightly recoveringand we currently do not have shortage of labor for our Xingfa factory.Also,it is our new strategy now to employmore skill
230、ed labor,and we do not plan to hire any unskilled labor in the near future.Temporary shortage of power.The Chinese governments recent enforcement of“dual control of energyconsumption”policy to control the total power consumption and efficiency has caused disruptions to Xingfasproduction progress and
231、 increased cost of goods sold due to lower utilization of labor and slightly higher cost forwastage metal raw materials.This policy might continue to have negative impact on our business,results ofoperations and financial condition.The future impact of COVID-19 on our results of operations will depe
232、nd on future developments and new information that mayemerge regarding the duration and severity of the pandemic,new variants of the COVID-19,the efficacy and distribution ofCOVID-19 vaccines and actions taken by government authorities and other entities to contain COVID-19 and mitigate its impact,a
233、lmost all of which are beyond our control.Nonetheless,we are closely monitoring the COVID-19 pandemic and will assess itspotential impact to our business.On a year-to-date basis,we have not noted a significant decline in orders as of December 31,2021,compared to the same period of 2020.Because of th
234、e uncertainty surrounding the COVID-19 pandemic such as outbreak inHong Kong and China in 2022,the possible business disruption and the related financial impact related to the potential furtheroutbreak of and response to COVID-19 cannot be reasonably estimated at this time.For a detailed description
235、 of the risksassociated with the COVID-19 pandemic,see“Risk FactorsRisks Related to Our Business The recent global coronavirus2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f
236、1a.htm22/203COVID-19 outbreak has caused significant disruptions in our business,which we expect will continue to have material negativeimpact on our business,results of operations and financial condition”.11 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a
237、.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm23/203 Foreign Private Issuer Status We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934,as amended(the“Exchange Act”).As such,we are exempt from certain pro
238、visions applicable to United States domestic public companies.Forexample:we are not required to provide as many Exchange Act reports,or as frequently,as a domestic public company;for interim reporting,we are permitted to comply solely with our home country requirements,which are less rigorous thanth
239、e rules that apply to domestic public companies;we are not required to provide the same level of disclosure on certain issues,such as executive compensation;we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures ofmaterial information;we are not
240、required to comply with the sections of the Exchange Act regulating the solicitation of proxies,consents orauthorizations in respect of a security registered under the Exchange Act;and our insiders are not required to comply with Section 16 of the Exchange Act requiring such individuals and entities
241、 to filepublic reports of their share ownership and trading activities and establishing insider liability for profits realized from any“short-swing”trading transaction.Emerging Growth Company Status We are an“emerging growth company,”as defined in the Jumpstart Our Business Startups Act(the“JOBS Act
242、”),and we areeligible to take advantage of certain exemptions from various reporting and financial disclosure requirements that are applicable toother public companies that are not emerging growth companies,including,but not limited to,(1)presenting only two years ofaudited financial statements and
243、only two years of related management discussion and analysis of financial conditions and resultsof operations in this prospectus,(2)not being required to comply with the auditor attestation requirements of Section 404 of theSarbanes-Oxley Act of 2002(the“Sarbanes-Oxley Act”),(3)reduced disclosure ob
244、ligations regarding executive compensation inour periodic reports and proxy statements,and(4)exemptions from the requirements of holding a non-binding advisory vote onexecutive compensation and shareholder approval of any golden parachute payments not previously approved.We intend to takeadvantage o
245、f these exemptions.As a result,investors may find investing in our ordinary shares less attractive.In addition,Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extendedtransition period provided in Section 7(a)(2)(B)of the Securities Act of 1933,as
246、amended(the“Securities Act”),for complyingwith new or revised accounting standards.As a result,an emerging growth company can delay the adoption of certain accountingstandards until those standards would otherwise apply to private companies.We intend to take advantage of such extendedtransition peri
247、od.We could remain an emerging growth company for up to five years,or until the earliest of(1)the last day of the first fiscal year inwhich our annual gross revenues exceed$1.07 billion,(2)the date that we become a“large accelerated filer”as defined inRule 12b-2 under the Exchange Act,which would oc
248、cur if the market value of our ordinary shares that is held by non-affiliatesexceeds$700 million as of the last business day of our most recently completed second fiscal quarter and we have been publiclyreporting for at least 12 months,or(3)the date on which we have issued more than$1 billion in non
249、-convertible debt during thepreceding three-year period.Corporate Information Our principal executive offices are located at Unit 2,5/F,Block A,Profit Industrial Building,1-15 Kwai Fung Crescent,KwaiChung,New Territories,Hong Kong.Our telephone number at this address is+852 2481 7938.Our registered
250、office in theCayman Islands is located at Cricket Square,Hutchins Drive,P.O.Box 2681,Grand Cayman,KY1-1111.Our agent for service ofprocess in the United States is Cogency,located at 122 East 42nd Street,18th Floor,New York,NY 10168,United States.Investorsshould contact us for any inquiries through t
251、he address and telephone number(852)2481-7938 of our principal executive offices.Our website is www.i-l-a-.The information contained on our website is not a part of this prospectus.12 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Ar
252、chives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm24/203 The Offering Securities being offered:5,060,000 ordinary shares on a firm commitment basis.Initial offering price:The purchase price for the shares will be$5.00 per ordinary share.Number of ordinary sharesoutstanding before theof
253、fering:13,000,000 of our ordinary shares are outstanding as of the date of this prospectus.Number of ordinary sharesoutstanding after the offering:18,060,000 ordinary shares.Gross proceeds to us,net ofunderwriting discount butbefore expenses:$23,402,500,based on an offering price at$5.00.Use of proc
254、eeds:We plan to use the net proceeds from this offering after deducting estimated offering expensespayable by us as follows:(i)approximately$5 million of the proceeds to set up our newsubsidiary or representative office in the United States to enhance sales and service support forour customers and f
255、uture expansion in marketing and internet sales of self-branded products;(ii)approximately$4 million of the proceeds will be applied to establishment of productionfacility(ies)outside China in order to mitigate the effects of additional tariffs that may be levieddue to the trade war between U.S.and
256、China and to leverage lower labor costs in southeast Asiacounties;(iii)approximately$6 million of the proceeds for working capital purposes in our HongKong operation,including but not limited to sales and marketing expenses,and research anddevelopment expenses of smart locks,smart security and inter
257、net of things(IoT)products;(iv)theremaining of the proceeds will be used to increase the registered capital of our manufacturingfacility in China for capital expenses and working capital.For more information on the use ofproceeds,see“Use of Proceeds”on page 46.Lock-up All of our directors and office
258、rs and all existing shareholders have agreed with the underwriter,subject to certain exceptions,not to sell,transfer or dispose of,directly or indirectly,any of ourordinary shares or securities convertible into or exercisable or exchangeable for our ordinaryshares for a period of 6 months after the
259、date of this prospectus.See“Shares Eligible for FutureSale”and“Underwriting”for more information.Nasdaq Symbol:ILAG Underwriters warrants:We have agreed to issue,on the closing date of this offering,warrants(the“underwriterswarrants”)to the Underwriter,in an amount equal to 5%of the aggregate number
260、 of ordinaryshares sold by us in this offering.The exercise price of the underwriters warrants is equal to125%of the price of our ordinary shares offered hereby.The underwriters warrants areexercisable for a period of five years from the closing date of this offering and will terminate onthe fifth a
261、nniversary of the date of the commencement of sales of this offering.Risk factors:Investing in our ordinary shares involves a high degree of risk.As an investor you should not buyour ordinary shares unless you are able to bear a complete loss of your investment.You shouldcarefully consider the infor
262、mation set forth in the“Risk Factors”section beginning on page 16.13 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm25/203 SUMMARY CONSOLIDATED FINANCIAL AND OPERATING
263、 DATA The following selected consolidated statements of operations and comprehensive loss data and selected consolidated statements ofcash flows data for the years ended December 31,2021 and 2020 and the selected consolidated balance sheets data as ofDecember 31,2021 and 2020 have been derived from
264、our audited consolidated financial statements included elsewhere in thisprospectus.Our consolidated financial statements are prepared and presented in accordance with U.S.GAAP.Our historical resultsare not necessarily indicative of results expected for future periods.You should read this Summary Con
265、solidated Financial Dataand Operating Data section together with our consolidated financial statements and the related notes and“ManagementsDiscussion and Analysis of Financial Condition and Results of Operations”included elsewhere in this prospectus.For the years ended December 31,2021 2020 USD USD
266、 Selected Consolidated Statements of Operations and Comprehensive Loss Data:Revenues$12,543,556$11,219,559 Cost of goods sold (11,231,253)(9,641,408)Gross profit 1,312,303 1,578,151 Selling and marketing expenses (150,152)(169,111)General and administrative expenses (2,902,040)(2,417,289)Finance cos
267、ts (57,774)(29,109)Loss from operations (1,797,663)(1,037,358)Total other income,net 411,148 22,010 Loss before provision for income taxes (1,386,515)(1,015,348)Provision for income taxes -Net loss$(1,386,515)$(1,015,348)Loss per share basic and diluted$(0.11)$(0.08)14 2022/12/13https:/www.sec.gov/A
268、rchives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm26/203 As of December 31,2021 2020 USD USD Selected Consolidated Balance Sheet Data:Cash and cash equivalents$131,129$302,440 Total current assets 7,1
269、27,138 6,059,235 Total non-current assets 2,181,831 2,393,834 Total assets$9,308,969$8,453,069 Total current liabilities 4,913,615 3,478,988 Total liabilities$5,828,683$4,356,505 Total shareholders equity$3,480,286$4,096,564 For the years ended December 31,2021 2020 USD USD Selected Consolidated Sta
270、tements of Cash Flows Data:Net cash(used in)operating activities$(1,038,967)$(1,598,979)Net cash(used in)investing activities (9,758)(221,760)Net cash provided by financing activities 876,334 1,049,390 Effect of exchange rate on cash 1,080 3,910 Net decrease in cash (171,311)(767,439)Cash and cash e
271、quivalents at beginning of year 302,440 1,069,879 Cash and cash equivalents at end of year$131,129$302,440 15 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm27/203 RIS
272、K FACTORS An investment in our ordinary shares involves significant risks.You should carefully consider all of the information in thisprospectus,including the risks and uncertainties described below,before making an investment in our ordinary shares.Any of thefollowing risks could have a material ad
273、verse effect on our business,financial condition and results of operations.In any suchcase,the market price of our ordinary shares could decline,and you may lose all or part of your investment.Risks Related to Our Business The recent global coronavirus COVID-19 outbreak has caused significant disrup
274、tions to our business,which we expect willcontinue to materially and adversely affect our results of operations and financial condition The recent outbreak of COVID-19 has spread throughout the world,especially in China,the United States and Europe.OnMarch 11,2020,the World Health Organization decla
275、red the outbreak a global pandemic.Many businesses and social activities inChina,Hong Kong,the U.S.and other countries and regions have been severely disrupted,including those of our suppliers,customers and distributors.Such disruption and the potential slowdown of the worlds economy could have a ma
276、terial adverseeffect on our results of operations and financial condition.Our suppliers and our customers have experienced significant businessdisruptions and suspension of operations due to quarantine measures to contain the spread of the pandemic,which have caused andmay continue to have a negativ
277、e impact on our business and operations,such as shortage in the supply of raw materials,suspend orreduce our production capacity,shortage of transportation or logistic services,delay of our products delivery,delay or cancellationof orders from our customers,and delay or default in payments from our
278、customers.Our customers or end-users of our productsthat are negatively impacted by the outbreak of COVID-19 may reduce their budgets to purchase our products,which maymaterially adversely impact our revenue and results of operations.Our business operations could also be disrupted if any of ouremplo
279、yees are suspected of being or is infected by COVID-19,since it could require other employees to be quarantined or ouroffices and production site to be closed down and disinfected.COVID-19 pandemic continued to affect global logistics.Between May 21 and June 24,2021,Yantian Port of Shenzhen,a majorp
280、ort for shipment of Xingfa,was temporary closed for a sudden COVID-19 outbreak which caused delay of delivering andshipment of our products to customers.In additional,there have been outbreaks of COVID-19 in other ports in China and causedtemporary closure of such ports,which interrupted and decreas
281、ed supply of raw materials for Xingfas production and driving rawmaterial prices up.Our customers have also been hampered by congested ports in the U.S.,which in turn have caused delay ofshipment,increase of inventory and disruption of our production schedule.The local government required mandatory
282、COVID-19tests on our employees of Xingfa factory from time to time,which has caused and might continue to cause certain disruption in ourproduction schedule.As part of global supply chain interruption due to COVID-19,coal and other supplies for power generation plants have beennegatively impacted.As
283、 a result,Chinese government started to enforce the“dual control of energy consumption”policy to controlthe total power consumption and efficiency which had caused disruptions to Xingfas production schedule and increase of the costof production.All of these would have a material adverse effect on ou
284、r results of operations and financial condition in the nearterm.In 2022,there have been outbreaks of the Omicron variant of the COVID-19 in Hong Kong where our headquarters arelocated and other cities in China,including Shenzhen,Shanghai,Guangzhou,Taiyuan,Changchun as well as Dongguan city whereXing
285、fa is located,and travel restrictions,mandatory COVID-19 tests,quarantine requirements and/or temporary closure of officebuildings and facilities have been imposed by local governments.Although our operations have not been materially and negativelyimpacted by such outbreaks in Hong Kong and Dongguan
286、 in 2022,the government authorities may issue new orders of officeclosure,travel and transportation restrictions in China due to the resurgence of the COVID-19 and outbreak of new variants,whichwill have material negative impact to our business and financial conditions.The growth of our business dep
287、ends on our ability to accurately predict consumer trends and demand and successfullyintroduce new products and product line extensions and improve existing products.Our growth depends,in part,on our ability to successfully introduce new products and product line extensions and improve andreposition
288、 our existing products to meet the requirements of property owners and builders.This,in turn,depends on our ability topredict and respond to evolving consumer trends,demands and preferences.The development and introduction of innovative newproducts and product line extensions involve considerable co
289、sts.In addition,it may be difficult to establish new supplierrelationships and determine appropriate product selections when developing a new product or product line extension.Any newproduct or product line extension may not generate sufficient customer interest and sales to become a profitable prod
290、uct or to coverthe costs of its development and promotion and may negatively affect our operating results and damage our reputation.If we arenot able to anticipate,identify or develop and market products to respond to the changes in the requirements and preferences ofproperty owners and builders,or
291、if our new product introductions or repositioned products fail to gain consumer acceptance,wemay not grow our business as anticipated,our sales may decline and our business,financial condition and results of operationsmay be materially adversely affected.2022/12/13https:/www.sec.gov/Archives/edgar/d
292、ata/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm28/203 16 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0001104659220
293、77643/tm2220498d1_f1a.htm29/203 We may not be able to successfully in introducing smart lock products that are current in research and development.We have invested our efforts,time and resources in the research and development of smart locks in the past couple years and theoutcome is uncertain wheth
294、er such development will be successful.We will continue to invest in the development of the softwareof smart locks and equipment and machineries to manufacture parts and assembly line to produce smart locks.We will also incurcosts to recruit information technology talents to develop software applica
295、tion and support functions of such new products.Inadditional,we will incur marketing costs to generate customer interest and sales of such products in enough volume to make it aprofitable product.If we fail to design and develop appropriate functions for our smart locks to attract enough customers a
296、ndestablish commercial manufacturing capabilities or if our smart lock products cant meet the regulatory requirements,our financialcondition and results of operations may be adversely affected.If we fail to obtain and maintain patent,trade secret and otherintellectual property protection and regulat
297、ory exclusivity for our new smart locks or if we are unable to ensure that we do notinfringe,misappropriate or otherwise violate the valid patent,trade secret or other intellectual property rights of third partiesregarding smart locks on the market,our business,financial condition and results of ope
298、rations may be materially adverselyaffected.We may not be able to successfully implement our growth strategy on a timely basis or at all.Our future success depends,in large part,on our ability to implement our growth strategy,including expanding distribution andimproving placement of our products in
299、 the stores of our retail customers,attracting new consumers to our brands,introducing newproducts and product line extensions and expanding into new markets.Our ability to implement this growth strategy depends,among other things,on our ability to:enter into distribution and other strategic arrange
300、ments with current and new retailers and other potential distributors ofour products;continue to effectively compete in our distribution channels;increase our brand recognition by effectively implementing our marketing strategy and advertising initiatives;create and maintain brand loyalty;develop ne
301、w products and product line extensions that appeal to consumers;maintain and,to the extent necessary,improve our high standards for product quality,safety and integrity;maintain sources for the required supply of quality raw materials and ingredients to meet our growing demand;and identify and succe
302、ssfully enter and market our products in new geographic areas and market segments.17 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm30/203 We may not be able to succes
303、sfully implement our growth strategy and may need to change our strategy from time to time.If wefail to implement our growth strategy or if we invest resources in a growth strategy that ultimately proves unsuccessful,ourbusiness,financial condition and results of operations may be materially adverse
304、ly affected.We incurred net losses for the year ended December 31,2021 and the past two years and may not be able to generate sufficientoperating cash flows and working capital to continue as a going concern.Failure to manage our liquidity and cash flows maymaterially and adversely affect our financ
305、ial condition and results of operations.As a result,we may need additional capital,and financing may not be available on terms acceptable to us,or at all.We also incurred net losses of$1,386,515 and$1,015,348 for the years ended December 31,2021 and 2020,respectively.As aresult,we have generated neg
306、ative cash flows from operating activities of approximately$1.0 million and$1.6 million for the yearended December 31,2021 and 2020.We can offer no assurance that we will operate profitably or that we will generate positivecash flows in the next twelve months,given our substantial expenses in relati
307、on to our revenue at this stage of our Company.Inability to collect our accounts receivable in a timely and sufficient manner,or the inability to offset our expenses with adequaterevenue,may adversely affect our liquidity,financial condition and results of operations.Although we believe that our cas
308、h onhand and anticipated cash flows from operating activities will be sufficient to meet our anticipated working capital requirementsand capital expenditures in the ordinary course of business for the next 12 months,we cannot assure you this will be the case.If and when we are unable to generate suf
309、ficient cash flows from operations to meet our working capital requirements and variousoperating needs,we may need to raise additional funds for our operations and such funds may not be available on commerciallyacceptable terms,if at all.If we are unable to raise funds on acceptable terms,we may not
310、 be able to execute our business plan,take advantage of future opportunities,or respond to competitive pressures or unanticipated requirements.This may seriously harmour business,financial condition and results of operations.If we are unable to achieve or maintain profitability,the market price ofou
311、r shares may significantly decrease.In the event that the Company requires additional funding to finance its operations,theCompanys major shareholders have indicated their intent and ability to provide such financial support,however,there is noassurance such funding will be available when the Compan
312、y needs it in the future.Any damage to our reputation or our brand may materially adversely affect our business,financial condition and results ofoperations.We have long business relationships with our customers by maintaining high quality and quick service response.Maintaining ourstrong reputation
313、with consumers and our suppliers is critical to our success.Our brands may suffer if our marketing plans orproduct initiatives are not successful.The importance of our brands may increase if competitors offer products with designs andfunctions similar to ours.Further,our brands may be negatively imp
314、acted due to real or perceived quality issues or if consumersperceive us as being untruthful in our marketing and advertising,even if such perceptions are not accurate.The failure to maintainhigh standards for product quality and integrity,including raw materials obtained from suppliers,or allegatio
315、ns of product qualityissues,even if untrue or caused by our raw material suppliers,may reduce demand for our products or cause production anddelivery disruptions.We maintain guidelines and procedures to ensure the quality and integrity of our products.However,we maybe unable to detect or prevent pro
316、duct quality issues,particularly in instances of the attempts to cover up or obscure deviationsfrom our guidelines and procedures.If any of our products become unfit for use or cause injury,we may have to engage in aproduct recall and/or be subject to liability.In addition,if our products have quali
317、ty issues,we could incur significant expensesrelated to the replacement of our products.Damage to our reputation or our brands or loss of consumer confidence in our productsfor any of these or other reasons could result in decreased demand for our products and increased costs and our business,financ
318、ialcondition and results of operations may be materially adversely affected.To the extent our customers purchase products in excess of consumer demand in any period,our sales in a subsequent periodmay be adversely affected as our customers seek to reduce their inventory levels.From time to time,our
319、customers may purchase more products than they expect to sell during a particular time period.Ourcustomers may grow their inventory in anticipation of,or during,our promotional events,which typically provide for reducedprices during a specified time or other customer incentives.Our customers may als
320、o grow inventory in anticipation of a priceincrease for our products,or otherwise over-order our products as a result of overestimating demand for our products.If a customerincreases its inventory during a particular reporting period as a result of a promotional event,anticipated price increases oro
321、therwise,then sales during the subsequent reporting period may be adversely impacted as our customers seek to reduce theirinventory to customary levels.This effect may be particularly pronounced when the promotional event,price increase or otherevent occurs near the end or beginning of a reporting p
322、eriod or when there are changes in the timing of a promotional event,priceincrease or similar event,as compared to the prior year.To the extent our customers seek to reduce their usual or customaryinventory levels or change their practices regarding purchases in excess of consumer demand,our net sal
323、es and results ofoperations may be materially adversely affected in that period.18 2022/12/13https:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htmhttps:/www.sec.gov/Archives/edgar/data/1814963/0007643/tm2220498d1_f1a.htm31/203 We operate in a highly competi
324、tive industry and may lose market share or experience margin erosion if we are unable tocompete effectively.We compete on the basis of product quality,design and performance,brand awareness and loyalty,product variety,reputation,price and promotional efforts.We compete with a significant number of c
325、ompanies of varying sizes,including divisions orsubsidiaries of larger companies who may have greater financial resources and larger customer bases than we have.As a result,these competitors may be able to identify and adapt to changes in consumer preferences more quickly than us due to theirresourc
326、es and scale.They may also be more successful in marketing and selling their products,better able to increase prices toreflect cost pressures and better able to increase their promotional activity,which may impact us and the entire locksetmanufacturing industry.If these competitive pressures cause o
327、ur products to lose market share or experience margin erosion,ourbusiness,financial conditions and results of operations may be materially adversely affected.Fluctuations in the price,availability or quality of raw materials used in our products could cause manufacturing delays,adversely affect our
328、ability to provide goods to our customers or increase costs,any of which could decrease our sales orearnings.Our major raw material purchases include copper,iron,zinc alloy and packaging materials comprised of paper and plastic.Wedepend on outside suppliers for these raw materials and must obtain su
329、fficient quantities of quality raw materials from thesesuppliers at acceptable prices and in a timely manner.We do not maintain fixed supply contracts with our suppliers.Unfavorablefluctuations in the price,quality or availability of required raw materials could negatively affect our ability to meet
330、 the demands ofour customers.Our inability to meet customers demands could result in the loss of future sales.The profitability of our products depends in part upon the margin between the cost to us of certain raw materials and ourfabrication costs associated with converting such raw materials into
331、assembled products,as compared to the selling price of ourproducts.We intend to continue to base the selling prices of our products in part upon their associated raw material costs.However,we may not be able to pass all increases in raw material costs or increases in the costs associated with taking
332、 possession of rawmaterials through to our customers in the future.The inability to offset price increases of raw materials by sufficient product priceincreases could have a material adverse effect on our consolidated financial condition,results of operations and cash flows.We do not engage in hedgi
333、ng transactions to protect against raw material fluctuations but attempt to mitigate the short-term risks ofprice swings by purchasing raw materials in advance based on production needs or reaching agreements with some of our suppliersto keep the cost of raw materials stable.We also attempt to lower consumption of raw materials by lowing waste rate and recycledmaterials without compromising produc